Editor's note: This is sponsored content.
According to recent estimates, the global Consumer Packaged Goods (CPG) industry is worth more than $20 trillion, with the US market encompassing around 10 percent. For many manufacturers, the industry presents abundant opportunities alongside major obstacles. Dominance in the CGP marketplace requires enough flexibility to respond to changing demands from the buyers, disturbances in the supply network, and other unpredictable factors.
More than 2/3rd of manufacturers have stated that they have had a decline in profits because of delays in the global supply chain. As a result of the rise in e-commerce and direct-to-consumer DTC sales, customer expectations are also shifting. Manufacturers must accelerate their rate of production if they have any chance of meeting demand.
These factors have led to a greater need for operational agility, cost efficiency, and customer-centric innovations. It is no longer sufficient to offer high-quality products. Manufacturers have to undergo structural transformation in order to optimize for greater market appeal and profit margins. Here are key strategies that would arguably increase your chances of profit in the CPG industry.
Leverage Market Trends
The first step to succeeding in the CPG industry is a strong understanding of market trends and consumer preferences. Consumers are increasingly fickle, and buyers need manufacturers who can quickly respond to shifting trends.
For example, the focus on eco-friendly packaging or gluten-free production options has influenced manufacturing as buyer demand for these products increases. Manufacturers can incorporate market research into their business processes to stay ahead of the curve.
Stay Visible to Retailers and Brands
Traditional modes of in-person marketing and networking are not as effective in the fast-paced world of CPG production. Just as consumers are used to fulfilling their needs at the click of a button, retailers are also seeking streamlined, simplified buying processes. One of the most important ways manufacturers can reduce the purchasing timeline is by building a strong online customer experience.
Many companies start their search for manufacturers online. A professional web presence that clearly outlines your capabilities, capacities, and certifications can significantly improve your chances of being discovered.
Industry directories, such as the Keychain.com platform, take advantage of digital marketing strategies and artificial intelligence to improve your visibility.
Build a Flexible and Reliable Supply Chain
Manufacturers only perform as well as their supply chains. Keeping up with the rapid pace of the CPG industry requires strong relationships with your suppliers.
Spread the risk by working with multiple suppliers. Having backup options can get your company through a supply disruption while also giving the flexibility to scale production up or down. Efficiently responding to market demands helps avoid the risk of production slowdowns or increased costs during shortages.
Alongside supplier relationships, logistics also play a critical role. In the CPG space, tight deadlines can make or break a partnership. Choose locations that will reduce the transportation distance and costs. This ensures your products can be shipped with little lag time.
Create a Strong Project Specification (Spec) Sheet
Adding one document to your business process can immensely improve your profitability and customer retention. Creating a project specification sheet not only demonstrates your professionalism but also sets clear expectations and avoids costly miscommunications.
A well-crafted spec sheet should include:
- A thorough description of the product, including dimensions, materials, ingredients, and packaging requirements.
- Clearly defined production schedules and lead times, including possible contingencies or factors that may impact delivery.
- Certifications (such as ISO, FDA, or other industry-specific standards), quality assurance protocols, and testing procedures.
- Detailed pricing breakdowns, including the cost per unit at various volumes, setup fees, and any potential additional costs for rush orders or changes.
Offer Customization and Differentiation
To stand out in a crowded field, manufacturers must offer customization options that align with market needs. Brands want unique packaging designs, tailored formulations, or specialized production processes that set their goods apart from the competition. Retailers also want to work with firms that have advanced capabilities, such as small-batch production for niche or specialty products.
You can increase your value proposition by offering flexibility in your production capabilities. This could mean expanding your packaging options, such as exclusive use of recyclable materials. Manufacturers that offer this level of flexibility and customization open the door to working with a wider range of brands, including everything from startups to established market leaders.
CPG Success For Manufacturers
Emerging as a leader in the CPG industry requires more than just producing great products. To maximize profits, manufacturers must stay ahead of trends, build strong supplier relationships, and keep a high visibility profile.
Positioning yourself as a flexible, reliable, and innovative partner to brands and retailers is the key to long-term success.
