FMCG leader recognise complexity increase visible through active SKU growth what’s impacting manufacturing as well as market support cost. It’s required to reduce active SKU portfolio by min 5% year on year.
Actions taken
Project preparation
- Analysis criteria and priority definition.
- Support and decision needed confirmation (including decision makers) for project implementation.
- Timing with milestones and revision/approval flow.
Analysis
Base line
Directly manufactured SKU’s defined as a priority for revision. Promo items off the flow, to be considered in further stages of the project. ~900 SKU’s in the analysis.
- All SKU’s clustered for Year on Year evolution for volume, complexity and financial impact (margin).
- Defined minimum volume per SKU in order to ensure optimal (calculated) manufacturing cycle in all production stages.
- Packaging components clustered with impact on complexity (size, pack type, secondary packaging and palletization).
- SKU volume ABC analysis run for priority setting.
- SKU life cycle review in order to avoid new SKU’s impact.
In the effect of above analysis, taking into consideration all criteria, SKU’s have been grouped in three clusters.
Proposed actions
- Introduction – no specific action needed.
- Growing (vs past period) – no specific action.
- Maturity – portfolio revision for alignment opportunity
- Declining items – opportunity area.
– Opportunity for harmonisation with other language group.
– Move volume to other size and change in Market strategy.
– Sourcing change if possible (ie. other plant, co-manufacturing, co-packing of other SKU).
– Portfolio discontinuation.
Results
In the effect of overall project multiple benefits have been delivered.
Portfolio reduction
Majority of the volume have been consolidated under other, existing SKU’s. Thanks to that there is continuous support and product delivery to the market without direct impact on sales. 89 SKU’s reduction effects in 80 SKU’s consolidation and 9 SKU’s discontinuation.
Line capacity have improvement.
Increased SKU run length and reduction of changeovers allowed to gain 10% on SKU volume/run and additional production time over 6% ~2500 minutes.
Overall project effected in
- Graphical projects (artwork) reduction.
- Packaging stock optimisation.
- Changeovers reduction.
- Scrap elimination.
- Production cycle increase.
- Inventory and stock optimisation.
- Capacity gain.
The true impact is not only portfolio optimisation, stock reduction, lower environmental impact, production cycle increase and several other benefits.
As a majority, portfolio optimisation is allowing to create space for innovations, new projects and business expansion. On top of that – it’s a real saving as delivered over 150 000 EUR on annual basis.
Timing of such project depends of multiple factors where final decision is a key to move on. In average it’s ~3-6 months process for analysis, revision, alignment and implementation. Inventory replacement and full market impact depends of stock consumption what, in some extreme especially for specific SKU’s, can be from 6 to 12 months.
I had an opportunity to run several optimisation projects on different areas. This is never the same way of working across all industry, thus specific approach and focus is needed. I’m skilled and experienced in such activities. Can do and – deliver as aligned.