2023 will bring challenges and opportunities to consumer packaged goods (CPG) companies. Find out which technologies CPG leaders will use to stay ahead of the game this year.
While the CPG market is expected to continue its growth in 2023,CPG companies are facing numerous challenges. These include widespread inflation (which increases the price of goods and impacts consumer spending decisions), unstable supply chains, and mor frequent low-stock and stock-out situations in stores. How will CPG manufacturers manage this complex situation?
Many are turning to technology, finding ways to reduce inefficiencies and unnecessary spends while still improving customer experience. Look for the following tech trends to be called into action in 2023 and beyond.
5 Tech Trends CPG Companies Should Consider for 2023
1. Digital Twins in Factory and Supply Chain Management
Most CPG companies are geographically diverse, sourcing items from various places, shipping and warehousing them across countries or continents, and serving stores in far-flung locales. It’s not surprising that managing all this movement and visibility is time- and resource-intensive. It’s even less surprising that many companies are turning to Artificial Intelligence and other technologies to simplify operations.
One area where we’re seeing a lot of buzz – not just in CPG or process optimization, but throughout many areas of the business world – is digital twinning. A digital twin is a detailed digital representation of a complex real-world entity like a factory (or customer segment, city, human body, etc. The possibilities are nearly endless). Paired with the Internet of Things (IoT) and machine sensors, these can model processes and provide real-time information to analyze and adjust performance as needed. This can create a more robust yet flexible supply chain and manufacturing process for CPG producers.
2. Image Recognition
AI, as most of us realize, has many applications. One is computer vision, aka image recognition. CPG brands are using image recognition to improve planogram compliance and monitor in-store item placement. This can reduce stockout situations, provide valuable inventory information, and save time for the employees tasked with assessing in-store displays.
3. Cloud Adoption
Cloud computing isn’t exactly a new trend, but it enables the flexibility, scalability, and long-distance connectivity that makes other technological feats possible. With the Cloud, it’s easier to explore, innovate, and propagate new solutions throughout the enterprise. Look for CPG companies to continue to invest in the Cloud and for Cloud providers to offer more CPG-friendly solutions.
4. Digital RTM Solutions
Given all the other changes we’ve been through in the past few years, it’s natural that routes to market are also being re-examined. Customer expectations are shifting and the balance between brand loyalty and customer experience is likewise changing. CPG companies are dealing with new technologies and platforms while still learning to fully navigate new channels. If you want to keep up, digitizing RTMs is almost inescapable. This is also becoming more supported in terms of available technology (specifically, Cloud, AI, and the increasing penetration of enhanced mobile networks), so implementing digital RTM tools will be less challenging than before.
5. E-Commerce and Direct-to-Consumer Sales
This is another instance of a trend that isn’t exactly new. But it certainly has accelerated, with several large established brands embracing DTC sales, self-service ordering, and online sales. This not only has been shown to increase revenue, it also lowers the cost of ordering over time and requires less field personnel. Optimization is the name of the game in 2023, and these methods allow brands to do more with less and improve their margins. And yet again, we’re seeing technology improvements as a major catalyst here.
What Will 2024 Bring for CPG Companies?
The 2020s have been off to a rocky start, with COVID-19 and the Ukraine War creating all kinds of issues. Agility has long been important in the CPG market, but now it’s crucial. Companies that leverage tech trends like the ones discussed above are in a better position to nimbly adapt to changes as they happen. It will be interesting to see what 2024 and beyond bring to CPG companies.
Authored by: Dr. Anil Kaul,
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