Digital Technology
Oct 10, 2018

The supply chain challenge for the consumer goods and retail industry

As someone new to Genpact following the Barkawi acquisition, I enjoyed attending its recent consumer goods and retail (CGR) forum - both as an opportunity to meet our supply chain and order management clients, and to hear first-hand the challenges and opportunities they are dealing with in today's hyper-competitive business landscape. 

Global CGR companies with heritage supply chains are facing a bleak future – they risk becoming monoliths with expensive SKUs and channel complexity due to customization and multi-party networks. They're also struggling to deliver direct to consumers and serve the last mile without taking a massive hit to profits.

Social media, e-commerce, and mobile connectivity have dramatically changed consumer behaviors and simultaneously reduced the capital required to launch a new CGR brand. This means increased competition for legacy CGR players against newcomers that aren't burdened by big distribution, manufacturing, and marketing overheads.

The hallmarks of future success

As part of the forum we discussed the characteristics of the enterprise of the future, to see how CGR businesses can stay ahead of the competition. Successful companies will evolve in radically different ways to make faster, more accurate decisions for the benefit of customers. Ultimately, this evolution will lead to "instinctive enterprises."

Organized around the customer, instinctive enterprises will have AI as their neural wiring, connecting people, processes, and domain knowledge. They will thrive via connected ecosystems – internally and externally – predictive insight, and adaptive workforces, which will enable them to have more agile supply chains and meet the demands of business customers and consumers alike.

To become instinctive enterprises, however, CGR companies will need to transform manufacturing, transport, third-party logistics, warehouses, supplier relations, planning, forecasting, inventory, and order management. If we look at the planning and forecasting challenge specifically, how can supply chain teams create predictive insights to balance over-optimistic sales forecasts with lean inventory levels that keep finance happy? Eighteen-month forecasts don't help, as predictions are hazy after the first three months and rapid changes in consumer behavior make them redundant. Fire-fighting these types of issues makes it hard to prioritize large-scale digital change.

About the author

Mike Landry

Mike Landry

Supply Chain Management, Global Service Line Lead

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