Supply Chain Vision
A major household products company had already used Sequoia to help create a conventional landed cost focused supply chain strategy – and several major cost saving investments followed.
However, the CEO then wanted to move to the next phase of thinking, answering questions about how the Supply Chain supports and interacts with the business strategy.
How does the Supply Chain:
- Contribute to Brand Value building?
- Support innovation and speed to market?
- Drive On-Shelf Availability?
- Underpin and protect business continuity?
The work that was completed took the broadest possible inputs, including retail, category and business trends – and translated them into a quantitatively supported but flexible framework for developing the supply chain over the following decade.
This included:
- Outline rules for the deployment of manufacturing sites by technology
- Make vs. buy guidelines for existing, declining and new products
- Introduction and roll out guides for new technologies
- Complexity management tools – that facilitate feedback from the Supply Chain into ranging decisions
The response of the Global Supply Chain Director is that this work greatly helped the business to avoid wasteful discussion and prevarication whenever significant supply chain related decisions needed to be made.
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Channel Driven Growth Strategy
A global FMCG client has ambitious growth plans from it’s already market leading position.
In conventional, well developed western markets it was already well established, and further growth mechanisms were well understood and managed.
However, significant growth would need to come from the many markets around the world where traditional retailing is not so well established – including Asia, Eastern Europe and Latin America.
Using our experience and contacts in other clients, we helped to explore a range of innovative channel opportunities to help drive growth. For example:
Direct Sales Channels have a track record of delivering significant growth – with several companies experiencing compound growth rates of 20% over a decade or more. However, the characterisitics and management challenges of these businesses are very different, where innovation needs to be relentless and managing and motivating millions of agents is the key to success. We investigated the economics, NPI characteristics and options for leveraging this type of Channel, through:
- Partnership – from light tough through to parallel catalogue;
- Organic set up; or
- Merger / Acquisition – identifying targets and initiating negotiations
Internet Channels have met with obvious success in music and books – but some in the FMCG industry think they will be unaffected by this kind of mechanic. Our research and modelling has indicated that this is far from the case, and we expect significant challenges to the conventional “big box” retail channel – with a move towards more diversified routes from suppliers to homes, including:
- Low price and free delivery of commodity items where there are few technical constraints, such as the need to chill, and little emotional engagement in the need to touch and feel before buying. This backbone of nappies to tinned peas will be easy to use and unbeatably low cost;
- Focused, local suppliers of more critical goods – the rise of the butcher and baker is already happening;
- Home delivery systems and / or click and collect approaches to solve drop scheduling issues whilst maintaining efficiency.
We expect to see a move away from “one size fits all” retailing to diversified, open, internet enabled distribution across all goods and markets. It is entirely conceivable that emerging markets will leapfrog the current western distribution model and go straight to these enhanced and more efficient mechanisms.
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