5 Ways to Build Resilience Across CPG Supply Chains

The past few years have been a rollercoaster for consumer packaged goods (CPG) companies. From pandemic-induced shutdowns to extreme weather events and port closures, disruptions have exposed vulnerabilities in their traditionally lean supply chains. Demand volatility, inflation, the rising popularity of private labels, and the growth of online selling channels have made their sales forecasts a moving target. Skyrocketing operations costs have also made it tough to achieve healthy profit margins, while labor shortages make it hard to get tasks done.   

But there’s a light at the end of the tunnel. In its work with leading CPG companies, Redwood Logistics has identified five key strategies for future-proofing CPG supply chains. By implementing these five best practices, CPG companies can build resilience across their supply chains — which enables them to change direction quickly, strategically and flexibly as conditions change, both upstream and downstream. Following is a quick look at these strategies for CPG success in today’s challenging logistics landscape.

1. Diversify Your Supplier Base 

In an environment where supply conditions are always shifting, it’s critical to have as many sourcing options as possible. CPG companies who focus on a single supplier are putting all their eggs in one basket — which is never a good idea. To create a foundation for flexibility and resilience, you should develop relationships with multiple suppliers. Your supplier network should span a range of geographic regions to reduce your overall risk in the event of localized disruptions, like natural disasters or political instability.

You should explore alternative sourcing options for everything you need to procure, from raw materials to packaging. This might involve working with local suppliers or partnering with companies that prioritize sustainability, which increasingly matters to consumers. It’s great to have long-term supplier partnerships, but supplier diversification is the key to resilience.   

2. Make Data-Driven Decisions

Today’s CPG landscape changes too quickly, and is far too complex, to manage using manual processes, human analysis and consumer-grade spreadsheets. And you can’t manage by guesswork, intuition or on-the-fly decisions. The great news is there are advanced technology solutions built specifically to answer the challenges facing CPG companies that are both accessible and cost-effective.

First, you need to invest in data analytics tools that allow you to gain real-time visibility across your supply chain. These solutions capture the data you already have and leverage it to track inventory levels, predict demand fluctuations, and identify potential bottlenecks before they cause major issues. Second, you need to embrace scenario planning tools so you’re not caught off guard by inevitable disruptions. These solutions use historical data, current market trends and predictive capabilities to simulate potential disruptions, then develop contingency plans that have a high probability of success. Powered by artificial intelligence, these tools replace days or weeks of human analysis with computational problem-solving that takes place in seconds. 

3. Leverage Technology to Drive Speed and Agility

Beyond disruption management and risk mitigation, advanced technology can also help optimize your day-to-day operations for cost, service, speed, sustainability and other metrics.  

Process automation allows you to optimize your workflows and make everyday decisions, like load building and route optimization, automatic. Warehouse robotics optimize processes like picking and packing, improving efficiency and accuracy — while freeing up your scarce human labor for more value-added work.

Advanced solutions also support tracking and traceability. Radio-frequency identification (RFID) tags and blockchain technologies help you monitor products and orders in real time as they move through the supply chain. This enhances transparency and facilitates faster response times in case of product recalls or safety concerns. 

4. Foster Collaboration and Communication 

In today’s fast-moving, complex world, the end-to-end supply chain needs work together to respond to changing conditions. That means building strong, connected partnerships with both suppliers and customers. Open communication and timely information-sharing are crucial for the early identification of potential disruptions, as well as the execution of collaborative solutions. 

If this sounds difficult to achieve, there are advanced visibility solutions and real-time communication platforms built for this purpose. They enable you to share data and updates seamlessly across your entire supply chain network, from multiple tiers of suppliers to distributors, transportation carriers and retail customers. 

5. Find the Right Partner 

If you haven’t embraced the power of these best practices to build resilience into your supply chain, where do you begin? An easy way is to find a partner that’s “been there and done that” when it comes to CPG logistics challenges. An experienced partner can quickly install new processes and workflows, advanced technology solutions, and other core competencies you need to succeed in today’s complex, volatile logistics space. CPG companies should seek out a Modern 4PL with deep experience, a solid track record of customer success, and a broad portfolio of services and solutions. By finding a trusted partner to build resilience into your supply chain, you can focus on your core business — while knowing you’re well prepared for whatever the future holds.

To discuss any of these strategies — or all of them — in more detail, reach out to Redwood today. In our work with dozens of leading CPG companies, we’ve helped customers master a range of logistics challenges, and we’re confident we can help you define your own roadmap for success.