Fast Moving Consumer Goods : Supply Chain Transformation

How we helped a leading European consumer goods supplier to build and deploy a flow management and supply chain planning target vision
Case study
07/16/2015

Context and challenges

Our customer is a leading consumer goods company in its sector, whose activity is shared between retail sales and sales to professionals.
Its products are made in its own factories in Europe and Asia, or are purchased from external suppliers, and then distributed, mainly on the European market, through a network of country warehouses.

Our customer operates on a difficult market :

  • Markets in global decline
  • Increase of retailer brands with low margins that are accentuating the need for cost reductions
  • Increasingly demanding customers (honoring commitments, delivery leadtimes, minimum orders, logistics service agreements, etc.)

…where there are numerous supply chain constraints :

  • Voluminous products with a low value
  • An increasing proportion of trade from asia (long leadtimes)
  • Substantial local / specific stocks
  • A multitude of small business and production entities

Against this backdrop, our customer wants to make a quantum leap in performance, and in particular in the service rate and control of the WRC.

Approach and methodology

A 3-month audit of the processes, organization and information systems revealed that there was no integrated and global management of the production capacities and needs. The use of a multitude of non-standard Excel files by each stakeholder and for each country / factory, which were difficult and long to prepare and a source of errors, plus the incomplete organization and processes, did not allow for rigorous control of the supply chain.
The need to strengthen capacity in terms of flow management (forecasts, procurement, production planning, balance between workload and capacity) was essential in order to achieve the strategic objectives.
Pending the next budget cycle (capital outlay in information systems) and faced with the relatively immature organizations in comparison with the flow management issues, an effort was made to define the target processes and organizations with all the European factories and markets, in order to mobilize the teams and to raise expectations and generate interest in the future project. This phase lasted three quarters and resulted in the detailed definition of the monthly and weekly target processes. Senior management and the various stakeholders (marketing, finance and sales) were all involved. During this period, the customer was able to validate the target organization, comprising a team of central
forecasters and planners.
Once the budget had been approved, the process to select an Advanced Planning and Schedulingapplication was launched, involving the following main steps: authoring of the specifications, identification of potential publishers, issue of the call for tender, selection of the short list, prototypes and visits
to the publishers’ customer reference sites, selection and the signing of the contract. The selection
process lasted 6 months, with Argon Consulting’s methodological support and business expertise of
the available solutions.
The deployment of the selected tool lasted 1 year.
The tool was deployed by the publisher’s teams, with support from Argon Consulting in :

  • The detailed definition of the requirements
  • Best project management practices
  • And, above all, change management (transition of the organizations, skills development, training and communication)

A preliminary analysis had already identified the jobs for which the change management process was crucial:

  • The sales force (new responsibilities)
  • Factory teams (limited freedom of action due to the centralized control of requirements)

In addition to the re-definition of the responsibilities and expectations of each player, targeted communication actions and specific training courses helped to make a smooth transition to the target.
 

Results

The results were visible and outstripped the initial ambitions:

  • Substantial reduction of stocks (-25% coverage)
  • Increased end-to-end visibility of the supply chain – current and planned – making it easier to take decisions (assignments, etc.)
  • Alignment of all the management organizations on the resulting forecasts and decisions (s&op)
  • Measurement and management of the supply chain performance for all the players (empowerment, analysis of causes and continuous improvement)
  • Tighter control of promotions and new product launches
  • Development of skills (trades and tools) and methods (security stocks, finite capacities, assignments in event of stock outages, etc.)
  • Increased reactivity to changes in the market (switch to a weekly planning matrix)
  • A first deployment of the aps platform for future optimization
  • The budget was not completely used up and the project was completed on schedule