CPG Company centralizes supply chain strategy and planning to drive efficiencies and improve service across their entire portfolio of brands. Utilize for Capital Planning, M&A, New Product Introductions and Risk.
Case Study: Optimizing Supply Chain Design to Drive Cost Savings and Competitive Advantage
As a dominant force in the Food industry, this leading company boasts annual sales exceeding U.S.$20 billion, making it one of the largest processors and distributors of food products in the United States. With over 50 well-known local and regional brands, as well as a wide array of private labels, the company operates through a vast network comprising hundreds of suppliers, more than 50 plants, and more than 150 distribution centers nationwide.
Recognizing the need for improvements, the company embarked on a comprehensive evaluation of its supply chain. Historically lacking a centralized supply chain function, the company faced various challenges, including limited supply chain expertise, lack of authority over plants, and the absence of common metrics and analytical frameworks for driving improvement. This hindered the company's ability to make informed decisions regarding production, plant and distribution center placement, regional coverage, and optimal delivery options such as trucks and railways. Given the perishable nature of its products, delivered freshness at the lowest cost was critical to the company's success and with the complex nature of its supply chain made this a monumental task.
To address these challenges, the company launched an ambitious multiyear initiative to centralize and streamline its supply chain operations. With annual landed costs amounting to over U.S.$6 billion, cost management became a key focus. The company aimed to optimize procurement, production, and network operations by implementing standardized plant management, streamlining product portfolios, designing an efficient network, and strategically locating manufacturing facilities.
To facilitate these efforts, the company leveraged cutting-edge technology, including the creation of a digital twin and the implementation of Supply Chain Network Optimization. This powerful capability allowed the company to evaluate different strategies and alternatives, gaining a comprehensive understanding of the broader implications and service impacts across its network. The platform's robust scenario management capabilities enabled quick analysis and decision-making, providing valuable insights before, during, and after implementation.
Lowest Landed Cost (LLC): The company successfully determined the optimal supply chain configuration to drive the lowest landed costs, contributing to significant savings.
Lower Conversion Costs: By implementing standardized plant management and simplifying product portfolios, the company achieved reduced conversion costs, further enhancing profitability.
Enhanced Efficiency: The optimization process led to a reduction in delivery area overlap, delivery miles, and customer lead time, improving overall operational efficiency.
Efficient New Product Launches: The company identified the most efficient assets for supplying new product launches, ensuring timely and cost-effective market entry.
Network Optimization: By analyzing capabilities and capacities within the supply chain network, the company optimized the utilization of third-party resources, resulting in lowered overall landed costs.
M&A Integration: The company successfully assessed the value of acquisitions and formulated strategies for seamless integration into the supply chain network.
Strategic Capacity Deployment: Through a well-defined capacity deployment strategy and optimized capital expenditure, the company positioned itself to support future growth projections effectively.
Risk Mitigation and Resilience: The supply chain analysis identified potential areas of risk and enabled the development of strategies to enhance resilience while minimizing costs.
By undertaking a comprehensive supply chain design overhaul, this Industry Leader has not only reduced costs but also gained a competitive advantage in the market. Armed with a centralized supply chain function, standardized processes, and powerful analytical tools, the company is poised to deliver its products at their freshest while ensuring optimal cost efficiency.