Is your supply chain ‘intelligent’ enough to handle future disruptions?

The bar for effective customer experience has been slowly rising, and now the new normal is fast delivery of goods, anywhere, at any time.

The latest report from the Capgemini Research Institute, which surveyed 1,000 companies across four sectors including CP businesses, found that over half of the organizations acknowledge that their supply chains have altered significantly over the past two years. Yet only one in five organizations feels equipped to handle the disruption. Just 11% of organizations feel prepared to meet shorter fulfilment timelines for consumers and only 9% believe they are well-equipped to offer personalized products and services.

So, what does this mean for businesses? It’s time for consumer product organizations to completely rethink their business models. Supply chain transformation is needed, not only to withstand these ongoing challenges and stay ahead of the curve but also to become capable of meeting changing consumer demands. To future-proof an organization, there is a need to digitize and connect the entire business in a way that’s completely different to anything the industry has seen before. 

The key to survival is enabling an intelligent supply chain. Such a data-driven, technology-enabled, scalable, and sustainable supply chain network can help businesses drive improved customer loyalty, create more business value and meet sustainability goals.

Enabling intelligent supply networks

Our research indicates that businesses across sectors understand the need to rethink their supply chain. They plan to increase investments by 17% over the next three years to transform their supply chains.

It would be prudent for these investments to flow into a combination of different technologies that can break down operational silos and create greater efficiencies. For instance, Internet of Things (IoT) devices can provide analytics for predictive maintenance in factories to lower costs and reduce disruption. While AI algorithms are increasingly taking the place of human planners to create touchless planning models.

Nike, for example, has completely transformed its supply network by using data to fine-tune operations, with a focus on inventory and demand sensing. Demand sensing produces precise, short-term forecasts of customer demand on a daily, and potentially hourly basis, which allows retailers such as Nike to accurately determine customer behavior and adapt their operations accordingly.

A new kind of demand planning

Historically, consumer demand data has been the bedrock for forecasting annual demand spikes. However, it has little bearing on what might happen in the future – something that is particularly important in today’s volatile business and economic landscape.

Consumer product organizations can become far more agile in anticipating short-term demand spikes in real-time through data, analytics, and AI. Take Unilever as an example, which utilizes one-click AI-augmented forecasting to analyze demand patterns while also gaining insights from consumers through e-commerce and social media channels.

By employing near real-time monitoring of consumer sentiment in categories (such as end-of-week analysis), and One-Click AI Sales Forecasting, businesses can predict rising and falling demand in the short, mid and long term. This type of data-backed forecasting means businesses can ramp up or down production to accommodate fluctuating demand.

Moving towards Intelligent Industry

Having insight into demand is one thing, but how can organizations fulfil that demand or, perhaps more importantly in today’s climate, decrease the volume of production when demand falls? The most effective model is a unified approach where supply and demand insights are integrated with connected manufacturing.

This is where Intelligent Industry plays a vital role. Near real-time visibility into production lines and related elements that are enabled by the cloud and digital factories, which are capable of monitoring and self-driving performance and maintenance – this is Intelligent Industry. Some of the key benefits of the Intelligent Industry are reduced labor dependencies and improved forecast accuracies through increased digitization.

However, it’s important to remember that greater digitization does not equal full automation, and the human element remains overwhelmingly relevant. The Capgemini Research Institute found that 80% of organizations that were most successful at digitalizing their industrial system first addressed skills shortages by upskilling existing employees and recruiting talent with the required digital skillsets. The real value is realized when organizations balance investment in smart factories with programs to upskill their workforce so they can utilize smart factories effectively.

Intelligent Industry for a sustainable future

Sustainability continues to be top of mind for conscientious consumers, and they want to see brands take action to reduce their environmental impact through transparent sustainability initiatives. With supply chains accounting for over 90% of an organization’s greenhouse gas emissions, prioritizing sustainability is not just important, it is critical.

However, through the adoption of sustainable practices across the value chain plus real-time tracking systems to monitor performance, businesses can better get a read on where there are sustainability gains to be made across the supply chain. Only with the visibility to identify where sustainability gaps exist can businesses hope to fix them.  

The challenges are many for CP businesses today – risk-proofing supply chains, meeting consumer demands, creating sustainable products, ensuring fair trade and overall decreasing their environmental impact. Reassessing their existing business model and implementing an intelligent supply network is imperative to surviving future disruption.

The opportunities presented by an intelligent supply chain are clear and it’s encouraging to see that those that have laid the foundation for this are already reaping the benefits.

Connected manufacturing links digital technology with the engineering of complex devices, vehicles, and equipment, to develop and deliver a more intelligent manufacturing experience for businesses