When we talk about predictions and strategic planning with consumer packaged goods (CPG) and food & beverage (F&B) companies, we’re met with a great deal of uncertainty given the current state of disruptions and upheaval. It’s logical that wise executives might shy away from making any predictions at all, given the turmoil brought on by the pandemic, and from supply chain issues and skills shortages to ongoing consumer changes. We wrote about it at the beginning of the year in our 2022 predictions article.
2022 Predictions for CPG Manufacturing
Among the many industry articles with 2022 predictions is a recently published supply chain and sustainability strategy round-up article in IndustryWeek. The industry analysts expect, among other predictions, a continued rise in labor costs, high demand for shipping, inflation pressures, a move from just-in-time (JIT) inventory strategies to more “just-in-case” processes, an uptick in additive manufacturing, ongoing customer demand for sustainability, and a need for better supply chain approaches via digital technology adaptation. Consumer Packaged Goods and Food & Beverage manufacturers continue to face these pressures and more.
QAD’s Director for the Consumer Products and Food & Beverage vertical markets, Stephen Dombroski, also wrote a 2022 predictions article for VMblog, specifically for CPG manufacturing, kicking it off with a quote from the often wise Yogi Berra: “When you come to a fork in the road, take it.”
He shares his predictions in the following six critical areas:
Continued Consumer Preference Changes
The CPG and F&B industries saw how the pandemic accelerated what has been evolving over the years in consumer tastes and product preferences. Manufacturers and processors redesigned how they introduced new products during the pandemic and how quickly, meeting consumer demands for sustainable, health-conscious products.
The Value Chain and e-Commerce
Even before the pandemic, online sales and e-commerce were growing – manufacturers saw seismic jumps in their popularity during the pandemic and this will likely continue, even in the Food & Beverage industry. While adding to the value chain, e-commerce requires that manufacturers and processors have a complete and integrated Sales and Operations Planning (S&OP) process in place in order to achieve a truly connected supply chain.
The Use of Contract Manufacturing
The use of contract manufacturing or co-packing will undoubtedly continue to grow as an economical way to meet consumer demand, giving brand manufacturers greater regional diversity.
The Return of the Milk Box
It’s an old-fashioned idea that may be returning in new ways – home delivery, even of perishable foods. Some appliance manufacturers are investigating the design of secure electric, refrigerated and frozen “milk boxes” that can aid in the home delivery of food products. Add another potential disruptor to the supply chain.
Demonstrable Sustainability Practices and Digital Manufacturing
Consumer demand for sustainable products continues to explode and manufacturers are responding with appropriate strategies via digital manufacturing technologies. Forward looking manufacturers and processors are using smart labels, scannable codes, updated labeling and packaging, and QR codes so consumers can gain information about ingredients, nutrition information, sustainable supply and other valuable information.
Manufacturer Owned and Managed Transportation Fleets
Disruptions in the transportation sector have been written about extensively, including shipping/port issues, infrastructure and supplier relationship management. The issues are well documented, including driver shortages and more LTL deliveries. Many CPG manufacturers are turning to company-owned fleets, bringing back better control and oversight, resulting in improved customer service IF they implement the right connected processes and systems to manage it.
Uncertainty is the New Normal
As Stephen put it in his predictions article, uncertainty is the new normal in the CPG and Food & Beverage industries. We can expect more disruption and a greater focus on profitable operations that deliver customer satisfaction. We’re seeing a significant opportunity for manufacturers to invent, or reinvent, the new normal at the fork in the road for those who wisely take it.
