Expected Post-Pandemic Shifts In CPG-Apparel Supply Chain
By Sanjiv Gupta, CEO of OpsVeda
The pandemic’s wide-ranging effects include increased digitization of various services and a shift toward the home. As more people worked from home and education moved to a virtual model, people have been in their homes an inordinate amount of time. This extra time translated into an increased need for food and other goods such as toiletries and of course, toilet paper. Demand ebbed and flowed since the pandemic period, with occasional “pantry loading” episodes where families accumulated stockpiles in advance of quarantine restrictions.
Changing Dynamics Since COVID-19
According to data from a McKinsey study published in March 2021, consumers and firms should expect variability in buying behaviors throughout the end of the year and beyond into 2022. Its survey data notes 70 percent of Americans feel their routines will be disrupted in 2021 and beyond. Changing routines means ebbs and flows to demand, which makes it difficult for CPG and apparel firms to plan their inventory and staffing needs.
The uncertainty and demand fluctuation led many managers to desire better real-time data that could help them make the right decisions. They wanted to move away from technology like business intelligence (BI) that offers static information on historical trends and patterns but doesn’t provide the accurate context for making more optimized decisions in an environment that is rapidly changing. This fast decision-making is especially important due to changing and increasing consumer expectations which include speedy delivery, seamless ordering processes, and accurate product inventory data. To meet these interconnected needs, companies are turning to Operational Intelligence (OI) platforms. These platforms offer inventory managers, logistics teams, and management access to real-time analysis of open orders, inventory levels, and even a look ahead at potential supply chain disruptions.
Accelerated Digital Transformation Of The Supply Chain
COVID-19 accelerated the push toward digital transformation, where processes and communications moved to digital platforms across industries and businesses. For the supply chain sector, it exposed problems in current models. According to a study from KPMG, “COVID-19 has uncovered several weaknesses in corporate strategies, including inefficient and ineffective supply chain management. This became more evident when the delay of essential supplies, like personal protective equipment, put lives at risk, resulting in the crucial need for supply chain digitization to enhance real-time visibility into product attributes including status and location.”
OI platforms are at the core of a digitized and modern supply chain. Logistics and ordering departments need platforms that improve their decisions and offer continuous updates and data. Online businesses within the CPG and apparel industries were sometimes inundated with orders from consumers and realized their current systems were not able to respond to disruptive events at the speed they needed them to. The pandemic forced their hands by making initiatives happen in the current year, instead of planning a multi-year project in stages.
Dependence On Ecommerce
We all know, the pandemic moved a significant amount of shopping online. This was an ongoing trend (like digital transformation) that accelerated as people hesitated to shop in person and many shoppers tried online purchasing for the first time. Ecommerce platforms experienced massive gains. There is also the change in omnichannel strategy from a wholesale/retail focus to a customer-centric business model that caters to consumer’s needs, whether that is curbside pickup, contactless payments, or same-day delivery. As the big box stores and retailers saw their sales come to a standstill, brands-built consumer direct and e-commerce relationships. This put the focus on the last mile of the supply chain and the direct-to-consumer channel. In the broader picture, consumers developed a dependence on e-commerce as part of their daily routines and lives, a dynamic that’s likely to only strengthen and expand as the pandemic fades.
Increased “Postponement” For CPG Makers
The supply chain disruptions from the ongoing pandemic and its ending will create “postponement” strategies in the CPG industry, a practice the tech industry has used for decades. In this context, postponement is a supply chain concept that involves building assemblies and sub-assemblies. These are kept on hand, in a ready state, and are put together for final assembly when warranted by customer demand.
It’s difficult to predict final customer demand, so a CPG provider might prep all the products, pending final packaging so they can react quickly in a day or two to meet the eventual customer demand. Operational intelligence can inform these actions, which together help firms maximize production and support consumer choices without sacrificing lead times.
About OpsVeda
OpsVeda is an enterprise software company on a mission to make customer operations immensely agile and profitable, through operational intelligence and AI-infused automation. Powered by patented technology and passion for business agility, OpsVeda solutions deliver predictive visibility and prescriptive automation toward opportunities, risks, and exceptions across the business functions of order fulfillment, supply, manufacturing, logistics, inventory, assets, and channel/retail. OpsVeda customers span consumer-packaged goods, food and beverage, fashion and retail, industrials, manufacturing, and high-tech industries.