Supply chain management – consumer industries


Consumer industries companies manufacture goods that affect nearly every part of our daily lives everything from clothing and shoes to home appliances and cell phones. These products are routed through retail channels to reach the end consumer.

Consumer industries consist of several distinct business segments, including consumer packaged goods; consumer electronics and durables; soft goods; and telecommunications service providers. Each business segment within consumer industries is faced with similar yet distinct business challenges.

There are similarities in the consumers that purchase these products, and these segments require a similar set of strategies to address them such as product innovation, fashion, and pricing strategies, as well as product and service bundling. Differences arise from the way in which the execution of these strategies ties to the channel, competition, execution, and fulfillment networks of each company.

The consumer packaged goods space consists of food and beverage companies, personal and household products companies, as well as paper and pulp product companies.

Best practices consumer industries can follow:
* Improved response time and service levels to customers
* Reduced inventory in the supply chain with optimal positioning of part and finished product inventory
* Improved ability to design products with re-use of components and lower component sourcing costs
* Reduced manufacturing and inventory costs
* Improved integration of supply chains and data infrastructure during mergers and acquisitions
* Increased cost efficiency of manufacturing and distribution strategies
* Reduced lead times
* Improved ability to scale in order to plan at the style, color, and size level for apparel and footwear manufacturers
* Maximized equipment uptime on production lines
* Increased efficiency in supplier relationships

Slashing Inventory at Whirlpool – a case

By adopting some of the best practices of Supply Chain Management mentioned above Whirlpool have achieved reductions in finished goods inventory and improvement in ability to respond to customers. This has already led to a $4.8 million reduction in standing inventory in Australia alone over just seven months. Benefits in North America have been substantially greater – in the double-digit millions of dollars in inventory savings.