Over the past 25 years, the consumer-packaged-goods industry (CPG) has experienced rapid expansion; year-on-year, US-listed CPGs alone have increased total returns to shareholders by 10% (McKinsey&Company). With an increase in consumer spending and the emergence of new global markets, the race to meet demand shows no sign of slowing.
While businesses in the CPG industry have been quick to respond to increased global demand for their products, they’ve also been fuelling it with constant innovation. It’s become clear that in today’s world, products not only need to get to market quickly, but they need to stand out from the (ever-increasing) crowd.
As a result, the sector that was worth $8 trillion in 2014 is on course to almost double in size – to $14 trillion – by 2025 (McKinsey&Company).
How to stand out – and stay profitable.
A growing sector doesn’t necessarily make increasing profits inevitable. The highly-competitive nature of this market, combined with high capital requirements, can make it appear difficult to achieve growth.
As such, CPGs not only need to innovate their product line, but each and every process of their business. A lean supply chain that can operate on a global scale is one that has been examined from every aspect; from R&D and indirect categories of spend (such as marketing), to distribution and country-specific requirements.
Ultimately, this comes down to increasing efficiency and achieving cost savings across the entire buying and selling process.
A cloud-based procurement platform like Geneus can manage such complexities with ease and, uniquely, can help CPGs achieve cost savings with their complex indirect spend.
Manage indirect spend, achieve growth
One way for CPGs to achieve significant cost savings in indirect categories of spend is through better management of point-of-sale (POS) and marketing materials.
As a case in point, one of our clients – a global drinks brand – wanted to use marketing to innovate within a crowded sector to grow their market share and increase profit margins. To do this effectively, they needed to achieve consistency of POS branding and value-added packaging on a worldwide scale. Using Geneus Engage, they simplified their purchasing processes and achieved volume consolidation and global visibility over their marketing spend. They also saved over 20% compared to previous pricing.
Both user-friendly and highly effective, the Engage module is focused around the co-ordination of buying activities. It enables enterprises to achieve lower price points through volume aggregation.
Demand forecasting enables CPGs to seamlessly achieve cost savings. Engage provides users with the ability to open buying windows, in which they can view demand from other participants and enjoy a sense of collaboration. Users can then access focused, time-bound buying events which streamline the transactional purchasing process for each business function.
To highlight the intuitive nature of this process, let’s imagine a user wants to purchase an item, but would like to achieve a lower price point. Using Engage, the user invites suppliers from their business’ preferred supplier network to tender, finalise specifications and negotiate prices based on a range of volume break points.
As a result of this, multiple markets can respond to an aggregated buying opportunity to consolidate their volumes and attain the lowest prices; and the user has achieved their aim.
Engage users also benefit from:
- Local-market access to global products
- Lower price points
- Consistency in point-of-sale materials
From enterprises looking to achieve lower price points to suppliers seeking improved manufacturing capability through larger volumes, Engage can deliver efficiencies and optimise volume savings.
To find out more about how Geneus Engage can help you achieve costs savings across your business, contact us today.