HFS Highlight: EY expands its partnership with CPG giant P&G to sure-up COVID-affected supply chains

COVID has devastated supply chains. In our August 2020 survey of 400 executives across global 2000 enterprises, supplier availability was cited as the pandemic’s most significant impact.  So, it’s little wonder that businesses are going all-in to regain control, and providers are responding to markets desperate for help. That’s exactly what EY and Procter & Gamble (P&G) are doing: the existing partners are doubling-down by expanding their collaboration to boost their supply chain management services.

EY is extending its prior work with P&G’s internal teams and qualified consultants, alongside its manufacturing reliability/efficiency and supply chain transformation tools; this is all brought together on top of EY’s supply chain intelligence platforms – building Intellectual property (IP) and methods to build supply chain foundations, leverage automation, and other emerging technologies, and empower workforces to quickly respond and adjust processes.

The EY-P&G announcement comes at the right time for the market; it centers around end-to-end supply chain visibility to improve resilience, manage costs, and boost agility in responding to COVID’s effects and unforeseen aftershocks.

Customers will benefit in areas of supply chain management like planning, customer service, distribution, and risk management. Broader than supply chains, functions including finance, sales, and more will also benefit given the intertwined nature of supply chains throughout enterprises. Entire ecosystems will see increased participation of customers and suppliers – further improving visibility for clients.

COVID has challenged Consumer Packaged Goods (CPG) companies via demand uncertainty, new consumer behaviors, sourcing and procurement process changes, and more…

In our survey, over 50% of CPG and retail executives say that COVID-19 has impacted their supply chains adversely. Though some of these are likely short-term effects, others are influencing structural changes in supply chain landscapes, forcing several transformation initiatives on CPG companies:

• Digitalization, visibility, and transparency: “Digital-first” approaches are becoming widespread for supply chain functions (purchasing, inventory, transportation, etc.) to increase visibility and transparency, and enable closer collaboration and better decision making.
• Volatile demand: COVID has changed consumer patterns. For example, the consumption of staple food items and hygiene products (sanitizer, household cleaning products, etc.) has increased significantly. “Intelligent” supply chain initiatives are helping mitigate this flux through improved insights: identifying critical product segments, targeting geographic areas, inventory stocking, and other uses of real-time data analysis.
• Localized manufacturing: Enterprises are diversifying contract manufacturing and supplier bases for resilience; though this can manage risk, costs can increase significantly.
• Disintermediation: Some CPG companies have adopted DTC (Direct-to-Consumer) channels to address new demands; for example, PepsiCo launched two DTC Snack & Beverage sites.
• As e-commerce demand surges, CPG companies need to review their transportation strategies (capacity utilization, channel management, etc.) to collaborate with key e-commerce players.
• Resilience – more than efficiency – is triggering supply chain transformation: Hindustan Unilever, Dabur, and Godrej Consumer Products are pivoting to local raw material sourcing to reduce dependency on China; Coca-Cola prioritized e-commerce to tap new opportunities; PepsiCo’s CFO hinted that it is now carrying more inventory.

The Bottom Line: Whether you’re a provider or partaker in the supply chain, resilience now and for the near future is front of mind.

Improving the visibility of supply chain processes and the ecosystem is a must. Strategic partnerships like EY-P&G and the fruits of supply chain management services can achieve a lot in this area; we’re also seeing the most rapidly up-and-coming technologies like process mining and discovery (that HFS recently grouped into Process Intelligence technologies) pivoting their attention towards supply chains.

Providers should be building their partnerships to respond to the demand being generated for supply chain management services.

Enterprises must go twofold: they must also build their partner ecosystems and leverage their existing/new providers’ ecosystems for the sake of visibility and the ability to respond now and to the shocks that will keep hitting their supply chains.