May 17, 2020

CPG Supply Chains are adapting to disruption, new research finds

supply chain digitilisation
supply chain efficiency
Supply Chain Technology
US
James Henderson
2 min
CPG Supply Chains are adapting to disruption, new research finds
Online shopping, new digital technologies, and increasing channel fragmentation are intensifying the pressures on US consumer packaged goods (CPG) suppl...

Online shopping, new digital technologies, and increasing channel fragmentation are intensifying the pressures on US consumer packaged goods (CPG) supply chains.

There are clear steps CPG companies must take in order to prepare, according to a new report authored by The Boston Consulting Group (BCG) and commissioned by the Grocery Manufacturers Association (GMA).

The report, ‘How CPG Supply Chains Are Preparing for Seismic Change’, highlights the top trends affecting CPG supply chains and the effect on CPG companies’ performance.

Among the issues addressed in the report: e-commerce sales growth, service-level performance, channel proliferation, network design, and cash management trends. 

The report is based on the 2017 Supply Chain Benchmarking Study, a study of the US units of more than 30 leading CPG companies conducted jointly by BCG and GMA.

“It’s been a turbulent couple of years for the grocery industry, with major disruption and dislocation in the retail landscape,” commented Daniel Triot, senior director of the Trading Partner Alliance of GMA and the Food Marketing Institute.

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“Despite the important performance gains in the supply chain in the past two years, CPG companies cannot be complacent. This report aims to provide guidance for CPG companies looking to harness new digital technologies and trends to support continued growth.”

Over the next two years, half the growth in North American grocery sales will come from e-commerce. But only 6% of CPG companies have a dedicated e-commerce supply chain team, and only 3% are able to fully track sales by channel.

As US consumers increasingly come to rely on the digital marketplace for their product needs, the lack of readiness could cause companies to fall far behind in securing their share of customer wallet.

“In the digital world, critical mass is won quickly,” says Elfrun von Koeller, a BCG partner and coauthor of the report. “And once won, it’s hard to dislodge. So CPG companies can’t afford to sit this out—their existing supply chains are often not well placed to deliver to these new channels.”

According to the report, channel proliferation is the greatest impediment to on-time delivery performance. For example, median on-time delivery rates (requested arrival date, or RAD) to online retailers was just 64%. 

“E-commerce introduces additional fragmentation to an already fragmented network, thus compounding the significant distribution challenges CPG companies already face,” von Koeller.

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Jun 21, 2021

Pandora and IBM digitise jewellery supply chain

supplychain
IBM
Pandora
omnichannel
2 min
Jewellery retailer Pandora teamed with IBM to streamline supply chains as sales of hand-finished jewellery doubled across ecommerce platforms

Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery. 

The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales. 

A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.

Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs. 

Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption. 

"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added. 

 

Pandora’s pivot to digital 

The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand. 

“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”

Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”. 
 

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