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Author: Anil Gandharve |11/27/17

How Artificial Intelligence is reshaping Consumer Packaged Goods companies: Part 2

Revolutionizing Supply Chain and Operations to meet the demands of the Digital Era

In my earlier blog, How Artificial Intelligence is reshaping CPG companies, I looked at the retail challenges and benefits of Artificial Intelligence (AI) for Consumer Packaged Goods (CPG) companies. In this blog, I will examine how CPG organizations are deploying AI technologies to optimize their supply chains and automate operations.

The buzz around AI is everywhere in business today, and CPG companies have joined other industries in considering how best to integrate AI into their businesses. In fact, many CPG organizations are already recognizing operational benefits of AI in a wide range of activities.

For example, companies are integrating AI systems with historical, customer and industry data to develop forecasts that improve supply chain management, help create more meaningful product promotions, and optimize product assortment and pricing. CPG companies are also using AI to automate processes, enhance productivity and dramatically reduce the time and costs associated with manual labor. Let’s take a deeper look at the benefits of AI in supply chain and operations.

Driving Supply Chain efficiency

Using Internet of Things (IoT) and Artificial Intelligence agents across their supply chain, organizations can gain granular, end-to-end visibility on their Supply Chain processes as well as rapidly identify and resolve issues. For example, some CPG companies can monitor product location and inventory to anticipate stock shortages and forecast when new shipments will be required.

In warehouses where a lot of work is already automated, AI can bring new efficiencies with end-to-end warehouse automation. Today’s warehouse workers spend time sorting products, scanning barcodes, and preparing products for shipment. In many cases, these activities, along with space optimization and inventory management can be fully automated using AI for more efficient and error-free operations.

Transport management systems equipped with AI already automate much of the transport process, relying on fewer people and improving visibility across the logistics spectrum. Some CPG companies use smartphone apps and RFID technology to track shipment from the factory to end users.

CPG companies are also moving toward network-based planning to speed up and standardize problem-solving processes. By identifying which data to use for specific outcomes, planners can be positioned to benefit from advanced analytics, integrated supply-chain management, predictive analytics, and optimized planning. As these systems become more prevalent, we will see more integrated applications of AI across the CPG supply chain.

Streamlining operations and creating smart, connected factories

CPG manufacturing facilities are already using extensive automation and IoT solutions to drive greater efficiency and innovation, and we expect to see new Artificial Intelligence applications that support smart and connected factories. Some of these AI initiatives include adaptive manufacturing that employs industrial robotics and flexible automation to adapt to market changes, predictive maintenance to avoid downtime, automated quality control and demand-driven production.

To further streamline operations, AI is also being extended to the front end of the supply chain, where it is being used to identify when a product is out-of-stock on shelves. With more consumers looking for personalized products and services, Direct Store Delivery (DSD) vendors and category captains are embedding AI into planograms and virtual reality based planogram apps, and using AI to measure the effectiveness of promotions. Overall, AI is helping CPG companies implement integrated decision-making across sales, manufacturing, and distribution.

Driving the Future of CPG with AI

CPG companies are deploying Artificial Intelligence solutions in a variety of ways across the three key areas of the value chain. To derive maximum value from AI in terms of improved retail and consumer-facing activities, operational efficiency and driving innovation across the supply chain, companies need to view AI as a significant lever for business transformation.

With executive focus, dedicated governance and extensive change management, AI can help CPG companies rapidly adapt to the new consumer-driven demands of the digital era.

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