2011’s Top 11 Business Priorities

With the consumer products industry holding such a prominent position in the supply chain, it would be wise for upstream and downstream partners to pay attention to the evolution of their business priorities. According to Tompkins Associates, international supply chain consultants, uncertainty is as certain as ever, and supply chain leaders must be flexible yet strategic. Tompkins cites globalization in China, mergers and acquisitions, and taking inventory management to a new level as these companies’ top survival strategies. In a recent report, Tompkins expanded these into the following Top 11 Priority list:

1. Uncertainty: A clear, new norm called uncertainty has emerged as the Great Recession ends. Organizations throughout the consumer products industry must accept uncertainty and implement agile processes that allow them to move forward. Realize that uncertainty cannot be controlled, so instead, make it an ally in achieving profitable growth.
2. Outsourcing, LSP Rationalization, and Suppliers: Properly assess current outsourced networks. Operating with large multiples of LSPs and suppliers can create internal challenges and add costs to the supply chain. Having an optimal number of LSPs will improve service and reduce cost.
3. Globalization and China: Emerging markets have moved beyond being low-cost manufacturing countries and are now where the growth resides. With young and growing populations, emerging markets will provide the growth engine for both local and global consumer products companies for the foreseeable future.
4. Reverse Logistics/Service Supply Chain: In a consumer-centric environment, execution of reverse logistics processes presents an excellent opportunity for companies to differentiate themselves from their competitors in terms of long-term customer loyalty and brand recognition. It is important that consumer product companies have their reverse logistics processes designed and in place for timely execution when needed.
5. Inventory/SIOP: With higher demand anticipated in 2011, the people, processes and technology of Sales, Inventory and Operations Planning (SIOP) must be taken to a new level so that inventory turns increase and customer service improves.
6. Mergers and Acquisitions: Understand the three key factors that will drive healthy M&A increases—tuck-in acquisitions, divestitures that clear out non-strategic or underperforming businesses, and occasional blockbuster consolidation moves. The push to maintain margins will continue to drive companies to achieve economies of scale to offset increases in commodity, production, and transportation costs. At the same time, organizations that have carefully managed their debt and cash position will have the financial resources to acquire promising businesses. In addition, growth-oriented companies will acquire local businesses to gain quick access to new emerging markets.
7. Strategic Market Planning: M&A activity for the consumer products industry is rising due to recession pressures that created bargain prices for various companies. But risks persist, and success comes from gaining a leading and sustainable position in the served markets.
8. Network and Supply Chain Flexibility: Know where your company stands in terms of network optimization, supply chain visibility, collaboration, risk, tax strategy, and global trade. Today’s successful consumer goods organization has used the downturn to restructure its distribution network and supply chain to reduce costs and increase flexibility, preparing well for the upcoming year.
9. Sustainability: Sustainable practices and waste elimination help reduce costs and boost brand reputation. Leading consumer products companies are striving to reduce energy consumption, reduce greenhouse gas emissions, and adopt more environmentally sensitive packaging practices.
10. Consumer Buying Trends: Consumer buying trends are influenced by three main drivers: consumer confidence, the economy, and product changes. As the economy strengthens, consumers are more likely to purchase more and higher priced goods. The ability to understand and react to consumer buying trends as early as possible, before they become obvious, creates a huge advantage.
11. Transportation Spend Optimization: The recession produced enormous pressure to control transportation costs in the face of stricter customer service demands. Now is the opportune time to invest in transportation management and technology to truly optimize transportation spending at the level of detail and control needed to stay ahead of competitors.