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Customer Stories - Realigning Client and Supplier Relationship - Solutions4Business

RE-ALIGNING CLIENT AND SUPPLIER RELATIONSHIP FOR A GLOBAL CONSUMER GOODS GIANT

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Company Profile

The first company involved in this case study is one of the world’s leading consumer manufacturer (CPG), with sales exceeding $60 billion in 2013. This company is headquartered outside the US and employs over 170,000 people worldwide.

The second company is US based with annual sales of $1.5 billion and employs about 5000 people.This company designs, manufactures, and supplies packaging products and solutions..

Both companies have a rich history of innovation, employee empowerment, social engagement and environmental focus.

INDUSTRY SPOTLIGHT

Packaging and Packing

The US packaging industry is estimated to total over $100 billion. Consumer goods companies often utilize co-packers to help them package their goods as well as provide new ideas in marketing. Consumers are also increasingly demanding when it comes to the appearance of their product’s packaging, while at the same time reluctant to pay higher prices for it. Moreover, packaging material choice is becoming ever more complex due to government regulations governing recyclability and sustainability, as well as consumer demands.

Trends in the marketplace

  • Promotions and Special Pack volumes are growing as a percentage of total in-store sales.
  • Retailers expecting faster and more reliable promotions.
  • Retailers having limited ability in providing sales projections to their business partners due to increasing volatility in consumer buying patterns
  • Most companies are exploring In-DC repacking operations in order to improve responsiveness
  • Large organizations are creating focused business teams that are responsible for managing promotional and/or repack volumes.
  • Industry is moving towards specialization, with most companies exploring turn-key repack/promotional support from suppliers.

BUSINESS SITUATION

The CPG Company made a strategic shift towards utilizing the supplier in order to support the growing needs of their promotion pack and re-pack business. Their goal was to reduce complexity, increase flexibility, improve responsiveness to customer demand, improve margins and reduce waste by consolidating all activities with one supplier.

Project team responsible for implementation built a business case that included the benefits and financial impact. They also did a detailed evaluation of capabilities before selecting right supplier. Given the sensitivity of the transformation and its financial and operational impact, project team did due diligence that included identifying risks and developing high level mitigation plan before signing the contract with the design and packaging supplier.

The start-up phase was particularly challenging and operational constraints started impacting customer service and other key business measures negatively. The supplier’s current environment was unstable and in many areas the operation was underperforming to the point that all faith had been lost in regards to meeting future business needs. As a result scheduled production was being diverted to other service providers. This activity was creating significant disruption in the operation and consuming limited team resources. Given the sensitivity of the situation, it was necessary for both companies to quickly identify underlying reasons and associated gaps in the existing process, and take remedial steps.

The client leadership called on Solutions4Business to assist in charting a path towards process excellence.

Solutions4Business deployed its proprietary Third Party Manufacturing Assessment Model (which primarily has eight pillars of which three were chosen for immediate implementation as part of the initial phase).
In a short period of eight weeks Solutions4Business’ experts were able to identify opportunities and layout a structured plan to drive immediate and long-term process improvements.
  • Operations/Manufacturing Process Review
  • Capacity Evaluation
  • Systems Work Flow

TECHNICAL SITUATION

Out of the client’s overall sales in the United States, the promotional and special pack business alone accounted for $1.5 billion in 2013. Strategic importance of this business is paramount since this links
into the innovation and fourth quarter holiday sales strategy.

Process of planning promotions was extremely complex given the multitude of brand business teams, disperse supply chain network, corporate pressures to manage cash productively, sweat physical assets and need to minimize waste. In general, such a scenario demands a ballet between inventory pre-builds and flex-capacity to support promotional volumes. In a nutshell, there was no room for errors in planning and execution of promotions.

Assessment

Solutions4Business's team identified and evaluated various issues belonging to verticals below

  • Process Gaps
  • Transition Planning
  • Organizational Capability
  • Capacity Planning
  • Operational Hinderances
  • Data Management
  • Process adherence
  • Training

SOLUTION

Taking into consideration the business and technical situations identified along with the initial feedback gathered from both companies, Solutions4Business deployed its proprietary Third Party Manufacturing framework.

The approach included mapping out leadership expectations to assessment pillars, client process assessment and needs analysis, conducting supplier assessment using the SOLUTIONS4BUSINESS assessment framework, AS IS process and systems mapping, GAP documentation and Improvement plan that was segmented into immediate wins, intermediate actions and long-range actions.

The strategy started with visiting both companies’ sites. During these visits we analyzed and listened to identified stakeholders, utilizing an in depth and all-encompassing list of questions developed by experts in the industry. The questions were centered on the following 3 step framework: Operations & Manufacturing Process, Capacity Evaluation and Systems Assessment.

Below are the focal points:

  • Organizational Design
  • Customer Orders processing
  • Strategic Demand management
  • Production Planning
  • Purchasing Control
  • Materials Control
  • Project Management
  • Capacity Management
  • Job Estimation
  • Logistics
  • Warehousing

Solutions4Business’ team first assessed the needs of both companies and identified the gaps, then came up with a vision to strategy deployment phase, asking the question:

HOW DO WE TACKLE ALL OF THIS NOISE BETWEEN TWO SUCCESSFUL ORGANIZATIONS?

This strategic approach included socializing, leveraging and empowering teams at both companies. Strategy pillars consisting of Demand Management, Project Management, Capacity Management and Operations that would be supported by a strong continuous improvement processes, robust information systems, and a sound supply chain network design managed by a well-trained team in an environment that had clear roles & responsibilities and expectations.

RESULTS

As a result of Solutions4Business executing its “Framework Assessment”, both companies have a crystal clear understandings of gaps in their systems, processes and team structures. They have a greater understanding of each other’s strengths and weaknesses and realize how their actions or inactions, can impact each other in this relationship.

  • Structured escalation process
  • More cohesive work environment
  • Increased trust and credibility
  • Improved visibility on project activity
  • Stronger more frequent communications
  • Clear Key Performance Indicators and performance reporting
  • Improved Customer service
  • Robust Standard Operation Procedure (SOP) adherence
  • Clear ownership and accountability for activities
  • Savings due to more robust material managements process

CLIENT TESTIMONIAL

“Solutions4Business recently conducted a supply chain capability assessment of a supplier on our behalf. They utilized a comprehensive assessment model and were able to generate findings and improvement insights rapidly. The output was logically organized and facilitated the quick development of an improvement work plan. The team collaborated very well with both our internal team and those at our supplier.”

- Director, Supply Chain, Global Consumer Goods Company.

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Saddle Brook, NJ 07663 United States

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