7 in 10 execs see supply chain as 'support function'
- More than half of consumer packaged goods (CPG) executives see the supply chain as an entity separate from their overall consumer engagement strategies, according to a recent report from Accenture. 69% of CPG executives surveyed see the supply chain as fulfilling a "support function," while 55% see it as a driver of growth.
- Accenture surveyed executives throughout the C-suite along with vice presidents at CPG companies headquartered in Austria, Canada, Germany, Ireland, Switzerland, the U.K. and the U.S. in early 2018 to find out how technology is changing the supply chain.
- "CPG companies must begin to see their supply chains as a way to differentiate and grow," the report said.
Just as the supply chain has become an essential competitive edge for retailers in an on-demand, service-oriented environment, the CPG companies that fill their shelves need to change their thinking if they want to stay competitive.
The report posits that a change in mindset is necessary to usher in the necessary supply chain technology investments to transition supply chains form a support service to a growth driver for CPG companies.
Examples of this more integrated mindset include PepsiCo's investment in a digital backend for its direct-store delivery (DSD) distribution system. DSD gives the company more control where it meets the customer — at the shelf — so this supply chain investment in both technology and operations complexity reverberates straight to the consumer.
Coca-Cola as well has connected the supply chain directly to the consumer with its Freestyle dispenser machine, which use an automated system to both sell to the customer and refresh the machines.
A telling data point in the discussion of new IT investments, according to Accenture, is who signs off on the purchase? New technology investments are often the purview of the CIO or CTO and not the CEO or CFO. From this, the report authors conclude that there remains a pervasive rift between supply chain innovation and overall business strategy. CEOs approved tech spending at just 16% of the companies surveyed and CFOs just 23%.
"While not minimizing the importance of CIOs and CTOs, this insight reveals that these investments are considered more IT capability enablers versus truly strategic business enablers that are driven from the top," according to the report.
Accenture argues that new technology such as machine learning, artificial intelligence, the blockchain, cloud computing, cybersecurity and more are essential to driving profitability from the supply chain. So which investments are CPGs seriously looking at?
- Accenture Driving your own disruption
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