Packaging, DC strategies for fast-moving goods
Exel and DHL Supply Chain this week released a white paper that examines the shifting market dynamics and strategies fast moving consumer goods (FMCG) manufacturers in the areas of packaging and distribution.
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The paper, Consumer Goods Manufacturers Seek Greater Supply Chain Flexibility,, looks at how these manufacturers can capitalize on packaging and distribution opportunities to meet new demands created by changes in retailer and consumer behavior in mature and emerging markets, Exel said in a statement.
'In the face of dramatic global change, retailers are developing new strategies to differentiate their brands and achieve competitive advantage,' said Joe Puleo, Exel's senior vice president, business development, for the consumer industry. 'Retailers' actions in turn have market share and profit implications for FMCG companies, creating a need for more flexible supply chain solutions. While consumer goods supply chains have evolved over the past decade, opportunities remain — particularly on the production side — to meet new market demands.'
Specifically, the report says FMCG manufacturers can outsource primary packing, consolidate secondary packaging locations and continue a trend of regionalization of distribution centers.
'Outsourcing primary packaging, also referred to as contract manufacturing, can increase asset utilization, reduce new capital investments, help facilitate product packaging based on regionalized demand, and provide greater flexibility in responding to the changing marketplace,' Exel said. 'Leveraging contract manufacturing resources and postponing primary packaging to the distribution center network also saves the cost of changing manufacturing to accommodate product launches and shorter product life cycles and saves on transportation.'
With regard to secondary packaging locations, Exel said: 'Consolidating secondary packaging, or co-pack, operations into an existing facility allows companies to postpone customization closer to consumption. This helps reduce order lead times, avoid carrying unnecessary inventory, enables just-in-time shipment of floor-ready displays and products for advertised promotions, and can result in less SKU and material obsolescence.'
Exel said continued regionalization of DCs allows shorter order lead times, which allows retail customers to respond quicker to fluctuating consumer demand.
'It also reduces retail store inventory, product obsolescence and security burdens that come with managing large volumes of product in some regions,' Exel said. 'Manufacturers can reduce both inbound and outbound transportation costs by locating DCs near the plant or in multi-facility campus operations that provide access to intermodal facilities.'