The relentless hype around digital in consumer-packaged-goods (CPG) manufacturing has left many leaders disoriented and paralyzed by the many buzzwords and the promised benefits of digital tools. At the same time, their efforts to gain traction with digital are hindered by legacy systems, processes, and capabilities. A recent McKinsey survey of senior CPG leaders found that most consider digital technologies to be a priority, but few have defined a clear strategic vision linked to actions. The major obstacles cited were a lack of skilled resources, out-of-date software models and an inadequate IT infrastructure, the absence of data standards, and obsolete data-management systems.
Several factors help to explain why manufacturers both need a digital strategy and have struggled to put one into action. First, the manufacturing-excellence programs companies have employed in recent years are yielding diminishing returns. Companies believe they have already captured the full value from lean management and are struggling to find the next pipeline of initiatives that will deliver the typically expected 3 percent annual productivity improvement. Many companies have also already tapped the potential of zero-based budgeting or complexity reduction, and further cost reductions are not expected to be significant.