April 2021 | Commentary | COVID-19

Supply Chain: An Engine of Post-Pandemic Growth

Tags: Risk Management, Customer Service, Technology

Growth has been hard to find for consumer goods companies in recent years. The majority of food and beverage businesses, for instance, are seeing growth of less than 3% according to Accenture's analysis. And across industry segments, growth has been trending downward for five years now, culminating in the unprecedented disruption of 2020.

Oliver Wright, Senior Managing Director and Global Consumer Goods and Services Industry Lead, Accenture, +44 (0) 20 7844 4000

As we look to the post-pandemic recovery, it's clear that renewed growth is essential for the consumer goods industry, and supply chains will be central to finding that growth.

If the supply chain is to take on this enhanced role, however, companies will need to stop seeing it merely as a cost center from which to drive ever greater efficiencies.

Consumer-centric Supply Chains

Instead, the whole supply chain needs to be reconfigured as a driver of growth. To do this, it needs to be reoriented around what customers value. This is what Accenture calls the "consumer-centric supply chain." It's a supply chain model that makes use of widespread digital connectivity and data-led intelligence to ensure the whole business is laser-focused on delivering consumer needs.

The precise capabilities needed to create a consumer-centric supply chain will usually depend on an individual company's unique context and objectives. However, Accenture's research reveals some common characteristics that all will typically share.

The first is customer and product segmentation. This is what distinguishes true consumer-centricity more than anything else. Supply chain management leaders are able to segment their value chains by product and/or by customer needs. They view the supply chain not as a monolithic entity, but rather as a series of distinct value chains, each with its own set of shared requirements and each delivering outcomes for a particular group of customers.

In addition, supply chain leaders typically design for margin capabilities across the ecosystem, providing the ability to deliver the right product portfolio at optimal cost. They also tend to have concurrent planning and execution capabilities, enabling them to synchronize re-planning so they can adapt quickly to new data insights.

Getting To Consumer-centricity

Transforming a product-centered supply chain into a consumer-centric supply chain is a major undertaking. It means rethinking not only the configuration of the supply chain itself, but also its use of digital technologies, as well as its supporting operating model and ways of working.

First, having segmented the value chain, companies need to reconfigure their supply chain to deliver the needs of each segment at scale. Ideally, this reconfiguration capability will be dynamic, enabling the network to be flexed quickly in response to changing market and business requirements.

Companies often choose to go "asset light" to achieve this level of agility. By outsourcing some of the asset-heavy aspects of the supply chain, they create significantly more flexibility in their network for responding to new consumer needs.

Digital connectivity across the value chain is another key requirement. This is the only way to enable the cross-functional decision-making that consumer-centric supply chains need (such as concurrent planning and execution mentioned above).

Similarly, siloed supply chain operating models need to be transformed for greater collaboration and cross-domain decision-making.

deliver what customers want

There is considerable value to be captured here. Our analysis suggests that intelligence-led supply chains can support revenue growth of as much as 3% through improved product availability, better customer experience, and fewer lost sales.

There is similar potential to improve profitability and optimize working capital, as well as numerous other opportunities in enhancing value propositions, product sustainability and customer trust.

For example, when Accenture asked nearly 200 supply chain executives about their value proposition priorities, one of the most frequently cited was the need to create connected customer experiences.

Having a personalized multi-channel experience was already important of course, but with the pandemic putting digital adoption into overdrive, industry executives now correctly believe it's an essential requirement of doing business. To support that connected experience, companies need supply chains that are tailored to each consumer segment and responsive to changing needs—both key capabilities of a consumer-centric supply chain.

Other priorities, such as consumer trust and greater sustainability, are equally well supported by greater consumer-centricity. By providing end-to-end transparency, digitally connected supply networks can, for example, provide the intelligence needed to enhance a product's sustainability as well as prove its social responsibility credentials to consumers.

Reorienting Around Customer Needs

Every company will have its own consumer-centric priorities. But what virtually all players in the industry share is a need for greater digital connectivity across the supply chain, supported by flexible processes and cross-functional decision-making, and greater organizational agility and responsiveness.

It is this foundation that will enable consumer goods companies to segment and organize their value chain around customer outcomes—and deliver those outcomes with a flexible supply network supported by digital technology. This enhanced focus on consumers will be essential as consumer goods companies look for that much-needed boost to growth in the years to come.






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