|
Consumer products are goods purchased for consumption by the average consumer. They are commonly called final goods, because after manufacturing and production, they are the final products that consumers see in retail and online stores.
Furniture and appliances, automobiles, hand tools, and toys are all examples of consumer goods. Materials or substances such as metals in their most basic form are not considered to be consumer goods; consumer goods have to be manufactured or produced into a product that is used by the consumer.
Fast Moving Consumer Goods (FMCG)
Fast Moving Consumer Goods is a phrase used worldwide to describe consumer goods companies that operate under the following circumstances.
- Fast moving consumer goods are sold quickly and typically for a low price, although in some cases, such as the pharmaceutical industry, the price can be high.
- These products generate a small relative absolute profit but provide a substantial cumulative profit.
- Products are replaced or fully used up over a relatively short period of days, weeks or months.
- Products can have a short shelf life such as perishable foods.
- Purchases are the outcome of small-scale consumer decision making.
- Advertising and promotions for sales are essential to profiting from fast moving consumer goods.
- Sales are generally led by companies with powerful brands using high-level distribution networks.
Companies that are successful in the fast moving consumer goods segment have highly efficient supply chains, significant supply chain visibility, excellent speed to market and high levels of on-time delivery to customers and shelf availability.
Industry Trends and Challenges
Consumer products companies are reducing costs and boosting customer satisfaction by eliminating waste and inefficiencies from their supply chains.
Issues that consumer products industry executives face on a daily basis include:
The Asia Opportunity: Do you know how to leverage the huge Asia opportunity? China and Asia present unique supply chain challenges as the region shifts from being the world's factory floor to a booming global marketplace. Learn more about Asia supply chain excellence.
Inventory: The best performing companies have become demand-driven, sensing demand signals and reacting within a limited window of time. Once companies become demand-driven, they are able to optimize inventory at each link in the supply chain and greatly reduce total inventory levels.
Leading companies also continuously review their stocking policies. They examine product service levels, as well as set appropriate inventory levels that will minimize slow and obsolete inventory and adjust safety stocks to meet service levels.
Distribution Networks: Changing conditions call for changing distribution networks. For example, as fuel costs fluctuate and customer buying patterns go up and down, the network needs to be examined for more suitable alternatives. The main goal for distribution networks is to find the right location for distribution centers so that they minimize costs and optimize service.
Many factors are taken into consideration when determining costs. While some companies evaluate their landed costs, others more accurately calculate based on their total delivered costs. Landed costs are from US point of entry through delivery to customers, whereas total delivered costs also look at international sources, ocean and air transportation, customs and duties, as well as port costs. Total delivered cost provides a more accurate view of a consumer products supply chain network.
Sourcing and Procurement: When consumer packaged goods companies work with overseas suppliers, it is easy to overlook the necessity of good communication and the relationship between buyer and supplier, which occasionally leads to disastrous results.
The focus in North America and Europe tends to be on supplier management, while the focus in Asia is on the relationship. It is essential to integrate these diverse perspectives. This focus on the relationship is called Supplier Relationship Management (SRM), which is expanding is use in the global marketplace.
Global trade and risk programs are also a key component of sourcing for consumer product companies. Benefits such as regulatory compliance, margin protection, brand integrity and maximized customer satisfaction are the result of effective global trade programs.
Transportation: Top companies are able to isolate demand to the point where they are able to make direct shipments to customers from their US plants or international sources. Transportation Management Systems (TMSs) are being used to integrate inbound and outbound transportation as well as manage inter-facility transfers.
These leading companies are also performing risk assessments on their global shipments. This allows them to guard against theft, threats, and counterfeiting. 
Other key transportation security practices include vulnerability analyses, governmental policy adherence initiatives, implementing C-TPAT, and supply disruption analyses. Learn more about these and other transportation solutions from Tompkins.
Distribution Operations: Consumer products companies that do not have the internal capabilities or wish to quickly expand their distribution networks may rely on Logistics Service Providers (LSPs). LSPs can also provide seasonal processing and storage relief.
The current business climate dictates reductions in operating expenses and greater productivity. As a result, companies are using more advanced Warehouse Management Systems (WMSs) to facilitate improvements to their DC operations.
Enhanced WMS features such as crossdocking, cycle-counting, slot management and dock scheduling are being implemented more frequently today.
Many companies are achieving the goal of more flow and less storage. Flow through and crossdocking have resulted in fewer goods being held in storage, which is particularly important for fast moving consumer goods.
Revenue Growth: Consumer product companies can increase revenue by either evaluating the market potential of new products, new geographies, or creating a competitive advantage to increase market share. In today's very competitive consumer products market, leveraging specific attributes allows companies to avoid low-cost product strategies.
Going "Green": Top consumer products companies are re-evaluating the packaging of their products. They are looking at this from a product protection and freight reduction perspective, in addition to reducing packaging materials as a "green" Initiative. Several software packages exist to help make packaging more sustainable.
Ask the Experts:
Send us your questions.
Learn More About Tompkins
International
To learn more,
simply complete our Information
Request Form.
|
