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As consumers increasingly demand more customized products at lower costs, manufacturing is only becoming more complex. These changes are presenting big challenges for manufacturers, and those that adapt and embrace data may be able to use that complexity to create a competitive advantage. Consumer goods manufacturers can use complexity to grow revenues and margins, and to increase productivity and speed to market. As consumer preferences expand, CPGs are trying to capitalize on opportunities by launching new SKUs. And in fast-growing niche markets like health and wellness and environmentally-friendly wares, product innovation can help manufacturers overcome flat sales by winning shelf space and capturing growth. Yet manufacturing more SKUs also means more complexity in the business system at a time when these companies are already under pressure to become more efficient and cut costs. McKinsey estimates that complexity among food and beverage manufacturers alone is costing the segment as much as $50 billion in gross profit. McKinsey said traditional approaches to simplification, such as cutting low-volume SKUs, address only one aspect of the business system and can produce unintended consequences. McKinsey said companies need a better approach to managing complexity, one that factors in commercial and operational perspectives and uses big data to set action plans that the entire organization can agree upon. The key isn’t to avoid complexity, but to learn how to manage and use it. “Good complexity more than pays for itself. Bad complexity, on the other hand, erodes profit, increases inventory, and makes the supply chain less agile.” “In other words, good complexity more than pays for itself. Bad complexity, on the other hand, erodes profit, increases inventory, and makes the supply chain less agile,” said McKinsey. Dave Padmos, Global Technology Industry Leader of Advisory Services at Ernst & Young, said that “winners” in the big […]