"A Year of Chaos and Certain Uncertainty"

By Stephen Dombroski; Director, Consumer Markets, QAD, Inc.

As we move into 2025, the CPG industry faces a year of "certain uncertainty" with a huge dose of chaos added in for fun. Issues from geopolitical instability to climate-related challenges will continue to shake up the market. Alongside the traditional hurdles such as labor shortages, rising costs, and supply chain inefficiencies, manufacturers must brace for unforeseen twists. The political landscape, including policy shifts and potential tariffs under the new U.S. administration, will add another layer of complexity, forcing manufacturers to rethink procurement strategies, supplier partnerships and their overall long term market strategy.

These challenges will require manufacturers to adopt more agile, technology-driven approaches to maintain competitiveness. New thinking and smarter planning will be necessary to navigate this uncertain terrain. Manufacturers that invest in automation, AI-driven production planning, and advanced supply chain software will be better equipped to stay resilient and thrive in an increasingly unpredictable environment. 2025 will demand innovation and adaptability to manage the chaos and ensure long-term success.

1.  AI-Driven Agility: The New Standard in Production Planning

In 2025, AI-powered production planning will become a baseline necessity rather than a competitive edge. With constant supply chain disruptions from geopolitical and climate challenges, CPG manufacturers will depend on AI to dynamically adjust production schedules, enabling rapid responses to fluctuating demand, material shortages, and labor issues. Machine learning will drive these systems, optimizing operations, reducing waste, and ensuring precision in just-in-time production.

Manufacturers relying on outdated systems will face increasing pressure as competitors leverage AI for real-time, integrated decision-making across production, procurement, and logistics. The industry will see a clear divide: those advancing with AI to streamline operations and those left struggling to compete in a world where agility and efficiency are paramount.

2.  The Battle for Consumer Loyalty: Speed and Service Over Price

The focus of customer service will shift dramatically in 2025. Due to economic pressures, the emphasis will no longer be on competing through low prices. Instead, manufacturers will be under pressure to provide quicker delivery times, better transparency, and improved customer interactions. Software solutions that streamline everything from production scheduling to distribution planning will be key to delivering on this demand. The race for customer loyalty will depend not just on product quality, but on the speed and efficiency of every step in the supply chain.

What to worry about: Manufacturers that can't integrate data across supply chain functions will struggle to meet consumer expectations for fast, reliable, and transparent service.

3.  Labor Issues: Balancing Automation with Human Engagement

Labor shortages will remain a challenge in 2025, driving CPG manufacturers to adopt hybrid workforce models. Automation will streamline repetitive tasks like packaging, while human workers focus on decision-making, troubleshooting, and quality control. To succeed, manufacturers must balance technological advances with human engagement.

A key strategy should be to implement a connected worker software to improve OEE and involve line workers in broader organizational goals. This not only boosts productivity but also fosters a culture of inclusion, retaining employees by offering meaningful roles. Investing in reskilling programs and creating workplaces where technology and human innovation thrive together will be essential to maintaining efficiency and competitiveness in an evolving labor market.

4.  Geopolitical Uncertainty: The Need for Multi-Sourcing and Flexible Supply Chains

Geopolitical instability and evolving trade policies, including potential tariffs from the new U.S. administration, are set to disrupt global supply chains further by 2025. CPG manufacturers must pivot toward greater self-sufficiency and adopt multi-sourcing strategies to reduce dependency on single markets. This shift will enable companies to mitigate risks from unpredictable policy changes, sanctions, and market volatility.

While these strategies boost resilience, they also introduce logistical complexities. Advanced supply chain software will be critical to manage diversified procurement, optimize costs, and ensure operational flexibility. Manufacturers that invest in self-reliance and scalable technology will be better positioned to navigate uncertainty, safeguard operations, and maintain competitive advantages in an increasingly unpredictable global landscape.

5.  Sustainability as a Competitive Necessity: The Rise of Circular Manufacturing

By 2025, circular manufacturing will shift from a niche strategy to a necessity for food and beverage manufacturers. This approach focuses on reusing materials, reducing waste, and rethinking product lifecycles to meet growing demands from consumers, investors, and regulators. Companies will need to overhaul supply chains and operations to cut resource consumption, repurpose byproducts, and recycle packaging.

While implementing circular practices requires significant investment and collaboration, proactive manufacturers will gain a competitive edge. Success will mean not only regulatory compliance but also recognition as sustainability leaders, attracting eco-conscious consumers and investors. The challenge lies in achieving profitability while minimizing environmental impact-a balance that will define the industry's future leaders.

Closing Thoughts: Are You Ready to Adapt?

2025 is shaping up to be a year of significant change for the Consumer Packaged Goods manufacturing sector and their supply chains. While these predictions may seem bold, they highlight a future where agility, technology adoption, and sustainability will determine the winners and losers. Manufacturers will need to act now to invest in the systems, processes, and people that will enable them to navigate a volatile world. The industry's challenges are immense, but they also offer tremendous opportunities for those who are prepared to innovate and disrupt the status quo. Will your company be ready to meet the challenges of 2025 head-on, or will it be left behind as others chart a new course?

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ABOUT THE AUTHOR

Stephen Dombroski is QAD's Director for the Consumer Products and Food & Beverage vertical markets. Steve has over 30 years experience in manufacturing and supply chain and has helped multiple companies in a number of industries to implement S&OP concepts and processes.