Bringing customers and suppliers closer together

In recent years, the CPG/Retail supply chain has changed shape significantly. Retailers and global players have reduced the number of direct suppliers, while at the same time, national and international consolidation has occurred across the industry.
Companies are now starting to focus on improving the efficiency and effectiveness of their supply chains to generate a competitive advantage. By using technology to increase the integration between customers and suppliers, inflexible supply chains can be changed into adaptive supply networks delivering benefits such as:

• Improved visibility of demand across the supply chain
• Greater responsiveness
• Reduced inventories
• Reduced working capital
• Better supplier management

Other innovations have been the introduction of CPFR (Collaborative Planning, Forecasting and Replenishment) – a process to fully integrate the customer/supplier interface and close the supply-demand gap. Industry B2B exchanges and retailer portals have also been established and these are helping to bring standardization and improved connectivity to the industry.

Leaders in the CPG/Retail industry are now considering the next steps in further integrating their suppliers into their supply chain and are turning their focus towards their small and medium sized suppliers.

Using technology to increase the integration between customers and suppliers, inflexible supply chains can be changed into adaptive supply networks.
Ensuring maximum effectiveness CPFR can be an extremely effective way of achieving supplier integration. However, implementation can be a lengthy and expensive process and can require significant infrastructure changes for both the customer and supplier. As such, the business case for CPFR integration only makes sense for larger, high-volume, customer – supplier relationships.

Furthermore, although portals and exchanges have delivered clear benefits to the customer side, concerns remain that this type of integration will push cost down the chain through increased competition, rather than driving cost out of the whole system. New alternatives to these two approaches are emerging which deliver the benefits of greater integration quickly and at very low cost. These can therefore deliver a good Return on Investment (ROI) across the areas of the supply chain that CPFR cannot reach. In the future, leading CPG/Retail organizations will offer their supply chain partners a scalable integration solution. This will allow both the customer and supplier to select the option that delivers the best performance for that particular supply chain interface and fits their own situation. Scalability will encourage suppliers to increase the level of integration over time, thus increasing the level of effectiveness and benefits.