Companies in the Consumer Packaged Goods (CPG) industry are constantly affected by local and global economic tribulations more than most because of the inherent costs associated with the manufacturing and packaging of their products. These costs can often put a strain on companies with few ways to cut their costs. Businesses in the CPG industry need to a way to make sure their products get to retailers, but also don't break the bank. Here are two approaches for easing that burden through supplier reduction within CPG supply chains.
Business Intelligence
Understanding all of the relevant data will give businesses within the CPG industry better insights as to how they can meet demand while also reducing costs. One of the ways this is possible is by using Business Intelligence Tools. These tools give companies a way to retrieve, analyze, and report data that provide executives with information necessary to make better business critical decisions.
Managing all of the data within their supply chain will be especially beneficial for firms in the CPG industry, which have many moving parts within the production of their products. Volume, Cash Flow, and Earnings are all factors that give CPG companies better insight as to how much money they will have for Operations while factoring in variances such as seasonal adjustments, promotional labeling, and marketing to consumer demands.
Consolidating Suppliers
Just as CPG companies have a select group customers that get the most attention and discounts, so do the suppliers. Becoming a higher priority to suppliers is another way CPG companies can save money and improve upon their global supply chain management. This can be accomplished most effectively by the consolidation of suppliers. A few of the benefits from supplier consolidation can include an increase in the amount of influence these CPG companies have over the remaining suppliers, a reduction in costs within the company, and an increase in the consistency of business processes.
Finding the happy medium between reducing some suppliers, while keeping and leveraging those that are critical within the supply chain is a delicate balance. However, it is one that can be achieved and greatly successful by utilizing proven processes and practice. Finding the right balance and the appropriate amount of suppliers will often lead to vast monetary savings, along with improved efficiency and flexibility for the company, and its suppliers.
- Ian Hood, Managing Principle