Retail, FMCG, CPG - Consulting
Retail Supply Chain & Logistics Project Examples
Do you need to reduce end to end Supply Chain costs? Or maybe improve on shelf or in store product availability? Or maybe you are carrying too much stock? These are all problems we have solved many times before ........
Our experience with Retailers and Retail Suppliers covers many sectors such as these:
- Baked goods
- Canned goods
- Cold stores
- Consumer goods
- Dry goods
- Retail - Grocery
- Retail - GM&A
- Retail - Fashion
- Retail - Furniture
- Retail - Discount & Variety
- White goods
We are very proud and privileged to count amongst our consulting customers some of the leading organisations in the area of Retail, FMCG and CPG LB Customers
Examples of Projects:
Retail, FMCG, CPG - Strategy
- Review of retail supply chains for fresh food, including the creation of a Supply Chain strategy using an issues based methodology
- Grocery Retail, Supply Chain strategy re-alignment
- GM&A Retail Supply Chain strategy development
- Retail Logistics strategy development
- Development of channel management options
- Due diligence of major grocery retail supply chains
- Cost To Serve Nationally and Internationally
- Retail distribution network design including asset specifications, asset quantity, exit strategy, new manufacturing facility design and process review
Retail, FMCG, CPG - Tactics
- GM&A retail, redesign of DC network.
- Multiple outsourcing of food products distribution centres including managing tender process, service provider selection and contract negotiations
- Multiple outsourcing of food products transport tenders including management of the RFT process, provider selection and process review
- Review and develop Field sales force territories
- Transport rationalisation reviews for retail food services and food manufacturing companies
- DC rationalisation for food manufacturing companies
- Design of retail distribution centres including automated equipment requirements
- Contract preparation and negotiation for transport and DC commercial agreements
Retail, FMCG, CPG - Operations
- Implementation of contract change-overs to outsourced service providers including project management, IT selection and reviews, commissioning of contractors
- Contract management of customers‘ warehouses across multiple sites
- Facility management during post implementation
- Development of retail Supply Chain KPIs
Retail, FMCG, CPG - Optimisation
- Group retail supply chain reviews across businesses with up to sixteen Divisions
- Group rationalisation of transport operations
- Major warehouse productivity improvement projects
- Business process re-engineering across multiple divisions
For further information regarding our work in these FMCG, CPG and Retail industry sectors, feel free to make direct contact with the following Logistics Bureau staff:
Sydney - Rob O'Byrne
Tel: +61 417 417 307
Melbourne - John Cole
Tel + 61 411 706 726
SE Asia - Colin Airdrie
Tel: +66 819 464 490
Retail Supply Chains
Like any Supply Chain, Retail Supply Chains have their own unique challenges. They’re different from the Supply Chains you might see in industrial companies or wholesaling companies and they have very different dynamics.
The retail supply chain is dealing with the consumer directly and the customer really is King. So everything in the retailer’s Supply Chain strategy needs to be focused on the customer, and of course the shareholders, that goes without saying. So what makes retail supply chains so different? Well that of course depends on the type of retailer we’re talking about, because the needs of hardware retailers will vary from those of a fashion retailer. But in general terms, retailers need to deal with; very broad product ranges, ranges that change, perhaps by season, possibly high levels of promotional activity, a broad supplier base, maybe some long supply lead times if there is a high degree of importing.
What all this means, is that the retailer’s supply chain needs to be very flexible, responsive and low cost if the market sector is highly competitive. In terms of customer value, there’s a bit of a cocktail that retail customers are looking for.
- Price - This needs to be competitive.
- Range - Can be very important, say in a hardware retailer, where the customer expects a 1 stop shop for all their needs.
- Service - Customers will quickly go elsewhere if service is consistently poor.
- Quality is a given.
- Availability is probably one of the key customer expectations. Particularly for advertised or promotional products.
- Convenience is also a key component.
- The Brand can be important depending on the retail sector, and lastly
- Fashion can play a key role.
So these are the ingredients of our customer value cocktail. Then there are the emotional aspects, such as in store look and feel. So for those managing the retail Supply Chain, delivering this cocktail of customer needs is the key to success, but doing it at the lowest possible cost.
If we look at a generic Retail Supply Chain, broken down into the main areas of cost, it tends to follow this pattern. These costs will of course vary by company and sector and are just an example. By far the biggest cost is the Cost of Goods or COGS, often 60-70% of total sales. That’s why retailers place so much focus on buying well. It’s where they can make the biggest gains. Next we have the inbound Logistics costs. These are the costs associated with getting product into the retailer’s distribution network from suppliers. Typically this is about 2-7% of sales. Then we have the retailers own internal Logistics operations, operating warehouses and delivery to the retail stores. Typically this is in the range of 3-5% of sales. Then we have in-store Logistics This is all the product handling that takes place at the back dock, the stock room, and replenishing stock out on the retail floor. This is typically 3-6% of sales and can be the largest part of the store labour cost. Finally, and one that people often forget, we have the opportunity cost, often in the range of 2-6% of sales. And this is the cost of a lost sale and lost customer loyalty through poor On Shelf or On Floor availability.
So for the retail Supply Chain in particular, improving service and reducing cost is all about trade offs and taking an end to end view of the Supply Chain. Many retailers take their eye off the ball by focusing too much on specific functions rather than the end game of service and cost. For example buying in large quantities from suppliers, to get a lower unit cost. But what is the end to end impact? COGs will go down, but inventory levels will go up. Handling costs may go up and we might face a higher level of markdowns as we try to sell through all the stock. As another trade off example, we might adopt a policy of allocating all stock on receipt. That is, pushing all the stock out to the retail stores, rather than allowing them to request it. This reduces warehouse costs and reduces inventory holding, but it pushes stock levels higher at the retail stores, increases store handling costs, and it can also reduce stock availability, as stock levels will vary all over the store network and some stock will get stranded at lower sales stores and again, this can lead to a higher level of markdowns to clear the stock.
So for those managing the retail supply chain, things can often be more complicated than in other industry sectors. The dynamics and trade offs can be different, and depending on the particular retail sector and product range, a number of very different approaches may be needed to meet the needs of different value streams. That’s the topic of a short video you might want to look at.
So in summary, retail supply chains are different. They need to be very focused on the customer’s needs and on reducing costs, but most importantly, they need to be managed from an end to end perspective so as not to sub optimise any one function.