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Credit crunch squeezing profits

FMCG manufacturers squeezed between fixed output prices & increased input costs.
Date: 15.12.2008

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Date: 17.11.2008

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Credit crunch squeezing profits

FMCG manufacturers squeezed between fixed output prices & increased input costs.

If times were hard before the credit crunch, then they are set to get harder for many companies, especially for the FMCG (fast moving consumer goods) suppliers to supermarket chains. Most of these suppliers are already severely bruised by threats of the loss of business if prices to customers were increased, burgeoning legislation and increased demands for higher quality, shorter lead times and smaller batch runs, together with severe penalties and rectification costs for getting something wrong.

At the input end of this spectrum, the farmers and other raw material suppliers, faced themselves with rising materials costs, are forced to pass these increased costs on to the FMCG manufacturer.

This leaves the FMCG manufacturer squeezed in the middle between fixed output prices and increasing input costs for materials, labour, energy, etc.

Historically, companies faced with the need to reduce operating costs have reduced the head-count. For most competitive companies this is no longer an option as their manpower resources are already quite stretched. The challenge going forward, therefore, is how to further reduce operating costs and improve efficiencies with existing manpower resources. In effect, ‘how can we continue to maintain total compliance whilst making our products faster and more cheaply?'

Some companies have already begun the process of inward focus in order to determine opportunities for further cost reductions, quality consistency/compliance and improvements in production efficiency, but for most companies there is still more to be done. The best that some companies have achieved is a fragmentation of data, with some information available within a mix of disparate computer systems and paper records.

Harford Control, through its Compliance Plus programme, for the first time, brings the benefits of integrated information management directly to the desktops of those who can make best use of it.

Compliance Plus means precisely that. First and foremost, the need for total compliance is non-negotiable. It is easy to see that compliance issues, especially coding and labelling, can easily occur within a busy factory environment with a large number of products (SKUs), frequent product changeovers and relatively short shelf-life lead times. However, with understanding and the right solutions in the hands of trained operators, most if not all non-compliance issues are totally and easily avoided.

The Plus part of the Compliance Plus programme deals with the additional benefits which can be achieved through improved production efficiency, whilst maintaining regulatory compliance in all its forms.

Whilst there is a very wide range of production complexity within FMCG manufacturers, there is also a great deal of synergy in that the KPIs necessary to measure and drive performance improvement are similar, whatever the product mix.

The new Harford Compliance Plus programme, therefore, assures compliance through factory floor control and informs all levels from ‘shop floor to top floor' of opportunities for further performance improvement through costs reductions and improved efficiencies.

Key to this objective is accurate and up to date information, prioritised in order to achieve maximum gain from optimal use of labour.

The Harford system generates all this information in real time and puts it onto the desktops and/or mobile phones of appropriate people both instantly and automatically.

Those already using the Harford system have seen gains within the first year of usage of between 10% and 40%. As most companies in today's competitive environment need to improve by at least 5% per annum, just to remain where they are, these gains are truly significant and no longer an option for companies wishing to maintain their competitive edge against ever increasing competition.

Contact Harford today for your free site visit and appraisal.

Date: 15.12.2008

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