Factory floor to the customer’s door: IoT and the CPG sector

Brands are aggressively expanding their use of the technology throughout the supply chain and into customer-facing areas.

This article first appeared in Consumer Goods Technology (CGT) in December 2024.

While the Internet of Things (IoT) itself isn’t new, the way Consumer Packaged Goods (CPG) companies are harnessing its power is nothing short of transformative. Historically, brands have used the IoT to track machine performance, monitor production quality, and understand their position in the production process.

But now, brands are shifting from a reactive to a proactive stance in their IoT interactions. Here we’ll delve into how CPG manufacturers are using innovative IoT technology to optimize their production, supply chains and customer service strategies—and how this is enabling smarter, more customer-centric experiences for consumers.

Unlocking production efficiency with real-time monitoring

CPG manufacturers have traditionally used IoT for internally focused production purposes. While these have been successful use cases, forward-thinking manufacturers are now seeking even greater advancements.

Enter real-time monitoring. As the name suggests, real-time monitoring offers immediate insights and allows instant issue resolution. This shift enhances efficiency, responsiveness, and agility in operations. But what does this look like in action?

For a bottling company, this could mean using smart sensors on motors, conveyors and filling machines to monitor vibration, temperature and injection rate. Through predictive analysis and real-time monitoring, employees can be alerted when an anomaly is detected prior to an issue occurring, with a regenerated pattern analysis with these parameters ultimately preventing production downtime. In fact, Cognizant estimates that bottling and food manufacturers could see a 20% to 25% reduction in downtime with predictive maintenance and real-time monitoring, leading to significant cost savings.

Take this real-world example: Procter & Gamble partnered with Microsoft to implement IoT devices across its manufacturing plants to track machine performance and maintenance schedules. By digitizing and integrating data from over 100 manufacturing sites globally, P&G achieved a 70% reduction in defective Pampers diapers, translating to weekly savings in the seven-figure range.

Connected devices touch every stage of the supply chain

Supply chains are the backbone of any CPG brand, and IoT is enhancing their agility and transparency. For manufacturers adhering to strict US Food and Drug Administration delivery timelines, real-time visibility into the movement of products—from production lines to warehouses, on the road, and finally to the customer—is crucial.

CPG companies that produce perishable products such as milk need access to real-time, transparent data to make informed decisions about the condition of the product at every stage of delivery. Many of these businesses partner with third-party logistics companies to deliver their products to retailers or to customers directly, emphasizing the need to optimize last-mile delivery through a farm-to-fork tracking system to avoid spoilage or waste.

However, preventing waste through efficient delivery is just one way CPG companies leverage IoT to streamline supply chains. Invisible QR codes offer a sophisticated solution, embedding tamper-proof metadata within items. These codes allow employees to scan multiple products simultaneously without worrying about barcode positioning. They also enable the tracking of products through every stage of creation, movement, purchase, and recycling.

Access to this data empowers CPG companies to more accurately predict demand. By understanding the raw material supply timeline and factory floor availability, IoT can precisely predict out-of-stock dates and the next availability for any product. With integrated analysis of sales data, inventory levels, supply forecasts, and customer buying patterns, IoT ensures timely replenishment and streamlined supply chain management.

Customers: the core of every CPG company’s success

IoT is transforming customer service by enabling brands to deliver personalized and proactive experiences like never before. Through connected products and smart packaging, brands can gather invaluable insights into consumer behavior and preferences. This data serves as a goldmine for tailoring marketing efforts, anticipating customer needs, and providing real-time support.

In 2022, Heineken rolled out a campaign inspired by remote-work lifestyle challenges. The company introduced Bluetooth-connected bottle openers that, when used, would disable work apps, offering a playful and practical way to help people disconnect and relax. This inventive use of IoT technology not only captivated consumers but also provided a clever solution to work-from-home fatigue.

Such initiatives showcase how IoT can transform a simple product into a powerful tool for customer engagement, driving brand loyalty and enhancing customer satisfaction. The ability to offer these personalized experiences not only sets a brand apart but also builds stronger connections with its consumers.

Elevating resilience and intelligence

From the factory floor to customers’ doors, IoT is revolutionizing the CPG industry. By harnessing the power of connected devices and real-time data, brands can enhance production efficiency, streamline supply chains, and deliver exceptional customer service. As IoT technology continues to evolve, the potential for innovation within the CPG sector is boundless, paving the way for smarter, more resilient, and customer-centric businesses.