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 Consumer products companies are working to eliminate waste and inefficiencies from the consumer goods supply chain to reduce costs and increase customer satisfaction.
Issues that consumer products industry executives face on a daily basis include:
Inventory: The best performing companies are able to forecast their demand well enough that they are able to have their suppliers produce inventory that appeals to a majority of their customers.
Top companies are constantly reviewing their stocking policies. They ask questions, such as what service levels do they want on their products, and they set inventory levels that minimize slow and obsolete inventory and set safety stocks to meet service levels.
Consumer Products Distribution Networks: As conditions such as fuel cost and customer ordering patterns change, distribution networks should change as well. Are distribution centers located so that they minimize costs and provide optimal service?
 Many companies evaluate their landed costs versus their total delivered costs. Landed costs are from US point of entry through delivery to customers, while 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 complete look at a consumer products supply chain network.
Sourcing and Procurement: When consumer packaged goods companies work with suppliers overseas, it is easy to overlook good communication and the relationship between buyer and supplier, with 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), and it is becoming more accepted in the global market.
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.
Top companies are also performing risk assessments on their global shipments. They are guarding against theft, threats, and counterfeiting. They are performing vulnerability analyses, governmental policy adherance initiatives, C-TPAT analyses, and supply disruption analyses.
Distribution Operations: Companies that do not have the internal capabilities or wish to quickly expand their distribution networks are relying on consumer products Logistics Service Providers (LSPs). LSPs can also provide seasonal processing and storage relief.
The goal of more flow and less storage is being accomplished by many companies. Flow through and crossdocking has resulted in fewer goods being held in storage, which is important for fast moving consumer goods.
Going "Green": Top consumer products companies are re-evaluating the packaging of their products. They are looking at this from a product protection perspective, freight reduction perspective and as a way of reducing packaging materials to be "green." Several software packages exist to help make reducing packaging a green initiative.
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, week 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.
- These 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.
Supply Chain Solutions
Whether you need to address supply chain strategies or tactical supply chain improvements, our team of supply chain professionals are uniquely qualified to meet your challenges.
Tompkins Associates focuses on end-to-end supply chain solutions in the consumer products industry, with offices in the US, Canada, Europe and Asia, including Technomic Asia, based in Shanghai, China, and Tompkins International EMEA, based in Germany.
Tompkins Associates has experience designing and executing major consumer goods consulting projects for:
- Global supply chain optimization
- Consumer products transportation optimization
- Distribution center design
- Distribution center optimization
- Strategic sourcing and procurement
- New market penetration strategies
- Identification of strategic acquisitions
- Demand/supply planning and management
- Logistics service partner selection
- Inventory optimization
- Trade management with security and threat mitigation
- Supply chain management processes optimization
- Logistics network optimization
- Customer service and value analysis
Case Studies
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Partial List of Consumer Products Clients and more
Case Study: MTD boosts productivity, accuracy, and efficiency while improving customer service and reducing operating costs. Learn more.
Resources
Finished Goods Inventory: Did you know that despite lower finished goods inventory levels in 2009, customer satisfaction did not decrease in the consumer goods sector? See more facts and consumer goods-related trends here.
A Snapshot of the Cosmetics and Skin Care Industry: Smoothing Out Logistics and Supply Chain Wrinkles. Learn more.
Executive-Level Supply Chain Leaders on the Rise
Blog Post: Is Balancing Supply and Demand Really Possible with Consumer Products?
Benchmarking and Best Practices: How to Join the Supply Chain Consortium
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