Fast moving consumer goods – a productivity perspective on supply chains

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.