Supply Chain Risk Management Helps a Renowned Client in the CPG Industry Save Millions
Overview of the CPG Industry The global consumer packed goods (CPG) industry typically consists of groups including appliances, toiletries and cosmetics, and food and beverage. The CPG industry acts as a foundation for the modern consumer economy as it drives not only massive amounts of money into other businesses like retail and advertising but also […]READ MORE >>
Overview of the CPG Industry
The global consumer packed goods (CPG) industry typically consists of groups including appliances, toiletries and cosmetics, and food and beverage. The CPG industry acts as a foundation for the modern consumer economy as it drives not only massive amounts of money into other businesses like retail and advertising but also generates a massive portion of the gross domestic profits (GDP) for countries across the globe. Over the years, the CPG industry has started witnessing a migration from offline to online channels to reinvent themselves in the market despite slowing GDP growth and currency weaknesses. CPG industries are thinking beyond the conventional shopping to create and improve the shopping experience for customers with the recent digital advances. Although the CPG industry is witnessing a promising growth with the advancements in the technology, several factors will likely hamper the growth of the sector. These factors include:
- Decreasing Operating Margins: CPG firms need to take into consideration the volatilities in the pricing of oils and their effect on transportation costs. This is because there is an increase in the need to distribute high-quality products while focusing on innovative, cost-effective measures.
- Fluctuating Consumer Demands: Today, CPG establishments need to be more dynamic, and consumer-focused as the demand from the consumers is fluctuating. Additionally, consumer preferences have transformed and moved toward sustainable options. Furthermore, the success and profitability of CPG companies are dependent on how they address the changing needs and reduce the risks.
These factors are compelling players in the CPG industry to leverage the use of supply chain risk management solutions. Supply chain risk management solutions help companies integrate several previous or ongoing initiatives, including those for business continuity and supply-chain security. Firms can also make use of these solutions to identify and prioritize risks they face and devise risk treatment plans, which include measures to protect the supply chain. This eventually helps them achieve production and delivery capabilities while avoiding sales losses.
The Business Challenge and Journey
The client, a leading player within the CPG industry space with business operations spread across the globe, wanted to identify the potential opportunities to make their supply chain more resilient and maintain topline revenue and market share even in case of a supply chain upset. Additionally, the client’s procurement function was also fragmented, which resulted in challenges during external events – such as natural calamities. These events send buyers scrambling for available capacity without any teamwork and collaboration.
To identify the potential opportunities and help the client achieve a more resilient supply chain, SpendEdge’s supply chain risk experts tailored an extensive research methodology. The research approach comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.
During the course of this engagement, the CPG industry client was able to align their category management strategy with supply chain risk exposure. Additionally, they also monitored the complete process, starting from risk analysis and risk evaluation through risk management and right up to residual risk control. This subsequently helped them better source and accordingly adjust the total cost of ownership.
Fundamental questions answered in this supply chain risk management engagement
The CPG industry client, with the help of the supply chain risk management solutions, gained actionable visibility into all types of risks including by cost and quality, supplier, category and location, natural disasters, and legal and compliance.