Challenges in the CPG and Retail Supply Chain Management

Consumer Packaged Goods or CPG

Consumer Packaged Goods or CPG are those kinds of goods that are consumed on a daily basis. Some of these include foods and beverages, household products and tobacco and clothing. These need to be topped up very frequently, almost on a daily basis. Although you will always have buyers, still there is a fair amount of competition too in this sector. Durables such as automobiles are just the opposite. These do not require frequent change and in times of financial crisis while CPGs will still have customers, durables find it hard to have buyers. “The CPG industry is one of the largest in North America, valued at approximately $2 trillion”. Despite a slowdown in CPGs these still have the advantage of larger margins.

CPG and Retail Supply Chain

There are some commonalities between CPG and retail supply chain. While CPG is focused on the need to provide the best products at the correct time and place with the help of efficient operations, retail is about the provision of the finest experience in shopping and also maintaining the highest profits while ensuring great relationship with the consumer.

However, dip in the US economy and the sluggish recovery thereafter have created a harsh retail environment. While the store traffic is not consistent, the Internet has become an effective alternative for the consumers. The retailers have reacted and changed their strategy of supply so that they are covered against the investment risk for their inventory. This approach to stay lean naturally has affected the supply chain with respect to the manufacturers of CPGs.

The Effect of the Internet

Today the Internet has to be recognized as an important competitor against CPG and retail chain. The Internet today provides the consumer with total transparency on the availability of the product in search, its pricing and clear perception. It is clear therefore that if the retail chain is unable to maintain stock levels in view of investment risks, the consumer will move away to the new product of choice. Both CPG companies and the retailers need to be smarter while figuring out their new strategies in terms of their investments while overcoming challenges to win back loyalties of the customers.

The Customer

The customer remains at the focus of most of the decision making and the vital force for both the CPGs and the retail chain. While the consumers keep up their demand for better quality, service and convenience there has been a shift in the manner in which the retail chains today compete to deliver in response. It is the customer who now chooses to decide whether he will stay or leave.

The other point with the consumer concerns the millenials generation. The priorities as well as their behaviors are totally at variance with that of their preceding generations. In this respect one will also have to strategize in respect of various ethnicities that include the Hispanics and since US is multi-cultural, the CPG and retail chain has to take cognizance of this diversity.

Yet another moot issue is whether when the customer decides, does he do so in favor of the retail outlet or does he cast his vote with the CPG brand. This issue is important along with other issues that include ensuring product availability, a favorable price comparison, and the convenience while participating in the process of making decision.

The issue of holding onto the customer is of the utmost significance. There are retail stores that are stocking up on food products just to ensure that their customers complete all their shopping at their stores. Similarly, the drugstore chains are now adding more food products on their shelves. It is now possible for you to find in a grocery chain a pharmaceutical store at the back besides bakery products as well. It is as though they plan to make it a “one-stop shop”.


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