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SpendEdge helps a Leading Food Retailer Develop a Risk Management Framework to Save Millions – A Retail Industry Engagement

Engagement Overview:

A leading player in the food retail industry wanted to enhance their procurement strategies to overcome operational risks. The failure of their supply chain strategies had greatly impacted their revenue, as a result of which they wanted to implement a detailed supply chain risk assessment to gain a competitive advantage.

SpendEdge was approached by the retail industry client to leverage its expertise in risk assessment and develop an accurate risk mitigation strategy. The supply chain risk assessment engagement entailed a quantitative analysis of various supply chain categories to devise an exclusive risk management approach.

About the Client:

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A leading multi-brand food retail major operating in the U.S., which recently made its way into the coveted top 10 listing of the world’s largest and most successful retailers.

Business Challenge:

The retail industry client was facing several challenges owing to their inefficient supply chain risk management strategies.

How did SpendEdge Help the Client?

  • Step 1: Identifying the risk factors and estimating their impact on business operations

Supply chain risks deter businesses from achieving their organizational goals; hence, the first step in supply chain risk assessment deals with the identification and estimation of the impact of risk factors. By doing so, the food retail client was able to classify risks based on the severity of the impact.

  • Step 2: Developing a suitable supply chain risk mitigation strategy

An effective risk mitigation strategy utilizes three resources namely – processes, people, and technology. Also, since each of these factors plays a key role in analyzing the gathered data, it’s imperative to establish an infrastructure that is dedicated to continuously gathering, interpreting, and acting on the gathered data. request proposal

  • Step 3: Developing a precise risk assessment framework

To devise an effective supply chain risk assessment framework, it is essential to analyze the gathered data to identify risks and develop strategies to avoid mishaps. The developed risk assessment framework also helped them identify and manage both short and long-term supply chain risks.

Benefits of the Engagement:

The risk assessment experts at SpendEdge devised a three-step comprehensive approach that helped the food retail client to develop a precise risk assessment framework to enhance procurement efficiency.

Why is supply chain risk assessment essential in the retail industry?

One of the most demanding concerns facing retailers today revolves around supply chain disruptions and its associated impact on revenue, profit, and brand reputation. Moreover, financial crises, natural disasters, and changes in political stability across developing countries have highlighted vulnerabilities both for individual organizations and for industries. However, supply chain risks also include risks arising due to factors such as supply disruptions, transportation delays, embargos, and outsourced service failures.

The diversity in the retail risk environment demonstrates the importance of mitigating supply chain risks with an integrated risk assessment framework. This is exactly what the supply chain risk assessment experts at SpendEdge specialize in. Our industry-specific guidelines help clients to implement an accurate supply chain risk assessment framework to ensure that they meet the industry and framework standards.

Key questions answered in this supply chain risk assessment engagement include

Risk Assessment

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Our Findings:

SpendEdge’s supply chain risk assessment solutions are guided by the principles of supply market intelligence to help clients enhance their overall supply chain efficiency. In this risk assessment engagement, the three-step approach aided the retail industry client to integrate supply chain data from various sources to identify supply chain risks and implement appropriate risk mitigation strategies.

Our approach empowered the retail industry player to be more confident in their data so that they can quickly detect supply chain risks. Also, drawing conclusions on this engagement our experts suggest that it is imperative for every organization to identify the key elements of the supply chain that are at risk and keep them under close supervision.

While risks in the supply network tend to paralyze most supply chain operations. Successful businesses are the ones that efficiently manage such risks and reinstate confidence throughout the global supply network. Nevertheless, if rightly done, the benefits are much more than cost reduction.

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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.

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Most Popular Retail Industry Trends This Year

Shopping is now gradually becoming less of a chore and more of an experience – all thanks to the latest retail industry trends. Customers are becoming more demanding, which makes it important for retailers to become open to change. Modern consumers are emphasizing more value on experiences over physical items or commodities. So, when shoppers purchase tangible products other than regular commodities such as groceries, they expect those products to either tell a story, be completely unique, fit into their lifestyle, or all of the above. Retailers who aim to retain their existing customers and gain new ones must keep track of the current retail industry trends so that there are in line with what customers want. This blog from SpendEdge sheds light on some ofRequest Demo_SE the retail industry trends that are garnering equal popularity among customers and retailers:

Visual Search 

Visual search is one of the most advanced retail industry trends today. Imaging the convenience and ease that a consumer could gain by just snapping a photo of the desired product to generate relevant search results rather than relying on a word-based search query. Visual search technology utilizes machine learning algorithms to recommend and search products online based on the matching attributes of the photo of the product shared by the customer. The results generated are of products with a similar shape, color, pattern, or even texture. This technique is particularly suited for retailers with large inventories or search results.

Predictive experiences 

Top companies in the market are leveraging innovative technologies such as predictive modeling, machine learning, and artificial intelligence to predict customer behavior and generate right-on-target messaging and product recommendations. These high-tech retail industry trends are also being used by retailers to hyper-personalize a customer’s shopping experience, especially in the case of online shopping.

Shopping is now gradually becoming less of a chore and more of an experience - all thanks to the latest retail industry trends. Click To Tweet

Rise of digital mobile wallets 

Mobile phones have now become an indispensable element of our lives. The use of mobile phones as a medium of payment is one of the most prominent retail industry trends this season. Smart players in the retail industry have already caught on to this trend. They are now providing seamless mobile payments by adopting APIs. Adopting flexible payment methods will help retailers provide their customers with ease of payment and convenience.

Customer-controlled delivery and return 

Today’s customers want products that are available exactly how, when, and where they want them. Smart companies are giving in to these demands by putting control in the customers’ hands. Several top companies have also introduced the concept of purchase online and collect in the store, which allows customers to pick up their orders faster than what it would take for an e-commerce order.

Growth of social media 

Social media is one of the most effective platforms for businesses and customers to connect with one another. The use of social media will continue to be one of the most effective retail industry trends in the years to come, considering the fact that majority of the customers are hooked on to this platform. Retailers will need to up their game by using social media and social apps to tell stories and engage with fans in real time rather than simply posting photos or updates.

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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.

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Supply Market Intelligence Helps a Leading Cosmetic Industry Client Track Commodity Markets and Suppliers

Overview of the Cosmetic Industry

In the retail sector, the cosmetic industry continues to be an urban-driven phenomenon. The proliferation of the cosmetic industry is dependent on the level of urbanization in a region, and consumption patterns hinge on end-users’ disposable incomes. With changes in lifestyle, people in emerging countries have started spending considerable sums on health and wellness. They also devote more attention to maintaining personal hygiene and grooming. This tendency offers several opportunities for leading players in the cosmetic industry to leverage and expand their presence in the market. The shift in consumer preferences reflects a broader acceptance of currently under-represented product lines. Furthermore, the consumer’s demand for products with request free proposalnatural ingredients will trigger the need for organic goods in the global cosmetic industry.

The Business Challenge and Journey

The client, a leading player in the cosmetic industry, was looking at leveraging solutions for supply market intelligence. The client was facing issues related to increased uncertainty in the economic markets. Therefore, the client wanted to monitor market conditions closely and respond appropriately through improved supply chain strategies. Also, since the instability of their supply chain had increased their risks while conducting business operations, concerns were being raised on the continuity of service delivery operations.

Moreover, the company’s supply chain management executives recognized the tremendous scope of implementing a supply market intelligence study to minimize the impact of supply chain risks on profitability. As such, they were looking at reducing the company’s risk profile by implementing strategies to maximize their financial gains.

To identify challenges in the supply chain activities, the strategic sourcing analysis experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the cosmetic industry. The experts also compiled information across a wide array of reliable sources such as trade shows, company presentations, industry forums.

Why should you leverage supply market intelligence?

Supply market intelligence helps organizations in developing a competitive advantage by reducing risks through increased knowledge of the supply market dynamics and supply base composition. It acts an essential component in minimizing supply chain risks to maximize ROI.

In fact, best-in-class companies have a dedicated supply market intelligence team that is committed to research and reporting of market indices, cost economics, price inflations, market trends, and other elements that feed into budget planning and marketing initiatives across the enterprise.

Fundamental questions answered in this strategic supply market intelligence study include:

Cosmetic Industry

The Result

The last few years have witnessed a stagnation in the sales of cosmetics in several developed markets. This has compelled manufacturers in the cosmetic industry to capitalize on growing consumer interests in the health and wellness segment. This also enabled them to improve sales by investing in new products, which contain natural ingredients.

 SpendEdge’s supply market intelligence solution offered relevant insights that helped the client to develop effective strategies to streamline their procurement processes. It also helped them track commodity markets and suppliers. Our supply market intelligence solution assisted the client in consolidating their purchasing power to secure the best value available in the marketplace. Moreover, the supply market intelligence solution offered detailed insights that helped the cosmetic industry client to work closely with customers to react quickly to market disruptions and opportunities.

Factors promoting the growth of global cosmetic industry include:

  • A multichannel distribution system: Cosmetic products are now available in several locations, online stores, department stores, boutiques, and discount retailers. Therefore, how and where the customers get their cosmetics will reflect your company’s brand and culture. Also, by adopting a multichannel distribution system, you can improve the visibility of your cosmetic brand.
  • Keep track of the industry trends: Monitoring and keeping track of the current industry trends can help you carve a niche for your business. This enables you to identify channels to promote your existing products and to develop new ones to fit the market’s needs.
  • Attract the target market: The ability to track your target market define the success of your business. Organizations looking to gain a competitive advantage in the cosmetic industry must devise specific strategies and tactics to gain entry into the market, maintain their position, and gain significant market shares.

The global cosmetic industry has come a long way, and today the cosmetics industry rakes in over 50 billion dollars each year.  Leading firms offer more scientifically advanced products due to developments in technology, ingredients, and formulas. Therefore, it becomes essential to understand the industry trends of today and the outlook for future trends. Supply market intelligence acts as a backbone to understanding market trends, and trace materials and products through the supply chain.

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SpendEdge’s Supplier Profiling Helps a Renowned Cosmetic Products Manufacturer Improve their Service Efficiency

Overview of the Cosmetic Products Industry

The cosmetic products manufacturing space is highly dynamic with the extensive use of innovation to meet the growing demand for luxury and prestige produce lines among the audiences. Companies in the consumer packaged goods industry are facing the need to reformulate their product offerings and introduce active ingredients to meet the needs of the health-conscious consumers. Increasing per capita income and growing awareness about beautification are the factors that are sustaining the growth of the cosmetic products manufacturing industry. In addition, the growth of the cosmetic products industry can also be attributed to the radical shift toward organic products.

Although the changing lifestyles and varying climate changes contribute to the growth of the cosmetic products manufacturing sector, some of the factors that may hinder the growth of the industry include.

  • Keeping up with the evolving beauty standards: The competition in the cosmetic products industry is relatively high with the influx of both multinational and regional players. Homegrown players need to design brand-building strategies to respond to the frequent changes in the outlook of the customers. As the consciousness among the consumers increases, brands should keep innovating to stay relevant and address the growing needs of the populace.
  • Innovations: With the drawbacks associated with the use of certain chemical compounds in the manufacturing of cosmetic products, prominent companies in the CPG industry are focusing on innovations to develop herbal and natural beauty products. The rising need for more organic products also involves high investments in research and development.
  • Regulatory challenges: At present, cosmetic products are subjected to stringent regulations from the Federal Food, Drug and Cosmetic Act and the Fair Packaging and Labeling Act. The stringent government regulations are compelling major companies to eradicate issues pertaining to misbranding and adulteration.

In this challenging environment, companies in the CPG industry should ensure that they provide transparency and traceability in their supply chain process and mitigate any risk pertaining to supply chain efficiency. Organizations can leverage the use of effective supply management solution to profile the most suitable suppliers and reduce risks associated with production delays and ensure consistency in their product offerings.request free proposal

The Business Challenge and the Solution Offered

A renowned cosmetic products manufacturer wanted to understand the latest industry trends and identify the key suppliers in the cosmetic products manufacturing space. The cosmetic products manufacturer wanted to keep track of the supplier performance and understand the strengths and weaknesses of their suppliers. With the help of a supply management solution, the cosmetic products manufacturer wanted to profile the most suitable suppliers from a pool of suppliers and engage with the right suppliers to reduce the time-to-market for the products.

To identify the pricing models and improve their operational efficiency, the procurement experts at SpendEdge carried out extensive research across prominent stakeholders in the CPG industry. The procurement experts also compiled information across a wide array of secondary sources such as trade shows, industry forums, and company presentations to assess the performance of the suppliers.

The supply management solution offered by SpendEdge helped the cosmetic products manufacturer understand the latest trends and profile the most suitable suppliers to reduce procurement costs and excess inventory costs. The cosmetic products manufacturer was able to maintain a customer-focused business to deliver product and service optimization and ensure the desired quality to the customers. The supply management solution also assisted the client in mitigating production delays and increasing the time-to-market for the products.

Fundamental questions answered in this supplier profiling solution include:

Sp- cosmetic

The Results

The supply management solution offered by SpendEdge helped the cosmetic products manufacturer identify the most promising suppliers to minimize leakage and maverick spend. The client in the CPG industry was able to efficiently manage their supplier database and segment suppliers based on criticality.

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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.

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Category Management Assists a Leading FMCG Sector Client Realize Savings of 5% for the Category

Overview of the FMCG Sector

The global FMCG sector consists of goods that are traded very frequently due to repeated purchases and are the first to leave the supermarket or hypermarket shelves. The FMCG sector is highly sensitive to changes in disposable income or, in other words, very demand elastic. The market share of the FMCG sector is expected to increase significantly over the next few years primarily due to macroeconomic factors such as rising disposable income, request free proposalimproving demographics, and expansion of organized retail in developing countries. Additionally, the FMCG sector firms are now increasing their focus on e-commerce due to the increasing mobile internet penetration.

However, our analysis of the recent FMCG trends shows that the FMCG sector firms are facing challenges in terms of:

  • Poor supply chain infrastructure: Lack of storage and transport facilities coupled with rising costs of raw materials and energy has been a significant challenge for the firms in the FMCG sector. For instance, food items tend to have a significantly shorter shelf life and require quick delivery systems, regular replenishment of products on the shelf, and vastly different distribution and storage requirements.
  • Multiple micro-markets: Multiple micro-markets across geographies have distinct needs, which triggers category preferences that vary from state to state. This poses a continuous challenge for players in this sector to balance out the market needs, and the inefficiencies related to customization.

Many such factors and FMCG trends are compelling firms in the FMCG sector to leverage the use of category management solutions. 

The Business Challenge and Journey

Client background: The client who approached SpendEdge is a multinational food manufacturing company. They produce convenience food products and snacks through its manufacturing facilities, which are present in more than 15 countries across the globe.

Client issue: The client sought to identify and implement cost-saving methods to reduce its overall operational spend in the Asia-Pacific region and identify the latest FMCG trends and their impact on the business. The client had a long-term relationship with a major premix manufacturer, and the premixes were being single-sourced. The pricing of these premixes was on an upward incline due to the depreciating value of the currency and suboptimal weather conditions affecting the supply of raw materials. To generate significant savings, the cost of premixes had to be optimized. However, the key challenge in doing so was the client’s limited visibility into the primary cost drivers contributing to the overall premix cost.

To help the client realize its cost-saving goals, SpendEdge’s category management experts followed a comprehensive research methodology and carried out discussions with prominent stakeholders in the FMCG sector. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to identify the key negotiation levers to dictate favorable price terms with the premix supplier and the latest FMCG trends.

Client journey: During the course of this category management engagement, the FMCG sector client identified the key cost drivers impacting the overall premix cost. These included the cost of packaging, blending, transportation and losses owing to wastage, along with the cost of quality control, and clearing and handling charges. Additionally, the client was able to work with the supplier to develop a mutually beneficial periodic review and price revision mechanism.

Key questions answered in this category management engagement

The Results

With the help of SpendEdge’s category management solution, the FMCG sector client was able to reduce the overhead expense allocations through robust supplier negotiations. Additionally, they established a supply chain model connecting the premix manufacturer and their raw material supplier to reduce costs. This resulted in the client achieve savings of more than 5% for the category.

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Procurement Best Practices Study Helps a Leading Multi-Brand Retailer Deliver Personalized Experience While Controlling Costs

Overview of the Retail Industry

The retail industry across the globe is fragmented and include companies selling goods and commodities for household consumption. The retail industry relies on factors such as increasing disposable income, rising consumer spending, and relative growth in the GDP to gain sustainable growth. Additionally, today, consumers across the globe are longing for convenience, creativity, and authenticity in the products being offered to them due to the recent shift to a more customer-driven economy. Amid fluctuating consumer preferences and rising consumer spending habits, the growing incidence of improved lifestyles around the world is inspiring the growth of the retail industry.

However, the retail industry is expected to witness a few challenges in the coming years. The factors include:

  • Supply chain: Retail industry firms are coming up with feasible ways to curtail the operational cost without comprising on the quality of the products offered to encounter the rising demands of the target audience. Additionally, companies need to ensure that right products are delivered to the consumers at the right time to stand a chance in this competitive market.
  • Higher disposable income: Over the next few years, customer spending power is likely to increase due to the steady recovery of the global economy.

These factors are forcing companies in the retail industry space to leverage the use of procurement best practices solutions. Procurement best practices solutions provide firms information about the best practices followed by their peers in the industry space and ensure the delivery of high-quality product and service offerings and personalized experience while controlling costs and driving profitability.request free proposal These solutions also help companies adopt best-in-class sourcing and procurement strategies across their business operations.

The Business Challenge and Journey

The client, a leading multi-brand retailer with business units spread across the globe, wanted to identify their peers across the retail industry space, key suppliers, and evaluate their sourcing and procurement best practices and capabilities to cut down their maverick spends across the supply chain. Additionally, they wanted to discover innovative potential partners along with advanced risk management strategies, control capabilities, and governance throughout the supply chain and service provider networks.

To help the client adopt best-in-class sourcing and procurement strategies, the best practices experts at SpendEdge tailored a comprehensive research methodology. The all-inclusive methodology included primary research coupled with qualitative and quantitative data collection procedures. The experts also gathered information from a wide array of secondary sources such as paid, company presentations, industry forums, and industry database in the retail industry space.

The procurement best practices engagement helped the retail industry client identify high-performing and low-risk suppliers and service providers to control costs associated with regulatory compliance. Additionally, the client obtained insights into a supplier, category, region, and branch level spend intelligence to guide capital allocation strategies. This helped them achieve operational efficiency and strict spend compliance.

Fundamental questions answered in this procurement best practices study include

The Results

The retail industry client identified the functional drivers and commercial decisions that impacted the profitability and implement best-in-class sourcing and procurement strategies. This helped them save millions across the supply chain.

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