The days of predictable consumer demand and stable retail channels are long gone, and today’s manufacturing supply chains need agility and flexibility to keep up with rapidly evolving market conditions. Change is now the only constant, and this presents increasing challenges for FMCG suppliers particularly as global consumers exercise their spending power, adopt new buying channels, and bring significantly different preferences to their purchasing decisions.
In response, many FMCG companies are increasingly leaning on their third-party manufacturing and co-packing suppliers to deliver the capacity, speed and adaptability now required of them. But as FMCGs look to these suppliers to act as an agile arm of innovation, they are now confronting the significant limitations of current workflows and modes of communication. Legacy systems, spreadsheets and old-style trading of phone calls and emails simply do not scale to meet this new vision of strategic collaboration – keeping many of the opportunities for improvements hidden from view.
Digitalisation with a cloud-based collaborative platform unleashes the potential for added profitability by shining a light into the ‘black box’ of the FMCG external manufacturing and packaging network, enabling a much more responsive operating model. Here real-time data is seamlessly shared, workflows streamlined, milestones and KPIs easily tracked with shared accountability between the FMCG and their supplier – ultimately allowing this ecosystem to bring consumer products to retail customers with the increased speed, agility, and reliability now demanded. Benchmarking and monitoring of supplier performance can also be more easily managed and optimised, which also allows brands to focus on continuous improvement within the supply chain ecosystem.
Indeed, digital transformation is unlocking the potential of the external manufacturing & supply chain network for several FMCG brands, and the benefits of Nulogy’s cloud-based multi-enterprise platform is allowing them to truly collaborate with their external manufacturing network to deliver far-reaching benefits. For the likes of L’Oréal Canada, Nulogy is seen as a strategic partner in the digitalisation of their supply chain. “By enabling automation and increasing visibility across our network, Nulogy has helped us collaborate more effectively with our external contract packing and promotional assembly partners to drive greater agility, sustainability, and cost optimization,” said Logistic Director, Véronique Gravel.
By providing access to real-time information on everything from capacity constraints, and the status of orders, to on-hand materials and stock, FMCG brands are far better equipped to respond with agility to volatile demand from their retail customers. Indeed, with greater collaboration comes speed to market, and the ability to seize revenue opportunities with confidence and drive growth.
In addition, waste and costs are more easily reduced. Without visibility into their networks, FMCG companies can be left guessing on what is possible and in the absence of information, many will err on the side of caution, increasing stock levels to manage the unknown, driving costs up and failing on sustainability goals. By providing visibility, digitalisation equals informed materials and inventory management, driving out waste and cost from the supply chain.
But digitalisation of materials and inventory management is not simply about waste. With effective and fast lot code traceability, FMCG companies avoid the risks inherent in paper-based or legacy systems where tracking down and quarantining inventory in the event of a recall can be time-consuming and error-prone. With a digitalised platform that enables network-wide visibility of materials and inventory at the batch and item level, traceability is as easy as a click of a button. For brands and for their suppliers who must function as custodians of that brand’s quality, recall readiness mitigates reputational risk.
Clearly, a digitally transformed external manufacturing and co-packing supply chain can deliver a raft of operational and financial benefits and, importantly, strengthen relationships between FMCG brands and external suppliers. By sharing data and working together to fulfil orders, mutual trust is built, enabling all sides to gain and creating a ‘win-win’ in this essential part of the supply chain.