Consumer Goods: A Formula for Service, Speed, & Brand Success

Consumer Goods: A Formula for Service, Speed, & Brand Success

The consumer goods industry may have experienced tremendous growth, but figuring out what consumers want is an ever-evolving puzzle. From where they shop and how frequently they buy to what price points entice them, consumer behaviors have been challenging to predict over the past year.

This experience is not only frustrating industry executives - it's compelling them to reassess their sales and operations planning (S&OP) process. In most cases, their legacy ERP or supply chain solutions cannot support the real-time, frequent forecasting and inventory planning needed to get ahead of margins pressures, rising costs, and shifts in consumer demand.

However, many consumer goods companies worldwide have overcome their S&OP dilemma using the Logility Digital Supply Chain Platform to deliver three critical requirements for a winning strategy in this ever-evolving environment:

• Service levels that minimizes delays and shortages and capitalizes on unexpected opportunities
• Speed to market enabled by multi-tier supply chain visibility and compliance
• Success based on agile and resilient operations that deliver high customer value cost-effectively

Improving in-store service levels with inventory optimization

Kelly-Moore Paint Company is a prime example of a business that has taken steps to modernize and connect its supply chain processes and systems. Leveraging the inventory planning and optimization solution from Logility, this well-established brand generates trend insights and supports a formal product review process, resulting in a 44% reduction in its SKU portfolio and more meaningful value for its customers.

Through Logility, Kelly-Moore has moved beyond relying solely on shipment history to purchase raw materials by forging a deeper connection between its master production schedule and procurement decision-making.

Batch manufacturing is more controlled and optimized, improving inventory turns and production scheduling efficiency. Capacity planning drives production plans, cadence, and raw material procurement and has cost-justified an investment in small-batch processing equipment. Additionally, new standard operating procedures have been implemented for inventory reception, transfers, cycle counts, and allocations, ensuring the right products are in the right places at the right time.

Calvin Chun, Director of Planning at Kelly-Moore, remarks enthusiastically, "Our planning efforts are much more streamlined. With the data we get from Logility, we challenge our internal processes and say, 'Does this make sense as a business?' which helps us make smarter decisions with greater confidence."

Kelly-Moore achieved 20% less overstock and avoided $1 million in purchase orders after reallocating sundries. The company uplifted distributes products to stores based on customer demand forecasts, raising service level improvements to 97% and reducing finished goods inventory by 13%. Moreover, the company saves $250,000 annually by transitioning the distribution of its transportation model to a more sustainable configuration - moving from 60% truck and 40% rail to 5% truck and 95% rail.

Refining planning through frequent and accurate forecasts

Growth through acquisitions in the consumer goods industry often brings overlapping product portfolios and internal communication struggles that lead to lower customer fill rates, excess inventory, and revenue loss. But Intertape Polymer Group (IPG) managed to avert those risks by implementing Logility's demand planning and optimization solution.

With Logility, IPG swiftly gained the visibility and flexibility to simplify demand planning for its make-to-stock products. "It used to take two people anywhere from 10 to 15 days to create a 12-month forecast. Now it takes one person three days to roll out a forecast that provides a more accurate foundation for inventory and replenishment planning across our business," explains Joe Tocci, senior vice president of Global Sourcing and Supply Chain at IPG.

As a developer and manufacturer of specialized packaging products and systems, IPG is better equipped to align build-to-order product lead times, minimize order quantities, and identify out-of-scope products and business units. The company is leveraging multi-echelon forecasting capabilities, such as item-level simulations and reforecasting, variance reporting between production and simulated plan, and merging of the demand forecast back into the live database.

With these improvements in inventory planning, IPG achieved a $13 million year-over-year reduction in inventory in its regional distribution centers while increasing fill rates to 86% by the end of the first year. Today, IPG proudly maintains a 95% fill rate and operates a recently opened customer distribution center containing a day-one in-stock inventory of 96%.

"The results we have realized have been phenomenal," says Tocci. "We have achieved a multi-million-dollar inventory reduction, and the savings we gained in the first four weeks following the implementation of Logility Inventory Planning more than paid for the cost of software and implementation."

Building supply chain resilience with network optimization

Like Kelly-Moore and IPG, Maine Pointe understands the value of a modern supply chain platform that keeps pace with the demands of ever-evolving market conditions. Consumer goods companies must continuously optimize their supply chain network to adjust to changing consumer preferences, disruptions, and supply challenges for example. The supply chain and operations consulting firm relies on Logility's network optimization solution to help customers create and operationalize procurement, operations, and logistics strategies that drive high economic returns.

With Logility's built-in reference data, Maine Pointe has real-time access to information on facilities, transportation, logistics, and lead times, leading to a quicker setup of its clients' models. This allows consulting experts to weigh the rewards and risks of changing truckload volumes, increasing parcel and ocean rates, and the latest changes in estate and labor indexes. In return, the company has eliminated weeks of data gathering and estimates costs immediately across multiple scenarios.

"Logility's network optimization solution gives us the quantitatively perfect answer by allowing us to visually modify and create new scenarios in seconds," according to Nathanael Powrie, executive vice president of data analytics at Maine Pointe. This allows us to balance our client's questions with not missing a critical decision-making window."

And as supply chains become more dynamic and disrupted, Maine Pointe is confidently addressing its clients' needs because it processes data 10x faster and builds models 3.5x sooner. Logility's scalable, flexible, and cloud-based graph database provides analysis and results more rapidly than legacy supply chain network optimization tools.

"When engaging in a data hunt, Logility represents accurate historical averages. This is a significant game-changer," Powrie shares. "It provides the best indication of relative prices for our scenarios and enables our analysts to work more productively."

Responding to constant change efficiently and profitably

The consumer goods industry competes in an ever-evolving landscape of customer preferences, buying behaviors, and disruptive economic forces. And many players are realizing the relying on spreadsheets they adopted a decade ago cannot keep up with every shift, leaving behind opportunities and making themselves vulnerable to risks.

But with Logility, it is possible to navigate it all and win, as evidenced in IPG's, Kelly-Moore's, and Maine Pointe's experiences. Companies can strengthen their supply chain by increasing forecasting frequency and accuracy, optimizing inventory, and running a resilient network - everything necessary to deliver value-driven services, accelerate speed to market, and drive ongoing business success.

Need more on inventory, S&OP, or network optimization? Download free copy of one of our executive briefs here.

Share this:

Recommended