In my previous posts about the increasing complexity of modern supply chain management and how we have often been viewed as the problem holders in the business, I have been evangelical about leveraging technology to integrate business planning processes. Today I go deeper into the challenges facing CPG manufacturing management and how companies are struggling to keep a grip on it.
It is typical for CPG companies to operate complex supply chains that work with multiple tiers of suppliers, warehouses, and sub-assemblies. Not to mention the coordination needed to ensure the flow of raw materials, components, and finished products across this network of a mix of owned or outsourced manufacturing sites.
It can sometimes feel that we are losing our ability to understand and manage anything that is even remotely complex.
When engaging with companies in this sector, I frequently encounter discussions revolving around how to gain control over CPG manufacturing management. Some of the recurring questions include:
"How can I effectively manage complex production requirements from both in-house and outsourced manufacturing plants?"
"In a world where sourcing is increasingly international, how can I easily track the status of my purchase orders at third-party manufacturers? How can I accurately forecast my manufacturing needs at the machine/SKU level and efficiently manage material and component supply?"
"How can I manage multiple vendors with varying prices for the same materials, which are supplied to an international network of facilities? How do I optimize my supply in accordance with my contracts and manage them effectively?"
"How do I align supplier commitments with goods in transit, as well as with my semi-finished and finished goods stocks? How can I plan effectively to meet customer demand while efficiently managing cash flow?"
So, how can these challenges be tackled?
The answer lies in integrated business planning.
Solving manufacturing planning challenges requires integration across sales, marketing and merchandising, finance, supply chain, procurement, and all partners in the chain. Ideally you are working with one set of data that is in a single system that can facilitate manufacturing forecast planning. By incorporating minimal dependent buffers and real-time scenario planning, this enables quick decision-making while bridging the gap to the end customer.
If you factor in the impacts of managing material stocks, transit stock, cycle stock, safety stocks at multiple points in the chain, plus build for seasonal products or promotions and when you come in in the morning you are still figuring out the answer to yesterday’s questions when a whole new inbox of today’s questions hits the desk, you may feel you are fighting a losing battle. Rather than focusing on real time data visibility as a goal, focus on real time scenario planning.
To succeed, a unified system with a single set of data should be facilitating manufacturing forecast planning, supplier management, and optimizing inventory levels. By implementing integrated business planning, companies can achieve end-to-end alignment, drive aligned outcomes, and realize significant benefits. If you are not doing this today, you could be doing this tomorrow, all in a single environment.
If you want to learn more about achieving company-wide alignment and overcoming these challenges, please don't hesitate to contact me via LinkedIn or email. I would be happy to hear from you.