ANDREW DAWSON In an industry where all parties are fighting for every cent in the value chain, the ability to streamline and optimise processes is a huge competitive advantage
The ability to manufacture just enough stock to cover orders and deliver ‘just enough’ product to every retailer is the optimal supply chain scenario in the fast-moving consumer
goods (FMCG) industry, says supply chain software company MACMobile commercial director Andrew Dawson.
“This is known as just-in-time (JIT) manufacturing and delivery. However, while there are many benefits to this type of hyper-optimised supply chain, achieving it has historically proven to be challenging.”
He explains that data analytics and insights lie at the heart of JIT, which requires line of sight throughout the supply chain as well as intelligent software.
“Armed with this knowledge, manufacturers are empowered with the ability to right-size their production for maximum returns,” says Dawson.
When it comes to the FMCG supply chain, presales are the most optimised route to market. Manufacturers know exactly what has been ordered and can deliver it as needed. The manufacturer can thus plan processes, staffing, resources and so forth to cater to this need.
Dawson mentions that the problem is that in many instances, distributors or wholesalers have to deal with a high volume of ad hoc and van sales. Manufacturers must produce extra stock of unknown quantities to cater for this and they often do not get it quite right. This then leads to additional challenges, including repeated deliveries and the need to pass credit notes on presale orders when required stock cannot be delivered.
Van sales are common practice in the African market, which are highly inefficient and mean that line of sight throughout the supply chain is impossible to achieve, Dawson highlights.
“Manufacturers might know what they have sold to distributors and be able to get some sales data from retailers, but there is a distinct lack of visibility in many areas. From a distribution perspective, the distributor needs to maintain enough stock on hand to ensure that they can supply sufficient quantities to retailers.”
The only way to achieve JIT manufacturing and, therefore, JIT delivery, is to have a single, fully integrated system from the manufacturer to the distributor, through to secondary distributors and finally the merchant.
“The data gathered through this integrated system can then be analysed and predictive modelling can be applied to calculate the required volumes of each product. This insight can be generated to a completely granular level and broken down for each distributor and even each retailer.”
Manufacturing can then produce the exact quantities required, optimising costs. Distributors can deliver the exact amount of product required to each retailer, eliminating the need for repeat deliveries and enabling the most efficient routes to be plotted.
“In an industry where all parties are fighting for every cent in the value chain, the ability to streamline and optimise processes is a huge competitive advantage. Line of sight is crucial to understanding rates of sale, effective sales locations and more,” he stresses.
Armed with this information, manufacturers can improve the efficiency of their processes, distributors can optimise their deliveries and stock levels, and retailers can optimise their stock on hand and budget according to sales.
“Intelligent route-to-market software with predictive analytical capabilities is the key component in achieving the seemingly impossible nirvana of JIT,” concludes Dawson.