Getting products to retailers is a battle for consumer packaged goods (CPG) companies as 80 percent of CPG supply chain leaders say transportation is now their greatest worry, according to a new report by The Boston Consulting Group (BCG)and the Grocery Manufacturers Association (GMA).
The report, “A Hard Road: Why CPG Companies Need a Strategic Approach to Transportation is based on the 2015 BCG/GMA Supply Chain Benchmarking Study,” is the ninth in GMA’s benchmarking series on manufacturers’ outbound supply chain logistics.
According to GMA, since the last survey three years ago, freight costs have risen 14 percent. In all, the report says the CPG industry spends $15.5 billion a year on transportation.
“Supply chain leaders are caught between two challenging transportation trends, as they either must pay more to meet service-level expectations or sacrifice speed and reliability for cost efficiency,” says Daniel Triot, senior director of the Trading Partner Alliance of the Food Marketing Institute and Grocery Manufacturers Association. “That is hardly a prescription for long-term success.”
While aging transportation infrastructure shoulders a lot of the blame, the report points to other issues including driver shortages, growing congestion and chronic capacity squeezes. These all affect delivery times, inventory management and service levels, GMA says.
To overcome these issues, the report suggests tactics such as efficiency moves and the choice of ownership model to new partnership approaches (with customers, carriers, and even other manufacturers) and network redesign.
“By partnering with business unit and enterprise leaders, supply chain leaders can more effectively apply these tactical solutions in a holistic way—and restore and build on the important performance gains of recent years,” GMA says.
A copy of the report can be downloaded at www.bcgperspectives.com.