Consumer Goods Manufacturers Embrace a Value Network to Cure Supply Chain Headaches
Consumer products companies are only as strong as their ecosystems, which means business operations can suffer (along with the consumer experience) when exposed to supply chain disruptions. Consumer goods manufacturers may also face severe uncertainty because of the complete disruption of global supplier networks.
The usual forces of competition and consumer demand compel companies to ensure supply chains perform not so much as cost centers, but as sources of strategic advantage.
Converting supply chains to value networks may be just the solution needed to establish such an advantage. In recent years, large and small enterprises alike have made huge investments to transform their supply chains for growth, according to Accenture, a consulting and professional services firm. Moreover, the trend will likely accelerate as companies aim to put painful supply chain issues behind them.
The terms “supply chain” and “value chain” have long been used interchangeably as though they’re synonymous. However, while both share certain defining features, such as logistics and the delivery process, they are vastly different.
Consider these five key advantages of a value chain:
1. Optimize Operations via Virtual Twins
A virtual twin is a digital model designed to accurately reflect a physical object and it can be used to run computer simulations, study performance issues in the digital world, and generate possible improvements, all of which can then be applied back to the original physical object.
Applying virtual twins across design, manufacturing, and the supply chain helps manufacturers avoid problems in the physical world by solving them in the virtual world first — saving time and money while eliminating production waste. Using virtual twins on a single platform offers multiple opportunities in a virtual environment to add value across the entire product development process, from concept to distribution.
2. Real-time Collaboration Connects Teams, the Operation, and the Extended Enterprise
Empowering suppliers and internal teams to innovate by bringing them together in a structure that supports discovery, analysis, and real-time collaboration is invaluable. By using a single, customizable and interactive platform that connects data and teams in real time, companies and suppliers can capture, monitor, and track operational problems and then use aggregated information from different operation areas to find the best solutions.
3. Increased Visibility Enables Better Optimization of Operations and Planning
Developing operational, tactical, and strategic plans with a multi-user, web-based environment enables full operational visibility across all partners. Through these platforms, planners and schedulers can configure the rules and constraints relevant to their operations, simulate hundreds of planning scenarios on virtual twins, and measure their impact using key performance indicators (KPIs) with predictive analytics and prescriptive decision support. They can then determine the best options, propagate changes across the value chain eco-system, and view their effects in real time.
4. Greater Efficiency and Confidence in Connecting Operational and Supply Chain Planning
Changes across the supply chain trigger facility and resource planning. To achieve peak efficiency and improve resilience, companies apply virtual twins to simulate both scenarios. Virtual twins allow organizations and their global supplier networks, still rebounding from COVID-19 disruptions, to simulate potential solutions to challenges before defining strategies and finalizing plans. Successful consumer goods manufacturers can agree, staying ahead of supplier-network challenges comes down to anticipating problems before they happen.
5. Focus on Improving Retail Logistics Planning for the Last Mile
Real-time visibility across all operations grants planners in the home and lifestyle industry the ability to spot problems and pivot as needed. An example is automatically re-assigning and scheduling employees to address shortages or high volume. With some industry analysts attributing up to 30% of transportation costs to the last mile, companies can use a value chain approach to make potentially major improvements.
Data analytics and powerful algorithms provide real-time insight into purchasing patterns, inventory, shipping capacity, and route management that can minimize costs and the last-mile carbon footprint in support of sustainability and business goals.
Consider the case of Amy’s Kitchen, a privately held manufacturer of organic and non-GMO convenience and frozen foods. To improve its complex scheduling — a function of the company’s unique process of assembling and cooking products simultaneously — it integrated planning and operational optimization tactics on a single platform to maximize resources and improve operational performance. By favoring a value-chain approach, Amy’s Kitchen succeeded in reducing inventory by 25% and increasing truck utilization by more than 80%.
In another example, a Fortune 500 food consumer products company also used a platform approach and logistics operations software to improve logistics and meat formulation. Employing a virtual twin of its supplier network, the company used powerful analytical tools to match the best trade-offs between objectives, constraints, and KPIs. The company arrived at optimal solutions (such as improved sourcing decisions) while also identifying savings in meat reformulation by aligning raw material forecasts and achieving greater insight into plant operations.
These examples illustrate that manufacturers large and small in the consumer goods and home and lifestyle industries can benefit from using virtual twins to optimize their manufacturing, logistics, fulfillment, and last-mile delivery logistics processes. All the benefits of upgrading to a value chain instead of relying on the traditional supply chain stem from the invaluable experience of having a complete view of a product, related processes, and supplier eco-system on one platform. Using a platform-based value chain approach allows companies to solve problems virtually before they happen in the real world.
—Adrian Wood, Director of Strategic Business Development, DELMIA, Dassault Systèmes
