The unavailability of certain packaged goods for basic consumer needs showed up as one of the first signs of COVID-19’s economic effects. Daily essential goods and basic sanitation and wellness products suddenly disappeared from store aisles, due to panic buying. (A report from Nielsen showed that sales initially soared by 322.5% for oat milk, 36.9% for dried beans, and 84.4% for powdered milk products.) While some of this is sorting itself out, there is still a great strain on the complex and already overstretched supply chain for Consumer Packaged Goods (CPG).
In addition to the explosive demand for specific CPG product categories, CPG companies are faced with a plethora of challenges that include disrupted availability from sourcing channels, limited availability of workers at some manufacturing facilities and warehouses, and the unavailability of clear signals in the sporadic, volatile demand still prevalent in the market.
CPG executives have been busy realigning their companies’ strategies to address the impact created by this unprecedented pandemic. To tackle the current business disruption effectively, many see accelerating or improvising some key operations as a first immediate step:
- Establishing a diversified supply chain for sourcing raw materials with urgency
- Increasing productivity to meet the spike in demand for essential goods
- Re-engineering and rapid changeovers to shift product lines from goods perceived by consumers as non-essential to goods they deem essential
- Exploring the uses of remote monitoring and assistance leveraging immersive technologies
Creating a Supply Net
This has been a wake-up call for most CPG companies to “deconstruct and reconstruct” their co-dependent supply chains in order to establish and nurture alternate global supply chains. Today, even more than in the recent past, CPG supply chains need to provide a combination of sustainable low cost, supply assurance and flexible, robust system capabilities that will support the enterprise’s innovation and business growth plans in the short, medium and long term.
Once the supply chain is diversified, CPG companies need to repurpose their factories and product lines to address shortages in certain categories. For instance, a major consumer products company mobilized teams charged with providing capability to manufacture and distribute hand sanitizer in five plants around the globe. Within 24 hours the first bottle of WHO-approved sanitizer was produced — and plans are in place to expand this to another five locations across the globe to achieve a significantly sizeable weekly capacity. Production at this scale requires expertise and rigorous safety protocols throughout the process, not to mention establishing a reliable supply chain for raw materials. As a strategic partner to this customers’ sourcing and procurement operations, TCS was able to quickly extend its expertise and help the customer in achieving this feat.
Health, wellness, and food and beverage products are subjected to stringent quality norms and statutory clearances. With only a very lean plant team available at their disposal, CPG companies have been considering remote monitoring and assistance combined with immersive technologies as a possible solution. (Such approaches have already proved very effective in the oil and gas industry, and other industries are exploring the capabilities for manufacturing training, onsite assembly, and safety.) With the implementation of remote monitoring solutions, production operations can be monitored and controlled remotely with collaboration from human experts when necessary. This can enable a CPG company to run with a lean team onsite and an extended team monitoring operations remotely from elsewhere.
What’s Next After What’s Now?
Consumer behaviors are likely to continue evolving long after the epidemiological issues stabilize and as society emerges from quarantine. By then, how CPG companies react to supply chain disruptions would have perhaps drastically changed. At that point, the “new normal” will just be…normal. In fact, before too long, our predictive and forecasting models will need to be recalibrated. Our so-called “real-time” view across the supply chain will need to be revamped to include our highly automated and digitally transformed factories.
As an industry, those of us who work in CPG may not be able to solve the larger problems facing virologists and front-line medical workers; as we often hear, the underlying issues extend beyond this particular health crisis or even this particular economic moment. But we can at least adapt our operations so that empty store shelves don’t contribute to consumers’ already sizable anxieties.