Tech Guest Viewpoint: Beat the Consumer Goods Supply Chain Challenge
By Rich Becks, E2open
To stay competitive in today’s marketplace, consumer goods companies are reaching across the globe to seek new customers in new markets. In order to cater to these new customer segments, brand owners are now providing a dizzying array of local product variations through a complex network of outsourced manufacturing partners.
At the same time, customers are demanding smaller lot sizes and more frequent deliveries through a multitude of third-party logistics providers. As a result, consumer goods companies have unintentionally introduced unprecedented levels of complexity into the production and distribution of their products.
Beyond the issue of complexity, the globalization of consumer product supply chains also has bloated inventory levels, reduced margins, and depleted much-needed working capital required for new product development. Consequently, companies are looking for solutions that can both optimize supply and demand throughout their distribution networks while also “bridging” internal supply and demand organizations.
To ensure that supply and demand are in better alignment, there are four supply chain challenges that today’s leading consumer goods companies must address, which are as follows:
1. Lack of End-to-End Visibility and Collaboration in a Multi-Tier Environment
Actionable, real-time supply chain information is hard to come by in today’s highly volatile, complex, and outsourced consumer goods marketplace. Multi-tier visibility can address this challenge by making forecasts and orders visible sooner and allowing bi-directional collaboration between partners. Having data on actual shipments and receipts as they happen provides insight into stock-in-channel inventory and point-of-sale (POS) information, which gives brand owners the ability to proactively manage volatile demand.
2. Inability to Link Product Design, Manufacturing, and Fulfillment Within the Supply Chain
Successful consumer goods companies increasingly compete on new product innovation and better customer service through market segmentation. Close coordination with contract manufacturing partners around formulations, product specifications, and POS packaging can make or break new product launches.
3. Conflicting KPIs That Actually Discourage Efficient Supply Chain Management
Sophisticated business intelligence is gained by integrating data across the entire value chain to provide unique insights about demand patterns, operations, and customer service requirements. But to make the most of this powerful insight, key players in the supply chain must be aligned in terms of what they’re measuring and the tools they’re using to interpret the information. A shared planning and execution process layer combined with the right business analytics gets everyone in sync and is the key to effective supply chain orchestration and risk management.
4. Lack of Planning Coordination Between Supply Chain Tiers
Committing with confidence to customer orders requires demand planning and collaboration across multiple tiers to ensure that the right materials are delivered to the right locations at the right times. Nevertheless, many companies are still unable to synchronize supply and demand because they do not have access to timely, accurate data from all supply chain parties. Too often, they settle for snapshot data dumps into online portals that lack real-time intelligence and the ability for “closed-loop execution.”
5. Fast-Moving Supply Chains for a Fast-Paced Industry
When it comes down to it, the four challenges above can all be traced back to the same core need for improved visibility and connectivity to get everyone, from n-tier suppliers, all the way to n-tier customers, on the same page. So how do you bring all of these parties together? The answer is simple: a shared, information-based business network.
A business network provides true multi-tier process orchestration through collaborative planning and execution that empowers all network participants, including retailers, distributors, contract manufacturers (CMs), and component suppliers, to make better business decisions.
The beauty of this collaborative framework is that businesses are able to leverage the collective brainpower of their partners, including CMs, by continuously responding to changes in supply, demand, and new product launches. Once connected to the network, businesses are equipped to handle timely, seamless transactions, and network-wide planning and response across enterprises. This close level of connectivity also makes brand owners and their CM partners more agile and responsive within their distributed and outsourced manufacturing environments.
Today, leading consumer goods supply chains are moving into the cloud to simplify data collection and process orchestration between their partners. Successful companies are reaching beyond the four walls of their enterprises and managing their value chains by utilizing consumer goods business networks to serve their customers better while dramatically lowering costs and reducing complexity. With this shift, the end of enterprise-centric planning and fulfillment isolation is in sight.
Rich Becks is the General Manager, Industry Value Chains at E2open.