State of Smart
Manufacturing Report:
CPG Edition
The challenges and opportunities of new technology for Food & Beverage and Home & Personal Care Manufacturers
This report is based on the responses of 216 Consumer Packaged Goods (CPG) leaders
across 13 countries. CPG as defined for this report includes Home and Personal Care,
along with Food and Beverage manufacturers.
I N T R O D U C T I O N
The 8th annual edition of the State of Smart Manufacturing report surveys the broadest audience yet, probing deeply into global manufacturing.
This report has expanded in scope from previous years, with quadruple the number of respondents, across 13 of the top manufacturing countries;
25% of whom work for firms with over $1B in revenue. Participants, who
hold positions from management up to the C-suite, responded to questions that reveal the current state of technology in manufacturing, the biggest challenges, and the future of the industry.
This report from Rockwell Automation, in association with Sapio Research,
includes a technology adoption plan alongside the research findings to help you turn insights into action.
WHAT IS SMART MANUFACTURING?
Smart Manufacturing is the intelligent, real-time orchestration and optimization of business, physical, and digital processes within factories and across the entire value chain. Resources and processes are automated, integrated, monitored, and continuously evaluated based on all available information as close to real time as possible.
MESA International
8th Annual State of Smart Manufacturing Report: CPG Edition 02
BALANCING QUALITY AND PROFITABLE GROWTH
I N T R O D U C T I O N
Businesses in the consumer packaged goods (CPG) industry have been dramatically affected by supply chain disruptions, the workforce shortage, inflation, and the pandemic.
At the same time, they’ve been undergoing a significant evolution of how they operate and use technology. The result is that the biggest challenge facing these businesses is finding a sustainable balance between maintaining quality and achieving profitable growth.
Challenges to achieving profitable growth
CPG manufacturers identified balancing profitable growth and quality as their biggest
internal obstacle in 2023. In fact, they cited this as their biggest internal obstacle in 2022 as well.
Additionally, this survey finds that CPG leaders are just as focused on improving the use of technology to better manage workforce issues – an area of particular concern given the sheer size of this industry’s workforce.
36% of respondents believe that the deployment of technology and the use of data represent significant internal challenges. And notably, 35% see worker retention as a key internal issue with a further 34% concerned about improving employee onboarding.
The biggest obstacles to growth, however, remain external. More than half of manufacturers in CPG see inflation as their biggest external obstacle in 2023 (52%). Supply chain disruption (41%) and a shortage of skilled workers (38%) were cited as the next biggest obstacles, revealing just how complex 2023 is shaping up to be for manufacturers in this space.
Q. What do you see as the biggest internal/external obstacle(s) to your organization’s growth next year (calendar year 2023)? Select top 3
Base: 216
8th Annual State of Smart Manufacturing Report: CPG Edition 03
Industry Obstacles and Outlook
INTERNAL
Onboarding new employees
Worker retention/knowledge retention
Using and understanding data to improve the business
Deploying and integrating new technology
Balancing quality and growth
EXTERNAL
Raw material/microchip shortage/prices
Impact of COVID-19 pandemic
Shortage of skilled workers
Supply chain disruption
Inflation
TECHNOLOGY’S
ESSENTIAL ROLE
When asked what they are doing to drive positive business outcomes, the most popular response for CPG manufacturers was to focus on better use of data analytics (43%). Indeed, technology is proving to be the answer to many of the problems that leaders are facing. The single most common way CPG leaders are mitigating risk - both internally and externally – is by adopting new technology. All this technology adoption is naturally accelerating the digital transformation of these businesses, and leaders are introducing change for reasons vital to success.
Catalysts for Digital Transformation
42%
Keeping up with competitors
Improving quality
Meeting the needs of the rapidly changing consumer behaviour
40%
Minimizing costs
Supply chain disruption
36%
Overall equipment effectiveness (OEE)
35%
Ensuring sustainable practices
34%
Boosting production
34%
Reducing downtime
33%
Agility/adaptability/keeping up with evolving markets
30%
Adapting to new regulations and standards
22%
“42% of businesses are accelerating their digital transformation just to keep up with competitors, while 44% are doing so to improve quality.”
INTRODUCTION
8th Annual State of Smart Manufacturing Report: CPG Edition 04
Q. Which of the following do you feel is creating the need to accelerate digital transformation in your organization? Select top 5 Base: 216
GENERAL ATTITUDES
TOWARD TECHNOLOGY
This research finds that while 35% of leaders across industries are extremely familiar with smart manufacturing there is a clear contrast within CPG. First, 48% of Home and Personal Care leaders say that they are extremely familiar with smart manufacturing, which is well above the global average. Yet, when broken down, only 23% of leaders in the food and beverage industry subset say the same, indicating an area of need for food and beverage manufacturers.
On average, businesses in CPG invest a little over 21% of their operating budget on technology, only slightly lower than the wider manufacturing industry’s average of 23%.
Given the disruptions they’ve experienced over the last 12 months, CPG leaders say they are keen to invest in technology to maintain business continuity. The top three technology investments for this reason were in cloud technology (45%), supply chain planning (42%), and cybersecurity (41%).
Importantly, these investments are paying off: cloud technology and process automation were the top two technologies cited by CPG manufacturers as having the biggest ROI.
Q. How familiar are you with various technologies aimed at smart manufacturing, including software? Select one
Q. Which of the following areas does your organization plan to invest in as a result of disruption over the last 12 months (COVID-19, major weather event, supply chain interruptions, society, etc? Select top 5
Smart manufacturing knowledge by sector
Home and Personal
Care Leaders
Extremely familiar
Food & Beverage
Leaders
Extremely familiar
48%
23%
Planned Investments to Mitigate Disruption
42% Supply chain planning
36% Cybersecurity
45% Cloud technology
35% Training
33% Automation of business processes
8th Annual State of Smart Manufacturing Report: CPG Edition 05
Base: 216
SECTION 2: GENERAL ATTITUDE TOWARD TECHNOLOGY
SECTION 2: GENERAL ATTITUDE TOWARD TECHNOLOGY
THE IMPACT OF PROCESS AUTOMATION
57% of businesses are using software to automate processes and 63% are using it to better track corporate data.
Notably, 48% of leaders are increasing process automation to address labor shortages.
That said, 90% of CPG manufacturers believe they’ll either maintain or increase the size of their workforce as a result of technology. 38% expect to repurpose their existing workforce and 29% believe they’ll actually hire more workers as a result of technology adoption.
% Already Invested
Process Automation
Cloud/Saas
Machine Integration
Machine Learning/
Artificial Intelligence
Industrial Internet of Things
(IIoT)/Internet of Things (IoT)
Cameras/Scanner/Drones
5G
Wearables
Generative Design
Voice Recognition/Natural Language
Processing (NLP) technology
66%
64%
62%
54%
53%
53%
52%
46%
44%
44%
90% of CPG
manufacturers expect
to maintain or grow
employment as a result
of technology adoption
8th Annual State of Smart Manufacturing Report: CPG Edition 06
Q. Which of the following technologies has your company invested in / plans to invest in (2022/2023)? Select one per row Base: 216
ADOPTING SMART MANUFACTURING
SECTION 3: ADOPTING SMART MANUFACTURING
In these industries, 78% of respondents believe smart manufacturing is very important to the future success of their business.
In fact, 49% of CPG respondents have already adopted smart manufacturing with another 45% reporting they’ll adopt within the year.
CPG manufacturers have either adopted or plan to adopt smart manufacturing initiatives for quality management systems (QMS) (55%), production monitoring (55%), and enterprise resource planning (ERP) (55%).
33%%
Manufacturing Execution System (MES)
Asset Performance Management (APM)
36%
Industrial IoT (IIoT)
39%
Computerized Maintenance Management System (CMMS)
40%
Enterprise Asset Management (EAM)
41%
Advanced Analytics
49%
Supply Chain Planning (SCP)
55%
Quality Management System (QMS)
55%
Production Monitoring
55%
Enterprise Resource Planning (ERP)
8th Annual State of Smart Manufacturing Report: CPG Edition 07
Q. Which of the following smart manufacturing initiatives / systems has your company adopted or plans to adopt? Select one per row Base: 216
SECTION 3: ADOPTION & SMART MANUFACTURING
THE IMPACT OF SMART MANUFACTURING
Keeping pace with market transformations (31%), mitigating the pandemic's impact (31%),
and addressing cybersecurity (28%) ranked as the top ways smart manufacturing has
helped CPG manufacturers overcome obstacles and mitigate risk.
Smart manufacturing initiatives for enterprise resource planning most frequently report having the biggest ROI in this sector with supply chain planning (SCP) and quality management system (QMS) showing promise as well.
Q. Which of these obstacles have your current smart manufacturing initiatives helped to mitigate? Select all that apply *Only asked to those who have already or plan to adopt Smart Manufacturing initiatives Base: 213
Keeping pace with market transformations 31%
Impact of COVID-19 pandemic 31%
Deploying and integrating new technology 28%
Cybersecurity risks (e.g., ransomware, phishing) 28%
Supply chain disruption 26%
Product quality / Balancing quality and growth 25%
Shortage of skilled workers 24%
Where has smart manufacturing helped the most?
8th Annual State of Smart Manufacturing Report: CPG Edition 08
G
SECTION 3: ADOPTIONSMARTMANUFACTURING
BARRIERS TO ADOPTION
While these initiatives are demonstrating tangible ROI and proving value, there are still meaningful barriers to adoption across the CPG industry.
The primary barrier to adoption is costs, as cited by 44% of CPG managers and leaders. That said, a lack of knowledge (41%) and a lack of skills (39%) are the second and third biggest barriers to adoption. Even so, there remains a clear interest in adopting smart manufacturing in the near term.
This data may indicate an opportunity for organizations to leverage an incremental, lower initial cost and resource approach to smart manufacturing by adopting modular solutions that provide strong value and quick time to payback and ROI.
Barriers to Smart Manufacturing Adoption
Cost/Expense
Lack of knowledge on smart manufacturing technology and benefits
Lack of skill set to take advantage of smart manufacturing technology
Misalignment between business objectives and smart manufacturing objectives
Employee resistance to technology adoption and change
Difficult to replace/upgrade legacy systems
Lack of skill set to manage smart manufacturing implementation
Lack of clear definition of smart manufacturing value/ROI
Leadership's resistance to change
No sustained leadership support
44%
41%
39%
37%
36%
33%
29%
28%
28%
28%
Q. What are the barriers to adopting smart manufacturing? Select top 5
Base: 174
*Only asked to those who are considering or have already adopted smart manufacturing technology
8th Annual State of Smart Manufacturing Report: CPG Edition 09
G
SUSTAINABILITY AND ESG
AS A COMPETITIVE DIFFERENTIATOR
CONCLUSION
95% of CPG manufacturers have ESG initiatives in place.
40% of these manufacturers pursue initiatives out of a desire to do good, and it’s
important to note how much these initiatives directly benefit the businesses themselves: 44% pursue sustainability and ESG initiatives as a competitive differentiator.
Another 40% do so to improve efficiencies.
Indeed, while 31% believe recycling and a commitment to being eco-friendly matter most to these initiatives, 30% believe product quality is what matters most.
This data points to the importance of having a sustainability and ESG policy in place for all CPG manufacturers.
44%
A competitive differentiator (to win business from customers who have supplier requirements)
40%
Improve efficiencies
40%
A desire to do good
39%
To address potential environmental issues before they arise
36%
Fosters a collaborative environment
35%
It’s good for the bottom line
35%
To build our presence in the community
26%
To address social inequalities that may suppress talent in the workforce
23%
Pressure from investors
Q. Which of the following drives or motivates your organization to pursue ESG/sustainability? Select all that apply
Base: 205 *Only asked to those with some form of ESG program in place
8th Annual State of Smart Manufacturing Report: CPG Edition10
CONCLUSION
LOOKING FORWARD
Managers and executives in this sector face a complicated mix of economic issues that are outside of their control and internal organizational challenges that are well within their control.
43% of businesses are relying on better use of data analytics to drive positive business outcomes. This will remain a challenge with more than 30% of data in this sector still going unused.
Fortunately, these leaders have already navigated some of the most challenging years this sector has ever faced. Armed with better data and increased process automation that is powered by smart manufacturing, their prospects to meet challenges head-on while accelerating profitable growth in the coming years look bright.
Q. How do you plan to drive positive business outcomes over the next five years? Select top 5 Base: 216
Driving Improvements Over the Next 5 Years
Better use of data analytics
ESG/sustainability program/policies
Adopting smart manufacturing software
Adopting supply chain planning software
Increased training and employee programs
Increased automation
Leveraging new/emerging market opportunities
Automated process enforcement
Adopting cloud technology
Additional staffing
Decreasing dependency on workers
Increased use of Artificial Intelligence/Machine Learning
43% 39% 38% 36% 36% 35% 34% 34% 28% 25% 23% 22%
EIGHTH ANNUAL
State of Smart Manufacturing Report
A global view of today’s challenges and tomorrow’s opportunities to harness technology for greater resiliency, agility, and sustainability
To see how the wider manufacturing community is using technology to move forward, read the
complete State of Smart Manufacturing Report.
8th Annual State of Smart Manufacturing Report: CPG Edition11
DEMOGRAPHICS AND FIRMOGRAPHICS
DEMOGRAPHICS AND FIRMOGRAPHICS
Industry Sector
Annual Revenue (US Dollars)
38%
Food and Beverage
62%
Home and Personal Care
Region
APAC
19%
Europe
51%
North America
30%
28%
26%
22%
18%
5%
$10 million - $149 million
$500 million - $999 million
$150 million - $499 million
$1 billion - $10 billion
$10 billion+
8th Annual State of Smart Manufacturing Report: CPG Edition 12
Q. What is your annual business revenue? (Aggregated Revenue)
Q. What industry do you work in? Select one
Q. In which country do you currently work? Select one
Base: 216
Allen-Bradley and expanding human possibility are trademarks of Rockwell Automation, Inc. Trademarks not belonging to Rockwell Automation are property of their respective companies.
Publication INFO-BR029A-EN-P March 2023 Copyright © 2023 Rockwell Automation, Inc. All Rights Reserved. Printed in USA.
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