Addressing a growing problem
While an efficient and effective supply chain is an absolute necessity to a wide range of industries, CPG companies are especially reliant on upstream-downstream connectivity. This is an absolute must to keep pace with evolving customer affinities and with the digital-market forces they command. However, like many other organizations in this space, Campbell’s had been losing ground in supply-chain efficiency over the years, and in so many small increments that it was undetected, until it became very obvious. This year, gross margin fell 6.8 percentage points, from 35.9 percent to 29.1 percent in the company’s fiscal third quarter, reported in May. Management cited high supply chain costs.
At the root of the issue, some argue, were disjointed supply-chain teams, processes, and technologies. Today’s CPG marketplace features heightened consumer expectations and rising logistics costs, which should have already driven supply-chain collaboration to a top strategic priority. Instead, Campbell’s highly individualized skill sets had created silos of overly specialized employees. These discreet groups had little, if any, ability to adapt to, or fulfill, numerous other critical responsibilities along the chain. In effect, Campbell’s supply chain had become the highly compartmentalized passage of distinct groups that business-school case studies teach students to avoid. Each group was too small and rigid to understand or react to more widespread and comprehensive needs.
Additionally, as the Wall Street Journal stated, “Campbell’s challenges are similar to those burdening the rest of the industry, which has faced the proliferation of niche, smaller brands and private-label products that have been chipping away at shelf space long dominated by Big Food.”
Quick Note: Supply chains are in general facing a dearth of talent. According to University of San Diego’s Mary Long, demand for highly skilled supply-chain talent outstrips supply by a ratio of six to one.
IT to refine the supply chain workforce
Campbell’s recently undertaken supply-chain initiative leverages information technology to address the aforementioned issues, ostensibly by infusing the workforce with better understanding, agility, and flexibility.
Last year, the company started a partnership with Penn State University’s Smeal College of Business (a preeminent supply-chain business school in the United States) to create specialized learning modules, best practices, and channels of insight. As part of this collaboration, Campbell’s supply chain leaders across the globe began using cloud-based software “to collaborate, tap insights from supply chain experts at Penn State’s Smeal College of Business, and leverage real-time analytics to identify trends across thousands of employee interactions.” This was “to break down functional silos and solve challenges more effectively,” the company announced in a statement.
At the core, Campbell’s IT platform applies artificial intelligence (AI) and natural language processing to provide real-time insights on strengths and weaknesses in the supply chain. The resulting analytics and reporting helps inform supply chain strategy, while significantly increasing the cross-functionality of employees and teams.
While the initiative wasn’t designed to expand the workforce to address the low headcount, it compensates for that leanness by better educating team members. Enhanced knowledge and awareness increases the range of tasks that team members can accomplish. It also provides decision-makers with immediate and reliable data needed to overhaul specific supply-chain operations, the company has stated.
Enterprise software revamps supply chain
Such efforts to improve supply-chain operations would ultimately be fruitless if Campbell’s didn’t also take steps to ensure a lasting impact. Having retired most of its legacy enterprise planning systems in recent years for a more comprehensive, integrated system, Campbell’s has also established a more communicative culture to support its supply-chain initiative.
Given the complex, physically segmented nature of the typical CPG supply chain (Campbell’s included), the venerable brand owner is now capitalizing on innovations in employee education and engagement, and connective enterprise planning, to give it the efficiency and agility it needs to remain competitive in a crowded marketplace.
About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on Vanguard Software’s Integrated Business Planning (IBP), forecasting and advanced analytic cloud platform. Vanguard Software is based in Cary, North Carolina.