Is Technology an Integral Part of Your Supply Chain Management Process?

When we say supply chain management (SCM), we’re not just talking about non-perishable, end products like household items or furniture. It includes perishable and non-perishable products at different stages of production, from raw materials to finished. But, for ease of understanding, let’s take a simple example of supply chain management in a retail chain like Whole Foods.  

To put things in perspective, this global retailer has a presence across 500 locations, and has a whole host of perishable and non-perishable products stocked in its stores. Supply chain management for such a brand would look something like this; 

• The retailer needs to keep track of perishable and non-perishable products separately because in the former, stocking fresh produce is more critical than in the latter. 
• The retailer needs to be aware of which products needs to be stocked, in what quantities, and also estimate how long they can be stocked so that they are still within expiry when being sold, and they’re not gathering dust in the warehouses 

• The retailer needs to take stock of local preferences, seasonal changes, economic conditions and market conditions when storing and stocking products 
• When sourcing products, he/ she needs to be aware of which stage of shipment the products are in currently. And, once the products are delivered, they need to scan and audit them to ensure they’re not damaged, and they meet the quantity requirements 

A Merit expert says, “These, still, are only a handful of changes and metrics the brand may have to track. The larger the business, the more complicated the SCM process becomes. In such a scenario, relying on manual processes and having minimal visibility can only lead to expenses, losses and lack of competitive advantage. Brands need to adopt supply chain management software and analytics that can give them a complete and clear picture of every aspect of their supply chain process.”  

4 Ways FMCG Businesses Can Optimise Their Supply Chains 

According to a study by Harvard Business Review on supply chain and procurement management, companies MUST have a supply chain management in place to work with suppliers to enable better demand planning, forecasting, risk management, cost management, new product development, and innovation in process and procurement.  

Data reveals that optimising the supply chain and reducing costs can help companies double their profits. And, many have indicated that having a holistic view into supply chain management has given them a competitive advantage, along with providing customers with a customised, reliable and wider selection of products.  

Despite this, the same data shows that only a small percentage of companies currently have complete visibility into their supply chain process. 

Now that we know how important supply chain management is for businesses, let’s look at best practices businesses can adopt to implement these practices effectively. 

1. Keep Data at the Core of your Supply Chain Management Strategy 

Invest in a supply chain management software that can centralise all related data and provide clear, holistic insights into how your procurement and supply chain process is being carried out day-to-day.  

According to Gartner, supply chain management (SCM) is the fastest growing market in the enterprise applications segment, and it has reached around USD 202.24 billion in 2022. These enterprise applications come with a number of benefits; 

• They make the process more efficient by identifying delays and bottlenecks, and speeding up the process of logistics and procurement 
• They eliminate manual work and bring automation into the process, thus making management more cost effective and productive 

• They centralise data from all sources and provide an holistic view of the different stages of your product/s journey from manufacturing to packaging, shipping and procurement. For example, Tableau enables businesses to view in real-time a comprehensive view of a business’ supply chain, which aids in demand forecasting, managing the supply chain network more efficiently, collaborating with different vendors more seamlessly, and having a significant impact on the bottom line 
• They mitigate risk that may arise from environmental, economic or political conditions 
• They ensure that the products and processes are compliant to the standards set for the industry 

Pepsico’s use of Tableau for Data Analysis 

Let’s look at an example of how Pepsico used Tableau to improve its data analysis process. 

Pepsico sells around 21 products through its customers across 200 countries, and generates sales close to USD 1 billion every year (as of 2021).  

This global FMCG brand works with thousands of customers, who provide reports from time-to-time on warehouse inventory, store inventory and such, which Pepsico then compares with its own production and shipping history. In this entire process, Pepsico was facing a major challenge. 

Each customer had their own mechanism of collating and generating reports, which meant when it reached Pepsico, the brand’s team of analysts in turn had to spend months putting together data from various formats into a standardised report. On the other hand, the analysts were relying on Excel to collate and maintain this data, leaving room for errors from both ends, which could lead to inaccurate analysis which can cost the company a lot of money. 

The FMCG giant turned to Tableau for a solution. According to the website, as a first step, Pepsico implemented Hortonworks Hadoop as a landing and staging environment for the multitude of data. Then, with Tableau and Trifecta (Tableau partner), it gained powerful analytics and visualisation capabilities that enabled analysts to easily make sense of volumes of data from different sources. 

The result? The team of analysts spent less time preparing data, had greater visibility into customer orders, and they were able to easily identify gaps and get ahead of larger issues. The implementation also reduced report production time by 90%, and spent more time in analysing data, rather than collating it. 

2. Evaluate Your Supply Chain Network 

Take stock of the suppliers you currently have in your network, and use past data and insights to evaluate if your suppliers are able to meet your demand requirements and supply products on time. This step is also crucial to; 

• Evaluate the capacity of each supplier, which can help you understand if you need to bring more suppliers on board 

• Plan logistics better. For example, you can manage logistics and infrastructure internally, or outsource logistics and equipment to a third-party vendor. Often, the latter saves costs but requires more monitoring and quality control. 
• It can help you avoid delays or disruptions and have a backup in place in case of unforeseen circumstances in getting the products delivered on time  
• Visibility into your supplier network can also help you identify areas where you can save costs and optimise processes and networks 

3. Automate the supply chain process as much as you can 

When we talk of automation, we’re talking about data-level automation (creating a central source of information and automating data collation and evaluation process), as well as using AI and machine learning technologies to automate production processes.  

For example, by using predictive analytics, manufacturers can estimate when it’s time to service machinery, or prevent a failure by monitoring performance data in real-time. This can curtail costs and make the entire manufacturing to supply process seamless and cost-effective.  

4. Organise your warehouse in an optimal way 

For example, you can categorise your products based on demand, seasonality, location and customer needs. On the other hand, you can adopt practices like kitting (keeping together a set of products that customers can order as a kit) and cross-docking processes (which require no storage in that the products can be onboarded from a transport vehicle onto another vehicle with no interim storage. This can reduce warehouse expenses and reduce storage and logistics costs). And accordingly, you can stock products across warehouses in a way that they occupy less space, and are stored in a way that the packaging and shipping process is also quick, cost effective and hassle-free. 

Investing in an inventory and warehouse management strategy can help businesses plan inventory ordering, shipping, tracking and storage more efficiently. 

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