Consumers will drive the need for greater supply chain collaboration over the next decade, according to a study by the Consumer Goods Forum and Capgemini titled “Future Value Chain 2020: Building Strategies for the New Decade.”
The report predicts that, over the next decade, supplier production will be brought into line with predicted and actual demands from consumers, rather than based on the forecasting models used today. Future products will be shipped to collaborative warehouses in which multiple manufacturers store their products. Competing firms will then collaborate to collect and deliver the goods. They will be driven by demand for carbon-efficient distribution and limited supply chain capacity.
“The trends highlighted in the report underline the need for even more collaboration among all parties in the value chain as we move through these challenging times. We should treat this as an opportunity to urgently act through putting in practice new plans and strategies that better suit the changing needs of our consumers,” said Nigel Bagley, Director for Industry Affairs, Unilever, and Co-Chairman of 2020 Future Value Chain.
The study identified 10 trends impacting this change over the next ten years
1. Increased urbanization and the rise of megacities will impact the size of stores, logistics and the supply chain, and distribution infrastructures.
2. An aging population will have economic and political consequences related to the amount of money spent on necessities like food and drink, and the type of delivery services, store formats and locations
offered to older consumers.
3. The increasing spread of wealth will lead to a growing middle class in developing regions, impacting consumption and availability of food items and providing a source of growth for manufacturers and retailers.
4. The increased impact of consumer technology adoption will be reflected not only in consumers’
own behavior but also in their ability to influence the buying behavior of other consumers as the use of social and digital media continues to spread.
5. An increase in consumer service demands will define new service models, offered via the Internet,
that move beyond selling individual products and will bring different types of “solutions” to consumers and shoppers.
6. The increased importance of health and well being will have significant ramifications as sales of healthful products and services are expected to nearly quadruple in the coming five years.
7. Growing consumer concern about sustainability will lead consumers to look to governments and companies to play a major role in combating climate change.
8. Shifting economic power to countries like China and India will cause trade areas to evolve and a new generation of globally competitive companies from these developing markets to emerge.
9. Scarcity of Natural Resources like energy, water and food will become a growing issue as demand is projected to outstrip easily available supplies over the next decade, resulting in increasing production costs.
10. Increased regulatory pressure will be seen particularly for hot-button areas like the environment, sustainability and food safety.
11. Rapid adoption of supply chain technology capabilities will enable a more synchronized value chain with greater visibility and traceability.
12. The impact of next-generation information technologies like cloud computing will lead to a new way to deal, jointly, with business and technology in the consumer goods industry.
The report draws on insights from 200 executives from some of the world’s leading retailers, consumer goods manufacturers, academics, third party providers and industry organizations. The report examines the changing trends that will have the greatest impact on the industry over the next decade, outlines a number of strategic objectives being put in place as consumer product manufacturers and retailers build strategies for the next 10 years, and provides examples of tactics that can help the industry achieve these objectives.