In order to unlock an agile supply chain, extending supply chain digitalization to external suppliers is key.
by Jason Tham, CEO of Nulogy
As the consumer packaged goods (CPG) and retail industries undergo yet another shift in response to the reopening of the U.S. and Europe, many brands are challenged to balance the complex mix of product needs as consumers take advantage of e-commerce, buy online pickup in store (BOPIS) and traditional brick-and-mortar shopping options. This dilemma is especially complicated as the supply chain industry is continually dealing with disruptions and shortages.
As consumer brands work to navigate increasingly variable demand while trying to meet continually shifting consumer expectations, many are looking to external partners for help – in some cases relying on them for 20-30% of their overall production, a number that’s only expected to increase in coming years. While relying on outside partners is not a new phenomenon in CPG supply chains, for the model to be effective in today’s instant gratification world, brands must ensure they are able to collaborate with partners in real time, and that they have the same level of visibility into their partners’ shopfloor as they have with their own.
How is this possible? By extending supply chain digitalization to external suppliers.
As consumers – especially millennial and Gen Z consumers – increasingly exercise their spending power through an array of significantly different purchasing preferences, brands have moved away from asset-heavy operations to a more agile operating model that has helped them better react to this volatile level of demand. At the same time, many brands have increased their reliance on external partners. But an organization is only as agile as its least agile partner. To ensure consumer demands are met – especially as production cycles shorten – brands must be able to communicate with their partners in real time to share information about new orders, delays or any number of other issues.
The external partner shopfloor has traditionally been a black box for brands, with data visibility on their product orders stopping at the supplier’s door. To be successful in today’s market that black box must be illuminated, radically transforming the ways in which brands and their external manufacturing and packaging partners work together. Key to this shift will be a multi-enterprise approach to collaboration.
Today, most CPGs have built their supply chain technology across massive ERPs, making optimizing collaboration and communication efforts cumbersome, costly and hard to maintain and scale. Instead of shoehorning these legacy systems into their external workflows, CPGs should look for new solutions that enable a multi-enterprise approach to supply chain management by offering real-time data and collaboration capabilities that extend to the external supply chain.
By digitally enabling the end-to-end supply chain, CPGs experience myriad benefits, from cutting costs to increasing responsiveness.
Digitizing the end-to-end supply chain is the key to improving agility and responsiveness for CPGs, which is critical to helping them better meet consumer demands. By shifting to a multi-enterprise approach that delivers real-time data and allows for more informed decisions, CPGs not only become more agile and responsive to the market, but they also improve trust and collaboration with their partners.
Jason Tham is a co-founder, CEO and brand ambassador for Nulogy. He is focused on corporate development, executive leadership, and understanding the evolving landscape of Nulogy’s clients. He is also on Nulogy’s board and speaks throughout the industry on the agile supply chain.
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