The outlook for the consumer packaged goods (CPG) industry is relatively positive as growth is forecasted post-pandemic. In a survey conducted among business executives, 50 percent of companies are expecting to increase their operating margins in 2022. This is attributed to the countermeasures they undertook to offset the unpredictability of the industry’s state during the COVID-19 pandemic.
While expectations for the CPG industry are optimistic, significant challenges remain to shake businesses globally. 9 out of 10 business executives pinpoint supply chain pressure as the greatest threat to business growth – the changes caused by which will persist post-pandemic.Post-COVID Foreign Trade Challenges for CPG Companies
Supply chain pressure is a top challenge for CPG companies nowadays as operational costs increase. Most notably, transportation and container shipping costs have soared by 25 to 50 percent due to stringent trade regulations. Production levels decreased to comply with worker capacity constraints. Additionally, the disruption in the shipping industry also contributed to supply chain pressure as the transportation of goods was suppressed by varying degrees of rigidity in border control measures and foreign trade policies. To add more pressure on CPG companies, the rise of e-commerce has led consumers to expect shorter delivery times for the products they purchase online. This burdens traders to ensure they can supply goods faster to satisfy consumers.
The consequences of supply chain challenges are felt not just by businesses, but also by consumers. As companies struggle to produce and transport goods, stockouts have become common. Consumer demand is left unmet, making it difficult for them to access and purchase their needs. On the business side, CPG companies are unable to leverage the essentiality of the demands needed for the CPG industry and the increased spending power of consumers. Businesses risk losing brand trust, confidence, and loyalty as they cannot deliver the promise of reliability and availability with limited stocks and empty shelves.A Digital Solution
To combat the foreign trade challenges caused by supply chain pressure, CPG companies should invest in digitization and automation services to streamline trade processes and meet consumer demand. CPG companies must be able to review their strategy, footprint, assets, processes, and tools to build a supply chain that is resilient to critical disruptions. Trade partners such as Ropaar utilize SAP Global Trade Services to streamline foreign trade compliance by empowering exporters to automate, standardize, centralize, and manage global trade compliance requirements.
SAP Global Trade Services help CPG companies build supply chain resilience and thrive amid critical disruptions through digitization and automation. Ropaar’s CPG expertise allows CPG companies to leverage applicable Free Trade Agreements (FTA) to minimize their duty exposure and reduce the effort required to comply with FTA regulations. With Ropaar’s SAP deployment, CPG importers and exporters can gain the following advantages:
Ropaar offers a wide variety of TRADEblazing services for CPG companies such as:
Leverage Ropaar’s CPG expertise today by connecting with us through this link.