Companies Say Supply Chain Strategies Are Due for Change
According to a new report from the Capgemini Research Institute, which examined the impact of the pandemic’s disruption on consumer products and retail supply chains, a majority of companies are planning complete overhauls to current strategies. In fact, the report showed that just 23 percent of consumer products organizations and just 28 percent of retailers believed the supply chain they currently have in place is “agile enough to support evolving business needs.”
Notably in the last year, 85 percent of consumer products organizations and 88 percent of retailers told Capgemini that they had faced disruptions and 71 percent of retailers said recovery from these disruptions took three months or longer.
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“CPGs and retailers recognize the great risk of future disruption, and they have an opportunity to be in front of creating agility and resilience to adapt their supply chain networks,” said Lindsey Mazza, global retail supply chain leader at Capgemini. “The pandemic was an accelerated learning event. Organizations realize that new technologies can enable much-needed agility — from improving demand predictions to boosting fulfillment to quicker, cost-effective last-mile deliveries. By investing now, organizations put themselves in good stead to safely support consumers in their time of need — whenever the next industry disruption may be.”
As companies restructure supply chains to better adapt to future disruptions, Capgemini’s report forecasts they will consider three critical areas of realignment: demand sensing, critical visibility and localization.
With 68 percent of companies reporting that they faced demand planning issues “due to lack of accurate and up-to-date information on fluctuating customer demand” during the pandemic, Capgemini said the move to demand sensing will be necessary to improve accurate forecasting. To address these concerns, 66 percent of organizations told Capgemini they plan to segment supply chains by demand patterns, product value and regional dimensions post-pandemic while another 54 percent said they will plan to use analytics or artificial intelligence machine learning for demand forecasting.
At the same time, as companies restructure strategies, Capgemini noted in its report that visibility has become critical. Seventy-five percent of consumer product companies reported they had struggled when they faced the need to quickly increase or decrease production during the pandemic. Now, the authors of the report said, “organizations understand the significance of digital investments in improving visibility.” Specifically, companies said they plan to invest in automation, robotics and artificial intelligence.
Further, Capgemini found in its research that organizations will be investing in shifts from globalization to localization, recognizing the importance of regional, or localized, supplier and manufacturing bases. While 65 percent of consumer product companies and retailers said they plan to invest in localizing supplier bases, dark stores were also called out as an increasingly useful alternative for fulfilling online orders for the future.
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