Title: Fast moving consumer goods – a productivity perspective on supply chains

Authors: Petri Helo, Kongkiti Phusavat, Pornthep Anussornnitisarn

Addresses: Industrial Management, University of Vaasa, P.O. Box 700, FIN-65101 Vaasa, Finland. ' International Graduate Program in Industrial Engineering, Department of Industrial Engineering, Kasetsart University, Bangkok 10900, Thailand. ' International Graduate Program in Industrial Engineering, Department of Industrial Engineering, Kasetsart University, Bangkok 10900, Thailand

Abstract: Managing the supply chain of fast moving consumer goods includes industry specific challenges. For instance, food products may have a very short life cycle although the routing from factory to distribution centres and finally to wholesale can include several options. Due to competition in the market, there is very much pressure on cost effectiveness. The delivery time is also crucial: the value of the product may disappear in a period of seven to 14 days. The productivity of food manufacturing and distribution may be sensitive to product mix variations, too. This paper presents a productivity analysis of a food supply chain. The key elements of the model are the value of the delivery time for wholesale and the manufacturing costs. There are certain trade-offs between capacity utilisation and lead-time performance. The productivity analysis is simulated with the system dynamics model. The results of the model suggest the value of sales time to be very important for retail. By using make-to-order type of production, the total supply chain creates more value for the retail customers. The managerial implications of the results are discussed.

Keywords: fast moving consumer goods; FMCG; SCM; supply chain management; food supply chains; life cycles; factories; routing; distribution centres; wholesale; competition; cost effectiveness; delivery times; product value; product mix; trade-offs; capacity utilisation; lead-time performance; system dynamics; retail customers; productivity; quality management.

DOI: 10.1504/IJPQM.2010.032069

International Journal of Productivity and Quality Management, 2010 Vol.5 No.3, pp.269 - 285

Published online: 08 Mar 2010 *

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