research reportUnmanned retail

Strategy change of consumer goods and retail supply chain From Capgemini Report

The following is the Strategy change of consumer goods and retail supply chain From Capgemini Report recommended by And this article belongs to the classification: Unmanned retail, research report.

A new report from Capgemini Research Institute investigates the impact of disruptions in consumer goods and retail supply chain in the past year. The report finds that 66% of enterprises say that they have adapted to the market under the epidemic situation and integrated resilience into operation. Their strategies will change significantly in the next three years. However, only 23% of consumer goods enterprises and 28% of retailers think that their supply chain is flexible enough to support the changing business needs of enterprises.

Cowid-19 is a wake-up call for consumer goods and retail companies: 85% of consumer goods companies and 88% of retailers say they are facing the challenge of supply chain disruption, while 63% of consumer goods companies and 71% of retailers say it will take at least three months for their supply chain to recover from disruption (Chart 1). As a result, companies are reorienting their strategies to focus on three key areas.

Turn to consumer demand perception

More than two-thirds of enterprises (68%) said that due to the lack of accurate and up-to-date information on customer demand fluctuations during the epidemic period, transparency faced the problem of demand planning. In order to improve consumer demand forecasting, 66% of enterprises plan to subdivide the supply chain according to the demand pattern, product value and regional situation after the outbreak of the epidemic, and 54% of enterprises say that they will use analysis / artificial intelligence machine learning for demand forecasting to cope with the impact of the epidemic.

Visibility becomes critical

Due to the epidemic situation, 75% of consumer goods enterprises are facing difficulties when they need to rapidly increase or reduce production capacity. To create flexibility to respond to sudden changes in demand, manufacturers need to explore opportunities to improve supply chain visibility, the report quoted. This helps to meet the challenges of strategic, tactical and real-time operational decision-making.

Enterprises understand the importance of digital investment in improving the visibility of the supply chain. 58% of retailers and 61% of consumer goods enterprises plan to increase investment in supply chain digitalization. Among them, 47% of enterprises plan to invest in automation, and 42% plan to invest in robotics or artificial intelligence; 64% plan to widely use artificial intelligence and 63% plan to use machine learning in transportation or pricing optimization.

From globalization to localization

In order to prevent similar supply chain disruption in the future, enterprises are realizing the importance of localization and making active investment. Consumer goods and retail enterprises are moving from globalization to localization of suppliers and manufacturing bases. 72% of consumer goods enterprises and 58% of retailers said that they are actively investing to regionalize or localize their production bases, or to provide close support for production.

65% of consumer goods and retail companies invest in regionalization and localization of their supplier base, with 83% in the UK and 73% in India. According to these strategies, in three years’ time, global suppliers will only account for 25% of retailers’ capacity, lower than the current 36% (chart 2). In consumer goods, global manufacturers will account for only 17%, down from the current 26% (chart 3).

With the advancement of localization and the reduction of physical customer flow, the dark store, which is independently operated and close to the delivery place, is becoming a more effective choice to fulfill online orders. Earlier research by Capgemini showed that if the delivery volume of behind the scenes stores increases by 50%, the profit margin may increase by 7%, because it has lower delivery cost and higher delivery throughput (without affecting store operation) compared with traditional stores.

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