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A Leading CPG Company Mitigates Risks and Improves Cash Flow Margins with SpendEdge’s Supplier Risk Analysis

CPG Industry Overview

Profitability is the key aim of all companies in the CPG industry.  But with fast-changing consumer preferences and shifting channel landscape, CPG companies have been forced to cut their costs and improve their supplier risk assessment process to address unprecedented risks. Businesses in the CPG industry need to devise a way to obtain a larger return on their investments and improve profitability.

Business Challenges Faced

The client is one of the leading companies in the CPG industry, based out the United States, and has operations spread across the globe. However, factors such as increasing trade wars and tariffs in the US, rising raw material costs, stalled demand, and declining profit margins were increasing supplier risks. The inability to manage such supplier risks was resulting in significant monetary losses, damaging the company’s reputation, and resulting in regulatory penalties, production delays, and product recalls.

The client, therefore, approached SpendEdge to leverage their expertise in conducting supplier risk analysis and profitability assessment. With SpendEdge’s supplier risk analysis solutions, they wanted to identify typical risks associated with key suppliers in the CPG industry, their impact on the supply chain, and analyze the overall efficiency of the firm in generating returns for its shareholders.

The key financial objectives client aimed to achieve through the supplier risk analysis engagement were:

  • Compute gross profit margins and operating profit margins to determine functional areas that were impacting the firm’s profitability.
  • Propose measures to increase value obtained from existing suppliers and improve the cash flow margin.



Spend Management: Reducing Purchase Spend for a CPG Industry Client

Engagement Overview

A leading CPG industry client wanted to address the challenges emerging due to inefficient spend management. As a result, the client wanted to leverage SpendEdge’s spend management engagement to enhance spend capabilities across their supply network and drive topline revenue growth. During the course of this engagement, the spend management experts at SpendEdge devised an all-inclusive approach which consisted of primary and secondary research methodologies.

Additionally, a detailed quantitative analysis of the various spend factors across the CPG industry client’s supply network was carried out to request proposal help them identify, evaluate, and prioritize each factor contributing to indirect spends.

About the Client

The client is a leading CPG industry player in the United States.

Business Challenge

The CPG industry player was facing difficulties in enhancing their spend management capabilities across their global supply network. Additionally, the client wanted to tactically address the burgeoning nature of their inefficient spend management system.

How did SpendEdge Help the Client?

Step 1: Collected and categorized organizational spend data

Today it is essential for organizations in the CPG industry space to collect and categorize spend data from a multitude of sources supply network to efficiently identify irrelevant sources of spend. By doing so, establishments can effectively decrease and overcome the inexorable circumstances caused by an ineffective spend management system.

Step 2: Devised a flexible spend management framework that aimed at reducing the organizational and supply risks

The dynamic nature of the supply chain called for the refinement of the CPG industry client’s spend management capabilities. The development of a proactive spend management framework required a combination of measures, which included – changes to the organization’s data management structure, superior spend management strategies, and the use of advanced spend management frameworks.

Key questions answered in this spend management engagement include

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Benefits of the Engagement

With the help of SpendEdge’s spend management engagement, the CPG industry client enhanced the visibility of their supply chain processes by establishing an interconnected relationship between different tiers of the supply network. Additionally, the client developed a holistic spend management approach. The approach accounted for major changes in organizational processes, data management, and data governance, which helped them address changes in market trends including the changes in regional and global demands.

Why incorporate spend management solutions?

With the ease of availability of advanced technological solutions like spend management systems, it is now possible for organizations across the globe to bring about massive cultural transformations as a fundamental part of their business plans. Click To Tweet

Our Findings

While leading CPG industry establishments turn to robust spend management solutions to reduce purchasing spend, they also understand that a precise spend management framework relies on the reliability and quality of the underlying spend data. This case study on spend management from SpendEdge concludes that a successful spend management system must be based on a robust data management foundation.

To know more about our spend management for CPG Industry players

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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:request proposal

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 organization’s 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 KPI’s 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 frameworkrequest proposal

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.

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

Consumer packaged goods

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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?

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

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Driving Operational Efficiency through Category Management in the Skin Care Products Segment

Engagement Overview:

The client, a pioneer in the skin care products segment, wanted to address a wide range of challenges arising due to inefficient category management, it included challenges related to – supply chain inefficiencies, procure-to-pay, supplier relationship management, and so on. To identify and focus on the key performance metrics in these areas, the CPG industry client approached SpendEdge to help them leverage it’s strong expertise in category management to address such challenges.

The category management engagement entailed the use of a detailed quantitative analysis of various categories within the skin care products segment to identify and benchmark the best suitable category management strategy.request proposal

About the Client:

A multinational company specializing in the manufacturing and sale of skin care products.

Business Challenge:

The CPG industry client was facing several challenges due to factors such as changes in the consumer profiles, competitive pressure, industry consolidation, economic factors, and technological advancements. To overcome such challenges and devise multifunctional synergies across their supply network, the skin care products client wanted to deploy an advanced category management strategy.

How did SpendEdge Help the Client?

  • Step 1: Defining the role of each category within the supply network

The initial step revolved around the process of defining the role of each category to help the skin care products client identify the importance of the category. This further helped them group different product categories based on the priorities assigned to them.

  • Step 2: Developing category scorecards

A category scorecard is the strategic allocation of work to achieve the goals and reach the objectives assigned for each category. It included a detailed assessment of the different categories to help the client develop precise goals and targets for each category.

  • Step 3: Developing a strategic approach to fine-tune category management strategies and drive operational efficiency

The scrupulous three-step approach helped in the fine-tuning the client’s category management strategies to ensure they meet the scorecards goals and objectives. It also enabled the skin care products manufacturer to scrutinize their category management strategies to meet organizational goals, increase ROI, enhance market share, and drive profits.

Key questions answered in this category management engagement include:

Skin Care Products

Benefits of the Engagement:

The category management engagement helped the skin care products client to set clear category objectives and fine-tune their category management strategies to boost savings. Our experts worked as an extension of the skin care products firm to identify the success factors that uncovered major opportunities to enhance brand perception.

Why is category management essential?

With the growing competitive pressure in today’s CPG industry, players are constantly faced with the challenge of enhancing brand visibility. Leading players in the manufacturing sector are now looking at partnering with retail industry firms to enhance sustainable category sales. Also, top players in the CPG industry are focusing on developing advanced category management programs to enhance their operational efficiency and drive sales.

SpendEdge’s category management solutions are tailored to help players in the CPG industry compete more effectively by minimizing wasteful spend. Aligning business processes with category management strategies helps achieve organizational goals set for your brand; thereby, establishing your brand as a true leader in the category and differentiating you from the global competition.

Our Findings:

Category management will enable organizations to increase competitiveness and enhance value from a customer’s perspective. If your organization is on the lookout for an objective way to enhance operational efficiency and category growth, category management is the ideal approach to identify alternative and feasible ways to enhance category performance.

Moreover, effective category management acts as an instrumental technique for enhancing business value by overturning the inertia that often sets in when businesses get confined to set standards.

To know more about our category management solutions
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Best Practices to Ensure Top Notch Supplier Quality

Manufacturing a product isn’t the same as it was about ten years ago, and it will continue to evolve. Today’s fast-paced business world is advancing to such an extent that business leaders must choose to consistently adjust to new emerging strategies to be at the top of the competition. Consumer packaged goods (CPG) manufacturers are under intense pressure to deliver quality products while keeping costs down. The push to globalize to meet customer demand, coupled with increasing mergers and acquisitions, makes it almost impossible for CPG companies to cost-effectively manage the quality of ingredients and materials across the supply chain. Supplier quality management (SQM) is a critical activity that relies on suppliers in the provision of the goods or services. It involves managing, monitoring, and responding to the changes in the supplier’s ability to fulfill customer’s needs on time and to meet the agreed quality specifications. Here are some best practices that will help CPG companies to streamlinSE_Demo2e their supply quality management better:

#Supplier quality check 1: Measure and track cost

If a product quality issue arises, it is often the parent company who bears the cost of poor quality, even though the fault may lie with a supplier. These costs can consume a significant portion of revenue, yet many companies fail to measure and track them in a consistent manner. This results in companies shelling out a bomb on poor quality every year, without knowing where or how to recover these costs. Companies must find out how much it costs to manufacture a good quality product. An appropriate ‘cost of poor quality’ metrics can also help to calculate supplier charge-backs accurately, and recover expenses faster.

#Supplier quality check 2: Set up a  cost recovery system

Agreeing on a cost recovery process with the suppliers can boost accountability throughout the supply chain. It may allow CPG companies to recover the cost of poor quality from a supplier with much more ease, and encourage them to look at and address issues that are causing poor quality quickly and efficiently.

#Supplier quality check 3: Supplier audit

Supplier audit is one of the key factors that will aid in ensuring supplier quality of CPG companies. Businesses can come to a consensus with suppliers on a procedure for a quality check against non-conformances in manufacturing, quality, service provision, compliance, etc. Audits will help companies identify areas for improvement and help ontake corrective actions, response and resolution processes, and targets. It will ensure that the supplier quality meets the desired standards.

#Supplier quality check 4: Build supplier relationships

Tracking supplier quality is not just about avoiding costly recalls, penalties, and lawsuits. It also aims at generating significant value for the business by strengthening overall product quality, enhancing the company’s reputation and credibility, lowering costs, and driving superior business performance. Companies must treat the suppliers as an extension of their enterprise and not a separate entity. Quality standards, audits, and other processes must be enforced with the same rigor and commitment in the supply chain as in the rest of the organization.

To know more about how to ensure supplier quality for your company

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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 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.request free proposal 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. 

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 Results

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.

To know more about our supply chain management solutions

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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 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.

Developing supply chain management capabilities is crucial for companies to avoid revenue losses. Request a free proposal and leverage our supply chain risk maangement solutions. 

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.

Wondering how you can conduct supply chain risk analysis?

Request a free demo from our experts and gain detailed insights.

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.  For detailed insights into the supply chain risk management solution offered, request for more information.

Fundamental Questions Answered in this Supply Chain Risk Management Engagement

The Results

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.

Want to address supply chain risks? Get in touch with our experts and access our supply chain risk maangement solutions.  


Category Management Study Helps a CPG Industry Client Develop Superior Sourcing Strategies

Category Overview

Lately, consumer’s enthusiasm towards the CPG industry has narrowed down drastically due to challenges such as the weakening currencies and slowing GDP growth. Moreover, CPG industry players have been facing pressure from competitors, which has compelled them to rely on strategies to drive traffic and enhance their profit margin in this ever-changing dynamic competitive environment. Also, to understand the spending patterns across the supply chain, leading organizations in this industry space have started adopting category management studies to gain better visibility into the procurement process and devise superior sourcing strategies.

Moreover, the category management studies offered by SpendEdge help CPG industry firms decrease their overall inventory spending.

The Procurement Pain Point and Insights Offered

A global CPG industry client was facing predicaments in devising superior sourcing strategies and maintaining better relationships with their suppliers. As a result, the client wanted to design a strategic procurement intelligence report to analyze the customer data. Additionally, they wanted to gain an understanding of the supplier’s pricing and evaluate their best practices.request free proposal

The category management experts at SpendEdge devised a blended two-step research methodology, which involved primary and secondary research coupled with quantitative and qualitative data collection methodologies.

This category management study helped the CPG industry client evaluate the dynamics of the market and gain insights into the supplier’s cost structure and pricing across the supply chain. Additionally, the client was able to increase their visibility into the category management processes through a comprehensive SWOT analysis.

Fundamental questions answered in this category management study include

CPG IndustryBusiness Outcome

The CPG industry client was able to improve their supplier selection decisions with the help of this category management study. Additionally, this engagement helped them reduce maverick spends across the supply chain.

To know more about our category management solutions

request free proposal

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