Top 3 trend-points and predictions for CPG companies in 2019
Consumer packaged goods (CPG) industry has been on a growth curve with a sustained CAGR of 10% possibly hitting $721.8 billion sales by 2020. Which side of this growth would your company stand on?
One of the major driving factors for CPG, where bigger companies have their brands readily recognizable the world over, is being in the right place at the right time. No, it’s not just a cliché. It’s a business strategy. Branding is a sustained effort and this brand counts for premiums for top brands. Sustained brand growth comes from consistent visibility and availability across retailers and online platforms. How does this happen?
You have heard about just in time delivery. Let’s go deeper into the buzzword, and this is something that would be done more often by every top company in 2019. ‘Just in time’ accounts for a lean logistics setup with a short lead-time, fast reaction time, complete control with end-to-end movement visibility.
Quickly going through these…
Short lead time – The ever needed/desired/demanded
It’s the time taken starting from when the shipment order is received, processed, allocated (to the right truck and driver), dispatched, moved on-ground, and delivered to the receiver (hub, retailer, or customer). The entire lead time needs to short in-order to properly utilize the available resources (trucks and its capacity, drivers, resource time when they are contracted, etc.).
2019 trends for shorter lead time
|Companies would invest in minimizing this lead time by getting on-board an auto-allocation solution which would spot the exact requirement of each shipment (frozen, fragile, heavy, etc.) and assign it automatically to the right truck (fitting the requirements) and the right driver (trained to handle the specific load).|
|Along with the allocation, a planning engine would create the ideal delivery schedule for single or multiple deliveries available for everyone to view and adhere to (manager, picker, loader, driver) for faster dispatch.|
|Proper capacity utilization past the scheduling and loading would mean the entire available fleet (owned or market-sourced) are utilized completely dividing the high freight rates and pushing the top line (margins) up and the bottom line (costs) down.|
|A tight schedule and properly utilized capacity also mean that the truck would be able to deliver to more locations and reduce the overall turnaround time.|
Recommended Read: Top 3 Logistics Management Trends Taking Center Stage In 2019
Fast reaction time – The requirement/hope/target
Faster reaction time has been talked off for a long time with small and inconsistent innovations making marginal differences. The reaction time is the time difference between an event or occurrence on the ground and the manager/supervisor/company becoming aware of it and ready to act on it.
In a heavily connected world, even small service (like delivery delays) are broadcasted quickly. CPG companies, that place a premium on their brands, need a fast reaction time, basically to act on a delay or disruption before it turns into a disgruntled customer (and before this disgruntled customer tweets about it).
2019 trends for faster reaction time
|Companies would invest in systems that would make reaction time quicker, whether for their own fleet, or (more likely) for their carrier partners. It would be critical to know whenever a carrier (3PL) partner misses or is about to miss a service level agreement like a delivery delay or demanded SKU (due to harsh driving).|
|Companies would walk the way of instant notifications and alerts for any anomaly on-ground (taking a route different from the planned one, unplanned detention, vehicle breakdown, etc.) so that they can fix it immediately.|
|Companies would use these notifications to communicate preemptively with customers to manage their expectations and avoid dissatisfaction (even possibly turn into a customer service success).|
Complete end-to-end control – The holy grail/summit/ideal
Moving on to something that has been the Numero Uno desire of every CPG company or their carrier partners. Complete control (with end-to-end visibility) over all their logistics movement, not just the planning but also the execution and delivery.
Companies are getting more and more conscious how an inefficient logistics set-up hurts their brands. More importantly, they are opening to the idea that a well-optimized logistics set-up can enhance their brand loyalty with consistent on-time deliveries and great experiences.
2019 trends for complete control/end-to-end visibility
|Companies, especially within the CPG industry, require this complete control more often. The major growth channel here is the scale and volume of operations and with multiple carrier partners and millions of shipments, control becomes an issue. Companies would streamline this need and bring in automation to build towards control.|
|They would want to be ahead of all eventualities by viewing all their trucks and drivers as they move on-ground in a single dashboard to bring regularity across the entire supply chain.|
|Ease of use would be clinching factor and here companies would look for systems they can easily interact with, perhaps just talk to the system to plan, track shipments, and assign shipments even on active trips.|
|Constant analysis would be a way to keep improving on their logistics set-up so companies would prefer a live logistics planning platform where they can tweak live trips, en-route shipments, and impending deliveries to improve the delivery experience for customers.|
Recommended Read: This Is How You Make Your Logistics Management Truly “Live”!
One common alignment factor… creating a great delivery experience!
‘The customer is always right’ or ‘the customer is king’ are old sayings but they don’t stop being true, especially in competitive CPG, retail, and e-commerce markets. It started in 2018 and it would move into 2019: companies would singularly focus their logistics on creating a great delivery experience for their customers.
This includes delivering on-time, giving them exact live tracking of their packages in their phones with accurate ETAs, capturing their feedback as they experience this delivery (at the time of handover), and more. Of course, the things that go into making this delivery ‘on-time’ hold true like shorter lead time, faster reaction time, and complete logistics control.
A great delivery experience = > Satisfied customer
Satisfied customer over time = > More repeat purchases + higher purchase value = > Higher customer life time value
And as this is based on optimized logistics, using the latest in machine learning technologies, the co-relation would keep being more and more profound with advancements in technology.
The only challenge or threat here is that to be ahead of competing companies would need to move quickly to such logistics optimization technologies.
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It still depends on supply and demand.