Fmcg Supply Chain- Managing Complexity
FMCG SUPPLY CHAIN
MANAGING COMPLEXITY
“Managing Complexity”: Managing complexity can be explained clearly with the help of following trends-
1) Increasing Number of Products and Services: With the increasing consumerism and competition among the organizations to attract more and more customers, customer has become more demanding and uncompromising. Companies are customizing products more and more to retain old customers and attract new customers, to fulfill increasing customer demand and gain competitive advantage over rival firms. This has led to the introduction of large number of new products with multiple SKUs which have very short life cycle. All these factors have led to increased complexity in supply chain which needs to be managed carefully.
2) Increasing Number of Suppliers: With the advent of large number of new products and SKUs, company’s demand for new raw materials is increasing continuously. This increasing demand for different raw materials has led to the large number of suppliers supplying to one company. Managing increasing numbers of suppliers in a supply chain is a complex task.
3) Global Sourcing: With the increasing globalization and pressure to reduce cost, companies are looking for cheaper sources of materials globally. They are sourcing materials from all over the world. This increase in the number of distant suppliers adds to the complexity of supply chain.
4) Increasing Number of Manufacturing Locations: With the dipping margins and increasing competition, companies are spreading their manufacturing facilities to the places where it is cheaper to produce goods. Goods are produced at these locations and then transported to either central distribution centre or directly to the regional markets depending on the cost of distribution. This has made material requirement planning and manufacturing a very complex activity.
5) Increasing Number of...
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