SUPPLY CHAIN REINVENTION
9
are shifting from globalisation to localisation of their supplier and manufacturing bases. Capgemini reports that 72% of consumer product organisations and 58% of retailers say they are actively investing in regionalising or localising their manufacturing base or nearshoring production.
The survey identified 65% of CP&R companies are also investing in regionalising and localising their supplier bases, rising to 83% in the UK and 73% in India. In line with these strategies, global suppliers will represent just 25% of retailers’ capacity in three years’ time, down from 36% today. In consumer products, global manufacturers will represent just 17%, down from 26% today.
Supply chain strategies will ‘change significantly’ as companies learn from a year of disruption and focus on building resilience
Two-thirds of companies say their strategies will change significantly in the next three years as they adapt to lessons from last year’s Covid-19 disruption to consumer products and retail (CP&R) supply chains and embed resiliency into their operations, according to a survey by the Capgemini Research Institute.
Just 23% of consumer product organisations and 28% of retailers believe that their supply chains are agile enough to support their evolving business needs, researchers discovered. The report states: “Covid-19 was a wake-up call for CP&R companies: 85% of consumer products organisations and 88% of retailers say they faced disruption, while 63% of consumer products organisations and 71% of retailers say it took at least three months for their supply chains to recover from the disruptions.”
As a result, Capgemini says companies are realigning their strategies to focus on three critical areas:
The move to demand sensing
Over two-thirds of organisations (68%) say they faced difficulties in demand planning due to a lack of accurate and up-to-date information on fluctuating customer demand during the pandemic. To improve forecasting, 66% of those surveyed plan to segment supply
chains according to demand patterns, product value and regional dimensions post pandemic, while 54% say they will use analytics/AI-machine learning for demand forecasting to cope with the impact of Covid-19.
Visibility becomes critical
75% of consumer product companies faced difficulties when they needed to quickly increase or decrease production capacity due to Covid-19. To create the agility to respond to sudden shifts in demand, manufacturers can identify opportunities to improve visibility, cites the report. This can help deal with the challenge of strategic, tactical, and real-time operational decisions.
Digital investments will be at the forefront of this process. The survey found:
• 58% of retailers and 61% of consumer product organisations are planning to increase investments in digitisation of supply chains
• 47% are planning to invest in automation • 42% are planning to invest in robotics • 42% will invest in artificial intelligence
• 64% and 63% of businesses taking part in the survey are also planning to make extensive use of artificial intelligence and machine learning across transportation and pricing optimisation respectively.
From globalisation to localisation
To prevent future disruption, companies are recognising the importance of localisation and are actively investing. CP&R organisations
‘65% of CP&R companies are investing in regionalising and localising their supplier bases, rising to 83% in the UK and 73% in India. In line with these strategies, global suppliers will represent just 25% of retailers’ capacity in three years’ time.’
In line with the move to localisation, dark stores, which have independent operations and are closer to delivery locations, are becoming an increasingly useful alternative for fulfilling online orders as physical footfall decreases. Earlier Capgemini research showed that if deliveries from dark stores increase by 50%, profit margins could grow by 7% as a result of lower delivery costs and higher delivery throughput compared to stores, while also not affecting store operations.
“CPGs and retailers recognise 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,” says Lindsey Mazza, Global Retail Supply Chain Leader at Capgemini. “The pandemic was an accelerated learning event. Organisations realise that new technologies can enable much-needed agility – from improving demand prediction to boosting fulfilment to quicker, cost-effective last mile deliveries. By investing now, organisations put themselves in good stead to safely support consumers in their time of need – whenever the next industry disruption may be.”
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28
