How CPG Supply Chains ArePreparing for Seismic Change
Disruption has come to grocery and, with it, major changes for leading consumer packaged goods (CPG) companies. E-commerce has gained momentum, and competition among retailers is at a fever pitch. With more participants and more routes to market, getting goods from plant to shelf involves more hurdles and more complexity than ever before.
In the past few years, service performance has improved for most CPG companies, yet many have still fallen short of their goals. Channel proliferation appears to be a great impediment to on-time delivery; rates for service to small-format and online retailers were lower than for traditional large-format customers.
As channels proliferate, service performance becomes harder to manage. The slow-growth environment, along with the rapid rise of e-commerce, is straining retail’s fragile economics. In response, mainstream retailers are turning up the pressure on CPG companies with greater service requirements. These companies will face rising customer demands, further repercussions from channel prolifera-tion, transportation constraints, and the need for more frequent network redesign.