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COVID-19 stunned the entire world as billions of people were forced to stay at home, manufacturing facilities and retail stores shut down, supply chains were disrupted, and consumers flocked to online buying. The pandemic has taken a tremendous toll on the global economy, and the consumer packaged goods (CPG) sector is no exception.

But COVID-19 will not be the last major crisis that CPG companies face. Market uncertainties will continue, whether arising from trade wars, Brexit, and events like the recent Suez Canal obstruction, not to mention the uncertain pandemic recovery.

Like every industry, CPG needs to be ready at any time with sufficient agility, speed, and flexibility to anticipate and respond quickly when the next global disruption occurs. CPG leaders are preparing now for long-term success by investing in intelligent technologies powering resilient operations across the entire enterprise. When the next disruptive crisis occurs, they will be better prepared to shift smoothly to new processes, operating models, and revenue streams for greater business opportunities

Increased customer personalisation through agile innovation

Even before the pandemic, consumer goods businesses struggled to keep pace with constant innovation and increasing competition. The “next normal” will put even more pressure on CPG companies by pushing them to offer greater personalisation, faster prototyping, decreased time-to-market of new products, and a steady release of innovative offerings. Competitive advantage will come from being able to anticipate customer needs and offer highly relevant choices at the right time and place. In other words, companies have to eliminate silos across the customer experience (CX).

With modern innovation services and solutions, such as intelligent ERP, CX, intelligent insights, and intelligent technologies, companies can understand and apply real-time data whenever and wherever needed. This revolutionises how brands communicate and gather customer insights, dramatically improving the innovation process throughout the product life cycle, and accelerating launches of new products and services.

Intelligent tech for supply chain resilience

The last year made it clear that fast-moving consumer goods companies need predictive, resilient, and intelligent supply chains. It’s the only way to manage and mitigate disruptions that can happen at any time, while maximising business opportunities and return on investment during good times.

According to research from GroupM, CPG manufacturers experienced a significant transition in how their products were bought, leading to a 277 percent increase in retail sales via e-commerce channels in the second quarter of 2020 alone. These forecasters expected the global retail e-commerce to reach $10 trillion by 2027.

At the same time, consumer expectations, like same- or next-day delivery, along with personalised shopping experiences, continue increasing. To meet these and other rising customer demands, managers need far more visibility into a supply chain, logistics, and warehousing so they can make informed decisions with speed and accuracy, and better predict and respond to global supply chain dynamics.

CPG companies are building resilient supply chains by investing in intelligent control systems, which understand and leverage data, implement capacity and inventory buffers, and help organisations build a diversified network of suppliers and manufacturing partners. According to Bain and Company, these organisations average 15 percent to 25 percent improvements in plant output and a 20 percent to 30 percent rise in customer satisfaction.  

State-of-the-art connected manufacturing

Fast-moving consumer goods organisations will also have to transform manufacturing on more than just an operational level. This goes well beyond automation. The latest era of digitalisation connects manufacturing production with end-to-end process execution across the supply chain, reaching new levels of connectivity and adaptability.

As the costs of IoT technologies decrease and ecosystems become more connected, companies will have more business opportunities. They can develop intelligent products, wrap services around those offerings, and sell business outcomes for greater value, increasing customer wins and loyalty.

Concurrently, as consumers become more health and environmentally conscious, leading CPG firms are investing in sustainable packaging, making products safer and increasing customer gratification. With evolving smart technologies, organisations can reimagine the future of digital operations for faster agility. They can enhance operational efficiency through robotics and automation, increase customer satisfaction through additive manufacturing and 3D printing for mass customisation, and achieve universal connectivity through Industry 4.Now. Investing in digital manufacturing will help CPG companies not only realise financial outcomes, but also differentiate themselves from increasing competition.

Competitive advantage from agility

After a period of turbulence exaggerated by the COVID-19 pandemic, the consumer goods industry is entering a new era. The most successful brands will embrace a culture and business model of continuous transformation. They’ll use intelligent technologies to adapt to fast-evolving consumer buying behaviours. They will prioritise agility and open-mindedness to gain a competitive advantage in the new reality. Only one thing is certain, change will continue to impact the way we do business. How well you adapt is up to you.

Discover more valuable content on the CPG industry.

Driven by clamoring sustainability mindsets and regulatory mandates, companies are increasingly making the circular economy an integral part of their business model. Turns out, what’s good for the planet can absolutely be good for business. IDC researchers predicted that by next year, most companies will realize greater value by combining digital and sustainability, making digitally-driven and sustainably enabled projects the de-facto standard. Consumer electronics and fashion have taken the lead in re-commerce, providing valuable lessons in how to succeed in the circular economy.

Generate revenue with second-hand product transformation

Given regulatory mandates like Right to Repair laws and the Waste from Electrical and Electronic Equipment directive, it’s not surprising that consumer electronics, specifically smartphones, are leading second-hand market initiatives. It’s also a prime revenue opportunity. Unlike declining rates of growth for new smartphones, the used market is exploding; IDC analysts expect it will total $65 billion by 2024.

The refurbished smartphone market is a good example of how companies are approaching sustainability with device lifecycle management. Using technology, major telecommunications companies are managing large-scale, global returns operations, with thousands of used devices entering the supply chain every day, regardless of their condition. The companies calculate each smartphone’s remaining value and potential profitability, channelling each device to its next-best-use based on quality attributes like cracked screens or water damage. They may repair and certify the smartphone ‘like-new’ for sale on the second-hand market or sell it for the spare parts across the company’s ecosystem. Keeping more devices out of landfills helps the environment, while adding value to the circular economy.

As stricter regulations continue to impact the circular economy, more consumer electronics retailers as well as manufacturers, will likely follow in the footsteps of the automotive industry. Second-hand sales, the spare parts economy, and a product lifetime connection with customers will come to the fore, opening new services-oriented opportunities for companies long after the original product sale.

Profits make sustainability fashionable

In the fashion industry, retailers are using intelligent technologies like AI and blockchain to operate more sustainably, including streamlining customer returns. Analytics and advanced automation are replacing error-prone human judgment with data-driven insights.

SAP has been working with customers to bring to market a pain-free returns experience that is also better for the business. In addition to providing a seamless consumer experience, the SAP Industry Cloud Solution will have an analytics engine. This will provide employees with data insights to make the best decisions and identify pattern anomalies. Brands can turn a painful return process into an opportunity.

“We want to empower fashion retailers to take control of their re-commerce at scale,” said Joanna Maryewska, entrepreneur in residence at SAP.iO Venture Studio. “Companies need integrated data from connected solutions enterprise-wide to realize the potential of re-commerce as a significant part of the business – something many companies have already set aspirational goals for.”

Another SAP.iO Venture Studio innovation tackles raw material tracing in re-cycled plastics. Plastic is one of the most important input materials for fast fashion. SAP is partnering to provide the Plastic-Tracing Blockchain System, which offers companies greater transparency in tracking raw plastic waste inputs and finished circular polymers outputs.

Ecosystem collaboration is central to circular economy

A spectrum analyser gathering dust in one laboratory can mean a great deal to an equipment-starved researcher elsewhere. A disused earlier generation iPad has tremendous value to people in emerging markets. Extending Say’s Law of Markets to the post-pandemic age of digitalization, when production is complete and the supply chain exists, modern technology extends the life and value of second-hand items. Market leaders are tapping their business networks to bring disparate parties together for a mutually beneficial exchange.

For example, fashion tech start-up, Queen of Raw, pairs unused fabric from suppliers and buyers, reselling and repurposing materials. This helps fashion brands save millions by extracting value embedded in their waste. Many fashion brands are launching collections `upcycled` from old garments or unused fabrics.

“We have been amazed by the compassion and purpose that allowed our Industry Cloud partner Queen of Raw to make a difference and drive profitable sustainability,” said Oliver Stocks, SAP vice president for business development. “Larger fashion corporations were challenged when it came to dealing with unused fabrics, especially during the pandemic as seasonal styles were no longer needed, stores remained closed, and consumer behaviors changed. Fashion leaders turned to SAP for integrated solutions.”

The lesson for businesses in just about every industry is that we are in a phase where resale, repair, reuse and recycling is desirable, needed, and more often than not, a customer demand. With the advent of intelligent technologies, the second-hand market is booming and an important new channel for sales. It delivers benefits to all parties from cheaper raw materials for business, inexpensive products for consumers, and a more sustainable world for everyone. Second-hand is here to stay and good for us all, so get excited and get involved!