What challenge(s) do our clients face?
Durable goods present a different set of challenges to typical FMCG. Longer supply chains and product life cycles, costly manufacturing assets and inventories, greater numbers of new products and innovation cycles are just a few characteristics that change the way the supply chain and marketing/sales strategy must be managed.
It is true that Durable Goods, from smartphones and televisions, to refrigerators and ovens, are also commonly known as consumer goods; but across many years of working alongside our clients, we have learned that the challenges that organizations need to overcome to ensure profitability and competitiveness are significantly different from those within FMCG industries. These include:
How do we help?
Our extensive track record allows us to address these challenges in a very targeted manner, bringing together technical depth and human touch:
When you take each one of these elements and combine it together, it’s easy to visualize how complex a Durable Goods company can be. Tackling such conflicting challenges can be daunting and inefficient in the absence of clear objectives, concrete plans and the backing of the whole Leadership and Organization. Technical expertise is fundamental to achieve success, but so is a team ready to push the change. We enjoy supporting companies in combining these two crucial ingredients.
We ensure an effective solution whilst motivating and developing the team and tools to make the solution permanent. In many cases our teams work together with our client’s supporting data analysis, decision-making, communication, change management and best practices exchange ; putting at the disposal of our client’s technical knowledge from across our practices.
Importantly, in the Durable Goods industry, we have experienced that many fundamental changes take time to mature and impact results. Therefore, we have adapted our methodologies to accelerate the design and technical discussions and move fast to implementation and adjustments based on the client reality.
Commonly applied services
We help our clients across the entire value chain, from planning, sourcing, manufacturing, delivery, logistics, distribution and sales.
Integration’s track record in the Durable Goods industry is broad and deep. We have delivered projects across the entire supply chain for large and leading white goods (washing machines, refrigerators and air conditioners), brown goods (Microwave Ovens, Cleaning Equipment) and Consumer Electronics (TV’s, Laptops, Electronic Accessories) manufacturers and retailers.
Our client, a multinational white goods manufacturer had long strived to balance its long and costly supply chain with a fast moving and volatile market dynamic – dependent on credit and governmental taxes and ever-changing incentives.
A number of dynamics were at play causing disarray in short and mid-term planning and extreme pains across the Supply Chain operation. These included, fierce competition for market share from growing rivals; rising relevance of e-commerce sales; aggressive commercial negotiations with clients for floor share and distribution; a great amount of imported raw materials, complex bill of materials and expensive finished goods inventories; and a great number of new product introductions every year in all categories.
Alongside the company, we developed a new way to plan the business and make decisions to steer short-term execution. This involved efforts to improve both Demand and Operations planning.
We increased accuracy in Demand Planning through development of a process which integrated (1) the available sell out and trade inventory data with (2) external market projections and (3) bottom-up commercial policies and negotiation strategies. In Operations Planning, a review of inventory polices coupled with improved tools and capability in inventory management and cost simulation unlocked important short-term flexibility and increased supply chain resilience through the anticipation of risks and mitigation plans.
The new Integrated Planning process connected top line marketing strategy, bottom-up commercial information and operational capacities to enable the best possible accuracy for the mid-term with the highest possible degree of flexibility in the short-term.
It became the most important decision backbone for the company allowing it to surpass annual revenue and inventory targets and importantly increase market-share and supply chain resilience during the COVID-19 crisis.
Our client, a large white goods manufacturer had identified a need to redesign its commercial policies. They were facing difficulty in managing their revenue and ensuring control over client investments (having over the years created an extensive price/promotion/discount portfolio) and this was impacting their profitability.
Initially, Integration was contracted to support the company to implement a recently designed commercial policy, which had been developed by another consulting firm. However, this implementation faced many challenges, especially the non-acceptance of clients and the company’s commercial team.
In light of these difficulties, we agreed with the client to broaden the project’s scope to identify and address all necessary adjustments. Driven by a focus on practicality, we interviewed the commercial team and visited key clients from different segments and across regions, developing a deep understanding of the day-to-day reality of both parties and mapping pain points, conflicts and enablers.
This understanding together with comprehensive data analysis conducted in parallel, enabled us not only to redesign the commercial policy, proposing new mechanisms and tools, but also to redefine the initial defined strategy per channel. This was complimented by a redesign of the revenue management area and its governance processes. This ensured control and standardization in clients’ investments and pricing and alignment with other areas such as commercial team, order management, marketing, and supply chain.
A step-by-step training on how to “implement” the new price list and commercial policy in a client followed by a pilot implementation in key clients led to strong adoption internally and externally. So much so, that the company’s leadership received several e-mails from those sales executive who had not participated in the pilot requesting to accelerate the commercial policy implementation in their clients.
With the model and processes successfully embedded the organization was able to see important improvements in compliance, organization, visibility of investments, and a more effective and win-win approach of investing in their clients.
Our client, a Consumer Electronics manufacturer, was approaching a high seasonal peak, the FIFA World Cup. Despite good recent commercial and market results, there were concerns regarding the Supply Chain’s capacity to deliver product availability on time to match retailers best sell-in dates.
The challenge was to synchronize a long lead-time supply chain (combining imported raw materials from China, assembly lines in the North region of Brazil and a demand concentration in the southeast) with retailers sell-in dates, which were 1 to 2 months prior to the beginning of the World Cup. Integration was hired for the interim management and took over the Planning, Order to Cash, Warehousing and Transportation processes.
Our first task was to prioritize all top sellers of televisions and prioritize raw material production and shipment from abroad to enable full capacity assembling and seasonality inventory build as soon as possible. To do that, a strong alignment with commercial team was required to understand the top SKUs, commercial priorities and best sell-in dates for each client.
This started a comprehensive reverse planning process, including sourcing, warehousing, factories and distribution planning to ensure all materials and finished goods would be available on time. We were able to book all transportation capacity in advance ensuring that the inventory would be distributed to the southeast prior to demand and before competition, with satisfactory costs.
This moment was crucial for the business and essential to gain market and floor share over competition. The combination of these strategies enabled the commercial team to command a strong negotiating position with all clients, delivering the desired floor share and ultimately a historical revenue target achievement.
TALK TO US
Since 2014 Alessandra has been working in our Supply Chain practice helping our clients to overcome challenges related to logistics, planning and efficiency. She has worked with clients in industries as diverse as Consumer Goods, Petrochemicals, Healthcare, Retail, and others with projects such as S&OP redesign, Order-to-Cash process improvement, Inventory Management and Cost Efficiency, to [...]
Andrea is a Founding Partner at Integration and is recognized as an important female leader among Brazilian executives, participating in the LIDEM (Group of Leading Entrepreneurial Women) Executive Committee. She is an expert within the field of Marketing & Sales and Retail and has led over 100 projects in these areas. She continues to be [...]
Gilberto is a founding Partner at Integration. Over the course of more than 25 years he has led the development of Integration`s award-winning Supply Chain practice, advising international clients across Latin America, Europe and USA. With a background in Engineering, he frequently participates in events and lectures across the world, to discuss latest trends and [...]
João is a partner at Integration and has been working since 2006 in our Supply Chain practice. During this period, he been instrumental to the practice's development in Integration's 7 offices around the world, contributing directly to its numerous awards in Brazil. He has led, and continues to lead on numerous projects in Planning, Distribution, [...]
Rodrigo is a managing partner at our Office in Munich. He joined Integration in 2006 in Brazil and led the Mexico Office, before taking on responsibility of the Munich Office. Rodrigo is part of our Implementation Practice, has amassed international experience in industries such as consumer goods, retail, food & beverage, pharmaceutical and healthcare and [...]