Understanding the CPG supply chain 

Key Takeaways: 

• The CPG supply chain is the journey a product takes from creation to consumption, involving sourcing, manufacturing, warehousing, distribution, retail, and consumption. 
• Key roles in the CPG supply chain include Supply Chain Manager, Procurement Specialist, Production Manager, Quality Control Inspector, Logistics Coordinator, and Demand Planner. 
• Major challenges in the CPG supply chain include changing consumer tastes, cost pressures, environmental concerns, technology integration, and supply chain disruptions. 
• The CPG supply chain offers diverse career opportunities for those interested in logistics, data analysis, sustainability, and other related fields. 
• Understanding the CPG supply chain helps consumers appreciate the complex journey of everyday products and presents ongoing opportunities for industry professionals to innovate and improve. 

The consumer packaged goods (CPG) industry plays a crucial role in our daily lives. From the toothpaste we use in the morning to the snacks we enjoy at night, CPG products are everywhere. Behind these everyday items lies a complex network known as the CPG supply chain.  

What is the CPG Supply Chain? 

The CPG supply chain is the journey a product takes from its creation to when you buy it. It includes every step and person involved in making, moving, and selling a product. Think of it as a relay race, where the product is the baton passed from one stage to the next. 

Key Stages of the CPG Supply Chain 

• Sourcing Raw Materials: Everything starts with raw materials. CPG companies need to find and buy the ingredients or components for their products. For example, a cereal company needs to source grains, while a soap maker needs oils and fragrances. 
• Manufacturing: This is where the magic happens. Raw materials are turned into finished products. In a food factory, ingredients are mixed, cooked, and packaged. In a cosmetics plant, various components are blended to create makeup or skincare products. 
• Warehousing: Once products are made, they need a place to be stored until they’re ready to be sold. Large warehouses store thousands of items, keeping them safe and organized. 
• Distribution: From warehouses, products move to stores or directly to customers. This involves trucks, trains, ships, and sometimes even planes to get products where they need to go. 
• Retail: The final stop before reaching consumers. Products are displayed on store shelves or listed on e-commerce sites, ready for purchase. 
• Consumption: The end of the line – when you buy and use the product. 

Key Roles in the CPG Supply Chain 

The CPG supply chain offers many job opportunities. Here are some important roles: 

• Supply Chain Manager  

These professionals oversee the entire process. They make sure everything runs smoothly from start to finish. 

• Procurement Specialist  

They find and buy raw materials. Their job is to get the best quality at the best price. 

• Production Manager 

These managers run the factories where products are made. They ensure everything is made correctly and efficiently. 

• Quality Control Inspector  

They check products to make sure they meet quality standards. No one wants a faulty product! 

• Logistics Coordinator  

These folks manage the movement of goods. They decide how and when products should be transported. 

• Warehouse Manager  

They oversee product storage. Their job is to keep track of inventory and make sure the warehouse runs efficiently. 

• Demand Planner  

These professionals predict how much of a product will be needed. Their work helps companies avoid making too much or too little. 

• Data Analyst  

They crunch numbers to find ways to improve the supply chain. Data is key to making smart decisions and informed decisions. 

• E-commerce Specialist  

With more people shopping online, these experts manage online sales and distribution. 

Challenges in the CPG Supply Chain 

The CPG supply chain faces several hurdles: 

• Changing Consumer Tastes: People’s preferences change quickly. Companies must keep up with what consumers want. A recent McKinsey report showed that 75% of consumers tried a new shopping behavior during the COVID-19 pandemic, with many of them intending to continue the new behavior. 
• Cost Pressures: There’s always pressure to keep costs down while maintaining quality. 
• Environmental Concerns: Consumers want eco-friendly products. This affects how companies source materials and package products. Nielsen reports that 73% of global consumers say they would definitely or probably change their consumption habits to reduce their impact on the environment. Users are being more aware and action-driven to make a difference. 
• Technology Integration: New tech can improve the supply chain but implementing it can be challenging. According to Gartner, 50% of supply chain organizations will invest in applications that support artificial intelligence and advanced analytics capabilities by 2024. This underscores the importance of ensuring that your business stays up to date with new innovations of you’ll be left behind. 
• Supply Chain Disruptions: Events like natural disasters or global health crises, like we experienced with COVID-19, can disrupt the flow of goods. 
• Inventory Management: Keeping the right amount of stock is tricky. Too much stock ties up money, too little leads to empty shelves. It’s all about finding that sweet spot. 
• Last-Mile Delivery: Getting products to customers’ homes efficiently is a growing challenge as online shopping increases. 
• Regulations: CPG companies must follow many rules, especially for food and health products. FDA food recalls experienced a 700.6% increase in the number of units impacted in 2022. With 416.9 million units recalled, this represents a 10-year high. This shows the ongoing regulatory scrutiny in the CPG industry, reinforcing the importance of adhering to regulations in the supply chain. 

How CPG Companies Can Stay Competitive 

To overcome these challenges and stay ahead, CPG companies can: 

• Focus on Sustainability: Creating eco-friendly products and packaging can attract environmentally conscious consumers. However today’s consumer are savvy and have a wealth of information at their fingertips, any brands caught greenwashing, or with flaws in their claims will face brand-damaging backlash. 

• Be Flexible: Build diverse supply chains that can adapt quickly to changes and helps companies respond to disruptions from sourcing, through to logistics. 

• Improve Forecasting: Better prediction of demand helps companies produce the right amount of products. 

• Work Closely with Partners: Strong relationships with suppliers and retailers can lead to a more efficient supply chain. 

• Invest in Skilled Workers: Having talented people in key roles is crucial for managing complex supply chains, especially where the integration of AI is concerned. Companies MUST think about their Industry 4.0 recruitment plans. 

• Manage Risks: Having plans in place to deal with potential disruptions can help companies navigate tough times. 

• Put Customers First: Understanding and meeting customer needs can give companies an edge over competitors while building trust and turning customers into loyal brand advocates. 

The CPG supply chain is a complex system that brings the products we use every day from factories to our homes. It involves many stages and roles, each playing a crucial part in getting products to consumers. 

For those interested in a career in the CPG industry, the supply chain offers many exciting opportunities. Whether you’re interested in logistics, data analysis, sustainability, or any other aspect of the supply chain, there’s likely a role that fits your skills and interests. 

The CPG supply chain is more than just moving products from point A to point B. It’s about getting the right products to the right people at the right time. Reach out to The Sterling Choice for more information about recruiting in the CPG industry.