Retail and CPG supply chains will look very different in the next three years.
A new Capgemini Research Institute survey of retail and CPG organizations examining the impact of the pandemic’s disruption on their supply chains finds 66% of respondents say their strategy will change significantly in the next three years. Only 23% of consumer product organizations and 28% of retailers believe that their current supply chain is agile enough to support the organization’s evolving business needs.
An overwhelming majority of respondents in both retail (88%) and CPG (85%) organizations say they faced disruption, while 71% of retailer respondents and 63% of CPG respondents say it took at least three months for their supply chains to recover from the disruptions.
As a result, organizations are realigning their supply chain strategies to focus on the following three areas:
Over two-thirds of all respondents (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 all respondents 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.
Roughly six in 10 retail respondents (58%) and CPG respondents (61%) are planning to increase investments in digitization of their supply chains for enhanced visibility. In particular, 47% of all respondents are planning to invest in automation, 42% are planning to invest in robotics, and 42% in AI.
Almost six in 10 retail respondents (58%) and more than seven in 10 CPG respondents (72%) say they are actively investing in regionalizing or localizing their manufacturing base or nearshoring production. In line with these strategies, Capgemini expects that global suppliers will represent just 25% of retailers’ capacity in three years’ time, down from 36% today.
“The pandemic was an accelerated learning event,” said Lindsey Mazza, global retail supply chain leader at Capgemini. “Organizations realize that new technologies can enable much-needed agility – from improving demand predictions, to boosting fulfilment 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.”