Transforming
Consumer Products

How procurement and supply chain management are driving change

Consumer Products:
An Industry Facing Unprecedented Disruption

The consumer products industry is changing rapidly. Consumers demand innovative products, sustainable options, and personalized experiences from brands they trust. Supply chains are becoming more complex, involving intricate inventory management considerations and a network of global suppliers, co‑packers, and co‑manufacturers.

As a result, procurement and supply chain management play an increasingly vital role in driving digital transformation. Explore how next-generation practices powered by intelligent technologies can help companies like yours grow profitably and sustainably.

automotive

 

40%

Of consumer products executives experience product shortages with direct material suppliers 1

Only

49%

Of consumer products executives can quickly find alternative sources of supply 2

Just

55%

Of consumer products companies have an automated capability to flag events that could disrupt tier one suppliers 3

Only

13%

Of consumer products executives can gain a clear view of overall spend automatically, in real time 4

Sourcing and Contract:
Key Challenges and Opportunities

Standardize source-to-contract processes across your organization to identify savings opportunities and find new sources of supply – reducing costs and mitigating risks.

Challenges

  • Align with both consumer and employee concerns for responsible products
  • Monitor individual supplier social responsibility and supplier diversity
  • Ensure supplier environmental, social, and governance (ESG) and other compliance across the supply chain

Opportunities

  • Move to a local and sustainable base of suppliers
  • Consolidate all sourcing contracting, and spend in one place
  • Make risk due diligence part of the procurement process

Challenges

  • Track product, planning, packaging, labeling, and quality management
  • Increase product safety and quality
  • Assess and monitor individual supplier risk

Opportunities

  • Gain better visibility into quality issues and complaints
  • Onboard new suppliers faster
  • Eliminate manual information exchange with trading partners

Plan and Forecast:
Key Challenges and Opportunities

Respond effectively to changes in supply, demand, and market conditions. Synchronize decisions across the organization with an integrated approach to supply chain planning.

Challenges

  • Bring new products to market faster
  • Boost on-time and in-full (OTIF) delivery
  • Drive better supply chain collaboration

Opportunities

  • Integrate data-driven insight and transparency into suppliers, co-packers, and co-manufacturers
  • Identify potential risk factors to prevent any disruption to the release of new product lines
  • Keep expedited logistics costs low

Challenges

  • Stay resilient, agile, productive, and sustainable
  • Ensure regulatory compliance throughout the supply chain
  • Balance the bottom line with the green line

Opportunities

  • Employ resilient, connected, sustainable processes from design to operate
  • Synchronize planning and execution

Challenges

  • Move to supplier managed inventory
  • Ensure resilient planning
  • Manage exceptions

Opportunities

  • Get early visibility into demand and inventories
  • Streamline the replenishment cycle
  • Increase service levels to enable a strategic supplier-buyer relationship
  • Align production plans with suppliers’ capacity promptly

Challenges

  • Manufacture to 1
  • Use drop shipping
  • Employ products-as-a-service

Opportunities

  • Improve fill rates
  • Decrease stockouts
  • Reduce overall inventory levels

Buy and Deliver:
Key Challenges and Opportunities

Reduce procurement costs, drive compliance, and gain greater visibility with transparent and connected spending. Manage goods and goods quality more efficiently across warehousing, fulfilment, and distribution.

Challenges

  • Reduce supplier delivery variability to drive lower safety stocks
  • Cut scrap and spoilage levels
  • Improve working capital

Opportunities

  • Automate transaction collaboration
  • Improve visibility of supplier capacity to meet forecast demand
  • Gain a view into inventory and production status at third-party manufacturers and raw materials suppliers

Challenges

  • Deliver the right products to consumers at the right time
  • Reduce stockouts and retail penalties
  • Increase revenue share

Opportunities

  • Engage next-level collaboration across the supply chain network
  • Gain real-time visibility into metrics for supply availability across multiple time horizons
  • Improve fill rates and decrease stockouts while reducing excess buffer inventories

Challenges

  • Improve on-time customer shipment performance
  • Respond instantly to changes in supply and demand
  • Identify potential issues before they affect consumers

Opportunities

  • Manage goods effectively across warehousing, fulfillment, and distribution
  • Spot potential breakdowns using dashboards and configurable rules
  • Gain early visibility into demand and inventories to respond faste

Invoice and Pay:
Key Challenges and Opportunities

Turn your invoices into strategic assets. Automate your accounts payables processes to gain better visibility. Improve trading partner relationships. Accelerate ROI.

Challenges

  • Capture errors and exceptions before they reach accounts payable and procurement
  • Provide real-time access to PO, invoice and payment status
  • Move to touchless invoice processing

Opportunities

  • Reduce exceptions with prevalidated invoices
  • Decrease expedited transactions and costs
  • Increase touchless rates with interconnected capabilities

Challenges

  • Accelerate the current cash conversion cycle
  • Improve payment term management
  • Increase working capital and net income

Opportunities

  • Benchmark against industry and regional peers
  • Discount dynamically and offer supply chain financing
  • Eliminate slow and costly processes

Challenges

  • Free up cash-to-fund growth initiatives
  • Stabilize your supply chain
  • Boost suppliers’ liquidity

Opportunities

  • Automate the early-payment discount process
  • Deliver required rate of return using business rules
  • Employ Web-based collaboration tool

How Customers Are Achieving Value from SAP® Solutions

Vorwerk & Co.: Delivering improved quality of life wherever home is

Read how SAP® Ariba® solutions helped household products and cosmetics company Vorwerk & Co. KG create a new, modern, mobile user experience for sourcing, purchasing, and supplier collaboration.

Read more

M-Industry: Modernizing procurement to bring innovative products to customers

M-Industry is a group of 23 Swiss companies that creates products for the market-leading Migros retail brand. Read how the guided buying capability for the SAP Ariba Buying solution helped the group simplify and accelerate its procure-to-pay processes.

Read more

Learn More About Procurement Software and Solutions from SAP

14,100+

CP companies in 134 countries are SAP customers5

100%

Of the greenest CP companies in the world run SAP solutions6

90%

Of the most successful consumer brands in the world run SAP solutions7

88%

Of CP companies in the Forbes Global 2000 are SAP customers8

Learn more about how SAP procurement software and solutions can help you

Contact us today

Sources

  1. “The Imperative for Procurement Digital Transformation,” Agile Procurement Insights Research by SAP in collaboration with Oxford Economics, 2021.
  2. Ibid
  3. Ibid
  4. Ibid
  1. “Intelligent Consumer Products: The Digital Transformation Imperative,” SAP SE, 2022.
  2. Ibid
  3. Ibid
  4. Ibid