Documente Academic
Documente Profesional
Documente Cultură
Goods Industry
Making your
Supply Chain Famous
2
Rapidly changing consumer
preferences, growth in
emerging markets, greater
private label penetration and
volatile market conditions
are creating significant
challenges for consumer
goods companies and their
operational capabilities.
Consumer preferences are
changing rapidly in both
developed & emerging markets.
Increased urbanization and
growth of modern trade have
all fueled worldwide demand
for convenience products. At
the same time, health concerns,
food scares, and environmental
awareness are powering a
desire for sustainable products.
Such rapidly evolving and
diverse demand patterns are
increasingly requiring consumer
goods supply chains to support
regional customization,
sustainability and compliance
with regulations.
Higher private label penetration
means retailers now compete
with and buy from branded
goods makers, challenging
market share with low-priced
house brands and creating
intense cost pressure on
consumer goods supply chains.
These margin pressures are
pushing consumer goods
companies to develop more
innovative products and
packaging as well as optimized
supply chain operating models.
The dramatic increase in price
volatility of raw materials is
placing significant pressure on
operating costs and influencing
many corporate decisions and
practices, from sourcing to
product development to pricing.
Strong growth in demand for
consumer goods in emerging
markets is countered by flat
growth in U.S. and European
markets. At the same time,
many consumer goods sectors
remain highly fragmented. In
the food and non-alcoholic
beverages sector, for instance,
the top 20 companies represent
less than a quarter of a global
market characterized by vast
differences in local taste,
perishability issues and varying
food technologies.
How do consumer goods
companies best respond to
these market conditions and
challenges to build world-class
supply chains that make their
organizations famous?
We are all familiar with
corporations that have famous
supply chains: Dell, Cisco,
Apple and others. However, it
is difficult for many consumer
goods companies to gain
insights from these companies,
as they often are executing
against unique business models
(Dells configure-to-order), or
a complex real-time supply
network (Ciscos multi-tier
supplier integration), or a very
specific consumer market
(Apple with a focused product
portfolio where constrained
new product supply is part of
the market strategy). What is
clear is that these companies
supply chains did not become
famous through a sudden
strategic transformation.
They were built through
the pursuit of continuous
improvement and a relentless
focus on building those leading
capabilities that would provide
competitive advantage within
their industries.
Given limitations on supply
chain development resources,
selecting the supply chain
capabilities in which to invest
is critical to a companys
ability to compete. Different
sectors within the consumer
goods industry have particular
challenges and constraints
that require specific supply
chain capabilities to respond
effectively. However,
Accentures Supply Chain
Mastery Research has
identified six ways in which
consumer goods companies are
responding to todays market
challenges and making their
supply chains famous:
Upgrading supply chain
processes and systems to better
support regional and global
supply chain structures
Intensely focusing on
customer service performance
through the re-invigoration of
sales and operations planning
at a regional and global scale
Optimizing manufacturing
and distribution networks to
improve service and reduce
cost-to-serve
Outsourcing non-core
operations to reduce costs or to
access increased capability
Collaborating with retail
customers to drive growth,
reduce end-to-end costs and
plan new product introductions
more effectively
Integrating sustainability
objectives within supply chain
strategies
3
4
In recent years, consumer
goods companies have built
regional and global supply chain
structures to achieve scale
and tax efficiencies. In fact,
consumer goods companies
have moved more significantly
toward regional and global
fulfilment models than other
industries (Figure 1). To better
support these structures,
consumer goods companies
need to upgrade their supply
chain processes and systems.
The consumer goods industry
was an early adopter of
enterprise systems, including the
now-common use of advanced
planning and scheduling (APS).
However, many consumer goods
companies still use internally-
or custom-built systems, and
few APS systems are being
used across all of a companys
products and channels. There
is clearly more value to be
gained from planning systems
by more fully integrating them
with transactional systems and
achieving greater user adoption.
From a planning process
perspective, while many
consumer goods companies
have centralized their
planning organizationsto gain
analytics based insights, there
is opportunity for further
centralization of processes and
systems, (Figure 2).
Upgrading supply chain processes and systems to better support
regional and global supply chain structures.
SABMiller, the $24 billion
global brewing company, is one
example of a company in the
midst of revamping its supply
chain management system.
The group has begun a major
business capability improvement
program that will simplify
processes, reduce costs and
allow local management teams
to enhance focus on their
markets. Finance, human
resources and procurement
activities will be streamlined by
deploying global information
systems, establishing a global
procurement operation and
selectively outsourcing certain
activities. Sales, distribution
and supply chain management
processes will also be enhanced
and moved onto common,
regional systems platforms. The
programme is expected to take
four years to complete.
1
2010 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
Accenture is a global management
consulting, technology services
and outsourcing company, with
more than 190,000 people serving
clients in more than 120 countries.
Combining unparalleled experience,
comprehensive capabilities
across all industries and business
functions, and extensive research
on the worlds most successful
companies, Accenture collaborates
with clients to help them become
high-performance businesses
and governments. The company
generated net revenues of
US$21.58 billion for the fiscal year
ended Aug. 31, 2009. Its home
page is www.accenture.com.
Endnotes
6 P&G launches supplier environmental
sustainability scorecard, Penton Insight,
13 May 2010
7 Unilever corporate website, http://
www.unilever.com/sustainability/
strategy/vision/
8 Fairtrade chocolate sales set to treble
as Cadbury's Dairy Milk carries ethical
logo, The Times, 22 July 2009
1 SABMiller corporate website,
http://www.sabmiller.com/index.
asp?pageid=149&newsid=1110
2How JohnsonDiversey Implemented
S&OP In Europe, Journal of Business
Forecasting, October 2005
3 Coca-Cola restructuring to generate
immediate efficiencies, Latest
Procurement News, 01 March 2010
4 Procurement strategies: Procurement
outsourcing trend continues, as Colgate-
Palmolive turns over many purchasing
functions to IBM, SC Digest, April 2006
5 Wal-Mart takes retail tips from P&G
India, The Economic Times, 8 April 2008
Contact
For more information on Accentures
Supply Chain Mastery Summit,
consumer goods and services industry
group or offerings please visit www.
accenture.com or contact one of
Accentures industry supply chain
leaders:
Jeffrey Russell
New York, USA
jeffrey.s.russell@accenture.com
Bill Read
Cleveland, USA
bill.read@accenture.com
Pedro Bejar
Barcelona, Spain
pedro.bejar@accenture.com
Mark Austin
London, UK
mark.austin@accenture.com
Anu Sekhri
New Delhi, India
anu.sekhri@accenture.com
Special thanks to Mitul Shah for all
of his contributions to this research
initiative.