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Technology’s Role in CPG Supply Chains


he consumer packaged goods (CPG) industry is in the midst of a digital transformation, thanks in part to the integration of technology into supply chain processes. From production to supply chains to distribution, technology is playing an increasingly vital role in enhancing efficiency, reducing costs, and meeting the evolving demands of consumers.

Here’s a deeper look at the pivotal role of technology in the CPG supply chain.

End-to-End Visibility

One of the most significant challenges in the CPG supply chain has been the lack of transparency and visibility. Real-time visibility into the supply chain is essential for efficient operations. With the integration of technologies such as order management systems, inventory management solutions, and delivery management platforms, businesses can operate more efficiently by consolidating data in one location. Integrated operations offer better visibility, improved workforce productivity, and faster deliveries to customers.

Real-time tracking capabilities enable end-to-end visibility, allowing companies to track the movement of products from manufacturing facilities to distribution centers to retail shelves and customers. This transparency reduces the risk of disruptions and enables quicker responses to issues. Delivery and distribution management platforms provide real-time data on product movement and vehicle conditions, ensuring products are stored and transported under optimal conditions. Customers can track the entire delivery process, from start to finish, ensuring transparency, building trust, and improving the customer experience.

distribution center
Automating distribution facilities can provide CPG companies with a significant boost in efficiency, agility, and responsiveness.

Distribution Center Automation

Automating distribution facilities can provide CPG companies with a significant boost in efficiency, agility, and responsiveness. Automated systems can handle repetitive tasks with speed, precision, and accuracy. Implementing automation technologies can help CPG brands minimize errors in order fulfillment, inventory management, and delivery, ensuring that the right products reach the right destinations on time. Automated systems can also lead to substantial cost savings in the long run. By streamlining distribution processes, CPG companies can reduce labor expenses, minimize the need for manual interventions, and optimize resource utilization. 

Kraft Heinz plans to invest over $400 million toward building a 775,000 square-foot automated CPG distribution center in DeKalb, Illinois. The distribution center, which is expected to open in 2025, will help the company to drive greater supply chain efficiencies and distribute its products to retail and foodservice customers faster. The distribution center will feature a fully automated storage retrieval system with the ability to run 24/7. The facility is expected to play a critical role in the company’s national distribution strategy, moving over 60% of Kraft Heinz dry goods in North America through its automated facilities.

Sustainable Business Practices

Technology also plays a crucial role in promoting sustainability in the CPG supply chain. From reducing paper usage with digital solutions to consolidating deliveries for fuel efficiency, technology aids in creating a more sustainable and environmentally friendly supply chain. CPG companies are increasing additional sustainability initiatives including optimizing delivery routes, reducing packaging waste, and implementing eco-friendly manufacturing practices.

Colgate-Palmolive sets aside a minimum of 5% of its capital spending for waste reduction, climate initiatives and other sustainability efforts. Products and their end destinations are extremely important to the company, which sells nearly 9 billion tubes of toothpaste worldwide every year, among many other consumer packaged goods. The company is committed to transforming its supply chain, including a system and analytics overhaul to get digital systems communicating with each other and get personnel all the supply chain data they need in one place.

Technological integration in CPG supply chains is ongoing and empowers companies to enhance supply chain visibility, automate distribution, streamline deliveries, and drive sustainability initiatives. As companies continue to adopt and integrate new technologies, the CPG supply chain will become more customer-centric, agile, and resilient.

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