2021 became the year of the supply chain. Throughout the year, supply chain disruption was a fixture in the news, the most-often used phrase in investor calls, and fodder for late-night comedian monologues.
What can food manufacturers and retailers do to mitigate the crisis today while future-proofing against similar shocks? Create supply chain transparency, agility, and resilience through data-driven programmatic commerce.
A long-term challenge
Food manufacturers and retailers should not expect consumer behavior to “go back to normal” any time soon. Research by Alvarez & Marsal finds 85% of consumers plan to continue or accelerate the shopping behaviors adopted during the pandemic. At the same time, consumers are worried about getting what they want, according to Oracle.
Since the start of the pandemic, 87% report being negatively impacted by supply chain issues; 92% expect more disruption in the future. Consequently, 91% are changing their purchase behavior, such as by stocking up, rationing essential items, and buying more through subscription services. Consumers want brands to be transparent on inventory status and are more willing to buy from a company they know uses advanced supply chain technologies (87%).
Anticipation exacerbates disruption
Food manufacturers and retailers are executing a variety of short-term tactics to help meet demand. Some of these tactics include increasing the number of ocean carriers, utilizing more ports, building in-house delivery capabilities, moving from “just-in-time” to “just-in-case” production and inventory, and buying larger quantities. At the same time, retailers are encouraging consumers to shop earlier and online.
While essential to meet short-term demand, these actions can distort true demand timing and levels. It’s critical that food companies accurately account for the crisis-driven actions by creating “disruption databases” that document critical information about events, their responses, and the resulting outcomes. This avoids distortions in going-forward projections, equips companies to improve predictive modeling by type of event, and better prepares them for future disruptions.
Steer clear of supply chain storms
Today’s supply chain is not a linear “chain.” It’s an interconnected, multi-layered network of producers, suppliers, sub-suppliers, and multi-level manufacturing points. However, the status quo of incomplete, disconnected, and siloed information and processes impedes transparency, agility, and resilience within this network. The challenge isn’t lack of data; it’s harnessing all the available data, converting it into insight, and leveraging it for competitive advantage.
Multiple sources of data must be collected and transformed into clean, unified, real-time data. This data must be synchronized with different systems, housed in a “single source of truth” repository, and be made accessible via dashboards and easy queries that don’t require a full team of IT experts to answer every marketer’s question. It also should leverage automation, artificial intelligence, and machine learning to anticipate and match demand volatility in real time.
To create a data-ready environment, CPG companies must shift to cloud-based systems such as data warehouses or lakes, business intelligence platforms, and CRMs. Once the cloud systems are established, data connections that span the supply chain and connect to brand, retailer and distribution portals can be created to provide unified access to and view of the data.
From data-ready to programmatic commerce
With data platforms and connectors in place, food companies can move towards a programmatic commerce operating model. CPG commerce will be transformed by leveraging the power and potential of data, technology, and collaboration to better connect demand with supply, create transparency, imbed agility, and build resilience through:
- Better forecasting: Leveraging AI/ML algorithms to be more predictive, prescriptive, adaptive, and accurate by incorporating as many leading shopper preference and behavior indicators as possible and providing advance warning of subtle behavior changes will help food companies stay ahead of demand shifts, surges, and declines.
- Comprehensive visibility: The only way to ensure real-time, end-to-end supply chain visibility is to use a platform that connects internal and external supply chain parties and devices to form a single source of truth that is always up to date and available to everyone involved. High-quality, real-time, shared data is the cornerstone of a data-centric supply chain and is imperative for supply chain orchestration.
- Effective scenario planning: In anticipation of future disruptions, food companies can create digital supply chain twins and run a range of “what-if” scenarios through AI/ML algorithms to quickly calculate the impact of various responses, recommend a course of action, and help align every decision horizontally and vertically throughout the network.
- Enhanced collaboration: With more than 80% of supply chain processes and data occurring outside any single enterprise, adopting technology that allows organizations to share information and collaborate on decisions and execution within and between companies in a timely manner is essential to improving the performance of the entire supply chain.
With programmatic commerce, food companies can get ahead of rapidly evolving consumer behavior and build a reliable and transparent supply chain that will serve them, their suppliers, their customers, and their consumers today and into the future. It’s time to say farewell to empty shelves for good.
Are Traasdahl is co-founder and CEO of Crisp, an open data platform that connects information and companies across the food industry supply chain.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.