Consumer products companies are working towards eliminating waste and inefficiencies from the consumer goods supply chain to reduce costs and increase customer satisfaction. Focus is to provide customers with quality products on time and at best prices.
Some of the common issues that consumer products industry faces on a regular basis include:
Inventory: The best performing companies are able to forecast their demand accurately and tackle variations through proper risk mitigation strategies.
Top companies constantly review their Inventory management techniques to increase their turnover rate and minimize slow and obsolete inventory. They ask questions, such as what service levels do they want on their products, what methods do they use to control inventory i.e push vs pull, cyclic vs stock level based vs manual replenishment scheme and so forth.
Consumer Products Distribution Networks: As conditions such as taxes, fuel cost and customer ordering patterns change, distribution networks need to change as well. Are distribution centers located so that they minimize costs and provide optimal service is a critical question in this respect?
Many companies evaluate their distribution network on lead times and delivery cost basis. Top companies constantly update their distribution network and channels in synchronization with the market demand.
Sourcing and Procurement: When consumer packaged goods companies work with multiple suppliers, it is easy to overlook communication and the relationship between buyer and supplier, leading to substandard product, increased operations costs and loss of productivity. Cost is a single most parameter which is given lot of emphasis while procuring both direct and indirect material.
Especially in India where the focus is on the relationship and cost of raw materials procured, it is all the more essential to integrate these diverse perspectives. This focus on the relationship is called Supplier Relationship Management (SRM), and it is becoming more accepted in the global market. The objective of cost reduction is achieved by increasing planned buying and reducing spot purchases. Cost reduction strategies such as e-procurement, Long term vendor contracts, and commodity price hedging are becoming increasingly popular in the consumer goods segment.
Manufacturing: Manufacturing of consumer products has evolved with changes in technology. The focus has been to increase through put rate, quality and flexibility of production. With advances in automation and lean manufacturing techniques production of consumer goods has undergone a sea transformation from being batch processes to continuous processes; it has become less labour intensive and more flexible to changing product mix.
Transportation: Top companies are able to isolate demand to the point where they are able to make direct shipments to customers from their plants or goods warehouses. Transport management system are being used to integrate inbound and outbound transportation as well as manage inter-facility transfers.
Distribution Operations: Companies that do not have the internal capabilities or wish to quickly expand their distribution networks are relying on consumer products Logistic Service Providers (LSPs). LSPs can also provide seasonal processing and storage relief.
The current business climate dictates reductions in operating expenses and greater productivity. As a result, the goal of more flow and less storage is being accomplished by many companies by using more advanced WMS solutions to provide improvements to their distribution operations
AQUA MCG, a supply chain consulting and execution firm, has capability designing and executing major consumer goods consulting projects for:
- Supply Chain Optimization
- Strategic sourcing and procurement
- Warehouse/Stores Management
- Demand/supply planning and management
- Logistics service partner selection
- Inventory optimization
- Flow in Manufacturing
- Supply chain management processes optimization
- Logistics network optimization
- Customer service and value analysis
- Procurements, strategic sourcing, purchasing, and procurement IT
Broadly, retail and consumer product goods supply chain has taken two diverse paths with large retailers integrating their supply chain practices both upstream and downstream with suppliers and wholesalers, and smaller players specializing in delivering customized product and services to their customers using JIT principles. Retail and CPG logistics and SCM collaboration is also extremely complex due to both market pressures of delivering rapid response, and long lead times related to low cost country sourcing.