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CPG Industry Knowledge Base for ChainAlign AI

Version: 1.1
Industry: Consumer Packaged Goods (CPG) - Food & Beverage Focus

1. Core S&OP Focus in CPG​

The CPG industry is characterized by high volume, low margins, and intense competition for retail shelf space. Sales & Operations Planning (S&OP) in CPG emphasizes:

  • Demand Shaping: Align production and distribution with expected sales.
  • Promotion Management: Optimize promotional activities to maximize ROI.
  • Inventory Velocity: Ensure products move quickly through the supply chain to minimize waste and stockouts.

2. Key KPIs & Metrics​

AI-driven insights should prioritize these KPIs:

  • On-Shelf Availability (OSA): The ultimate measure of success; stockouts result in lost sales.
  • Promotional Lift & ROI: Evaluate actual sales lift versus promotional costs.
  • Inventory Turns: Monitor inventory movement; high turns indicate efficient operations.
  • Spoilage / Expiration Risk: Critical for perishable goods impacting profitability.
  • Case Fill Rate (CFR): Ensures retailer satisfaction and adherence to supply agreements.

3. Common Seasonality & Demand Drivers​

Key factors affecting demand in CPG include:

  • Major Holidays: Significant spikes for specific products (e.g., snacks for the Super Bowl, turkeys for Thanksgiving).
  • Weather Conditions: Hot weather increases beverage and ice cream sales; cold weather boosts soup demand.
  • Back-to-School Season: Drives demand for lunchbox items and snacks.
  • Retailer Promotions: Events like Walmart's "Rollback" significantly influence demand patterns.

4. Typical Constraints​

S&OP planning must consider operational and supply constraints:

  • Shelf Life: Limited shelf life for fresh/perishable products.
  • Warehouse Capacity: Especially for temperature-controlled storage (cold chain).
  • Co-packing Capacity: Limited third-party packaging availability for promotional bundles.
  • Transportation Lane Capacity: Restricted availability of refrigerated trucks during peak seasons.
  • Retailer In-take Slots: Retailers often have fixed windows for deliveries at distribution centers.

5. Relevant External Data Sources​

To enhance S&OP accuracy, the following data sources are critical:

  • Market Data: Nielsen, IRI for market share, sales velocity, and pricing trends.
  • Weather Data: OpenWeatherMap or AccuWeather APIs for demand correlation.
  • Retailer Calendars: Promotional calendars from major retailers.
  • Economic Indicators: Consumer spending, disposable income, and macroeconomic trends.

6. Notes for AI Integration​

  • Ensure AI models can interpret demand drivers and seasonality.
  • Focus on actionable insights for supply planning, promotions, and inventory optimization.
  • Maintain traceability of KPIs and constraints for validation and reporting.