This month’s cover story on the Contract Packaging Association’s 2018 “State of the Industry Report” reveals a robust and fast-growing contract packaging/contract manufacturing industry, but one facing significant challenges due to seismic changes in the markets it serves. In early May, CPCM supply-chain software provider Nulogy hosted its fifth annual XCHANGE event in Toronto, ON, CAN. Titled “Go Boldly Together,” it featured a number of brand owners and CPCMs who shared their insights on the forces impating their businesses—all of which supported the findings of CPA’s 2018 report. Kudos to Nulogy for keeping it educational on day one, with very few plugs for its own supply chain solutions, but with emphasis on the value of data-sharing approaches in general.
In his keynote, Nulogy CEO Jason Tham shared that this year’s XCHANGE theme was chosen to suggest courage, exploration, and new frontiers—“to bravely go into a new territory.” Among the new frontiers discussed were industry consolidation/mergers and acquisitions, e-commerce, SKU proliferation, and changing demographics, among others—all challenges that require new supply chain strategies.
“These forces are bearing down on your business,” said Tham. “Your environment is exponentially changing, with volatility, unpredictability, and uncertainty. How will you respond? What is your role in the change? Well, you have a decision here: You can take a step back and stand and observe, or you can define that new world and your part in it, and go boldly into that future you’ve envisioned.”
Naturally, Tham advised that digitization of the supply chain for flexibility, agility, and collaboration between supplier and customer is the way forward. “In a meeting I had with one of the global CPGs we work with, the vice president of supply chain said very bluntly, ‘Digitize or die,’” he shared. “Digitization isn’t a destination in itself; it’s the journey. What is that destination? It’s the opportunity to be agile to operate in a world that’s very complex.”
Throughout the day, CPCMs, brand owners, and consultants echoed Tham’s sentiments during their presentations. Following are several observations and insights that, to me, sum up some of the key points around digitization:
- “We still tend to operate in functional silos,” said Adrian Gonzalez, President of Adelante SCM, a supply chain consultancy. “There is a misconception between cooperation and collaboration. True collaboration is when you have a shared mission statement. We must move toward platforms that better synchronize operations, allowing us to share business intelligence and analytics. We have to get over the hump of working in silos both organizationally and operationally.”
- “A consumer today doesn’t just say I’m going to the store to see my choices, those are the only choices available. Now it’s much more of a pull strategy,” Neil Ackerman, Senior Director, Global Supply Chain Advanced Planning, Johnson & Johnson, told attendees. “Consumers say what they want, and they can decide. It causes the supply chain to go upside down. Everything has to be smaller amounts, it has to go to different spots. This is all impacting how decisions are made. We, as supply chain executives, are going to be the most important people in the world.”
- When, in a discussion on omni-channel markets, Gautam Gupta, Co-Founder and CEO of snack subscription business NatureBox, was asked what some of the biggest benefits of onmi-channel are when done successfully, he replied: “It’s loyalty and data. On the loyalty side, our customer spends a few hundred dollars with us a year. That’s the impact of loyalty. Data allows you to deliver on flexibility.”
- David Warrick, General Manager of Microsoft, advised, “Supply chain data is the new currency.” He noted that digital transformation depends on four characteristics: 1.) Data needs to be trusted; 2.) Data streams must be intelligent; 3.) Data needs to be delivered in real time; and 4.) Data cannot sit in isolation, it must be collected and used to build reusable assets.
- During a panel discussion, speakers (representing both CPGs and CPCMs) were asked, “How do you build trust and greater collaboration?” Vèronique Gravel, Manager, Inventories and Subcontracting for L’Oreal Canada, answered, “To build trust, you have to go back to the basics. In a relationship, you have to have a good SOP and service level agreement. We have peaks in our business. If the data is wrong, and you make a decision on it, you can totally lose a customer. For me, transparency is key to a good relationship with a supplier.”