True Planning: Linda Peel, Oracle Corp.
These days, most consumer goods companies are all sailing through uncharted territory. The ebb and flow of the economy continues to impact consumer and retailer wants and needs, and consumer goods companies are trying to navigate how to best meet these new demands and find that illusive goal of profit. The need to evaluate market scenarios and drive supply chain decisions based on a clear understanding of what will drive profit and then align that to brand, category and target consumer profile strategies has never been more important. Here, Linda Peel, director, Applications Solutions Group, Oracle Corp., explains how your company should evaluate the impacts of decisions and trade offs across the entire value chain.
How have new consumer buying habits — brought on by the recession — affected supply chains for consumer goods manufacturers?
Peel: Unprecedented volatility and shifts in consumer buying habits — what they buy, why they buy, and where they buy — experienced over the last 24 months of recession-induced change has created a chaotic effect across the supply chain. History is not repeating itself and can no longer act as the key signal to project demand and drive supply plans. Consumers are shifting to multiple channels, choosing purchases on various demand needs, and are seeking value purchases. Add to this a change in product mix as new products are entering the market after two years of recession-induced creative stagnation. Not to mention consumers have increasingly determined that they are going to trade down for private label products.
What steps can consumer goods manufacturers take to ensure that they have full visibility of consumer demand, supply and financial data?
Peel: In order to be effective, manufacturers must have timely and full visibility to demand, as well as supply financial and timely market demand signal data (it goes beyond ePOS and syndicated market data) to drive profitable decisions leveraging a systematic continual S&OP evaluation proactively to make profitable trade offs/decisions.
Manufacturers must integrate these signals directly into decision-making assessments of trade offs evaluating multiple market scenarios — like product allocation, alternative supply sources, change in product mix demand, promotion lift and cannibalization impacts, and more — to drive manufacturing and sourcing decisions with a clear understanding of profit, service levels, category strategies and consumer drivers.
Differentiation means proactively identifying exceptions to the forecast and evaluating options to make the best “informed” decisions. Access to key insights is the “game changer” not volumes of data. Ask yourself: “How many hours do your resources spend ‘hunting and gathering’ data?”
How can consumer goods companies then best connect the dots between consumer demand and their supply chain planning and execution capabilities?
Peel: Consumer goods companies must connect consumption and market demand signals directly to downstream planning and execution as well as have seamless visibility to financial objectives, innovation plans, sales and trade decisions, consumer demand and supply options. Unfortunately, connecting disparate planning tools and processes is both cumbersome and does not support flexibility to drive timely insights to deliver rapid and proactive analysis in order to both sense dynamic changes and respond quickly.
Traditionally, IT investments have been on ERP projects with integration to non-ERP applications focused on standardization. Leading companies are now shifting that investment to focus on enabling best-in-class value chain capabilities that drive differentiation and provide a flexible, modular “enterprise” business infrastructure that is more responsive to the needs of the business. ERP is no longer the center of the world, but the “commodity” transaction element that does not support the needs of an “outside-in” process or the capability to synchronize planning and evaluation of innovation, integrated sales and marketing, and demand driven operations. Think beyond ERP. IT must co-partner with the line of business to provide the best-in-class capabilities across these differentiating processes. Force-fitting ERP to do everything, while trying to connect disparate planning solutions and enabling average capabilities, is just not good enough to compete anymore.