A recent Auburn University survey of 110 CPG logistics executives asked about hot button issues for the future in the CPG supply chain. They identified several:
- Demand planning capabilities. The retailers' drive for lean inventories is pressuring suppliers to better manage their own inventories. Innovators understand that accurate demand planning is critical, and they are investing in business analytics tools that will help driver greater insights from retailer promotional plans, POS data, and other leading indicators.
- Vendor managed inventory. Here, the CPG company is responsible for monitoring retailer sales and in-stock status, creating inventory plans, and initiating replenishment orders. Said one survey respondent: "We're taking a look at VMI as a strategic initiative with certain customers. It would give us visibility to the customer's DC and ultimately to the shelf."
- Greater cost knowledge. CPG companies want to better understand their cost to serve individual retailer customers. They are aggressively exploring how to capture more accurate cost information.
- Freight control skirmishes. Some mid-sized CPG companies are concerned that retailers are taking greater control of inbound freight, with strategies such as dictating that suppliers use the retailer's preferred carrier. According to one logistics executive, "Some retailers have taken responsibility for their transportation, but don't perform as well as our carriers. If they fail to keep an appointment or their carrier does not make it to the destination on time, we are still accountable for the out of stock."
- Technology implementation. Many CPG companies are investing in supply chain technology tools to drive greater process efficiency, cut costs and improve visibility. But they are anxious about implementing and integrating these new tools. They feel pressure to demonstrate a clear ROI for the systems investment.
- Leverage 3PL expertise. Mid-sized CPG companies recognize that they lack the internal resources and expertise of their larger competitors. As a result, they are forging more strategic relationships with third party logistics providers.
Download the complete report: Key Supply Chain Challenges of Mid-Sized CPG Companies.