The more they gear these efforts to leading indicators (such as projections of stockouts or high inventory positions), the more planners can escape from firefighting activities. By identifying best-in-class approaches and sharing them across planning teams that use digital platforms, companies can create an efficient, sustainable process to deal with the problem. How often have you seen individual planners working on their own analyses in an inconsistent and nonrepeatable way, working on relatively unimportant problems, or struggling to find the right answers with incomplete information? What’s more, today’s planners often solve similar problems again and again-for example, they may calculate the likely cannibalization effects on existing products whenever a new line is introduced. For many companies, however, the initial benefit of digitization is its ability to support current planning activities by speeding up and standardizing the problem-solving process. Sometimes, as we’ll see below, that involves the use of advanced analytical-optimization techniques. Today, some CPG companies are finding new ways to address these challenges with the aid of digital technologies. In fact, it hadn’t identified the important decisions it had to make to improve its supply chain’s performance, so it couldn’t structure its data in a useful way or even ensure that it was collecting the right data from customers. One global CPG company collected hundreds of gigabytes’ worth from its customers’ systems, for example, but couldn’t mine that data. Yet many organizations struggle to turn that data into actionable insights. One area of particular interest has been the use of point-of-sale data from retailers to build a more accurate picture of real-time customer demand. So CPG companies want to find data-driven solutions for the disconnects in their supply chains. Not all of those bets paid off, and it started to experience service issues. When that assistance wasn’t forthcoming, the company had to adopt a different approach-reducing safety stocks in categories where it thought demand would be relatively stable. To achieve them, it needed help from other parts of the organization, including more accurate forecasts and shorter manufacturing lead times. One CPG company gave the function aggressive top-down targets to reduce inventory, for example. Many efforts to improve supply chains focus too narrowly. But capturing those gains requires a portfolio of actions-from better sharing of information to vendor-managed inventory approaches to close cooperation on sales and promotion strategies. The total margin-enhancement opportunity from closer collaboration between CPG companies and retailers may be approximately 2 percentage points. Or companies may find it hard to make the numerous changes required to improve. Cross-functional meetings may struggle to make decisions and end up merely sharing information. Sometimes, for example, companies aim to foster cross-functional collaboration but have difficulty achieving it when they execute. Several challenges bedevil efforts to align players across the supply chain. Why is it hard to improve integrated supply chains? If supply chains are hard to run efficiently, the issue is compounded by wider industry trends-global networks, shorter product life cycles, channel and SKU proliferation, and rising service demands. Whether the problem is inaccurate forecasts by marketing and sales, long procurement lead times, or poor compliance with manufacturing schedules, the result is the same: costs rise, the health of the inventory suffers, and service levels fall (exhibit). Other supply-chain issues are created within a company, but outside the function: differences in focus, incentives, and priorities among other parts of the organization all too often manifest themselves in poorer performance in the supply chain. Multiply those challenges across many business units and geographies, and the problem gets even tougher. But in this effort to maximize local performance, it’s easy to make decisions that have a negative impact on other parts of a company and hard to manage the inevitable conflicts and trade-offs in an optimal way. Sales-operation managers want to meet customer-service demands and minimize stockouts. Distribution centers want to control inventory levels and handling costs. Yet even after many years of focusing on cross-functional transformations, many CPG companies struggle to bridge significant gaps in their supply chains.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |