While retailers have been incorporating data into their decision-making for years, the manufacturers of the products they stock are now beginning to create digital threads
Manufacturers of consumer-packaged goods (CPG) are utilizing analytics to anticipate customer demand and optimize their processes.
ABI Research forecasts that overall, digital factory revenue will approach US$24 billion in 2030, with spending by CPG manufacturers on data and analytics services forecasted to reach US$4 billion in 2030, up from US$500 million in 2021.
“Plant managers walk a tight rope every day. Too little production leads to shortages and lost revenue opportunities; too much production means that perishable products go to waste,” explained Michael Larner, industrial and manufacturing principal analyst at ABI Research.
“Digital Threads across the supply chain are essential.”
Production planning is challenging without information from retailers’ point of sales systems. CPG manufacturers need to work with retailers, distributors, and supply chain partners to share sales information through the supply chain, from the farmer to the checkout line.
“While creating digital threads across the supply chain will take time, in the short-term CPG manufacturers need to ensure that their production plans are informed by as much relevant data as possible,” Larner pointed out.
CPG manufacturers are investing in IoT sensors and analytics to monitor temperatures and humidity levels in their facilities and the condition of ingredients and foodstuffs, alerting staff if conditions change beyond acceptable parameters.
Many CPG manufacturers are undertaking ambitious data projects. For example, Anheuser-Busch InBev is unifying its 27 disparate Enterprise Resource Planning systems (ERPs) into a single system, and Mars is creating a digital thread to provide visibility from the point of origin of its raw ingredients to the point of sale.
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Technology firms such as AVEVA, Parsable, Seeq, and TeamViewer are well placed to support CPG manufacturers extract and utilize the data generated in their facilities.
Digital threads will be essential for CPG manufacturers to meet the needs of their various stakeholders.
“Manufacturers need work with retailers and supply-chain operators to, among other things, anticipate and prepare for demand surges, have flexibility on their production lines to accommodate trial flavours and new packaging as well as have the required documentation available for regulators as evidence of how the facility handles ingredients,” Larner concluded.