Connected Value Chain: A Boon for Consumer Goods Companies
By Ishu Jain, Business Development Head - APAC, Consumer Goods Business Unit, Wipro Technologies
Leading analysts predict that more than a billion middle income people will be added to the consumers’ list from emerging markets alone by 2020. Digital channel with the use of digital technology such as smart-phones, tablets, iPads, has transformed the consumer industry to an altogether new paradigm. Companies can better service consumers at a one-on-one level via insights and preferences gathered through the buying behaviors, product choices and price points. Use of digital technology has been a key enabler in the recent growth of consumer goods industry.
Building A Value Chain
The imperatives of e-commerce drive companies towards what is a ‘Connected Value Chain’. Name of the game is speed. The speed at which demands get sensed and acknowledged to fulfillment from the distribution centers and delivered at the door step of consumers/shoppers will largely define the success of these companies. ‘Connected Value Chain’ enables identification and fulfillment of consumer needs at a personal/oneto-one level through a digital channel that includes smart devices, real time insights and analytics and most importantly seamless integration of supply chain solutions.
Ensuring that products are actually fulfilled on time is as important as how many products are made available. Agile and visible manufacturing that work in tandem with the needs of dynamic demands and is flexible to capacity adjustments at the plant level provides optimum product costs. The ability to provide manufacturing insights through real-time meaningful manufacturing KPIs for enabling key supply chain decisions is the way forward for an efficient connected value chain.
This is where the top tier CG companies are directed towards. Technological advances in the form of 3D Printing is providing ammunition where innovation can be directly prototyped in manufacturing, cutting down the time to launch cycles significantly.
Consumer-oriented Distribution Distribution Centers (DCs) today are fulfilling more online orders along with traditional orders. Inventory visibility across product mix not just within, but across DCs is the key for efficient and on-time fulfillment. In fact, there are definite collaboration trends where CG companies have opened their DCs for online retail giants to enable fulfillment directly from their DCs, this will not only result in efficient fulfillments, but also offer better price points to consumers. It may not be too far-fetched for CG companies to explore newer fulfillment models on the lines of what the automotive sector is doing. For example, instead of a ‘Make to Stock’, why not take a look at a ‘Pack-to-Fill’ or a ‘Fill-to-Order’ type of models. Imagine beverages getting shipped to DCs in bulk from plants and then the DCs do the packing and filling, depending on the order size.
“Usage of digital devices such as smart phones and other mobile devices hasn’t just grown on the consumer side of things, but within the CG companies too”
Consumers, the Driver to Online New Product Introductions
Consumers are becoming more environmentfriendly because of which, demand for more sustainable products is becoming the need of the hour. At the same time, participation of consumers in the innovation process via new social media connects such as crowd sourcing provides greater opportunity for companies.
Digital Consumer and Digital CG Company:
Usage of digital devices such as smart phones and other mobile devices hasn’t just grown on the consumer side of things, but has increased exponentially internally within the CG companies itself — in their plants, distribution, sales and marketing operations. The ability to connect the devices across these functions through Internet of Things (IoT) is making the value chain more connected and much more agile. It will help expedite supply chain decisions if orders can get picked up on the field by sales staff while they also have visibility into the inventory at a warehouse or at plants real time through smart devices.
Collaborated Consumer Insights
Most CG companies hitherto have been relying on multiple sources of information, each with its own silo of analytical capability. With better consumer insights and behavioral patterns on the front end of the value chain and better visibility of the supply chain and manufacturing responses, CG companies are now looking at solutions that provide an integrated view for enabling collaborated value chain. Getting a real time view on fill rates, on Usage of digital devices such as smart phones and other mobile devices hasn’t just grown on the consumer side of things, but within the CG companies too time accuracy, fast/slow moving products, etc. assists in making informed decisions.
Enabling Connected Value Chain
So how important some enablers can be for connected value chain?
‘Time to Market’ has been one of the perennial drivers for CG companies as a product differentiator in the market. More and more solutions around it especially in the ‘Concept to Launch’ value chain have been gaining traction. Crowd Sourcing solutions addressing the Ideation Management are among the top candidates. How tightly this integration with ERP and the supply chain is going to ensure a tighter Concept to Launch Process? This will ensure two outcomes, one a collaborated R&D across the company towards globalization and harmonization and two, a robust and agile process for launch/re-launch across anywhere in the world.
Manufacturing outsourcing is not uncommon in CG today, where dynamic demand is a norm. Supply chain planners need to look beyond their manufacturing capacities for fulfilling unplanned demand spikes. CG companies are now moving towards solutions such as warehouse/manufacturing intelligence that provides them real time visibility of inventory/plant performance and capacities at HQ through KPI based dashboards. This gives the planners the needed visibility to gauge whether there is additional capacity in-house, for an informed make/buy decision, saving significant dollars.
In short, the future is going to be about solutions that are platforms, may be even command centers which will provide collaborated end-to-end supply chain right from sensing demand at the consumer’s point to fulfillment back to him/her in the shortest time.