**London**: Consumer packaged goods companies are leveraging AI technology to mitigate supply chain disruptions, with 88% of executives recognising the competitive edge it offers. A five-step strategy is proposed to modernise processes and enhance efficiency in response to evolving consumer demands.
Consumer packaged goods (CPG) companies are increasingly looking to mitigate supply chain disruptions through advancements in technology, particularly artificial intelligence (AI). Recent insights from HFS research, in collaboration with Genpact, reveal that a notable 88% of CPG supply chain executives believe that the implementation of generative AI will offer a distinct competitive edge. The growing complexity of supply chains, driven by consumer demands for greater personalization, is prompting businesses to invest in technologies that enhance collaboration, manage distributed networks, and increase flexibility.
To facilitate this transition toward adaptive and profiting supply chains, experts suggest a five-step strategy:
Firstly, modernising applications is crucial. Many CPG firms currently employ outdated supply chain management systems that lack integration with cloud technologies and sophisticated data analytics. While upgrading these systems can be expensive and time-consuming, establishing a strong foundation of high-quality, real-time data is essential for AI to deliver reliable insights. A global consumer goods company exemplifies this approach; it introduced AI to enhance supply chain visibility and improve decision-making processes, enabling predictions of risks up to 24 months in advance and reducing time spent on operations planning.
Secondly, bridging data gaps is essential for the holistic understanding of supply chain operations. Companies are advised to assess the readiness of their data, create governance policies to standardise practices across regions, automate data cleansing processes, and develop a comprehensive data lake for core supply chain information. A multinational CPG company reported a 30% increase in productivity and significant cost savings after moving to a global supply chain visibility solution, underscoring the value of accurate data in optimising supply chain decisions.
Identifying priority AI use cases forms the third step in the process. Firms should engage operational and technical experts to evaluate potential AI applications based on business value, feasibility, and expected return on investment. A major company operating 225 production centres worldwide saw notable improvements in forecast accuracy and reductions in inventory and losses by focusing its AI efforts on these aspects, leading to significant enhancements within a year.
Empowering personnel constitutes the fourth step. It is crucial for CPG companies to foster a supportive environment for employees in the face of evolving technology. Emphasising growth and service improvements rather than purely productivity can alleviate fears of job loss, which may inhibit technology adoption. Upskilling employees in AI applications not only prepares them to utilise new technology effectively but also enables them to define specifications and validate AI outputs.
Lastly, starting small is advisable. The implementation of these strategies requires careful resource management and readiness for change. Companies are encouraged to identify feasible improvements based on their current operational maturity, understanding that even small enhancements can yield beneficial outcomes and create funding opportunities for further technological investments.
The implications of these transformations are significant for CPG companies aiming to enhance their supply chain strategies. The ability to adapt to demand and supply fluctuations is no longer a futuristic aspiration but an essential capability for maintaining competitiveness in the sector. The ongoing integration of AI into supply chain operations holds promise for building advanced supply chains, ultimately meeting consumer expectations more effectively. Continuous digital transformation efforts and learning from AI implementations are expected to lead CPG firms to leverage new technologies for substantive competitive advantages.
Source: Noah Wire Services
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