Devising a Robust Supply Chain Risk Management Framework for a Leading CPG Player – A SpendEdge Case Study

Engagement Overview:

A leading player in the CPG industry wanted to devise an effective and efficient supply chain system to compete in new market segments. To do so, the client approached SpendEdge to enhance their supply chain capabilities and overcome supply chain challenges. A detailed quantitative analysis of various categories within the supply chain was carried out to analyze spend patterns and develop an effective supply chain risk management framework to suit the needs of the CPG industry client.

About the Client:

The client is a leading player in the  CPG industry, specializing in the production of a wide variety of packaged goods ranging from paper-based products to food and beverages. Also, having established their presence in the MEA market segment, the client was looking at expanding their operations to newer regions.

Business Challenge:

The CPG industry client was facing challenges in devising a flexible supply chain risk management framework.

How did SpendEdge Help the CPG Industry Client?

• Step 1: Identifying internal and external supply chain risks

The first and the most crucial step in devising a supply chain risk management framework revolves around the identification of risk factors affecting the organization’s supply network. These risks include both external and internal risks such as supply-side risks, demand-side risks, business risks, environmental risks, and other physical risk factors. A detailed analysis of each identified risk factor helped identify scenarios that are likely to occur, it also enabled the client to answer essential questions such as why they occur and how can the company deal with such risks.

• Step 2: Setting standards for the organizations supply chain processes

Once the risk factors across the global supply network are identified and grouped into different categories it is necessary to take steps to incentivize the global supply network so as to make it function in the most suitable way to drive maximum value. This means utilizing more than just the traditional metrics and setting new supply chain standards to suit the functional needs of the business. However, identifying the right KPIs is crucial for any business and revolves around the specific business needs, the market segment, market stability, and fluctuating demand.

• Step 3: Development of a robust supply chain risk management framework

The supply chain risk management experts at SpendEdge devised a three-step comprehensive approach that helped the CPG industry client to gain a holistic view of risk factors across their supply chain. The devised framework also enabled the CPG industry client to enhance the visibility of supply chain processes, which ensured seamless upstream and downstream flow of information.

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Key questions answered in this supply chain risk management study include:

Benefits of the Engagement:

The supply chain risk management framework enabled the client to redefine the supply chain strategies to enhance visibility. The solutions offered by our experts also assisted the CPG industry client in devising appropriate supply chain strategies that helped them detect, gauge, and assess risk factors throughout their global supply network.

Importance of supply chain risk management for CPG industry firms

In recent years, companies operating in various industries be it retail or CPG industry have realized the importance of maintaining a robust supply chain management system across their business segments. Players in these industries have also understood that it is the supply chain that deciphers business strategies into day-to-day interactions within and beyond the organizational level. Several such factors have compelled leading businesses in the CPG industry to make strategic investments in enhancing their supply chain capabilities in order to overcome organizational silos.

Moreover, even the well-established CPG industry firms are focused on reinventing their supply chain processes in spite of having achieved a leading position in their industry. This is because by doing so, companies are in a better position to tackle supply chain risks and respond proactively to the fluctuating- economic, technological, and competitive landscape to exploit new market opportunities and CPG industry trends more effectively than their peer groups.

Our Findings:

In this supply chain risk management engagement we helped a CPG industry client transform their supply chain performance by implementing a three-step approach. This approach can also be adopted by other CPG industry players to maximize the potential of their supply network.

Leading CPG brands have already transformed their supply chain systems with respect to time and investment. So, what are you doing to turn your supply network into a source of competitive advantage?

Procurement and supply chain solutions for consumer-packaged goods

Demand Forecasting and Planning:

Accurate demand forecasting is essential in the CPG industry to avoid overstocking or stockouts. Advanced analytics, machine learning, and AI-driven tools can analyze historical data, market trends, and external factors to provide more accurate demand forecasts.

Inventory Management:

Efficient inventory management prevents excess inventory buildup, reduces carrying costs, and prevents product obsolescence. Inventory optimization tools help determine optimal reorder points, safety stock levels, and replenishment quantities.

Supplier Relationship Management:

Building strong relationships with suppliers is critical for a reliable supply chain. Supplier portals and communication platforms facilitate collaboration, communication, and visibility into supplier performance and capabilities.

E-Procurement Platforms:

E-procurement platforms enable digital procurement processes, including sourcing, RFQs (Request for Quotations), supplier selection, contract management, and electronic purchase orders. These platforms streamline procurement activities, reduce paperwork, and enhance efficiency.

Transportation and Logistics Optimization:

Efficient transportation and logistics are vital for timely delivery of CPG products. Route optimization, load planning, and real-time tracking solutions reduce transportation costs and improve on-time delivery.

Importance of CPG supply chain optimization

Reduced Lead Times:

Optimization efforts streamline processes, reduce bottlenecks, and expedite order processing. This results in shorter lead times, allowing CPG companies to respond more quickly to changes in demand or market conditions.

Inventory Management:

Effective supply chain optimization minimizes excess inventory, which ties up capital and storage space. It also prevents stockouts, which can result in lost sales and dissatisfied customers.

Forecast Accuracy:

Modern supply chain solutions leverage data analytics and AI to improve demand forecasting accuracy. This leads to better inventory planning and production scheduling, reducing the likelihood of overproduction or underproduction

Toknow more about our supply chain risk management solutions and how it can help CPG industry firms