Visibility the number one solution for disjointed consumer goods supply chains
Growing supplier networks, direct-to-consumer sales and continued disruption have made consumer goods supply chains unwieldy, but the answer lies in enhancing visibility says a new white paper
Fast-Moving Consumer Goods (FMCG) firms are increasingly working with more suppliers and across more channels, even as disruption continues and throughput speed increases. The answer to this rising complexity is deep visibility into supply chains says a new white paper.
The cutting through complexity and climbing costs in consumer goods supply chains white paper, which is free to download now, find that FMCG supply chains are facing input shortages, geopolitical risk, labour constraints and transportation performance issues.
One solution for these potential disruptions is to find more sourcing and manufacturing partners across a wider number of locations to reduce risk.
However, coordinating all of these partners while maintaining operations and delivering in a time of high demand volatility is incredibly challenging.
Over the last four years we have seen a plethora of ... black swan events happening at various places globally
FMCG faces up to the unknown
Expert report contributor Alexandros Skandalakis, Director, Operations Strategy and Transformation for Greek nutrition company Delta Foods SA, summarises the situation for consumer supply chains over the last four years in one word: “Ambiguity”.
“Over the last four years we have seen a plethora of ... black swan events happening at various places globally,” he notes.
For Marc Bekkers, Director Customer Service & Logistics, Heineken Netherlands Supply, some of the events his team have encountered include “demand volatility, new capacity constraints in our production distribution and low material availability.”
We need more visibility and a stronger grip on critical resources
Even “simple things like warehousing and transportation have suddenly become bottlenecks,” in this environment says Bekkers, “which is completely new to us.” Previously, these could be acquired reliably at short notice, but changing market dynamics have put them at a premium, “so we need more visibility and a stronger grip on critical resources,” he says.
It has become “more and more complex to balance efficiency and effectiveness,” concludes Antonio Ventriglia, Group Head of Logistics for Coca-Cola HBC, “putting severe pressure on operational capacity in warehousing, transportation, and rates. This requires adaptation, agility, flexibility and close partnerships with suppliers and customers,” both internal and external.
Firms react with visibility-enhancing technology
The foundation for this kind of approach relies on a high degree of visibility into the most mission-critical components in each organisation’s supply chain.
For Coca-Cola HBC this has been into the last mile, leading to investment into a transport visibility solution. With this, they can now see “how our delivery trucks are operating from the moment they are called off for loading at our warehouses, to the moment they deliver to customers’ premises,” giving them “visibility and transparency on delivery,” says Ventriglia.
The transport type is selected according to route and cargo, and is always full
Due to this greater field of vision, they can “address the exceptions and manage these proactively.” Now, they are no longer “reactive, only receiving information about a delivery delay directly from customers or logistics providers,” and instead have “shifted to more predictive approach to prevent service issues with customers.”
Aksel Eroglu, Global Head of Operations Strategy and Supply Networks for Nestlé, also notes that investments into transport network visibility have paid off for them. They have combined “Advanced demand and supply planning solutions to better plan or synchronise our supply chain end-to-end,” and a “hired truck fleet to execute route loops and effectively redeploy trucks where needed to ensure service continuity.”
With this the “transport type is selected according to route and cargo, and is always full,” which “reduces inventory and waste, helping to cut CO2 emissions” explains Eroglu.
An upward trajectory
The white paper sees no end to this drive towards more investment into visibility solution. Indeed, companies are increasingly understanding the value of improving supply chain oversight.
The research notes that surveys from Deloitte, Willis Towers Watson (WTW) and TraceGains of the consumer and F&B sectors all found that supply chain visibility is now seen as the primary measure to reduce risk, improve performance and increase resilience within supply chains.
For example, a Deloitte survey of 150 consumer products executives found that 30% most profitable companies questioned were much more likely to be making investments into visibility related outcomes. For example, there was a 44% positive difference between these top performers and the remainder for investments into stakeholder transparency, a 27% gap for collecting detailed supply chain data and a 26% leap between them and the rest for investment into secure data sharing capabilities.
Therefore, the white paper concludes that in an industry that only continues to move faster and faster, and that continues to face volatile conditions, the need for visibility is only deepening. The research expects related investments to be one of the central focuses for consumer goods companies for the next half decade.