Is it possible for your production planning to be aligned to real-time market dynamics? Is it possible to have high availability of all SKU’s coupled with lower system inventory? Can this become a competitive edge for your business? Does your business face the conflict of growing sales and managing inventory levels?
Consumer product companies are faced with unprecedented challenges. They must contend with uncertain market conditions, rising material & production costs, slow growth coupled with changing business models. As an outcome of these obstacles, companies face cash flow constraints which impede growth and their future-readiness. These conditions complicate and impede strategic decision making and hence there is no clarity on their differentiated value proposition. Innovation and competitive edge creation have subordinated to the tried-and-tested. Consumer product companies appreciate the importance of the supply chain for their sustainable growth though the solutions adopted do not enable high availability with low inventory. Instead, the supply chain creates excess inventory of unwanted material and constantly stocks-out of the fast-movers. This leads to sales-losses on one-hand, while incurring high inventory carrying costs, further dampening profitability. Without clarity on how to avoid this constant recurrence of sales losses, each function reasons for improvements in other functions.
Consumer products can be further categorized in consumer goods and consumer durables. These are products that customers purchase for their personal consumption. Consumer goods have a short consumption-period, while consumer durables have a longer consumption lifecycle. Consumer goods are purchased frequently, while consumer durables have a long period between successive purchases.
Historically, the primary focus of consumer product companies has been product manufacturing, sales & marketing. In the last few decades, supply chain started to play a prominent role to enabling high service levels and inventory control at the primary point of sale. Business focus on secondary points of sale and end consumers has become relevant areas of interest for creating differentiated solutions.
The industry structure is complex with multiple options for finished goods procurement (internal & external), and diverse market outreach opportunities. A effective & efficient supply chain is expected to align the raw material and finished goods availability to market dynamics, without high system inventory. With the levels of uncertainty and variability internal and external to the company, supply chain will definitely require a crystal ball or third eye to manage.
The biggest issue being retail presence, significant growth can be achieved by ensuring high levels of availability for the channel partners and thereby achieving high service levels for the end customer. As per all the leading management philosophies, inventory control is actually the flip side of the same coin of availability.
Consumer product companies are overwhelmed with availability challenges for their fast runners, while are overflowing with inventory of all other products (slow movers, obsolete products). This undesirable effect is equally visible with their distributor / dealer partners, as well as the retail outlets. High inventories limit cash flow, creating obstacles for speedy introduction of new products. These effects are actually an outcome of our own creation – the way we manage companies using forecasting as the primary basis of business! Variable lead times from production and procurement further stress the system’s boundaries, and occasionally a breakdown is observed across the system. Our current management paradigms have created disharmony and conflicts within the function, leading to increased stressful working conditions!
Our time-tested thought process offers a powerful alternative management paradigm, a paradigm-shifting mechanism to streamline the holistic supply chain. Deploying the Solution elements for consumer product companies, our model offers two primary business level interventions for consumer product companies, with the objective of sustainable business growth in sales and profitability.
Production led Intervention: Release capacity and reduce production lead time enabling faster and real-time response to market dynamics. By leveraging the bottleneck resource and focusing on product flow, our solution maximizes effective production output for profit maximization. This leads to significantly higher availability with significant improvement in the inventory health, while total system inventory reduces. As an outcome, inventory turns more than double, measured availability surpasses 95%, and the health and inventory profile across the system is optimized. Distribution & Supply Chain
Market led Intervention: Our solution promises a three-fold increase in Return on Investment of the channel partners. By ensuring that the channel inventory is healthy and agile, and by ensuring very high availability and large product portfolio at each point of sale.
Applying our solution, we have been able to increase sales with a smaller inventory base. With this differentiated value proposition, consumer product companies can provide irrefutable offers to the channel partners to expand their market share.
For long-term sustenance and growth, any company needs to create a Competitive Edge in the market, creating and winning market share through a unique way of managing business! The different paradigm for managing business is not based on forecasting, instead based on speedy response to real-time market dynamics. The replenishment solution is the basis for production planning and servicing the channel partners. This solution leads to minimizing lost-sales coupled with reducing system inventory. High service levels to the distributor / channel partners are guaranteed. Process based execution ensures transparency, eliminates manual intervention and reduces inter-function conflicts, enabling effective cross-function working for the common business objective of sales & profitability growth!
Benefits: The benefits observed within 3-6 months of the Solution implementation:
Avenir, with its team of Expert Consultants deliver significant growth for their clients. Our engagement model is based on closely working with the client in strategy development and implementation of the Consumer Products Production, Supply Chain and Market Solution. Within a six-eight month period we are able to establish and deploy the solution. Immediate internal gains are observed within three-six months, while system gains of financial benefits may lag by two-three months.
We have deployed our solutions across various Consumer Products companies in India and abroad – a national player in the white-goods industry, the market leader in locking solutions, a dominant player in a niche apparel market with international presence, a large beverage company in Latin America, a new entrant into the beverages market in India are some of our successes.
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