Blog | Food and Beverage

Trying to Keep Pace with Supply Chain Disruption?

Now CPG manufacturers can build more resilient operations – and reduce demand shock – despite unprecedented circumstances.

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Pandemic-related manufacturing shutdowns, natural disasters and political unrest have wreaked havoc on the supply chain over the past two years. If you’re in the Consumer Packaged Goods (CPG) industry, you have likely felt the shockwaves more than most.

One thing I have learned for certain: Companies that do not have a formal supply chain planning process have struggled to meet dynamic changes both in demand – and supply.

Specifically, companies that rely on a disconnected process largely driven by manual methods of supply chain planning and communicating – with fragmented data across the organization – are unable to understand clearly what’s ahead. And how to deploy resources in the most optimal way to meet the needs of their customers.

The result? Longer lead times and late deliveries. Expensive expedited shipping. Increased backorders. Cash tied up in excess inventories. And more.

Building Supply Chain Resiliency

To succeed in today’s environment, your supply chain must be more resilient to disruptions than ever before. A resilient supply chain can better withstand circumstances that are beyond your control – like demand volatility, supply shocks and other material shortages and cost increases.

The key to building this kind of resiliency is better visibility to both potential issues downstream in your organization and upstream at your suppliers. This is where a digital supply chain planning solution can take the lead.

This cloud-hosted supply chain planning solution enables you to move from a fragmented, disconnected process to a connected, forward-looking one. How? The solution sits on top of any ERP system to connect all facets of your operations – from critical areas in your own organization to your customers and suppliers.

"In other words, one integrated solution connects top floor planning with plant floor production. And closes the loop from customers through suppliers."

By removing organizational silos and unifying your business, the solution delivers the visibility you need to optimize inventory – and establish both strategic and tactical objectives. In other words, you will have ready answers to critical questions regarding both expected sales and the means to fulfill them – right down to tactical day-to-day execution.

Preparing for Success

A connected approach to supply chain planning can have a dramatic impact on the bottom-line performance of your business. For example, this leading manufacturer of dry spices reduced inventory levels by 20% and maintains nearly 99% on-time, in-full deliveries.

But a successful implementation is contingent on a few key requirements:

Establish clarity on what you can and can’t accomplish across the organization.
I like to say “wishful thinking is not a tactic.” You must have a clear understanding of the business’ capabilities to meet your customer demand requirements.
Ensure all planning data is accurate and accepted.
It may go without saying, but the adage “garbage in, garbage out” certainly applies here.
Keep attributes used in planning grounded in reality.
Many companies incorrectly set lead times to zero, which, from a planning perspective, assumes inventory will magically appear when needed. In reality, that can’t be further from the truth – especially in today’s environment. Defining inventory requirements and your true supply chain capabilities are critical to avoiding “stock-out” and late delivery scenarios.
Account for uncertainty and planning errors.
In periods of great uncertainty and disruption, accurate planning is difficult. But the question isn’t “were you wrong” – it’s the degree to which you were wrong. If you understand the degree of error, you can identify means to reduce its impact, such as building inventory buffers.
Accept that not all customers and products should be treated the same.
Remember the 80/20 Rule. When faced with limited options, the significant few trumps the trivial many.
Accept that manufacturing excellence can’t be achieved in isolation.
Time and again, we’ve seen that organizations that work cross-functionally across the supply chain and with their customers achieve positive outcomes – even in uncertain times.

Published June 26, 2022

Ara Surenian

Vice President and Product Management, Rockwell Automation Company

Ara currently leads product management and engineering for Plex DemandCaster Supply Chain Planning. He is a supply chain visionary with over 30 years of industry experience and is a seasoned and storied presenter who enjoys sharing his knowledge.

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