Consumer goods manufacturers will build smarter, shared and synergistic supply chains that compete in the same-day/next day world. As 2018 unfolds, consumer goods manufacturers will continue to diversify beyond traditional distribution channels. They will find new and innovative supply chain models to reach consumer buyers with same day and next day delivery.
As we continue our 2018 Supply Chain Predictions blog series, we’re making a third prediction today. Here it is: In 2018, consumer goods manufacturers will build smarter, shared and synergistic supply chains that help them compete in the same-day/next day world. The key word in our prediction is “compete.” This is because in the world of online retailing and consumers’ desire for same day and next day delivery, consumer goods manufacturers must look beyond the traditional and embrace new, wholesale ways of doing business. How they operate their supply chain and distribution networks is no exception.
Let’s take a closer look at where we think “smarter, shared and synergistic” really means. First, on the warehousing front, there’s been a long-held belief that a shared warehouse operates on a ‘one-size-fits-all’ model. This often translates into the typical consumer goods manufacturer believing they must set aside retailer or consumer-specific order customizations in order to take advantage of the shared labor and cost savings of a shared facility. Warehouse Management System (WMS) technology advancements combined with the right approach to a diverse, high-performance labor team have driven a major shift to the traditional ‘one-size-fits-all paradigm’ of shared warehousing. At LeSaint, we’re helping consumer goods manufacturers take advantage of the synergies a shared warehouse offers without sacrificing their customized needs, especially where those warehouses are located within reach of major yet localized consumer markets. The LeSaint shared warehouses in the Chicago-land area, for example, can reach nearly all consumers in the Midwest with same-day-next-day delivery, with products ranging from air purifiers to apparel and exercise equipment. Learn more at: http://go.lesaint.com/sharedwarehousing1
Also with the advent of online retailing and the rapidly changing consumer preferences, we’ve noticed a major supply chain implication for consumer goods manufacturers in the area of returns management. As any supply chain practitioner will tell you, returned goods need to be processed efficiently, a final disposition identified, and then repaired/refurbished products cycled back into the distribution network. However, for many consumer goods manufacturers, returns management has been an after-thought in the supply chain, and largely operated independent of the forward logistics network. From our experience at LeSaint, consumer goods manufacturers cannot afford to keep these silos.
A further, critical consideration is the total cost of processing returns altogether. For example, it is not uncommon for the cost of processing returns and repairing products to exceed the products’ revenue value altogether; yet accepting returns and exchanges from consumers is critical to the overall customer experience. This makes identifying an efficient, effective process for handling returns even more important for consumer goods manufacturers. In short, they must innovate – finding synergistic distribution models that integrate both forward and reverse logistics in order to remain competitive and control costs.
Let’s also take a closer look at the transportation aspect of the supply chain. The current capacity constraints we are experiencing are in fact, a perfect storm resulting from the ongoing (and indefinite long-term!) driver shortage, new regulations and a booming economy that has freight volumes at an all-time high (read more here). Historically, by the time the supply of trucks catches up to demand, demand starts to ebb, resulting in a major swing of the pendulum in the other direction towards excess capacity. But will the major swing happen again? Or have we arrived in a new era? Does the driver shortage and ongoing regulations mean that no matter the supply of trucks, there simply won’t be drivers available to operate them? At LeSaint, we believe we are approaching a tipping point in transportation where the traditional rules of supply and demand will be replaced with totally new and innovative ways to operate a transportation network. For consumer goods manufacturers, that means getting smarter about transportation. It may even mean collaborating with other shippers to find synergies across a shared transportation network, dramatically reducing transportation time/requirements for products, or even looking at alternative modes and technologies beyond the traditional truck and driver altogether.
What are your plans to develop a smarter, shared or synergistic supply chain in 2018? Join the conversation.
Want to explore these topics further? Learn how LeSaint helps CPG Manufacturers succeed in taking advantage of shared and synergistic distribution networks, by reading our case study with Blueair, a leading manufacturer of air purification systems. Visit: http://go.lesaint.com/blueair
Note from the Editor: This is the second blog post in LeSaint’s 2018 Supply Chain Predictions series. Stay tuned for what supply chain practitioners should do about these trends — and more —- coming in future posts.
Guest Author: Guest author of today’s blog post is Dino Moler, Executive Vice President of Client Solutions at LeSaint Logistics, where he is responsible for developing creative, customized logistics solutions that reduce total logistics costs, free up working capital and improve customer service. Dino serves as Chairman of the Board of Directors for the Transportation Marketing & Sales Association, and actively participates in logistics industry associations and events.
