Digitalization creates a disruption and requires companies to rethink the way they design their supply chain . With this definite trend of digitalization and growing customer expectations, how can a brick and mortar CPG giant adapt to supply chain 4.0 ?
From the customer perspective, there are growing service expectations towards customization, full transparency and easy access to channel and SKU mix. Such changes would reflect on the supply front with stronger need of constant changes to the SKU portfolio, need to transform the supply chain to cope with a faster and more efficient system of delivery.
The new digital-driven chain poses a lot of questions :
- Can P&G move from a demand/supply model to customer-centric supply chain?
- Can the system be agile enough to incorporate analytics to deliver products faster? Can it meet Amazon’s “predictive shipping”, where products become available before the customer’s reaches the purchase intent phase.
- Would it be able to respond to ad-hoc changes in demand and supply- minimizing planning cycles and frozen periods?
- Can P&G provide full visibility to customers and end-to-end transparency throughout the supply chain, ensuring that all stakeholders base their decisions on the same set of facts?
- When can P&G push its products from store-basis to digital? 
Digitalized Value Chain
Supply chain 4.0 comes with impacts on all areas of supply-chain management. It ultimately enables a step change in service, cost, capital, and agility, with changing a lot of improvement levers (outer circle) and value drivers (inner circle) .
The Game Plan
P&G has laid out a long-term plan to tackle the different levers that need to be balanced to reach a fully digitized value chain. It is operating with a mission to become the most technology-enabled business globally. In the short term, P&G is building the intimate relationship with consumers through one-on-one relationships enabled by technology. They have recently developed “consumer pulse”; utilizing Bayesian analysis to categorize consumers’ feedback allowing real-time reaction. This plays on the “collaboration” driver, pulling the level of end-to-end collaboration. This is coupled with efforts to accelerate the movements of goods from the factory to shelf. Using digitalization as a source of competitive advantage, P&G is digitizing their operations in all parts of the supply chain- from manufacturing to point of sale. On the manufacturing front, front-line employees are using iPads to pull off real time data from manufacturing lines. There’s currently strong systems, “Control Tower” and “Distributor Connect”, allowing for efficiencies on logistics and transportation. Such move resulted in a 15% cut in “deadhead” movement .
In the long-term, P&G envisions a system where visibility of a certain product on a certain manufacturing line in real-time is possible and accessible. Furthermore, they’re looking into integrating such system with costing control system, thus integrating accounting and manufacturing. They are also planning to be digitally connected to retailers, allowing a streamline movement of products, common data warehouse, and minimal errors between suppliers and retailers .
Need for a further leap?
Such plan seems well-structured and planned. However, to accomplish a fully digitized factory to shelf system, a lot of interventions need to take place. P&G needs to start from the base of the pyramid to be able to climb to the top of the digital space. Sales and Brand teams need to pivot their strategies towards maximizing value to consumers, and not for the company- only then, will real transparency occur. The age of digitization requires agility in internal and external operations. To be able to execute with agility on manufacturing and customer interface, internal processes need to be as agile and flexible to cope with ad-hoc requests and changes.
In developing countries, further efforts are needed to enable a connected digital trade. On-ground training for sales representatives and retailers is needed. Without such training, getting data from the trade will be almost impossible.
A deep-dive into the future of the digitalization of retail supply chain leaves a series of unanswered questions. What is the intention of building a personalized channel with each consumer? To provide real-time data that drives further product innovation or to alter the marketing strategy to tackle the customers concerns? There is no doubt that digitalizing the manufacturing processes would allow production efficiencies, higher utilization and faster delivery, but what about digitalizing the shelf space and planogram? Is it maximizing value for consumers or pushing products that maximize value for the company?
In a developing country like Egypt with fragmented retail space and a universe of millions of touchpoints, how feasible is it to be digitally connected with retailers? With sales representatives incentivized to stock-up retailers, how doable is it to streamline movement of stocks?
 Knut Alicke, Daniel Rexhausen, and Andreas Seyfert, “Supply Chain 4.0 in consumer goods,” McKinsey&Company, April 2017, Link, Accessed November 2017.
 Stefan Schrauf, Philipp Berttram, “Industry 4.0: How digitization makes the supply chain more efficient, agile, and customer-focused,” Strategy&, September 2016, Link, Accessed November 2017.
 “Inside P&G’s digital revolution,” McKinsey&Company, November 2011, Link, Accessed November 2017.
 “The future of retail supply chain”, McKinsey&Company, November 2011, Link, Accessed November 2017.