CPG Trends 15 August 2023

Supply Chain Innovation: The Future is Now

Supply chain innovation has never been more important to businesses. How can your business navigate the complexity of emerging technologies? What avenues might augment your supply chain strategy? Prateek Jain unpacks several interesting technologies that may help impact both your bottom line and consumer experience.

We are on the verge of witnessing the remarkable transformation of supply chains in the digital age. As the backbone of every business, supply chains face unprecedented challenges and opportunities. From navigating the complexities of the pandemic to addressing environmental concerns and evolving customer expectations, a supply chain must be resilient, agile, and sustainable. But that’s not all—the advent of 3D printing, drone delivery, and autonomous vehicles introduces a new era of possibilities, poised to revolutionize supply chain processes and redefine customer experiences. This is an exciting journey of innovation and limitless potential, demanding supply chain innovation like never before.

In this piece, I unpack:

• The current supply chain landscape
• Opportunities in 3D printing
• Opportunities in drone delivery
• Opportunities in autonomous vehicles
• Takeaways for brand owners

The current supply chain landscape

Good supply chain management is the lifeline of any business, and right now must help navigate an exhilarating era of emerging challenges and boundless prospects. The convergence of the digital age, compounded by the COVID-19 pandemic, geopolitical dynamics, ecological imperatives, and evolving customer demands, is thrusting supply chains into a realm that demands unwavering resilience, unparalleled agility, and steadfast sustainability. Decision making must incorporate innovation to ensure customer satisfaction that still respects the bottom line.

However, many supply chains are still operating with outdated and inefficient processes, systems, and models that hinder their ability to cope with the changing environment and meet the expectations of their stakeholders. These supply chains are vulnerable to disruptions, delays, errors, and waste, eroding their performance and profitability. To overcome these challenges and seize the opportunities in the digital age, an innovative supply chain must be employed. Innovation is not just about adopting new technologies; it is about transforming the culture, mindset, and capabilities within the supply chain organization. It is about creating new value for customers, partners, and society by reimagining and reinventing supply chain processes and practices. Delivering the future of the supply chain means searching for innovative solutions that respects the entire value creation ecosystem.

Fortunately, there are many examples of innovative practices and emerging technologies that are transforming supply chains across industries and sectors. These innovations enable supply chains to enhance their resilience, agility, and sustainability by introducing automation, optimizing inventory, transportation, and logistics processes; creating new products and markets; improving product quality and performance; supporting humanitarian and social causes; and reducing waste, emissions, and resource consumption. Let’s explore some of these innovations and how they can help businesses serve customers better and be more efficient in the future.

3D Printing: Enabling On-Demand and Customized Production

3D printing, also known as additive manufacturing, is a technology that creates physical objects by depositing layers of material on top of each other, following a digital design. 3D printing can enable on-demand real-time production, and customization of products, parts, and components, reducing the need for inventory, transportation, and waste.

Some of the benefits of 3D printing for supply chain innovation are:

• Creating new products and markets that are not possible or feasible with traditional manufacturing methods;
• Improving product quality and performance by using advanced materials, optimizing designs, or enhancing functionality;
• Empowering local production and distribution of products, reducing the dependence on global supply chains and improving responsiveness to customer needs.

Some examples of 3D printing for supply chain innovation include:

• Adidas uses 3D printing to customize midsoles for Futurecraft 4D shoes, enhancing responsiveness, cushioning, and durability;
• GE Aviation employs 3D printing to manufacture fuel nozzles for more efficient jet engines and optimize maintenance costs, emissions, and noise levels. They also use 3D printing to repair damaged parts ensuring operational efficiency;
• Evoware pioneers seaweed-based packaging, offering eco-friendly alternatives that extend shelf life and support local seaweed farmers in Indonesia.

Businesses can serve customers better by offering faster, cheaper, more convenient, and more personalized delivery options. 3D printing can also help businesses become more efficient by optimizing inventory, transportation, and logistics processes.

Drone Delivery: Improving Speed and Accessibility of Delivery

Drone delivery, also known as Unmanned Aerial Vehicle (UAV) delivery, is a technology that utilizes drones to transport goods from one location to another. Drone delivery can improve the speed and accessibility of delivery, especially for remote or hard-to-reach areas, reducing the cost and environmental impact of transportation.

Some of the benefits of drone delivery for supply chain innovation include:

• Enhancing customer convenience and satisfaction by offering faster, cheaper, and more flexible delivery options;
• Supporting humanitarian and social causes by delivering essential supplies such as food, medicine, or blood to areas affected by natural disasters, conflicts, or epidemics;
• Enabling new business models and partnerships by creating new opportunities for value creation and collaboration among stakeholders.

Some examples of drone delivery for supply chain innovation include:

• Amazon Prime Air employs drones for swift deliveries, enabling quick transportation of eligible merchandise to customers in Lockeford, California, and College Station, Texas;
• Zipline utilizes drones to efficiently transport blood and medical supplies to remote clinics in Rwanda and Ghana, contributing to life-saving efforts;
• Walmart collaborates with Flytrex to introduce drone delivery services for groceries and household items in Fayetteville, North Carolina, enhancing convenience and accessibility for customers.

Innovative delivery methods offer supply chains significant benefits, such as reducing lead time and costs by bypassing congestion, road limitations, and geographical barriers, as well as expanding delivery possibilities into areas that are traditionally difficult and costly to serve. There is the opportunity here to enhance reliability and security by minimizing human errors, theft, and transportation-related damages.

Autonomous Vehicles: Optimizing Transportation and Logistics

Autonomous vehicles (AVs), also known as self-driving vehicles or driverless vehicles, are vehicles that can operate without human intervention by using sensors, cameras, and artificial intelligence to navigate their environment. AVs can optimize transportation and logistics, improving safety, efficiency, and sustainability of moving people and goods.

Some of the benefits of AVs for supply chain innovation include:

• Reducing labor costs and shortages by replacing human drivers with automated systems, especially useful to streamline long-haul or last-mile deliveries;
• Increasing capacity and utilization by operating around the clock, without fatigue or breaks, and by platooning or coordinating with other vehicles ensuring the optimization of routes and speeds and ensuring safety;
• Improving customer experience and loyalty by offering faster, cheaper, and more reliable delivery services, as well as new features such as in-vehicle entertainment or shopping.

Some interesting case studies of utilizing AVs for supply chain innovation include:

• TuSimple utilizes autonomous vehicles (AVs) to transport freight between Arizona and Texas, reducing driver costs significantly and maintaining a round the clock fleet operations. They make self-driving trucks, a technology that may be among the innovations to help lower longer-run inflation in the transport sector.
• Waymo Via optimizes goods transportation across warehouses, distribution centers and stores, through AVs across various locations, increasing load factor and partnering with renowned companies;
• Nuro specializes in local delivery of groceries, pizza, and prescriptions using AVs equipped with advanced technology, collaborating with major retailers such as Kroger, Domino’s, and CVS to provide efficient delivery services.

Innovative transportation solutions improve safety and security by reducing accidents caused by human errors and fatigue. They also minimize environmental impact through the use of electric or hybrid vehicles, while introducing new modes of transportation like robo-taxis and robo-shuttles for convenient and affordable mobility services.

Key Takeaways: The Importance of Supply Chain Innovation for CPG Brands

Supply chain innovation surpasses the mere adoption of new technologies. It represents a profound transformation of the culture, mindset, and capabilities within the supply chain organization. It is important to recognize that supply chain innovation is not a singular project or a standardized solution. It is an ongoing journey that requires continuous monitoring, evaluation, and improvement.

By actively engaging customers, suppliers, partners, regulators, and communities, supply chain organizations can acquire invaluable insights into their needs and expectations. The alignment of innovation goals with business objectives and values becomes paramount.

Supply chain innovation transcends being a mere option or choice; it becomes an imperative and a transformative opportunity for businesses to elevate customer service and operational efficiency, positioning themselves for success in the future.

This is especially true for consumer-packaged goods companies, facing increasing challenges and opportunities in the digital age. A new dawn of transformative technologies, encompassing 3D printing, drone delivery, and autonomous vehicles, stands poised to reshape the very fabric of supply chain operations and redefine the customer experience. This is a really important moment, a crossroads where supply chains can completely change and companies can grow like never before.

To make new things and ideas work better, CPG companies can be smarter about how they manage and measure innovation. Figuring out how much a new idea really helps and fits in with the company’s plans is key to making a successful plan for the future.

The technologies mentioned above are only examples of the many innovations that are transforming supply chains across industries and sectors. A complete review and assessment of the value chain identifying where and how to improve the approach could lead to immediate increase efficiencies and long-term competitive advantage. For instance, digitization can enable Supply Chain 4.0, which becomes faster, more flexible, more granular, more accurate, and more efficient. By applying Industry 4.0 innovations to their supply chains, CPG companies can jump-start performance and customer satisfaction.

In conclusion, supply chain innovation is not only a necessity but also an opportunity for CPG companies to thrive in the digital age. By embracing innovation as a strategic imperative and a competitive advantage, CPG companies can create new value for customers, partners, and society by reimagining and reinventing supply chain processes and practices.