FMCG Companies Face Rising Supply Chain Management Pressures

Major retailers are under tremendous pressure to go green and reduce their carbon footprint. To achieve this, they first turned to initiatives close at hand, including the reduction of energy consumption at the store level, product packaging resizing and the more efficient construction of new stores.

The oasis of quick fixes though that lie close to hand are beginning to dry up and under pressure to go further, retailers are now placing their global supply chains under the microscope.

Efficient supply chains for example can drive significant sustainability. Take for example FMCG companies that are being placed under tighter and tighter scrutiny to deliver on-time, with full loads that aren't rejected. Full loads mean fewer lorries on our roads, fewer rejections equal less waste and on-time deliveries reduce bottlenecks and returns.

As if suppliers weren't being squeezed enough, now comes a whole raft of new initiatives that, unless automated, will place margins under greater and greater pressure.

There is something supply chains can do though that will not only deliver the carbon reductions retailers seek, but turn these initiatives in to an opportunity to improve profitability.

It's not uncommon in these "green" times for a supplier to be faced with a mandate from a major retailer to reduce its carbon footprint by 25%. That's not a 25% reduction in its own internal footprint but the footprint it creates in trading with the retailer. Understandably, all eyes turn to logistics and product returns as two major areas that can achieve this. But how and at what cost?

The solution lies in the redesign and integration of business processes between the supplier and its hauliers that, if done correctly, can not only help them deliver major improvements in carbon footprint but also improve cash-flow and reduce costs.

If for example suppliers and their logistics providers exchanged delivery requests, load plans and despatch advices in real-time, they could increase the number of full loads and decrease the number of incorrectly timed deliveries. Furthermore, by equipping drivers with simple mobile-phone based text messaging (SMS) or Apple iPhone applications, proof of delivery (POD) messages could be sent back to the supplier's computer system immediately the goods are received. This not only allows the supplier to invoice more quickly (sometimes by weeks) but also has a dramatic impact on reducing invoice queries.

To conclude, there are many such initiatives that if implemented can help suppliers and their hauliers drive improvements to margins, cash-flow and customer service, whilst in tandem delivering the sustainability returns their customers demand.

Perceptant is a recognised expert in Efficient Logistics, Supply Chain Management & Electronic Data Interchange - EDI and has been helping companies seamlessly collaborate for over 20 years. During 2010, organisations can have a free review of their logistical supply chain by visiting the Perceptant's Solutions Forum, which can be found on their homepage.