After years of focusing digital transformation efforts on business operations like supply chain optimization and demand planning, consumer packaged goods (CPG) companies are turning their attention to manufacturing operations, particularly in processing and packaging, according to a recent report from Packaging World.
The current state of digital strategies
Only 25% of surveyed CPG companies have formalized digitalization strategies. Among those with strategies, the primary goals include:
- Data collection and management
- Enhanced operational flexibility
- Incorporation of AI technologies
- Information flow streamlining and error reduction
The report noted a clear gap between corporate headquarters and manufacturing sites, with many digital transformation strategies developed at corporate levels not yet reaching manufacturing operations.
Manufacturing’s digital potential
The survey found that 61% of respondents expect manufacturing processes to experience the most significant changes from digitalization. Within manufacturing, processing operations are typically further along in digital adoption than packaging operations, often because more capital investment is concentrated in processing equipment.
Data analytics emerged as the clear priority, with 61% of respondents expecting digitalization to impact their data collection and analysis capabilities in the coming year. When combined, machine learning and AI were mentioned by 71% of respondents as top areas of impact.
Key drivers and challenges
Interestingly, the same factors appear as both drivers and barriers to digital transformation:
Drivers:
- Reducing human error (45%)
- Cost savings (33%)
- Keeping pace with competition (27%)
- Speed to market (24%)
Barriers:
- Implementation costs (44%)
- Difficulty prioritizing where to start (32%)
- Skills/training gaps (27%)
- Cybersecurity concerns (20%)
Emerging applications
The report also highlighted two unexpected areas gaining momentum:
Sustainability tracking: With Extended Producer Responsibility laws expanding globally, companies are digitalizing packaging material tracking to comply with reporting requirements and support sustainability initiatives.
Consumer connection: QR codes and other smart packaging technologies are enabling direct connections with consumers, providing brands valuable data they previously couldn’t access when products were sold through retail channels.
For manufacturing leaders looking to advance their digital transformation journeys, the report suggests starting with clear articulation of business benefits, focusing on user-friendly implementations that make workers’ jobs easier, and identifying specific problem areas that would benefit most from digital solutions.
Find more digital transformation and technology adoption insights in our 2025 State of Food Manufacturing: Digital Transformation report.
