8 minute read
I recently had the pleasure of speaking at a Reuters virtual panel discussion on how FMCG brands in Europe can collaborate more effectively with their external supply chain partners, including contract manufacturers and co-packers. I was joined by Miguel Ortega Otero, Head of Customer Collaboration & Supply Chain at Danone; as well as Bishen Morgan, Sustainability & Procurement Director Europe at Anheuser-Busch InBev.
We were pleased to see supply chain professionals from all over the globe tune in to the online event! The panel discussion was an invigorating exchange of ideas and strategies, and revolved around three key themes that can help establish long-term success for FMCG brands:
1. Build relationships with suppliers who share your goals
During the discussion, it was clear that one of the major keys to successful brand-supplier relationships was the sharing of—and commitment to—aligned goals. Previously, many supplier relationships were focused on maximising cost effectiveness, which led to transactional and occasionally adversarial relationships between brands and suppliers.
With the recognition that the external supply chain can act as an agile arm of innovation, however, brands have been looking for new, more collaborative ways to partner. For many brands, the demand volatility generated by the pandemic has just accelerated this trend of increased collaboration with external supply chain partners.
Instead of focusing on how suppliers can save money for the brand—a mindset that has arguably led to transaction-oriented, reactive supply chains—the panel agreed that FMCG brands need to focus on building sustainable, long-term relationships within their external supply chains. To this end, panelists suggested that brands seek out suppliers who share their long-term business vision and are willing to work together for mutual benefit.
Innovation is critical in the world we're living in. Cost efficiency will only take you so far—you have to work with your suppliers to find innovative ways of solving problems.
In order for brands and their external suppliers to discover innovation and exponential growth together, collaboration is the only way to go.
Bishen Morgan, Sustainability & Procurement Director Europe, Anheuser-Busch InBev
According to ABInBev’s Sustainability & Procurement Director Europe, Bishen Morgan, this approach could be summarised in three steps:
- Identifying external supply chain partners who share the brand’s long-term vision;
- Building and executing a strong, collaboration-based plan; and
- Defining and measuring concrete metrics to determine long-term success.
During the discussion, another point especially resonated with me: the idea that brands needed to deliberately invest time into changing the dynamics of how they do business—essentially shifting the fundamental culture upon which these relationships are built.
As best summarised by Danone’s Head of Customer Collaboration & Customer Supply Chain, Miguel Orega Ortero: At the end of the day, every relationship will have missteps and misunderstandings, but it is the shared vision and commitment that allows these relationships to evolve over time and continue on the road toward a mutual long-term success.
2. Leverage external suppliers as brand custodians
During the discussion, I raised the idea that there existed a significant amount of untapped value that external supply chain providers could offer to the strategic vision of every FMCG brand. As I will explain later, digitalisation is the key to unlocking the value.
For example, in markets that require complex co-pack operations and stringent food safety regulations, brands need reassurance around quality and risk management for the orders that they outsource to external suppliers. Product traceability continues to be a significant concern, and I’ve regularly heard from FMCG supply chain leaders about their desire to work with suppliers that have the technology in place to quickly trace products in the event of a recall.
In this situation, a digitalised production floor is able to quickly and efficiently capture and share this data with brand customers. This example illustrates how external suppliers can perform an important role as custodians of their brand customers’ reputations—enabled by the right technology.
I and the other panelists wanted to make it clear, however, that technology is just the means to an end. External suppliers need to demonstrate how they can provide strategic value to brand customers; conversely, FMCG brands should express the willingness to facilitate transparent and constructive dialogue with their external networks. Strategic alignment is just as important as being technologically equipped to deliver that value.
This example is just one of many about how external suppliers can be leveraged as strategic partners for the long-term success of the brand.
3. Harness technology to enhance sustainable supply chains
Following up on the topic of technology, the panel discussion circled back several times to this subject and the myriad ways technology can benefit external supply chains—including to enhance sustainability.
In my conversations with FMCG brands, I’ve noted that a lack of visibility into an external supply chain—due to legacy systems or cumbersome workflows—can prevent them from uncovering a massive opportunity to reduce waste. Supply chains are often hindered by blind spots that obscure waste, cost, and inefficiency such as obsolete inventory or overstock.
Some companies are afraid to invest the time and money into new technology, but they need to move away from that fixed mindset if they want to keep up with today's smaller, more flexible market players.Miguel Ortega Otero, Head of Customer Collaboration & Supply Chain, Danone
Using a multi-enterprise platform that facilitates collaboration and data visibility amongst your external manufacturers and packagers, you’re able to clearly see what’s in your ecosystem and what’s possible. With a lean and agile external supply chain, focused on sustainably innovating, you will be able to serve your retail customers more responsively, while reducing waste and cost. In sum: Collaboration enables agility, agility enables better performance, and digital transformation can help you get there.
The webinar discussion covered a vast range of other valuable topics for FMCG brands, but I wanted to reflect on what I believe were some of the most resonant ideas from the panel. Thank you to my fellow panelists, Miguel and Bishen, for their inspiring ideas and insights.
Click here to watch the full webinar recording.