The consumer goods supply chain in recent years has provided a roller coaster ride that’s worthy of any nationwide amusement park. While the environment is no longer quite as disruptive as during the pandemic, most manufacturers aim to work more collaboratively across the value chain so they can continue to meet shifting consumer demand. A well-invested tech stack is a critical component to any company strategy.
To be sure, challenges still abound for CPG professionals workinging SCM and logistics, but today’ssupply chain technology trends include optimism for the improvements in data collection, predictive analytics, and more.
What are the supply chain priorities in 2023?
Much of the global supply chain challenges for consumer goods companies include the continued slow freight market recovery, global transit delays of goods and materials, qualified labor shortages, global geopolitical events and national legislative decisions, and unpredictable natural disasters, says Dustin Verdin, executive director of business innovation at Zipline, a provider of supply chain technology solutions.
“Wait times to transit at the Panama Canal have gone from a few hours to upwards of five days,” he notes.
What are the raw materials shortages in 2023?
Raw material shortages are not as prevalent as they were a few years ago, marking one of the more positive current trends of supply chain management. Joel Beal, CEO and co-founder of Alloy.ai, a provider of demand and inventory control towers, notes that questions about allocation and limited inventory for retailers have decreased significantly.
The most notable supply chain shortages are in minerals, according to Adhish Luitel, a senior analyst in ABI Research’s supply chain management and logistics division, including copper, which is vital for electronics. Luitel says copper is experiencing record lows this year, with production mainly in China and Africa. The blend of high demand and inefficiencies in mining sites due to ongoing lockdowns in China has exacerbated the problem.
There haven't been significant raw material shortages affecting the U.S. technology and semiconductor industries in 2023, according to Paul Silverglate, vice chair of Deloitte LLP and U.S. technology sector leader. Concerns were raised about the Ukraine war and supplies of ultrapure helium for semiconductor manufacturing, but these have not materialized.
However, Silverglate notes China began restricting gallium and germanium, essential in electronics, on August 1. Fortunately, U.S. companies relying on these materials had a six-to-nine-month inventory and time to accumulate more reserves before the restrictions were enforced.
“CO2 is one material that continues to be in short supply, but a whole host of commodities are feeling pressure from global disruptions,” says Tom Madrecki, VP of supply chain at the Consumer Brands Association. “On top of this, imposing tariffs that would drive up the cost of tin mill steel could certainly spark new supply chain issues. U.S. steel manufacturers are only capable of meeting 50% of total demand from U.S. can manufacturers, and a lack of access to a product so ubiquitous in consumers’ everyday lives would be felt far and wide.”
What is the future of supply chain management?
Christian Roeloffs, co-founder and CEO of Container xChange, an online container logistics operating platform believes that the current use of technology in supply chains merely scratches the surface of its potential.
“While discussions around visibility and tracking for enhanced preparedness are ongoing, the full transformative power of technology remains largely untapped,” he says. “In the face of ever-present disruptions, businesses are recognizing the criticality of adopting technology as a fundamental solution. As the world braces for ongoing uncertainties, embracing and leveraging technology will emerge as an imperative for sustained operational excellence.”
Data analysis and predictive insights will take a central role in the near future of supply chain management, according to Roeloffs. “As technology integrates deeper into operations, the ability to extract and interpret data will enable organizations to gain profound insights. Predictive analytics, grounded in historical data and real-time information, will empower decision-makers to anticipate disruptions, optimize inventory, and enhance demand forecasting accuracy.”
He also outlined a number of other supply chain management trends expected to shape the future of the CPG industry:
Sustainability and Eco-friendly Practices
“Heightened awareness of environmental concerns is prompting companies to recalibrate their supply chain strategies towards sustainability and eco-friendliness,” he says. “This entails a concerted effort to reduce carbon emissions, curtail waste generation, and adopt conscientious practices across sourcing, manufacturing, and transportation. The transformation to green supply chains is driven not only by ethical considerations but also by the realization that environmentally conscious practices align with long-term business viability.”
Collaboration is more important than ever in supply chain management, and it’s not going unnoticed by suppliers, manufacturers, distributors, and retailers. They are recognizing the need to form robust alliances that streamline processes, enhance communication, and elevate overall efficiency, he says. “Such partnerships foster a networked ecosystem where shared goals and resources facilitate agility, responsiveness, and a harmonized flow of goods and information.”
Localized and Regionalized Strategies: Navigating Global Uncertainties
More CPG companies are exploring localized and regionalized supply chain strategies, hoping to diminish potential impacts from long-distance transportation challenges and geopolitical risks. “By bringing supply chain elements closer to their point of consumption, businesses aim to enhance resilience, reduce vulnerabilities, and fortify their ability to navigate an unpredictable world,” says Roeloffs.