Expectations fulfilled: Transforming a CPG’s supply chain
How KPMG used advanced data and analytics to optimize a complex distribution network and deliver on demand
Client
Leading CPG company
Primary Goal
Optimize US supply chain and improve last-mile delivery (timing, costs, operations)
Industry
Consumer and retail goods
Technology
Coupa Supply Chain Guru, Tableau
Staying ahead of customer preferences can feel like trying to hit a moving target—and especially as today’s on-demand consumers expect their must-have-now products to move even faster. For our client, a leading consumer packaged goods (CPG) company, managing that demand and consistently closing last-mile customer delivery were growing challenges. The company’s multiple brands—ranging from pet foods to personal care products to cleaning supplies—were using disparate distribution networks, workflows, and technologies. So KPMG helped our client make the difference by developing a detailed new roadmap to transform the company’s US supply chain operations.
KEY OUTCOMES
Making a measurable difference
- Five strategic roadmap options, with detailed scenarios, impact analyses, and recommendations
- 99 percent of delivery goal, including 69 percent within one day and 30 percent within two days
- Dynamic new efficiencies via consolidated distribution centers and more centralized tech and operations
- $9.4 million forecast savings in fulfillment costs over five years
Client transformation journey
Click on each part of the journey to learn more about our client’s transformation.
The KPMG four-phase approach to transform a complex CPG supply chain
Our client engaged the KPMG Supply Chain and Logistics Advisory team on a six-month project beginning in March 2022 to provide (1) a thorough analysis of its US supply chain operations and (2) a set of options to enhance and optimize those operations. The KPMG team included three to six resources over the project’s four phases.
Phase 1: Network costs and operations
The first step was an initial discovery process to get a complete snapshot of the current-state distribution network—costs, operating processes, number of locations, differences by locations, delivery timelines, and more. Work included:
- Interviews with key stakeholders
- Data collection and analysis (Supply Chain Guru, Tableau, spreadsheet analytics)
- Baseline costs by locations and across the network
- Operational processes.
Phase 2: Network and brand analyses
Because our client’s distribution network was highly influenced by its unique brand operations, it was important to look next at how and why things were different—and where the brands might work better together. Key steps included examining:
- Distribution locations, space, and operations by brand
- Third-party logistics providers
- Expected last-mile delivery windows and actual fulfillment timelines
- Small parcel shipping needs, whether to home, office, or retail
- Relevant technology systems, including procurement platforms, warehouse management systems, and ERPs.
Phase 3: Scenario analyses
From the start, a key goal was to develop multiple optimization scenarios and their related business cases so that the client could evaluate the impact of any changes—potential benefits and cost efficiencies versus the associated level of effort and operational risks. KPMG developed five scenarios, forecasted over a five-year period and compared to the company’s current as-is supply chain: The scenarios, from least-impactful to most-impactful, were:
- Option 1: Optimize skin health products—three brands in four locations
- Option 2: Optimize home, personal, and oral care products—five brands in four locations
- Option 3: Optimize pet/veterinary (largest brand by distribution freight and complexity)
- Option 4: Optimize all brands except pet/veterinary
- Option 5: Optimize all brands.
Phase 4: Business case and strategic roadmap
In the end, the risk-reward case for our client of a full supply chain reset was compelling, especially as it became clearer that there were growing risks to not making changes to an increasingly inefficient distribution network. With the new plan, the company could reduce its supply chain costs while adding more capacity, streamline redundant workflows and disparate technologies, better leverage warehouse space at each location, and, perhaps most important, guarantee the now standard expectation of at least two-day fulfillment across 99 percent of its customer base. Among the key steps:
- Consolidate more than 30 distribution centers down to 7 locations, largely driven by the pet foods distribution footprint
- Retain and utilize pet/veterinary mixing centers and their fulfillment capabilities
- Consolidate skin, home, personal, and oral care products into three of the seven facilities
- Integrate and transform current tech stack to enable last-mile delivery execution and fulfillment
- Consolidate small parcel operations into one centrally managed organization and governance structure, and implement small parcel operating model practices to standardize last-mile processes and systems
- Renegotiate third-party carrier contracts to leverage scale
- Total estimated savings: $7.4 million to $9.4 million over five years
The road(s) to transformation
Meaningful change is rarely achieved by following a single path forward—a one-way, nonstop ticket to “somewhere better.” In today’s agile world, our KPMG teams have observed that, more often than not, organizations greatly benefit from evaluating transformation initiatives across a range of scenarios, with at least some learnings and recommendations from each scenario often coming into play as the project progresses.
This “planning is everything” approach allows company leaders to fully understand the benefits, risks, and level of effort at all points of the potential journey. And while that journey may even take a few turns along the way, with the right scenario-planning up front, you’ll never be surprised by any change in direction. It’s all part of the well-planned ride.
Meet the team that made the difference for a leading CPG company
How complex is your supply chain and distribution network? Is it ready for the next five years, and the inevitable shifts in your customers’ needs, preferences, and expectations? Please reach out to us if we can help you think about the new and emerging options to optimize your supply chain and logistics operations. KPMG. Make the Difference.
Yatish Desai
Principal, Advisory, Supply Chain Logistics and Distribution Lead, KPMG US
Jeffrey Meil
Director Advisory, KPMG US
Yatish Desai
Principal, Advisory, Supply Chain Logistics and Distribution Lead, KPMG US
Jeffrey Meil
Director Advisory, KPMG US
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