Consumer packaged goods (CPG) are everyday products, meaning everyday logistics processes and sales through various channels, which is why technology is so important to the CPG logistics operation.
Technology is revolutionizing CPG operations and logistics, providing a deeper understanding of consumers and enabling efficient navigation of various distribution channels. One of its most significant contributions is enhancing transparency, a crucial factor in the success of CPG operations, especially in logistics. The global CPG market is projected to reach a staggering $2.9 trillion by 2029, with the US alone expected to exceed $200 billion. This exponential growth underscores the indispensable role of technology in the CPG industry.
Technology impacts several aspects of the CPG industry, from consumer insights to logistics and supply chain optimization, product innovation, marketing, and sustainability. This article explores the impact of technology on CPG logistics.
CPG logistics processes long have been plagued by a lack of transparency, resulting in complications across the value chain. The opacity also impacted the industry’s efficiency in delivering products to consumers, making it a heavily manual end-to-end process. As you can imagine, this led to slow deliveries, poor planning and forecasting, paper-based documentation, and inefficient operations.
The impact of e-commerce on consumer delivery expectations has made the market more competitive, pushing stakeholders to adopt technology to gain an edge. Including technology in CPG logistics operations has also significantly improved the consumer experience.
Today, CPG businesses can effectively manage same-day orders and their associated delivery cycles, all while tailoring their approach and improving the versatility of logistics operations.
Although the modern CPG industry has enjoyed much success, it is not without some challenges. The application of technology has leveled the playing field for many businesses in the industry and their logistics operations, especially with regard to flexibility in meeting consumer demands. However, in the midst of all that, there is:
The market is overly saturated, and depending on what lens you are looking at it from, it can be good or bad. For customers, it is good because they can get cheaper and better products. However, for businesses, not so much because they always have to operate with razor-thin margins so they don’t get obliterated by the competition.
In many cases, the level of competition makes it challenging for new brands to gain any traction in the industry. Established brands have perfected leveraging economies of scale to drive down production costs and continue to sell and deliver to customers at lower prices.
The modern CPG industry has to continually battle consumers who know what they want and are not shy about it. While this is a good thing and sparks innovation across the industry, CPG logistics must always play catch-up because it must optimize operations to consistently meet the ever-nuanced demands.
Consumers want more sustainable products, but beyond that, they want the entire process, including the logistics, to be sustainable. They also want transparency, cheaper products, and faster delivery timelines. Businesses must race against time to optimize logistics; otherwise, they can lose consumers.
The rise of e-commerce channels and the omnichannel experience have forced businesses and logistics providers to adjust their delivery approach. It has promoted more D2C (direct-to-consumer) distribution channels, disrupting the other model where there was a middleman or wholesaler and forcing more businesses to have a more personal experience with their customers.
Although doable, it has forced these businesses to be more hands-on, which is outside their comfort zone. For many of them, it remains to be seen if and how they can handle these new developments.
Ideally, CPG logistics entails the delivery of CPG goods to where they need to be and when they need to be there. Sounds simple enough, but the entire logistics process can get complicated with multiple orders necessitating multiple deliveries. This is why technology plays a critical role. Here are the several ways it is transforming CPG logistics:
By leveraging technology solutions, more CPG businesses can streamline and optimize their logistics processes to suit consumers’ needs.
They monitor market trends, logistics and delivery KPIs, and consumer demands. Technology solutions help them gain insight into the bigger picture, identifying areas of the logistics operation that can be streamlined, eliminated, optimized, or maintained. This way, the CPG logistics operation will always be in a state of metamorphosis, moving towards perfection.
The increasing demand for CPG products has only fueled the demand for CPG logistics. And the continued success of the CPG market will heavily depend on its logistics operations. The ability to leverage technology will depend on how much insight they can gain from the market and consumers. Since consumers are the end users, what they want is critical, even in the delivery process.
From sourcing and procuring raw materials to delivering the final product, CPG logistics cannot succeed if the supply chain struggles to perform or produces poorly.
The supply chain operation is the engine that keeps the CPG industry going. It is here that the bulk of the work is done — including the procurement of raw materials, partnership with suppliers, manufacturing process, storage and warehousing, and logistics. To truly optimize logistics operations through technology, the entire supply chain must first be enhanced, as logistics efficiency is inherently tied to the overall performance of the supply chain.
If there are delays, it will impact logistics operations. If there is a mix-up or mistake in sorting and processing orders, it will impact logistics operations. And if there is low production for any reason, it will also impact logistics operations. Every part of the supply chain management leads up to logistics, especially with respect to outbound logistics or the last-mile delivery process. Technology will not optimize the logistics process beyond the level of the supply chain, so it is essential to leverage technology solutions across the board.
With technology, businesses can communicate and collaborate easily with suppliers and strategic partners.
Technology is the foundation of the CPFR (collaborative, planning, forecasting, and replenishment) business strategy. This way, businesses, supply chains, and their partners can collaborate effectively, with both parties having access to each other’s inventories. They can effectively collaborate and plan together to ensure that the replenishment process is as seamless as possible. Businesses and supply chains do not always have to worry about the supplier or partner meeting up because the supplier is already plugged in.
In situations where the supplier cannot meet the demands or lacks the capability to meet them, they can inform the business on time, prompting a proactive approach to finding other alternatives. The same situation applies to the CPG logistics. It allows the CPG business to effectively plan with the logistics department and logistics team to streamline and optimize operations. This will help ensure that there is adequate infrastructure to meet the demands of the consumers and of the supply chain.
Technology has enabled CPG logistics operations to become more flexible and responsive to consumers’ demands.
Through technology solutions like real-time tracking, demand forecasting, automated warehousing, and predictive maintenance, CPG logistics has become much stronger and more agile. It is now able to adjust to risky or unplanned situations promptly and effectively. The improved responsiveness and agility in logistics operations have led to shorter lead times, better inventory management for supply chains, and enhanced customer satisfaction.
Tech takes center stage in the future of CPG logistics. With trending technology solutions like AI, AR, and IoT, it can only get better. AI can design hyper-personalized products and logistics operations based on consumer data, and the Internet of Things (IoT) can create transparency through intelligent packaging that tracks freshness and triggers automatic reordering, optimizing inventory and reducing waste.
Zengistics was founded on the belief that our collaborative technology platform has the power to bring large-scale efficiency through collaboration and tech-enablement. Carrier or shipper, we provide end-to-end solutions, complete transparency throughout your entire supply chain, and connectivity into our established network or partners. Contact us today.
Operating on the world’s first collaborative logistics platform, Zengistics is a technology company that executes freight.
