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Improving Supply Chain Efficiency for an FMCG Distributor |
| Our client is a prominent FMCG distributor with a wide range of product offerings in the food and beverages, household and personal care, and liquor and spirits categories. With rapid expansion in the market, the client faced several significant challenges, including low availability of new brands, excess obsolete items, and extra inventory on hand blocking cash. |
| C |
Challenge  |
The client approached us to improve their supply chain efficiency and address the following challenges:
- Low availability performance of new brands, which was under 65%
- Excess obsolete items reaching up to 4.5% of gross sales
- Extra inventory on hand in days above the cash conversion cycle blocking cash
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| A |
Analyse  |
Our team worked with the client’s team in harmony, aligning core goals with top management. We conducted a thorough analysis by:
- Analysing the year-to-date (YTD) sales and distribution network to rationalize demand vs sales
- Applying Pareto principle to explore where 80% of sales comes from 20% of items
- Investigating all limitations, such as minimum-order-quantity (MOQ), shelf life, stop code in TRADE and HORECA, containerization vs demand, to map the cost-benefit picture
- Setting brand-level forecasting process rationalized with distribution network, trade marketing action that is likely to influence sales
- Standardizing the sales and operation planning (S&OP) process to ensure SKU rationalization, ordering process in line with sales team’s action synchronized with trade marketing team.
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| R |
Results  |
Our solutions enabled the client to achieve the following results:
- Reduced order cycle of 3 brands to quarterly cycle, having more than 18 months shelf life
- Increased order cycle of 4 brands to monthly cycle, having 12 and less month of shelf life
- Eliminated more than 40 items, causing more cost than benefit for the business
- Negotiated with relevant principles to rationalize limitations based on market conditions, which resulted in a reduction in MOQ, revision of inco-terms, fresh produce of loading, and more
- Developed a united distribution network map aligned with sales, trade marketing, and supply chain, which resulted in developing end-2-end supply chain to act in line with the distribution network
- Implemented common key-performance indicators, linking action of sales, trade marketing, and supply chain to each other to work commonly
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| E |
Effect to Business  |
Our collaboration resulted in the following benefits:
- Increased availability of newly onboarded brands to 93% from 65%
- Reduced obsolete products from 4.5% to 1.5% of gross sales within 9 months
- Reduced inventory on hand by 37 days, which enabled concrete support on cash flow and for investment to business expansion
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| Related Services: |
Our services in business analytics, demand planning & forecasting, supply planning & procurement, and trade marketing were instrumental in achieving these results for our client.
We believe our expertise in supply chain management and our ability to align our solutions with our client’s core goals and challenges were key to the success of this project. We are confident that we can help your business achieve similar success, and we look forward to the opportunity to collaborate with you.
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