The consumer packaged goods (CPG) industry is developing at a breakneck pace. Companies are expanding into new markets and innovating to suit the demands of digitally active, aware, and connected consumers.
The CPG industry has been one of the most used yet widely mismanaged industries. The sector witnesses massive unrealized potential to grow leaps and bounds with an extensive consumer network. But with new players coming in every day, established companies in the CPG industry are working towards addressing the needs and wants of a customer instead of making the customers bend based on the old methodologies and practices.
However, the threat of disruption is always present. Consumer Packaged Goods companies are challenged to discover new ways of making profits. At the same time, they have to establish and maintain the openness of their supply chains globally. Lastly, they have to be compliant with an ever-increasing number of regulatory requirements.
Challenges in the Consumer Packaged Goods Industry
- Customers are becoming more aware of the environmental impact of their purchases. More and more people are shopping outside the periphery of grocery shops rather than inside aisles due to a shift in consumer demographics (particularly among millennials).
- Fast-paced changes are taking place in retail. E-commerce giants such as Amazon are reshaping the retail landscape on the one hand. Merchants like Walmart and Aldi are competing with e-commerce and potentially promoting pricing rivalry among retailers on the other hand.
- Private-label manufacturers have long catered to consumers on a budget for personal care items. While luxury private offerings in packaged food goods touting natural/organic credentials have been around for a while, this tendency has just begun to shift.
- Securing increasing shares of both developing and developed markets by expanding globally.
- Utilizing retailers’ and retail channels’ increasing ability to mine and respond to consumer-provided Big Data.
- Encouraging a more diverse range of products while preserving the existing thin margins.
- As retail channels compete with one another, the speed of the supply chain is speeding up.
- Adapting to the price cycle that has seen the price of some commodities treble, the volatility of their price nearly tripled since the year 2000.
- Supply chain risk management in the face of increasing counterfeiting and tightening consumer product safety and health regulations.
- Creating cost savings to counteract an increase in CPG levies, such as new taxes targeted at encouraging consumers to make healthier purchasing decisions.
- Buying from ecologically, health and safety, and socially conscious suppliers to build brand equity is one example of this strategy driven by consumer values and preferences.
Benefits of Procurement Software for the CPG Industry
Here are the potential benefits of procurement software:
- Reduces Costs
Organizations may see where and how much money they’re spending. Procurement software is recommended and used by the finest firms to know exactly how much they spend on buying, which goods or services are frequently bought, and which vendor delivers the best solution. It also demonstrates the most cost-effective substitute for the most expensive goods. It ensures that an audit trail is maintained. Errors and rework on those errors are reduced as a result.
- Efficiency and Productivity
Increased productivity and efficiency can be achieved by speeding up procurement processes such as ordering, invoicing, payment, and purchasing approvals through procurement management software. A more efficient and productive workforce is a direct result of software’s ability to automate procurement processes, which decreases the stress on personnel. Employees can also put more effort into building relationships with vendors, enhancing their performance, and developing long-term goals for the company.
As a result, the company is free to focus on higher-priority objectives instead of wasting time and errors monitoring data and documenting transactions.
- Consistency and evenness
Standardization is the focus of procurement software. In order to reap these advantages, the company must integrate its various departments to share data and create a central repository for data analysis. When new orders are received or made manually, staff are no longer required to research supplier or vendor agreements. To keep track of the orders, it usually lays forth a plan or structure for how that procedure should be carried out. Implementing this set of procedures might begin with the first request for services and continue until payment details are entered into an accounting system.
- Seamless Integration
It is easier to keep track of appointments and deadlines in the procurement process if all functions are brought together. Having all of the information you need at your fingertips makes it a breeze to find what you need. Risk can be assessed at any point in the process thanks to an integrated system. An audit log of all transactions made during the procurement cycle is maintained by procurement software, which records every transaction in detail.
- Improves Customer Satisfaction
Automated Process Automation also improves customer satisfaction by allowing clients to follow their orders directly from their mobile devices. Procurement Software has made the procurement process more automated, such as by generating all of the necessary files and sending reminders about due dates. The procurement process can be made more efficient and error-free through the use of automation and digitization.
Although the current economic situation is difficult, it provides an opportunity for the CPG firms to build best practices and increase their competitiveness and profitability by focusing on procurement.
Procurement software will reduce your cost, bring transparency, and increase efficiency. Through Procol, you can follow data patterns thanks to effective data analysis. Investing in procurement software solutions is no longer an option; it has become a need if you want to see your business grow and succeed.
To understand how Procol can help your business in the CPG industry, schedule a demo today!