Behind the supply chain scenes
An efficient and resilient supply chain is a competitive advantage against the background of global disruptions. It is an important driver of financial performance, especially during times of high inflation. How are Fast Moving Consumer Goods companies, retailers and manufacturers coping with their supply chains? What drives the future supply chain agenda?
Fast Moving Consumer Goods
Due to their more upstream position and inherently complex supply chains, FMCGs are exposed to disruptions. Inventories have therefore continuously increased in recent years - in combination with below-expected volume growth.
FMCG companies have been exposed to recent supply chain disruptions due to their more upstream position and inherent complex supply chains
Inventories have continuously increased as a counter act to these global disruptions - in combination with below expectation volume growth
As a result, in 2023 inventory performance reached an ‘all time low’ and dropped below 4 turns per year
Early signs of ‘winners’ realize the need for more SC flexibility and look for fundamental changes – throughout the end to end supply chain
Delivering operational excellence and sustainability goals remains top priority
Retail
Retailers generally need more agile supply chains to adapt to volatile consumer demand, often leveraging just-in-time inventory practices. This results in higher inventory turnover ratios than FMCG companies.
Retailers generally have more agile supply chains to adapt to volatile consumer demand - resulting in twice the inventory turnover speed compared to FMCG companies
This set up results in a ‘strong’ correlation between margin and inventory efficiency, as both metrics immediately benefit from higher sales volumes
In 2023 a positive sales development therefore resulted in improved inventory turns
To improve margins, ‘winners’ in retail have a strong focus on SC efficiency improvement through robotization, automation & smart steering
Sustainability reporting and improvements remain strong focus of SC agenda
Manufacturers
High demand volatility remains a challenge – leaders search for collaborative (planning) models to provide resilience.
Inventory turnover levels are in the same range as FMCG companies (~4x), and much lower than retailers
Manufacturers are maintaining improved stock performance in 2023 compared to pre-covid levels, with strong correlation to EBIT performance
In 2023 inventory performance remained steadily high, despite much tougher business conditions
High demand volatility remains a challenge; leaders success-fully work on collaborative, end to end planning models to provide resilience and adaptability
Digitization and (advanced) automation key enabler for improved cost / availability performance
What drives the future Supply Chain Agenda?
SUSTAINABILITY
Both reporting and improvement, driven by (EU) legislation, requires focus from supply chain executives.
AUTOMATION
Intelligent process automation for cost-savings & to counter rising costs of materials, labor, energy etc.
ARTIFICIAL INTELLIGENCE
Find and apply advanced analytics solutions to enable automation and streamlining of processes. for a competitive advantage.
E2E PLANNING
Increase grip on SC planning to become more agile and respond efficiently to disruptions up-and-downstream.
LABOR
Ongoing scarcity of labor remains an attention point. However, the worst seems to have passed and is less top-of-mind than 2022.
Want more details about the supply chain of the future? Reach out to
Jasper van Rijn
Managing Director Retail
+31653376760