Increased challenges in the consumer products industry are creating dramatic shifts in what companies need to do to stay competitive in the marketplace. The growing demands of globalization are adding complexity to all parts of the supply chain, including ensuring a product’s quality and timely delivery. Increased demands of consumers for personalization and one-day delivery are requiring companies to operate in new and innovative ways, and at warp speed. Consumer products companies must work on a global scale, while maintaining flexibility, speed, quality and innovation within their businesses. The most innovative of these companies are using the power of digitalization—i.e. the integration and information sharing among multiple digital technologies—to transform their businesses and better connect to consumers to drive innovation. Leveraging IT software technologies that have been boosting productivity for discrete manufacturers for years—such as product lifecycle management (PLM), advanced simulation and big-data analytics—these companies are beginning to reap the same benefits. Digitalization can unlock unlimited potential for consumer products companies by enabling them to deliver consumer preferred innovation, at a speed they never thought possible, with productivity and profit that deliver top and bottom line results.
External forces create challenges and opportunities
The consumer products industry is going through more change than it has seen in the last 50 years. From food to cosmetics to household cleaners, there are 30 times as many new product lines launched each year as there were in the 1960s, with the numbers rising sharply since 2000. Whether these new companies are growing to support Asia’s increasing population or introducing new products to satisfy the personalized demands of consumers and retailers, there are more consumer packaged goods than ever before. As an example, Mintel adds 33,000 new products each month to its global database. Companies must manufacture billions of each new product, in hundreds of different manufacturing environments around the world, and for thousands of global customers. This level of scale and complexity is exacting a toll. Many consumer products companies are seeing the complex needs for supporting current business drain the innovation capacity of research and development organizations, just at the time when consumer demand for innovation is increasing.
Today’s consumers demand more of brands, including integrity and authenticity. The rapidly growing millennial generation looks beyond obvious features and benefits of a product, and is now looking for ethically sourced ingredients, formulas that aren’t tested on animals, sustainable manufacturing that doesn’t involve child labor, and recycled or recyclable materials. To get a product into consumers’ shopping baskets, companies must pay strict attention to everything from the recipes for their products and where materials are sourced, to working conditions and purpose-driven marketing, all while introducing new consumer-preferred products to the market faster than ever before.
And it’s not only consumers who are paying attention to ingredients. Over the last five years, regulatory agencies have been demanding more and more product documentation. Companies must ensure they meet the ever-increasing regulatory demands, such as the new Food Safety Modernization Act. Companies must be responsive enough to quickly bring new products to market to win consumers, but precise enough and with the high quality necessary to satisfy regulators.
And they must do this on a global scale. Global multi-location operations mean original product formulas and their manufacturing processes must be adapted for the materials and equipment available, in compliance with local regulations, all while maintaining the consistent product quality consumers demand. Controlling product quality is essential to maintaining brand integrity, which is more and more important to today’s buyers.
Finally, the massive scale of production presents a unique challenge for consumer products companies. When you make billions of units of a product, it’s the efficiency of development, manufacturing and distribution that dictates whether you make a profit on your innovation. That’s a very different problem from what is seen within discrete industrial manufacturing companies, where a bill of materials may contain millions of items, but products are made in only a few facilities. Consumer Packaged Goods is truly an industry of a different scale and complexity.
Yet, just as the industrial manufacturing industry segments have turned to digitalization as a solution to many of the complexities faced in their businesses, consumer product industries now have the opportunity to embrace these same solutions to meet changing needs within their business. The business is very different, but many of the tools and process changes that have reaped rewards for more mature users of PLM systems are relevant to solve the challenges consumer products companies face today.
Hidden data limits productivity and innovation
External market forces aren’t the only challenges facing many consumer products companies. Today, few consumer products companies have a common data structure or a shared information platform for information used in the different phases of design and manufacturing. This means that there’s no single source of truth even for a single product. Often the most valuable information and insights are difficult to share within a project or transfer to other projects, limiting re-use of critical information and causing non-value-added replication of work already done. Single data items can be re-entered more than 10 times across different systems in the value chain, creating dozens of opportunities for mistakes, not to mention the wasted productivity.