Supply Chain Innovation within the FMCG sector

May 4th, 2017 | Supply Chain | By James Absalom

Supply Chain is ever evolving and having spoken and met with a number of senior leaders across the fast moving consumer goods sector over the last quarter I am fascinated around some of the feedback and strategic initiatives being put in place from one company to the next.

First of all lets look at some of the limitations and issues:

  • Unpredictable or intermittent demand
  • Unreliable forecasts
  • Multichannel demand VS single solution
  • High inventory levels
  • Long lead time
  • Poor customer service levels
  • Functions working in silos
  • Natural disasters and geopolitical volatility
  • Seasonal demand

What are the effects of this limited performance?

  • Loss of sales
  • Loss of customers or suppliers
  • Increased warehousing costs
  • Increased time to market
  • Production bottlenecks
  • Overworked staff
  • Poor staff morale
  • High rate of attrition

So what innovative concepts are companies within the FMCG sector implementing to improve upon this?

  • End to End supply chain visibility
  • Real time data analytics
  • Modern infrastructure and fully automated systems
  • Web based and e-commerce CRM solutions
  • Supply chain segmentation
  • Inventory optimisation

So what is End to End supply chain visibility?

  • Visibility from customer through to supplier
  • Most organisations information exists in silos
  • Sales department = projections and budget, production = production schedules, buyers have supplier cost and delivery schedule
  • The focus of this fragmentation of data is designed to serve the purposes of the individual departments in the organisation instead of that of the entire supply chain

In a recent Gartner research paper the goal of supply chain visibility was described as follows

“The aim of end-to-end supply chain visibility (E2ESCV) is to provide controlled access and transparency to accurate, timely and complete events and data — transactions, content and relevant supply chain information — within and across organizations and services operating supply chains.”

So how do you implement this change?

Walter James were recently working with a client in Turkey and the MEA region on providing executive level talent cross the planning and distribution function for a newly created SC Control Tower in Istanbul

Each country within the region was operating in silos and relationships, forecasts and demand management were not working in real time and not communicating

The client devised a plan in which the control tower makes key data available to the partners in a supply chain facilitating coordination of customer demand with supplier response. For a supply chain control tower to transform available data into usable information, our client identified development was required in three areas:

  1. Processes – Processes need to become more collaborative, with data sharing and planning being done across departments as well as between organisations. Coordination of sales projections and the supply chain can assist in helping suppliers to anticipate future demand. Organisations need to develop specific data requirements that can be shared between partners in the supply chain to make demand planning possible
  2. Relationships – Information must be shared across processes not only within the organisation, but within the functional silos such as planning, sourcing, production, and delivery. It also requires information sharing between business functions and outside the enterprise, providing a real end-to-end process view to all supply chain partners
  3. Technology – A major challenge in the sharing of information between tiers is the problem of passing data between information systems. How do you connect a company with an enterprise-wide ERP system with a supplier who manages their business on a spreadsheet? Innovations such as cloud computing and data collection and analysis software are now making supply chain control towers possible.

The real time end-to-end data that the supply chain control tower will now provide will enable our client to manage demand signals more accurately to reduce inventory levels, answer customers’ requests faster and more accurately, and smooth the effects of demand variation.

Walter James were working with a client who were seeking executive talent across the supply chain risk optimisation team. They have recently spent a significant amount of time investing in a new concept around “What if” scenarios

Our client created multiple “what if” scenarios across their 400,000 SKUs operating across 100 DC and 250 plants globally.This enabled them to know sooner and act faster whenever their were problems within the supply chain. This worked across issues such as: What orders were impacted? What sites were effected? Which suppliers/customers? What volume of orders?

By creating these real life scenarios such as natural disasters, seasonal demand and geopolitical volatility it enabled then to greatly improve on risk mitigation and the effects had across planning and forecasting within the business which in turn increased output, productivity and customer service levels.

Planning Excellence?

Walter James are currently working with a client in providing talent for the planning excellence team across a large scale SAP APO implementation. Our client are truly aware they are “behind their competitors” when it comes to best in class consumer supply chain and are looking to significantly increase their talent in this area

We are working with them across a number of different innovative and newly created positions across: Real time data analytics, Global master data, Product launch (NPI), lifecycle management and planning excellence

As they are going from a regional set up to a centralised location breaking up silos is important and although they have technically skilled and system orientated employees they have identified that the level of strategic planning and execution is far higher than any employee could implement. Due to large amount of SKUs and customers in emerging markets they are implementing a supply chain segmentation strategy dedicated across both products and region which ultimately is enabling them to increase customer service levels and importantly improve planning and demand forecasts, reduce inventory which in turn requires less storage and finally will increase revenue and margins

Conclusion

Supply Chain Planning is an ever evolving function which is constantly pushing the boundaries of innovation. It requires:

  • Strong relationships and communication amongst stakeholders across different functions
  • Cutting edge systems and data technology which provides real time information and analytics from customer through to supplier
  • Flexible and dynamic segmentation methods dependent on region or product
  • Innovative risk mitigation strategies that enable a business to react quickly and minimise damage when something does go wrong
  • Best in class talent that posses the ability to implement all of the above in an agile and dynamic manner

Supply Chain is a people function built on relationships and alliances. Walter James believe that our competitive edge on the market is not only our dynamic and agile approach to  modern executive search but understanding and identifying who and where these game changers are. Our entire business model and strategy evolves around the implementation of innovative concepts within change and transformation programs across the global supply chain function.

For more information please get in touch with us at info@walter-james.com +44 (0) 203 805 3320