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Quyntess in CPG

If you are in the Consumer Packaged Goods (CPG) industry, your supply chain certainly requires being lean and responsive. Shorter product life cycles have led to an increase in the number of product variants and increasingly volatile demand patterns, while the number of distribution channels continues to grow. End-customers and distribution channels demand ever higher standards in terms of product availability, product returns and integrated execution of fulfilment processes throughout the supply chain. You continuously have to reconsider and adapt your outsourcing and sub-contract policies; not just as part of your focus on core competences, but also as a way of responding to demand fluctuations in the supply chain. At the same time, you require firm control of your inbound supply chain because your sourcing is increasingly global and exposed to the vulnerabilities of greater supply distances. Furthermore, quality and traceability are vital factors in your efforts to mitigate and manage supply chain risks.

Typically, you supply to customers that are active in different distribution channels, ranging from direct end-customers to retailers and wholesalers. You are likely to have at least several hundred suppliers, thousands of SKUs across multiple brands and several factories. The performance and quality of your supply chain need to be as 'slick' and professional as your own high-quality products. You understand that your activities are strongly demand-driven and are aware that your end-to-end supply chain strategy needs to consider the forms of collaboration with all of your partners even more closely.

Key supply chain challenges in the CPG industry

  • Transforming tactical S&OP plans into synchronized operational plans.
  • Streamline processes with partners, in spite of their trade volumes or IT capabilities.
  • Improve collaboration between planning, procurement, warehousing, finance etc.
  • Manage accurate collaboration processes in a single and accessible interface.
  • Lean paperless collaboration processes with internal and external trading partners.
  • Reduce (safety) stock levels and improve end-to-end material traceability.
  • Cope with complexity caused by seasonality, lead times and fast turnaround times.
  • Create synergy and generate buying power with extended supply chain processes.
  • Improve Return on Net Assets (RONA) by initiating end-to-end supply chain visibility.
  • Manage disruptions or changes in planned activities on product availability.

Forecast-Driven, VMI, Consignment Stock

The normal practice in your industry is to work with purchase orders addressed to your suppliers and direct product deliveries to customers from your own warehouses after production. However, you are also accustomed to a mix of other scenarios. These may include working to call-off schedules based on Forecast, Vendor Managed Inventories (VMI) and Supplier Managed Inventories (SMI), and holding Consignment Stock at inventory locations managed by other parties: suppliers in the case of outsourced production and LSPs in the case of managed warehouses. This requires close cooperation with your partners; full inventory visibility and full accountability on the part of all of the parties involved in the production and distribution chain are also indispensable. In the case of outsourced operations, your partners may even order raw materials directly from suppliers on your behalf. Achieving end-to-end visibility of time-phased inventory is key to ensuring good performance. This is only possible if collaborative information from sources other than your own Warehouse Management System (WMS) is available. We provide this level of end-to-end inventory visibility throughout the supply chain, regardless of location and legal ownership of the goods.

Outsourced Manufacturing, VAL, Warehousing and Distribution

Outsourced activities rely heavily on a responsive and collaborative trading partner base; certainly in the case of partners that participate in closed-loop data communication with you. They act as an extension of your internal organization rather than a fully independent third party that works with you based on outsourced relationship. Sophisticated collaboration options that are capable of satisfying the collaboration needs of all of the parties involved, including stakeholders in your own company, require an integrated way of working. Agreeing such arrangements contractually is not enough: the support of a powerful collaboration solution is also required. Quyntess implemented best practices for collaboration, visibility, business process management (BPM) and workflow for leading businesses in the diary, food and beverage and various CGP industries. These best practices are continuously integrated in our solutions, offering organizations the opportunity to leverage this expertise and achieve the shortest possible time to value.

Procure to Pay landscape

CPG companies typically rely heavily on supplier collaboration if they are not vertically integrated. Some of the ingredients or materials may be commodities that can be bought on the open market, but the more critical ones tend to be directly sourced. Especially in food and food-related businesses, traceability of ingredients and additives is essential for supply chain safety and security. Problems in this area can potentially damage your company's reputation and expose you to liability claims.

Our customers typically operate multiple plants, communicate with hundreds of suppliers, use thousands of different ingredients or parts and apply either order-based or call-off based replenishment processes. They need an efficient collaboration platform between their internal systems and external processes and systems that may differ by individual supplier/factory combination due to acquisition legacies and specialization. However their suppliers' capabilities, order volumes and order frequencies are very diverse. Companies of this type use our Procure to Pay solution to decouple their internal processes from the processes operated by external partners and create a common denominator.

The benefits of our Procure to Pay solution:

  • Create forecasts and orders for shared corporate contract-based material demand.
  • Generate purchase orders for individually sourced materials by procurement.
  • Manage changes to Orders (e.g. delivery time, quantity, price, specification).
  • Handle order confirmations, changes and approval workflows with business rules.
  • Generate goods despatch notices, e.g. labels, barcodes and packaging information.
  • Ability to collaborate with LSPs for transport orders and track & trace activities.
  • Automated goods receipt and efficient self-billing processes.
  • Availability of visual VMI tools to manage fulfilment objectives.
  • Accurate supplier scorecards to measure KPIs against target and the peer group.

Contract Manufacturing Collaboration

Because flexibility and agility are so important, CPG companies commonly outsource operations such as manufacturing and packaging these days. While S&OP plans drive these allocations at a tactical level, actual implementation is only possible if sophisticated and real-time collaboration processes are in place with these partners. The scope of these collaboration processes includes capacity planning, work orders, raw materials supply, inventory and returns management. Typically, MS Excel spreadsheets, e-mails and many paper documents are still prevalent in this environment and a real-time, demand-driven supply chain is not yet in place.

Quyntess has extensive experience with supply chains of this type, as our customers typically operate multiple plants, communicate with multiple co-makers or subcontractors and deal with third party warehouses for subcontract services and value-added logistics, including reverse logistics. Our customers require an efficient collaboration platform between their internal systems and external processes and systems that may differ by individual contract manufacturer/factory combination due to specialization and specific arrangements. Furthermore, these contract manufacturers have very diverse IT capabilities, order and inventory management processes and relationships with these partners can change over time. They typically use our Procure to Pay solution to decouple these internal processes from their external partners' processes and create a common denominator.

Our solution addresses the following collaboration needs:

  • Define standard workflows for internal and external collaboration processes.
  • Exchange essential data for recipes, ingredients, manufacturing instructions etc.
  • Purchase from internal or external suppliers, based on real-time information.
  • B2B automation and traceability of material consumption, demurrage charges, etc.
  • Inventory management functionality, e.g. stock takes, inventory control and returns.
  • Despatch functionality with pack-and-stack, barcodes and notifications for LSP.
  • e-Billing for payment status, reverse billing and reconciliation against contracts.
  • VMI tool and stock visibility for manufacturers to manage fulfilment objectives.
  • Contractor scorecards to measure KPIs against target and the peer group.

Order to Cash Landscape

From a supply chain perspective, your customer is often a retailer or wholesaler that distributes your products to consumers. Unless you operate a direct web channel with home delivery through either your own network or a third party's network, the retailer or wholesaler is generally an important customer or, at the very least, a link between you and your end-customer. A delicate balance always exists in the collaborative relationship between CPG companies and their distribution channel. While the various parties sometimes share common interests, the individual players frequently have different objectives.

The key here is to use a customer collaboration platform that allows effective management of sophisticated relationships of this type in addition to simply handling purchase orders, despatch advices and invoices. By providing a single portal with a single connection to your internal processes and systems, our Order to Cash solution decouples your IT and systems from multiple external collaboration scenarios with your customers. These scenarios vary dependent on trading volume and frequency, sophistication, the power balance and many other factors. Pre-configuring these processes on our platform avoids creating a proliferation of customer-specific connection and procedure variations within your internal processes and systems. Our platform supports all communication channels: EDI (system to system), Portal and (electronic) paper-based collaboration in the communication flow from your customer. Obviously we also manage collaboration with all of the other partners involved in your customer collaboration such as Logistic Service Providers, Contract Manufacturers, or other parties such as customs agents.

The benefits of our Order to Cash solution:

  • Availability of end-to-end inventory visibility throughout the supply chain.
  • Streamline sales-, forecast- , production/replenishment orders and inventory.
  • Manage order changes and confirmations regarding price, quantity, delivery etc.
  • Availability of pro-active alerts for customers based on management by exception.
  • Manage events triggered by customer impacts on your performance evaluation.
  • Support flexible B2B automation with multiple partners in multiple formats.
  • Become "easy to work with" and maintain cost leadership efficiency.
  • Ability to manage returns processes including re-usable packaging and containers.
  • e-Logistics processes either managed by yourself, your customer or a 4PL.

e-Logistics Landscape

If you are in CPG manufacturing, transportation and warehousing are typically not part of your core business, however you are heavily dependent on these activities. End-to-end supply chain logistic costs may amount to as much as 20% of the value of the goods. These processes are typically subcontracted to logistic service providers and, depending on the business characteristics and Incoterms, are managed by your suppliers, your own organization or your customer. Consequently, this industry is characterised by multiple logistic collaboration scenarios, all of which involve their own individual challenges.

Your suppliers can arrange transport and deliver duty-paid, however you face the challenge of tracking the materials. Identifying a realistic delivery date to your site after the goods have left the supplier's factory becomes a difficulty. Another scenario is when Manufacturers buy on ex-works delivery terms and instruct global or regional LSPs to collect the goods from suppliers, possible carry out value-added activities on their behalf and then deliver on a JIT basis to your plants or to your contract manufacturers.

Additionally, customers can also request manufacturers to arrange shipping, but at the same time require detailed ASN information and impose slot booking. In other physical distribution scenario's, CPG companies require product delivery to customers from managed warehouses and may need to send an IWT message to their LSP and receive an ASN and POD in return.

Carrier performance needs to be managed and monitored at all times. Flexibility and closed-loop collaboration are therefore key requirements: you need to avoid becoming dependent on a Logistic Service Provider for your collaboration information and integration needs in the supply chain. Our e-Logistics solution offer this degree of flexibility.

Benefits of our e-logistics solution:

  • Ability to label goods with your barcodes for both inbound and outbound processes.
  • Forward supplier shipping notices to a 3PL for pick-up and create Transport Orders.
  • Transport allocation to 3PLs based on contract terms, capacity agreements etc.
  • Evaluate transportation in terms of its impact on production and delivery schedules.
  • Manage trading partner KPIs against SLA and peer performance.
  • Ability to interface to customs brokers and any other third parties.
  • Send despatch advice details and track & trace information to trading partners.
  • Manage slot booking processes with both customers and internal shipping docks.
  • Generate proactive alerts for on-time delivery and fill rates for your customers.
  • Easily validate carrier invoices relative to the activities they have performed.