News & Trends Impacting the CPG Supply Chain
What's The Difference?
CPG, or consumer packaged goods: merchandise that customers frequently use up and replace. Examples include food and beverages, cosmetics, and cleaning products.
DG, or durable goods: merchandise that is not consumed or destroyed in use and is generally not replaced until the merchandise experiences a problem. Examples include cars, appliances, and furniture.
A Razor-Sharp Success
Online shaving and razor company Harry's was started by two hopeful entrepreneurs who bought a defunct factory and wondered what to do with it. They realized that a solution-driven approach could guide them. Consumers of both genders always need razors; ideally, they need them consistently, at a decent price. The founders decided to fill that need. They opened their factory doors—and their company books—and approached those consumers straightforwardly.
Initially, the strictly online brand didn't have much of a following. But eventually, the strategy of being genuine and open with consumers worked. Today, Harry's is a $100-million company with a significant base of loyal, dedicated consumers. By letting consumers in on their company's journey, the founders turned their razors into a lifestyle.
CPG companies can take tips from Harry's to create a brand that truly speaks to, and connects with, consumers. The key takeaways are:
- Share your story: Every brand, whether established or new, has a story—and consumers want to connect with it. By encouraging consumers to interact with your brand, you create the relationship needed to keep them coming back.
- See a need, fill a need: Razors are a fact of life for men and women. By seeing that need and filling it in a convenient and interesting way, Harry's created a niche presence within the market.
- Never underestimate the power of word of mouth: Much of Harry's' business can be attributed to its willingness to connect with consumers via social media and other online channels.
From direct-to-consumer delivery to Internet of Things-enabled appliances, the disruptive forces in the grocery industry are hard for CPG suppliers to avoid, according to a study by The Boston Consulting Group and the Grocery Manufacturers Association.
The report highlights actions that CPG companies can take to meet customers' needs and adapt to a changing environment. Among them:
- Seek efficiencies. CPG companies currently carry 60 percent of the cost of logistics and hold roughly 50 percent of inventory in the grocery supply chain. They will need to refine their transportation networks, reduce inventories, and lower costs to meet customers' changing demands and new market conditions.
- Capitalize on big data and digital. For 78 percent of participating CPG companies, end-to-end data visibility—from point-of-sale data to GPS tracking data on shipments—is a priority. Although they are accumulating more, and more valuable, data, most companies need to develop tools and systems to more effectively analyze it.
- Sell the benefits of collaboration. Channel proliferation makes accurate forecasting and planning all the more critical for CPG companies. Success requires both technology and active engagement with their distributors, retailers, and customers, especially when it comes to alternative and e-commerce channels.
New Tech on the Block
CPG and manufacturing executives express the most bullish blockchain outlook, according to a new Deloitte survey:
- 42% are planning investment of at least $5 million in the coming year
SOURCE: New Tech on the Block: Planning for Blockchain in the Retail and Consumer Packaged Goods industries, Deloitte study