CPG Partner Conversations: Managing Global Supply Chains into the Future with Plantensive
The COVID-19 pandemic created unprecedented disruption. In just a few days, our world turned upside down. As shelter-in-place lockdowns, mask mandates, and social distancing rules took hold, new consumption patterns quickly emerged. Arguably, no industry felt this dramatic impact more than consumer packaged goods (CPG). However, industry leaders are forging ahead with resilience, tenacity, and innovation. We’ve embarked on a series of conversations with executives from AWS strategic partners to showcase their leadership and innovation during these challenging times.
In the latest installment of our CPG Partner Conversations series, we’re chatting with Dan Luttner, Supply Chain Managing Partner at Plantensive, a global supply chain and retail planning company working at the executive and store level to build, implement, and optimize end-to-end CPG business strategies. Dan shares his perspective on the current challenges—and opportunities—awaiting CPG companies adjusting to a new normal and innovating in a dynamic, post-pandemic operating environment.
AWS: Help our readers understand your vantage point. What’s the space you play in, and what type of CPG executives does Plantensive interact with?
Dan Luttner: Plantensive, and our parent MorganFranklin Consulting, specialize in supply chain planning for FMCGs. We help executives like chief supply chain officers better harmonize data in order to create more accurate demand forecasts across omnichannel, as well as make more informed decisions regarding manufacturing and inventory positions and time distribution/replenishment. At the store level, we enable chief merchants and category management leadership to optimize localized product assortments and presentation to customers. Additionally, the CFO plays a role as we enable margin expansion and cost reduction. Typically, the CIO is also central to our conversations, as technology solutions enable more advanced decision-making and insights.
AWS: CPG companies have been managing through this unprecedented disruption. What have been the biggest challenges for your customers?
Dan Luttner: From our perspective, most of our clients are facing a trifecta of challenges: a rise in material costs, highly variable and unpredictable demand, and increased consumer pricing pressure. Any one of these challenges is worth improving. So, as these three factors interact and change, CPG companies are finding it difficult to manage costs and customer service levels. The ability to react rapidly with practical and sustainable solutions is critical for CPG success.
AWS: How do you see CPG companies adjusting their current operating environments to changing market dynamics and consumer expectations?
Dan Luttner: This is a supply-constrained market, and we see firms responding in multiple ways. First, we must know where we’re going, and then decide how to react. Traditional demand forecasting methods are based on linear regression models, which unfortunately have become insufficient. Add in the variability of brick-and-mortar demand, coupled with DTC and ecommerce needs, and we have a strong case to pilot AI-based forecasting solutions. Second, the rising raw material costs, and in some cases reduced supply, means that CPG firms require supplier capacity visibility. Then, they must match it to the most profitable demand. Visualizing and assessing the supply and demand picture in near-real time is essential. Third, CPGs must optimize the product mix presented to consumers. We have seen increased financial performance and customer satisfaction from limited product assortments since COVID-19.
AWS: The CPG industry is incredibly resilient. As you look toward the new normal, what role do technology and the cloud play for CPGs? How do you see technology enhancing the way CPGs make, move, or market their products?
Dan Luttner: As supply chains appear less like linear processes and more like integrated mesh networks, the ability to synthesize large amounts of data to make informed decisions quickly is imperative. Legacy technology solutions that required overnight batch processes to solve and optimized single functions or siloed processes have become insufficient. We are helping clients select, pilot, and adopt a new generation of planning tools in order to enable real-time, cross-functional visibility and collaboration. Doing this in the cloud, like on the AWS Cloud, can save IT from having to manage complex workloads in-house. It also provides a more elastic and powerful solution that provides business insights at the speed demanded by the new normal.
AWS: With the current CPG industry disruption, how is your company innovating in response?
Dan Luttner: The best part of working in our industry in this climate is our partnering with forward-thinking clients. For example, we’ve recently helped a home hardware company migrate their supply chain planning solution to AWS. This enabled our teams to analyze where the automated solution recommendations were being overridden by users, and then measure the human intervention impact on autonomous planning. The result clearly demonstrated where human intuition or knowledge enhanced forecasting, as well as where it didn’t. In another example, we helped a snack food manufacturer create a digital twin of their supply chain, modeling production, distribution, and multiple cost and time constraints. The virtual optimization generated a 5% increase in EBITDA in year one, as well as anticipated savings of tens of millions of dollars annually.
AWS: There is much talk about a “new normal” going forward. What does this “new normal” look like to you, and how do you think the CPG industry will look three years from now?
Dan Luttner: I’m not sure that anyone can define what a new normal is, or whether we’ll land in a steady state. The punchline here is that change is a constant. The pace and degree of variability is accelerating. While it can be stressful and presents challenges today, there are also massive opportunities for innovation. We’ve already seen examples of first movers taking the leap forward. In three years, I expect CPG firms to have continued the journey toward customer-centricity. The future will mean more customization, more DTC, and a need for supply chains to be more resilient and elastic than the status quo of 2020.
AWS: What makes you excited for the future of CPG?
Dan Luttner: If the pace of change in the last 18 months continues consistently, the CPG industry in 2024 will be an even more dynamic, intelligent, and responsive industry than it is today. We’re lucky to get to work with cutting-edge technology to solve real problems. I’m personally excited to bring transformation to more CPG companies, and to contribute to better consumer experiences and supply chain sustainability.
AWS: Thanks for chatting with us, Dan. We appreciate your insights and expertise.
We hope you enjoy our blog series. If you have questions for Dan, Plantensive, or AWS, leave a comment on this blog. And learn more about how Plantensive is leading innovation in CPG and retail planning here.
If you’re ready transform your supply chain, contact your AWS account team today to get started.