3 Lessons from a Consumer Goods Leader
For consumer goods companies, the supply chain is the heart of the company driving shareholder value, providing that the right products are in the right place at the right time. So how do you keep the heart healthy? For 35 years, some of the world’s most successful companies have applied ORTEC’s solutions to help them grow their business. Here are some key takeaways from a recent workshop I led examining trends in the consumer goods category and how companies can optimize operations and drive growth.
1- Know the business to grow the business.
Take beer, for example. ORTEC has a track record of helping beer companies around the world optimize operations, from The Beer Store to MolsonCoors, Carlsberg to Scottish Newcastle. Beer companies and beverage giants such as Coca-Cola rely on our beverage industry expertise to help them grow their business. Do your homework. Example: Understanding how distribution in the direct to store supply chain directly affects service level thus impacts product availability and stock outs is critical. Find out what the business challenges are and how you can solve them. Every position in the supply chain functions is important. Look to make a difference.
2- Laser focus on shareholder value.
Read the quarterly and annual reports of your customers and prospects. If you know that a global consumer goods company has publicly stated its 2020 sustainability goal is to reduce their carbon footprint by 20%, help them reach that goal. We’ve helped some of the world’s largest retailers and consumer goods companies save over $1 billion dollars by optimizing supply chain operations, taking hundreds of thousands of trucks off the road and consequently reducing CO2 emissions significantly. Shareholders care about sustainability and savings. Every savings acquired directly impacts the companies earnings per share.
3-Revenue growth trumps cost savings.
At the end of the day, it’s all about growth. The global consumer-packaged-goods sector will nearly double in size—to $14 trillion—by 2025, from $8 trillion in 2014 according to McKinsey. Finding the right balance between efficiency and service to increase revenue is key. This can only be achieved if building flexibility into supply chain execution is made a priority. Considering changing consumer demographics, increased competition and rising complexity, companies must take stock and use transportation data to increase visibility and drive revenue. For example, industry leader Proctor & Gamble redesigned their entire North American network to improve revenue which they call “consumer delight” which translates to never stocking out. Executing the “consumer delight” strategy trumped reducing operational costs. Read their 10K’s to find out more about this strategy.