You know the story well: the pandemic brought about drastic fluctuations in consumer demand and wreaked havoc on companies’ ability to predict and keep up with demand—try as they might. Demand planning, which can already be a time-consuming and imperfect process, became even tougher to do effectively, especially given supply chain disruptions at a local, regional, and global scale.
What CPG brands need, it’s ubiquitous to hear nowadays, is agility. And for good reason.
So what does agility actually mean?
Let’s zoom out for a second and think of an example we’re all familiar with: soccer. (And with teams located in Barcelona, Buenos Aires, and New York, Unioncrate is more than familiar with it.) Think of the kind of agility training soccer players do, often involving weaving in and out of a line of cones. In this case, agility means the players can maneuver around the cones quickly, switch up their direction seamlessly, and develop a new rhythm that maintains a path towards a primary goal.
Agility within the CPG space looks similar to this. Whether you call it adaptability, flexibility, quickness to recover, or something else, agility is about speed and a preparedness to roll with the punches. Here, we examine three key pillars that enable maximum agility across the supply chain planning process, including the importance of:
In a world that runs on machines, it’s impossible to keep up with supply and demand without engaging the digital technologies of today. One of the most prominent, flexible, and versatile? Artificial intelligence.
As we’ve seen over the course of the last year, demand can change in an instant, and your forecasts need to change along with it. And it’s vital to note that demand changes are nothing new—the pandemic simply laid bare just how quickly consumer preferences can shift, thereby changing the ways in which companies are able to fulfill demand. Sometimes, what’s worked in the past will no longer work in the present and future.
A business's demand sensing capabilities should be versatile and ever-aware. Luckily, AI is never static. At its most basic level, it’s a series of algorithms that can tell us something we don’t know (due to either time or capability constraints, for example), powering through a jungle of complex data with every passing millisecond. Even better, since AI “learns” as would a human brain (hence the “intelligence” in “artificial intelligence”), it’s self-correcting or self-learning, so to speak, and can increase in accuracy every time it runs while yielding dynamic data-driven insights.
Part of what makes AI a key tenet of agility is that it analyzes data without emotionality attached to it. To us, Covid-19 was a life-altering crisis, but to a model, it’s just another data point in a series. Accurate, AI-generated forecasts, for example, can give you the agility you need by enabling you to be proactive across the board. If demand is to skyrocket, for example, your forecast should anticipate it and a variety of decisions can be proactively made, which can be further augmented by running a number of alternative manual scenarios.
The proactivity that agility puts into motion can be realized across the supply chain. This includes: sourcing from alternative locations in the case of shortages or other circumstances; purchasing raws and components as far in advance of upcoming spikes in demand as possible; optimizing warehousing space and logistics coverage; executing promos in the right regions by product or customer; increasing margins by focusing on top-selling SKUs; and much more. As a result, logical, forward-thinking decision-making can take precedence over fear- and panic-driven decisions, making it easier to steer your business through troubled waters.
AI’s breadth is impressive—it can process a near-inconceivable amount of data—but something so wide-reaching needs depth to be truly agile. And depth can be overwhelming without a way to view and make sense of the data. Therefore, the best AI-generated forecasts should be not only speedy and accurate, but also granular and cut-able. In other words, the dynamic relationships that AI uncovers are only as good as a company’s ability to view and utilize them. Furthermore, all of this should be available at the click of a button (or two).
When you’re able to see your data across your business in a multidimensional way—and rely on automation to make sense of it—you can quickly pivot your supply chain and financial operations to tackle whatever obstacles come your way. This level of granularity, when combined with automation, is a heightened ability to:
All of these levels of granularity permit you to pursue a “wait-and-see” approach to supply chain planning, also known as postponement. By getting real-time, granular data on potential supply chain disruptions—stock-outs, raw material shortages, shuttling costs, and so much more—brands can wait to manufacture product until they know for a fact that there’s a ground-level demand for it (or as far as lead times allow). Take it to the next level, even: With data insights down to the ship-to level, you can even know the demand for each specific distribution channel. By incorporating all of these insights into your forecast models, you can identify big structural shifts before they even happen.
While agility means not having to shoot in the dark when it comes to demand, it also means not having to shoot in the dark with just AI. The key to agility is collaboration—specifically between artificial and human Intelligence.
Your demand planning process isn’t completely flexible if you stick to using only AI to inform your forecasts and decision-making. How could it be? One-off circumstances pop up in the real world that AI, without human input, doesn’t have insight into, such as a last-minute shipper approval. Combining AI and HI (human intelligence) allows you to unite AI forecasts with sudden events that happen in real time, which can look like anything from new distribution gains and upcoming promotional activity to one-time orders from a specific retailer.
A key element of agility is integrated data and processes, which prevent your team members from working in silos. Uniting the forces of AI and HI permits team members to share information only they may be privy to. Balancing data with boots on the ground enables the kind of quick pivots you need to make to optimize production. This results in company-wide visibility and alignment among decision-makers, enabling the kind of rapid reactivity needed to face supply chain occurrences head-on.
In the consumer goods space, agility can be boiled down to one essential mantra: Adapt, don’t react. Adopting this mindset and forward-looking technology is key to gaining a strategic edge over the competition. An agile supply chain means that you can take action in moments when others can’t, and when your products are available when your competitors’ aren’t, you end up getting more market share.
Unioncrate is an AI-powered Supply Chain Planning Platform that gives CPG brands the technology they need to compete and win in a rapidly changing consumer landscape. Our automated demand and supply forecasts deliver unmatched accuracy, collaborative visibility, and actionable intelligence, simplifying a manual-heavy process and slashing hours from your week.