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Procurement and supply chain execution: to be great sellers you need to be exceptional buyers

No one stays in business selling in the food and beverage sector without having excellent execution on the buying side. The need to manage currency exposure, or commit early to volumes for key manufacturing inputs (annual crops), quality checks, manage working capital by ensuring product arrives as it is needed, accurately allocating the landing costs of a shipment so your item cost is correct is all fundamental to sustainable success.

What we see in local business is a good number of very capable “heroes” (staff you could not do without) who use knowledge and a great deal of guile to create mechanisms to capture all these details. The problem is that many of these mechanisms are either prone to error or offline from your core systems, leaving the rest of the team in the dark on the true cost of purchases and when they can expect receipt.

We can also suffer from our good old kiwi mentality of just making things work, potentially through circumventing processes like QA checks that protect your business from ultimately brand damaging quality issues or a full product recall.

The good news is that your business doesn’t need to rely on heroes – you can enable these processes and give decision makers in your business information they can rely on

Being able to visually manage planned orders based on demand will allow your procurement team to make better decisions, reducing stock-outs and improving customer service. Better still, these improvements enable your heroes to do less manual work, take a step back and consider how they can add value to your business rather than chasing their tails day after day.

For instance, how often to you undertake procurement category reviews and engage your suppliers in meaningful dialogue to drive the best possible outcome from your strategic sourcing activity? You know there is value for your customers and your bottom line here!

Having stock at the right place at the right time for the right price is something that technology should help your procurement team with. Helping them to make better decisions, providing both your team and customers better information, all availing you with a sustainable competitive advantage and more predictable profitability.

What are the best practices and how do you achieve them?

  • It starts with Demand Planning, with many companies using history and input from marketing and sales to help them assess future sales, after accounting for any unexpected demand patterns like promotions and new product releases. At a more advanced level, we can harness the power of machine learning to identify trends and patterns that are unlikely to be that obvious to anyone but a data scientist – think of this as a cheap way to access the best statistical experts on demand!
  • Accounting for the true cost of an inbound product shipment, allocating all costs associated with the shipment to each individual item. Then your pricing decisions reflect the actual cost of goods sold, allowing predictable gross margins and no direct costs “lounging around” in the wrong part of your P&L, eroding profit.
  • Integrating quality control into inwards good processes creates another level of control for an organisation. Showing that you can stop goods from being transacted further until they have passed predetermined tests or being able to have lots on hold while tests are performed provides assurance to your customers.
  • Managing the ETA of shipments and providing great customer service by having reliable ‘available to promise’ capability, when shipments are on the way, and delivery dates and all supply chain lead times are known. Or alternatively, ‘capable to promise’ based on ability for staff to create automatic back-to-back orders (sales order creating purchase order) to support indent orders processes, or out-of-stock situations, and still give assurances around the expected arrival date for your customer.
  • Integration with carriers and 3PLs allows for a more seamless process and less ‘manualmatic’ processes of people updating information in the system manually. It also supports more timely and accurate information, especially if delivery pricing can be integrated into your sales process from courier or freight forwarder systems. 

“We have been able to consolidate global demand and create a single global pool of inventory which means we are able to meet our demand profile more effectively across the different pathways of doing business.” COO – ICEBREAKER

If you’re facing these challenges and know it’s time for change download our food and beverage industry whitepaper now, or reach out to us so we can help you in your journey from good to great. More predictable profitability awaits you - let us help you by delivering tomorrow’s business advantage today!

Posted by: Derek Lamb, Solution Specialist, Dynamics Solutions | 19 July 2017

Tags: data insights, Food and Beverage

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