Conclusions from the JBA 1998 Beverage Industry Survey
Overall, a general consensus of opinion isthat better forecasting, competitive purchasing or integrated suppliers are within the toptwo issues. All these need an IT solution to provide accurate and timely (in some casesreal time) information, integrated to the other players in the supply chain.
Many areas of improvement have beencovered, but where do you start in your business processes? Some countries see one area asthe best for them to address, while others may not have yet understood the messages fromother industries. Some countries continue to reap benefit from some of the practicesadvocated by ECR, while others still strive to reduce a horrendously long and stock heavysupply chain.
Perhaps a reality is that companies wouldlike to benefit from new initiatives and internal focus, but do not know where to start!ABC scored fairly low with some respondents and has not really taken off (similar to DPP -Direct Product Profitability in the '70s), yet CAP rated fairly high. One wonderswhether the infrastructures, benchmarks and supporting IT are in place to capture therequired information.
To pick out some results as moresignificant than others would be dangerous. However, some comments on the findings follow.
The significance of optimizing introductionconfirms an industry trying to promote existing products to help a price rise becomestandard in a competitive environment, increase volumes and build market share and brand.Whether industry has a good process to introduce new products depends on the product andchannel, but is of particular interest at this time. With the shift in other industries,for example Food, ensuring the correct range of products is created has resulted in movesfrom product to category management and rationalization of brand, size and multi-packsize. However, how many are actually practising rather than talking about it.
Product introduction is key for the US,possibly due to the size of the market, and the fixed three-tier structure. Overall,suppliers to major outlets rank it high, as although there is price pressure, this can bea profitable sales channel for them. This channel shares information via EDI and thereforehas good forecasts of initial demand and better co-ordination of marketing efforts. Thehigh figure for primary producers is not surprising. For example, in beverage, a key trendis to use promotional packaging of standard products to build brand awareness and marketshare. The significantly high figure for sales automation in the US may be due to the sizeof the territory, and is a key message for the US wholesalers and the rest of the world.However, there may be some complacency in the country, as some see no need for change.
Forecasting is particularly high in the US,compared to the UK, and perhaps an unexpectedly high value for Spain. Sharing informationacross the supply chain is key to improved forecasts. The importance of integratedsuppliers in the US is probably the beginning of an increasing trend. Wholesalers have alower priority on this, but the producers will no doubt start pushing this upwards.
On the demand side of the supply chain, theimportance of transport planning in the UK is no surprise. In the US, transport planningis not a core competency and is handled by external partners. However, in the UK, withperhaps the busiest roads in the world and higher costs, this is a major problem, and hasled to sophisticated solutions, from outsourcing (gaining the benefits of critical massand better efficiencies) to high investment in planning.
Schedule manipulation and progressionappears to be an interesting trend, driven by the need to feed the supply chain on acontinuous basis, driven by demand from customers rather than being pushed by suppliers.Again, the supply chain integration issue needs EDI capability for supplier and customerto exchange information and updates show Food and Beverage catching up with the Automotiveindustry in this.
In Italy, a major requirement is to improveflexibility to change. With the low retailer presence, the vacuum appears to be filling upwith mergers and investors. The businesses there need to adapt quickly to capture theirmarket. This may be where innovation will spring from, and is worth watching.
Germany shows a move for productinnovation, an aggressive approach to maintain products on the shelves in a pricedominated market. Overall 70% of new products fail. At what cost is success?
What has not been covered in depth are theissues which have to be complied with just to continue trading, for example, legislativechange. Coupled with a generally perceived move from 'quality' to'environmental' issues, this is the backdrop against which all other initiativeshave to compete.
Finally, although many assume that thesedays quality is a given, the ranking of strategy for achieving goals in the near futureshows France awarding improve product quality the highest rating. Perhaps the lesson forus all is that wherever your current focus is, the watchword should be continuousimprovement in an ever demanding market and changing world.
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