How CPG companies can leverage demand signals to navigate supply chain disruptions

Today’s rapidly changing market pushes traditional supply chains to their limits. Global disruptions, shifting consumer preferences, and increasing demand for sustainability require companies to adopt smarter, more agile supply chain strategies. 

In a recent webinar co-hosted by Fractal and Microsoft, Praneet Aneja, VP of Product Development Strategy, Fractal, and Rich Anderson, Senior Partner Technology Strategist, Microsoft, discuss how companies can use product demand signals and consumer planning to enhance supply execution, drive efficiency, and maximize profits.

Evolution of demand signals

The world continues to shape new demand signals. In 2020, COVID-19 rapidly became a global issue. Consumer packaged goods (CPG) companies faced supply disruptions, and demand shifted due to price inflation and shrinkflation. Consumers worried about the virus increasingly stayed home, prompting CPG companies to explore alternative channels and offer omnichannel experiences. 

COVID-related concerns naturally influenced consumer psychology toward healthier and more sustainable lifestyles. CPG companies responded by innovating and expanding their portfolios to include organic and healthier alternatives. They also introduced premium products to deliver additional value. 

In recent years, shoppers have noticed higher prices and increased premiumization. Their concerns are evident through a shift toward private-label products, impacting growth for leading CPG companies. To counter this trend, companies must quickly leverage trade and consumer promotions to attract consumers, increase retention, and encourage them to try or switch from competitor and private-label products. 

Finally, the shift from mass production to personalized consumer experiences has become critical. How global CPG companies leverage brand technology to drive innovation and execute localized assortments will be key. Additionally, integrating demand signals into supply planning and execution to improve forecasts, reduce waste, and increase supply chain agility will differentiate market leaders from challengers. 

Using demand signals to inform an agile supply chain 

CPG companies must assess critical scenarios such as price changes, product delisting, renovations, innovations, and promotions to effectively respond to new demand signals. Each scenario uniquely impacts both demand and supply decisions. In the webinar, an example of price-pack architecture illustrates this further. 

For instance, a price change requires understanding its impact on product volume and portfolio mix. Delisting a product requires analyzing consumer behavior shifts and managing inventory clearance. Renovations and new product innovations demand evaluations of margin potential and production adjustments. Furthermore, promotions require careful inventory planning and logistics to maximize outcomes. 

Proactively addressing these points through AI-driven analysis enables businesses to link demand insights with supply chain actions, ensuring long-term competitive advantage. 

Integrating demand signals into supply chain decisions 

In the webinar, a practical example of product delisting highlights how integrating demand signals directly into supply execution improves the supply chain performance. The process begins with detailed portfolio diagnostics and analyzing how consumer demand will change. 

Teams then use recommendation engines to combine insights from demand, supply, finance, and consumer perspectives. This structured approach quickly leads to measurable efficiencies and incremental cost savings within months. 

Learn more with this webinar 

In today’s rapidly evolving market, integrating demand signals into supply chains is essential. These insights enable businesses to quickly adapt to changing consumer behaviors, optimize their inventory, and significantly improve operational efficiency. 

Explore these strategies further and learn how your organization can use AI-driven insights for a smarter supply chain in this short 10-minute webinar.