Four consumer goods supply chain challenges you need to beat
To stay competitive in today’s marketplace, consumer goods companies are reaching across the globe to seek new customers in new markets. In order to cater to these new customer segments, brand owners are now providing a dizzying array of local product variations through a complex network of outsourced manufacturing partners.
Beyond the issue of complexity, the globalisation of consumer product supply chains also has bloated inventory levels, reduced margins, and depleted much-needed working capital required for new product development. To ensure that supply and demand are in better alignment, there are four supply chain challenges that today’s leading consumer goods companies must address, which are as follows:
1. Lack of end-to-end visibility and collaboration in a multi-tier environment
Actionable, real-time supply chain information is hard to come by in today’s highly volatile, complex, and outsourced consumer goods marketplace. Multi-tier visibility can address this challenge by making forecasts and orders visible sooner and allowing bi-directional collaboration between partners. Having data on actual shipments and receipts as they happen provides insight into stock-in-channel inventory and point-of-sale (POS) information, which gives brand owners the ability to proactively manage volatile demand.
2. Inability to link product design, manufacturing, and fulﬁllment within the supply chain
Successful consumer goods companies increasingly compete on new product innovation and better customer service through market segmentation. Close coordination with contract manufacturing partners around formulations, product specifications, and POS packaging can make or break new product launches.
3. Conﬂicting KPIs that actually discourage efficient supply chain management
Sophisticated business intelligence is gained by integrating data across the entire value chain to provide unique insights about demand patterns, operations, and customer service requirements. But to make the most of this powerful insight, key players in the supply chain must be aligned in terms of what they’re measuring and the tools they’re using to interpret the information. A shared planning and execution process layer combined with the right business analytics gets everyone in sync and is the key to effective supply chain orchestration and risk management.
4. Lack of planning coordination between supply chain tiers
Committing with confidence to customer orders requires demand planning and collaboration across multiple tiers to ensure that the right materials are delivered to the right locations at the right times. Nevertheless, many companies are still unable to synchronise supply and demand because they do not have access to timely, accurate data from all supply chain parties. Too often, they settle for snapshot data dumps into online portals that lack real-time intelligence and the ability for “closed-loop execution.”
Fast-Moving Supply Chains for a Fast-Paced Industry
When it comes down to it, the four challenges above can all be traced back to the same core need for improved visibility and connectivity to get everyone, from n-tier suppliers, all the way to n-tier customers, on the same page. So how do you bring all of these parties together? The answer is simple: a shared, information-based business network.
A business network provides true multi-tier process orchestration through collaborative planning and execution that empowers all network participants, including retailers, distributors, contract manufacturers (CMs), and component suppliers, to make better business decisions.
Today, leading consumer goods supply chains are moving into the cloud to simplify data collection and process orchestration between their partners. Successful companies are reaching beyond the four walls of their enterprises and managing their value chains by utilising consumer goods business networks to serve their customers better while dramatically lowering costs and reducing complexity. With this shift, the end of enterprise-centric planning and fulfillment isolation is in sight.
By Rich Becks – General Manager, E2open
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.