Consumer Packaged Goods

Develop agility and cut costs to adapt to greater demands from retailers and seek new areas of growth abroad, within a sluggish European market

Industries are faced with a difficult operational situation in the fast moving consumer goods (FMCG) sector. In just a few years, operational excellence has become a major competitive lever for FMCG industries and it is now indispensable in the quest for profitable, sustainable growth.

Context

Industries are faced with a difficult operational situation in the FMCG sector, characterized by:

  • Reduction of profitability due to slow-moving consumption in European markets, price war between retail chains, and decline in consumer purchasing power, along with fluctuations in production costs (rises in raw material prices, pay and regulatory pressures, etc.)
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  • Evolution in retailers’ procurement models in Europe, in particular with the setting up of central purchasing departments and the tendency to accelerate cycles. As a consequence, we see a reduction of batch size supplied and the potential transfer of stock, which then lead to increased logistics costs and working capital requirements and greater demands in terms of deadlines, reactivity, and guaranteed availability
  • Increased complexity due to marketing strategies based on special offers and new product launches

Challenges

In just a few years, operational excellence has become a major competitive lever for FMCG industries and it is now indispensable in the quest for profitable, sustainable growth. This objective can be achieved by focusing on a range of initiatives, which include:

  • Improving operational efficiency, cutting costs, and reducing dependency on the fixed cost structure (procurement optimization, manufacturing performance plans, sharing of infrastructures, flows, and stocks, introduction of variable costs, delayed differentiation, reduction of complexity, and increase in product ranges, etc.)
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  • Optimizing product availability by establishing an agile Supply Chain, capable of quick decisions regarding the choice of production sites, logistics networks, and inventory deployment. Collaborative forecasts, use of demand signals, flow and capacity management, and flexible logistics networks are all levers to be mastered
  • Controlling innovation: deploying the strategy and processes for cutting time to market, securing product launches, and minimizing manufacturing cost prices from the design stage (design-to-cost approach), while keeping complexity at a minimum
  • Finding the most appropriate business model for international development
  • Clarifying the service offering and assess the issues at stake throughout the Supply Chain using a cost-to-serve approach
  • Developing collaboration with retailers in order to better anticipate and plan the company’s operational capacity.

 

How can Argon Consulting help you?

Argon Consulting has developed in-depth knowledge of the issues and the competitive levers in the FMCG sector. Argon teams can help you achieve sustainable results by transforming your operations via:

  • Service strategy and segmentation of service policies
  • Inter-company Supply Chain collaboration (flowcasting, management of special offers/promotions)
  • Vendor Managed Inventory (VMI),shared supply arrangements, data synchronization, etc.)
  • Industrial strategy and make or buy decisions
  • Industrial performance optimization (Lean Manufacturing initiatives, capacity and efficiency management, productivity, flexible organization, and introduction of variable costs)
  • Logistics strategy and distribution network reconfiguration
  • Logistics and transportation excellence
  • Supply Chain processes overhaulwith a focus on decision-making processes (sales forecasts, planning, Sales & Operations Planning (S&OP), and performance management indicators)
  • Optimization of stocks and working capital requirement
  • Innovation management and product life cycle control
  • Reduction of complexity in the product portfolio
  • Management and control of operational costs (ABC, cost-to-serve, etc.) and optimization of information systems (Master Plan, decision-making assistance, and support)
  • Change management and staff mobilization (change strategy, communication, training, and support)

Argon Consulting’s clients include:

Bahlsen Lorenz, Cadbury, Colgate, Danone, Nespresso, Energizer, Fagor Brandt, Henkel, Euralis, Lotus Bakeries, Loeul et Piriot, MapaSpontex, Mars, Poult, Reckitt, Saint Louis Sucre, Sara Lee

Case Studies

Definition of a target distribution master plan to support the development of high added value activities in Asia/Pacific countries
How we helped a leading European consumer goods supplier to build and deploy a flow management and supply chain planning target vision
Defining a target distribution network to support development of high-added-value activities in Asia-Pacific countries