Supply Chain Management Helps A Leading Consumer Products Manufacturer Achieve Over 30% Reduction in Indirect PO Transaction Costs
Overview of the Consumer Products Industry The consumer products industry can be mainly divided into four groups namely food, beverages, toiletries and cosmetics, and small appliances. Most firms offer products that fit primarily into one of these groups, although a firm may have a smattering of brands that cross the lines. The consumer products industry’s […]READ MORE >>
Overview of the Consumer Products Industry
The consumer products industry can be mainly divided into four groups namely food, beverages, toiletries and cosmetics, and small appliances. Most firms offer products that fit primarily into one of these groups, although a firm may have a smattering of brands that cross the lines.
The consumer products industry’s growth has been nothing short of exhilarating over the past quarter of the century. Firms in the CPG industry have launched innovative products to meet an ever-growing array of human needs and desires. They have also expanded rapidly into the burgeoning consumer markets of the developing world. Additionally, consumer products companies are aggressively building global scales along every part of the value chain to gain a stronger footing across the CPG industry. However, a few factors are expected to hamper the growth prospects of the consumer products industry. Some of these factors include:
- Data granularity and visibility: With regulations and compliance becoming stricter, traceability functionalities have become more pertinent and requisite than in the past. Consumer products companies need strong data granularity to reduce operational risk, provide high quality and compliant products, properly respond to an adverse event with a targeted recall, and avoid counterfeiting issues associated with global trade.
- Shrinking operating margins: With global competition, companies in the consumer products space are facing challenges in meeting the global price points. This creates an additional pressure, as manufacturers need to ensure the delivery of high-quality products while finding innovative ways to cut costs.
To overcome such challenges, consumer products companies are leveraging the use of robust supply chain management solutions. Supply chain management solutions help firms gain better visibility into logistics operations; thereby, reducing a company’s overall shipping cost. These solutions also enable businesses to quickly diagnose supply chain issues and provide quick solutions to help maintain customer satisfaction.
The Business Challenge and Journey
Client background: A leading consumer products manufacturer specializing in the production of personal and household care products. They wanted to gain spend visibility and implement better policies and controls through a No-PO-No-Pay initiative.
Client issue: The client wanted to conduct a master clean up, update records for active vendors, set up new payment terms, and redevelop and implement a robust vendor approval policy. Additionally, the client wanted to develop and implement new processes and policies and ensure a smooth transition across their business units.
To help the consumer products manufacturer reduce the discrepancies across the supply chain, the supply chain management experts at SpendEdge, conducted a comprehensive research and carried out discussions with prominent stakeholders in the CPG industry.
Client journey: During the course of this supply chain management engagement, the consumer products manufacturer implemented a No-PO-No-Pay policy for all their indirect purchase orders. Additionally, the manufacturer mapped over 15 internal groups, with provision of internal and external communications for the smoother functioning of the supply chain.
Key questions answered in this supply chain management engagement
The consumer products manufacturer achieved over 30% reduction in indirect PO transaction costs. The client also monitored the overall service quality, and more importantly, minimized savings leakage across their manufacturing units.