This phase was marked by a heavy reliance on paper, a minimal touch of digitalization, and the omnipresence of manually operated warehouses.

As the clock ticked towards the end of 2019, a shift was palpable. The dawn of Supply Chain 3.0 brought about a fresh wave of change. 

The industry started dabbling in basic digital components, sparking the initial stages of warehouse digitalization. This phase was a significant leap, setting the tone for more advanced transformations ahead.

2020, while globally recognized for the challenges posed by COVID-19, became a pivotal year for supply chains. The pandemic acted as a catalyst, accelerating the pace of digital transformations across the board. It pushed companies to not just digitalize, but to venture into the realm of automating their previously digitalized warehouses.

Then came 2021, heralding the age of Supply Chain 4.0. It wasn’t just another step; it was a quantum leap. 

The industry began harnessing the power of comprehensive data analytics, enhancing decision-making processes to be more agile and detailed. Distribution centers, which once required heavy manual intervention, transformed into fully automated hubs, optimizing storage, retrieval, and distribution.

Nowadays, reflecting on this rapid trajectory underscores the immense progress made. Yet, with progress comes new challenges, making it essential for industry players to stay adaptive and forward-thinking in the ever-evolving CPG supply chain environment.

Emerging Trends in CPG Supply Chains

As we survey the current landscape of the CPG supply chain, several trends stand out. These emerging paradigms are not only redefining operations but also promising a more efficient, sustainable, and customer-centric future.

⦁ Computer Vision: This technology uses cameras and artificial intelligence to interpret and act upon visual data. In the context of supply chains, computer vision aids in inventory management, defect detection, and even automates picking processes in warehouses.

⦁ Green Logistics: The emphasis on sustainability has birthed the trend of green logistics. It focuses on reducing carbon footprints, utilizing eco-friendly packaging, optimizing routes for transportation to reduce emissions, and more. The goal is a more environmentally responsible supply chain.

⦁ Internet of Things (IoT): IoT devices, embedded with sensors and software, collect and exchange data. In supply chains, they monitor product conditions, track shipments in real-time, and optimize warehouse conditions, ensuring efficiency and product integrity.

⦁ Digital Customer: Today’s consumer is more connected and informed than ever. The digital customer expects transparency, quick service, and personalization. Supply chains are adapting by providing real-time tracking, personalized delivery slots, and more interactive customer service options.

⦁ Robotization: Robotics are no longer the stuff of science fiction in supply chains. Automated robots, especially in warehouses, perform tasks from packing to transporting goods, ensuring speed and accuracy.

⦁ eLockers for Last Mile Delivery: Addressing the challenge of the 'last mile' in delivery, eLockers are secure, centralized locations where customers can pick up their products at their convenience. This reduces the complexities and costs associated with doorstep delivery.

⦁ Optimization Algorithms & Blockchain: Algorithms are now being developed to predict supply chain disruptions, optimize routes, and manage inventory. Simultaneously, blockchain offers a transparent, secure, and decentralized way to track product journeys, ensuring authenticity and trust.

⦁ New Production Technologies: Advanced manufacturing methods, like 3D printing, are on the rise. These technologies enable faster prototyping, customized production runs, and local manufacturing, reducing both costs and delivery times.

Together, these trends indicate a future of the CPG supply chain that is tech-driven, sustainable, and highly responsive to the evolving needs of both the market and the consumer.

Challenges Facing the CPG Supply Chain

The Consumer Packaged Goods (CPG) supply chain is undergoing significant shifts, and with these changes come new challenges that businesses need to navigate. Here's a look at some of the pressing issues the industry faces:

⦁ Competitive Efficiency in a Low-Cost Market:

⦁ The rise of low-cost distributors and eMarketplaces that compete primarily on price is threatening traditional business models.

⦁ Increased bargaining power of distributors is evident, given the consolidation and participation in buying groups. By 2025,  it's estimated that purchasing groups will represent 95% of retail value for CPGs in Europe, up from 55% in 2019.

⦁ Direct Consumer Engagement & Disintermediation:

⦁ Traditional business models that have reigned for decades are being disrupted as brands seek direct contact with their consumers.

⦁ Disintermediation places companies directly in front of genuine consumer demand. In 2022, 70% of sales growth in food and beverages is expected to come from  eCommerce.

⦁ Emergence of New Market Players:

⦁ Millenials and Gen Z are driving demand for healthier and eco-friendly food options.

⦁ The rise of "activist consumption" has ushered in support for green, sustainable, local, and community-driven brands.

⦁ In 2018, small brands (with revenue <100M USD) grew eight times faster than larger brands (revenue >5.5B USD). Brands with revenues under 1B USD increased their market share by two percentage points to 25.7% between 2013 and 2018.

⦁ Disruptions in Demand & Distribution:

⦁ Unpredictable disruptions in raw material supply, production capacity, or distribution capacity pose significant risks.

⦁ Sudden shifts in total demand, whether by geography, channel, or product, have led to amplified "bullwhip effects" and product scarcity challenges.

⦁ Operational Realities and Needs:

⦁ Businesses grapple with questions like: Do you have control over your processes from order to delivery and returns? Do you have collaborative applications with suppliers? Can you trust the data from your information systems? Are your systems scalable?

⦁ Control over logistic processes, maintenance costs, understanding customer demands, personalizing offers, being open to new digital sales channels, attracting new talent, and leveraging new technologies (RPA, Mobile, IoT, Digitalization, Blockchain) are all areas of concern.

⦁ Data-Driven Value Creation:

⦁ With the vast amount of data available, there's an urgent need to enhance the capacity to derive value from this knowledge. To these challenges, one must also add the capability to integrate, interpret, and act on this data efficiently.

In navigating these challenges, companies must stay agile, adaptive, and forward-thinking, leveraging both strategic insights and technological advancements to maintain a competitive edge.

New Opportunities in CPG Supply Chain

In an ever-evolving landscape, the CPG supply chain is poised for transformation, with numerous opportunities awaiting those willing to innovate and adapt.

 Dynamic pricing pressures from traditional distribution channels underscore the necessity of exploring opportunities to reduce costs and protect margins. But cost-cutting alone is insufficient. Companies are exploring the diversification of channels, looking beyond the conventional to the eMarketplace and direct-to-consumer (B2C) models.

Premium and niche products are emerging as a way for brands to differentiate themselves and command higher price points in a crowded market. Digitalization is no longer an option; it's an imperative. 

The advent of new distribution channels, such as eMarketplaces and eCommerce platforms, beckons companies to embrace new competencies, infrastructures, processes, and omnichannel systems. However, there's a delicate balancing act to be struck. While leveraging new channels, brands must be cautious not to cannibalize or antagonize their traditional channels.

Changing consumer tastes are driving brands to pivot in their offerings. Acquiring and enhancing local companies and brands offers a way to tap into local market sentiments. There's a palpable shift towards investing in research and development for products catered to micro-segments, be it gluten-free or vegan offerings. 

Updating traditional recipes, implementing supplier audit and approval programs, and ensuring product traceability are becoming not just best practices but essential ones.

In an era defined by Black Swan events and volatility as the new normal, embedding resilience and agility into the supply chain is paramount. Strategies such as optimizing the product assortment during crisis periods to maximize production, streamlining inventory, and having more frequent forecasting cycles—shifting from monthly or quarterly to weekly or even daily—are gaining traction. 

Direct consumer demand detection through channels like eMarketplaces and eCommerce aids in this endeavor.

A customer-centric digital supply chain aims to deeply understand and anticipate customer needs. This ensures timely and accurate deliveries while offering new channels of engagement. A 360-degree visibility of the entire value chain is pivotal, providing end-to-end transparency across distribution, production, and logistics flows.

Agility, robustness, and sustainability become the pillars of the modern supply chain. 

With the adoption of new technologies, companies can optimize their distribution and logistics networks. A truly intelligent supply chain leverages advanced data analytics to enhance forecasting capabilities, and the integration of robotics and automation further streamlines processes. Business intelligence, thus, becomes a tool not just for insights but for tangible, bottom-line results improvement.

VASS Aproach in Supply Chain

At VASS, our approach to the Consumer Packaged Goods (CPG) supply chain is both distinctive and effective. Recognizing the intricate dynamics of the CPG sector, we drive both digital and intelligent transformations within the supply chain.

 Our foundation is rooted in strategy, but it's the deployment of our five core pillars that sets us apart: Customer-Centricity, Agility, Resilience, Proximity, and Automation. 

These tenets not only guide our methodologies but also power our solutions, ensuring that businesses in the CPG space realize not only optimized operations but also significant cost savings throughout the supply chain.

Strategy

At the heart of our approach lies a deep-rooted commitment to aligning the supply chain with a company's overarching business strategy. To achieve this alignment, we begin with a thorough analysis of all drivers that influence the supply chain.

Our evaluation focuses on multiple facets:

⦁ Delving into the processes, organizational structures, and systems that play pivotal roles in the supply chain.

⦁ Understanding the relationship models and networks that interlink various components of the chain.

⦁ Scrutinizing performance indicators (KPIs) and analyzing constraints to ensure optimal operation.

⦁ Conducting comparative analyses with benchmark models, a step that allows us to identify and integrate industry best practices.

⦁ Assessing the overall impact on efficiency and cost, ensuring the supply chain not only serves its primary function but does so cost-effectively.

Solutions: To translate our assessments into actionable strategies, we utilize an array of tools and frameworks including D3, the CANVAS Business Model, SCOR, and SWOT (DAFO in its Spanish acronym). These tools enable us to craft a strategy tailored to each company's unique needs, challenges, and goals, ensuring the supply chain becomes a potent force for business success.

Resilience

In the complex, ever-changing landscape of today's markets, the essence of a resilient supply chain cannot be overstated. Our approach in establishing this resilience is multifaceted, designed to ensure that supply chains are not just responsive but proactive in the face of volatility.

Stress Test: At the forefront of our resilience strategy is the application of a comprehensive 'Stress Test'. This test evaluates the supply chain's capability to manage and mitigate unforeseen challenges or 'Black Swans', ensuring readiness against potential disruptions.

Structural Changes: Understanding the inherent risks within the chain, we delve into a cost-benefit analysis, contemplating the integration of structural changes. This initiative aims to correct and counterbalance any identified risks, fortifying the chain's resilience.

Play Books: With an eye on the future, we craft 'Playbooks'. These strategic guidelines prepare companies for various potential scenarios, ensuring they're not caught off guard and can navigate challenges with confidence.

Smart Modeling: Harnessing the power of intelligent analysis, we emphasize the modeling and optimization of the supply chain. This allows for deeper insights, better foresight, and agile adaptability in the face of market changes.

Solutions: To underpin our resilience strategies, we employ advanced modeling tools coupled with Data & AI. These solutions, particularly new predictive models and data governance methodologies, bolster the supply chain's ability to stay resilient, responsive, and robust.

Agility

In the fast-paced realm of modern CPG supply chains, agility is not just beneficial – it's vital. The ability to swiftly make informed decisions and adapt to ever-changing conditions can make the difference between success and stagnation. Our approach to agility focuses on empowering businesses to move rapidly without compromising on efficiency or accuracy.

Control Tower: The foundation of our agility strategy is the Control Tower. This central hub allows businesses to anticipate disruptions in the supply chain and take proactive measures to prevent them, ensuring that operations remain smooth and uninterrupted.

Digital Twin: Leveraging the power of the Digital Twin, we enable businesses to assess the cost-benefit dynamics of real-time supply chain management decisions. This digital representation provides a mirror image of the physical supply chain, granting valuable insights into potential improvements and optimizations.

Agile S&OP: Understanding the ever-changing demands of the market, we implement Agile S&OP (Sales and Operations Planning) processes. This strategy ensures that companies can quickly adapt to market needs, keeping pace with its dynamic rhythm.

Solutions: To translate our agility strategies into actionable results, we offer a suite of cutting-edge solutions. These include the Supply Chain Business Network, an Intelligent Control Tower, Digital Twin technologies, Demand Sensing, and the forward-thinking principles of Industry 4.0.

Automation in operations

In an era where precision, efficiency, and timeliness are paramount, the automation of operations is no longer a luxury but a necessity. By integrating cutting-edge technology and systems into the daily workings of the supply chain, we aim to decrease operational costs while significantly enhancing overall performance.

Demand Forecasting: Accurate demand forecasting lies at the heart of a successful supply chain. By amalgamating diverse data types using advanced algorithms, we hone in on demand trends, ensuring that businesses can anticipate market needs and respond proactively.

Process Automation: Minimizing manual intervention, we digitalize and automate back-office processes in line with the bespoke business rules established by each enterprise. This not only increases speed but also ensures consistent accuracy and reduces the risk of human error.

Production Planning: Ensuring that production lines function at their optimal capacity is critical. Our approach aims to maximize production output, optimize inventory levels, and guarantee adherence to business SLAs, thereby ensuring the seamless movement of goods from production to consumer.

Distribution: Streamlining the distribution process is key to ensuring timely delivery and customer satisfaction. We bolster efficiency in key distribution operations by integrating advanced WMS (Warehouse Management System) and TMS (Transportation Management System) solutions.

Solutions: To bring our automation strategies to fruition, we offer a robust suite of solutions. These encompass the Supply Chain Planning Warehouse Management System, Predictive Analytics for Management and Optimization of Constraints, RPA (Robotic Process Automation), Transportation Management System, and the introduction of operational robots to further enhance job safety and efficiency.

Proximity

In today's globalized world, maintaining proximity in the supply chain is of paramount importance. It's not just about geographical closeness but ensuring robust, close-knit relationships with suppliers, clients, and the end consumer. A chain built on trust and efficient communication ensures smoother operations and timely deliveries.

Implementing Processes: Smooth communication is the linchpin of effective business relationships. By putting processes in place that encourage transparent and regular communication, we foster collaboration between clients and suppliers. This ensures everyone is aligned, and discrepancies are addressed promptly.

Retail and Omni-Channel Capabilities: As the business world pivots towards a more consumer-centric model, the importance of omni-channel capabilities becomes evident. We help organizations build their distribution capabilities specific to retail and omni-channel by aligning organizational infrastructure, processes, and systems with the demands of modern commerce.

Integrated Supply Chain: In our quest to provide seamless operations, we utilize both traditional (like EDI and DESADV) and cutting-edge technologies (like Blockchain) to connect commercial partners. This approach not only streamlines operations but also ensures security, trustworthiness, and transparency.

Local Supply Chain: Recognizing the growth and significance of smaller brands, we emphasize creating supply chain models geared toward them. This includes integrating production and distribution strategies that cater to smaller batches and prioritize local distribution, ensuring faster time to market and reduced overheads.

Solutions: Driving these proximity-centric initiatives are our suite of solutions like Distributed Order Management, In-Store Omni-Channel Logistics, CommerceHUB, and Digital Architecture. By employing these tools and strategies, businesses can guarantee a more integrated and efficient supply chain.

Customer

In the age of digital transformation, it's crucial for businesses to pivot their strategies towards a more customer-centric model. The key lies in creating a supply chain that not only meets but anticipates the needs of both the immediate customer and the end consumer. By putting the customer at the heart of every operation, businesses can ensure loyalty, satisfaction, and growth.

360º Customer View: By offering a comprehensive perspective of the customer, including their orders, complaints, returns, and deliveries, businesses can make more informed decisions. This 360º view allows for rapid response to any issues, ensuring customer satisfaction at every turn.

Consumption Monitoring: Understanding customer consumption patterns is vital for tailoring offers that resonate. Monitoring helps businesses personalize their offerings and align them with the exact needs and preferences of their target market.

Optimizing Customer Service Processes: Every touchpoint with the customer is an opportunity. By streamlining order and delivery tracking processes, businesses can offer a smoother, more transparent experience, resulting in increased trust and repeat business.

B2C Digital Sales: The transformation of sales portals and channels to cater to direct consumer sales is becoming imperative in the digital age. A seamless, user-friendly interface that simplifies the buying process can drastically increase conversions.

Offer Personalization: Today's customers seek tailored experiences. By segmenting customers and predicting their buying patterns based on past purchases, businesses can curate offers that are not just relevant but also compelling, leading to increased sales and loyalty.

Solutions: Driving this customer-focused initiative is our array of solutions like the Digital Contact Center, Path to Customer Anywhere, Digital CommerceHUB, Beyond Customer Customization, and strategies for Revenue Growth. Through these tools, we help businesses transform their supply chains to be truly customer-centric.