FMCGs (from MANUFACTURERS' point of view)
In a low-growth European market, consumer product stakeholders have to make sure their products are available in the sales outlets of their customers, whether they be supermarkets or other channels. These multinational or national companies are looking to make cost and stock savings ... and have to anticipate/resist their customers' demand in a context of inflationary logistics costs and uncertain raw material price trends.
In Europe, the FMCGs Supply Chain depends heavily on its specific features and has all kinds of challenges to take up:
- Irreproachable customer service: attentive to their image and the perceived quality of their products, and aware of losses due to department stockouts and penalties imposed by their customers, companies in this sector do what they can to guarantee product availability to their customers - when the market is often disrupted by the countless special deals that characterise this sector. As part of the production internationalisation process, which often involves several countries, the important thing is to keep effective tabs on the PIC/S&OP process at international level - for example by incorporating special deals and new product launches as effectively as possible…
- A need for stock management: thrown off-course by not only the company's special deals, but also the competitors', our customers must constantly improve the "Forecasting", "Production Planning" and "Procurement/implementation" processes. For that they need an agile Supply Chain, which can react promptly to a weather change, change in sales trends or unexpected standard/special deal cannibalisation.
- The need to work towards new solutions for better control over distributor customer demands and costs: over the past few years, VMI (vendor-managed inventory) projects have developed for example, which enable some of our customers to join forces and flows to reduce stock at their customers and their transport costs. This isn't necessarily an ideal solution in all cases: what matters is being able to simulate different solutions (cross-docking, orders split into lots, consolidation entre, VMI) and determine the best solution for each manufacturer-distributor pair. Optimised price schedules also need to be presented, with incentives depending on the savings made.
- Mounting pressure on control of transport costs: given the low growth in Europe, many of our customers are focused on cost control. With the upward trend of transport costs between now and 2020 (ecological tax and energy hikes) this requires brainstorming about distribution networks, relations with supermarkets and Cost To Serve. The Consumer Products sector, with its massive flows, keeps a particularly close watch over this logistics cost and the environmental impacts of transport.
What DIAGMA can do for you
Founded in 1973, DIAGMA is now a leading consultancy firm in Supply Chain Management - and several-times the top-ranking firm in its sector.
Due to the specific products and complex processes, DIAGMA takes a methodological approach tailored specifically to tackling Supply Chain problems in the Consumer Products sector.
Examples of projects conducted in this sector:
- For a multinational: review its forecasting processes (special deals and standard) for improving its forecasting reliability and agility (reaction time between an abrnomal sale and possible correction of its forecasts). Scrutinise the cannibalisation between Special Deals and Standard.
- For a beer manufacturer, review its distribution network to cut the cost of delivering its products in Europe. Support it in selecting a new logistics service provider (outsourcing).
- For a fresh produce manufacturer in the Maghreb (North Africa), review its organisation so as to set up a genuine Supply Chain Department, responsible for stocks, logistics costs and customer service quality.
- Assist a customer in setting up an APS software application (Advanced Planning System) in its company.
- Put together a Vendor-Managed Inventory Business Case for two companies with a nearby warehouse. What would the gains be? The costs? The risks?
- Determine the costs of different delivery methods to customers (warehouse stock, consolidation warehouse in consignment stock, consolidation or deconsolidation cross-docking, etc.) and compile a price schedule that includes these points and quantitative aspects (full or half-lorry delivery).