When excel and duct tape are not enough

11 Jan 2022

Over the past year, we’ve talked to hundreds of supply chain leaders - and you’re frustrated. Global supply chains are becoming increasingly fragile, and the problem is only getting worse. Almost all of you have been hit by at least one disruption in the last year that has impacted your topline, and you’re feeling immense pressure to find bottom line savings and build redundancy. But how?

Within the CPG industry, the stats are dire. Inefficient supply chains could cost $800bn in topline growth by 2030 (Kearny), and procurement is often the single greatest point of failure for mid-stage, rapidly growing CPG brands. At the same time, supply chain SaaS is growing rapidly (as evidenced by the emails piling up in your inbox each week). So why are so many procurement teams still relying on excel and duct tape to do their jobs?

The technology gap

We have implemented and tested countless supply chain tools in our 25+ years in the industry – ERPs, MRPs, inventory management tools, and AI-forecasting tools. Many promise the world, but very few deliver. They are expensive, difficult to implement, hard to adapt, and overly reliant on manual data entry and updates.

So, procurement teams end up spending their time building systems from scratch - stitching together thousands of lines of data on contracts, ingredients, suppliers, purchase orders and bills of materials. Many of these tools and databases suffer from version control and broken formulas – they rely on information that is copied and pasted or linked from other files using importrange formulas. It’s nearly impossible to extrapolate a single source of truth and use it for truly integrated and dynamic cross-functional planning.

Even more worrisome, there are typically only one or two people in an organization with the institutional knowledge required to navigate, update, and interpret these files. Without this institutional knowledge, critical procurement decisions are missed, and the entire supply chain begins to unravel.

What are procurement teams worried about?

Procurement teams should be spending their time out in the market, finding high quality suppliers with differentiated products, negotiating for the lowest prices, increasing resiliency and reducing risk across the entire network. In short, they should be monitoring and optimizing the performance of their networks.

Instead, we find that procurement teams are spending the majority of their time sifting through endless PDFs, emails, ERP exports, and rows of excel to manage and monitor a handful of critical areas:

Data integrity

What: Ensuring that ingredient, contract, supplier, and BOM databases are up to date and properly linked to other key inputs, like demand and production plans.

Why it matters: It's impossible to do any supply chain analysis without good data, and the data required often comes from many different sources. This is incredibly time-intensive and challenging to manage across tens and hundreds of suppliers, ingredients, and SKUs.

Cost reconciliation

What: Tracking invoices and POs to make sure contract terms are honored and co-manufacturer invoices match expected costs. Triaging among suppliers and co-manufacturers when costs come in higher than expected for ingredients, storage, and freight.

Why it matters: Doing this right takes an immense amount of time. Doing this wrong means allowing ingredient costs to come in above plans, and leaving easy margin opportunities on the table.

Contract depletion

What: Tracking volume and dollar contract liability over time in order to ensure that there is enough capacity across all ingredient contracts to meet production demand. Knowing when you need to source, negotiate, and open new contracts to meet shifting demand.

Why it matters:  Failing to maintain sufficient contract capacity forces your co-manufacturers to purchase ingredients on the spot market at a higher price, eating into your product margin, or worse - jeopardizes your ability to procure and therefore produce and ship  product.

Order allocation

What: Determining how much each co-manufacturer should pull from each ingredient contract to maintain sufficient inventory for each production run. It's incredibly time consuming to analyze and triangulate data from your demand plan, production capacity, bills of materials and contract data.

Why it matters: Optimizing this pull schedule means minimizing waste as well as ingredient, freight, and storage costs. Failing to do this means leaving product margin on the table, particularly around freight and storage.

Supplier performance

What: Tracking key KPIs like service levels and spend across every supplier and co-manufacturer.

Why it matters: Weeding out poor performers and identifying your best suppliers means getting to profitability faster, and provides you with leverage in contract negotiations.

You need a co-pilot

At Mammoth, we know that procurement teams are the difference makers in every supply chain, but they need and deserve better tools. The activities above are critical to running an efficient and cost-effective organization. But we think you can spend a lot less time doing them, and a lot more time on strategic sourcing activities. Imagine all of your data in one unified place -- contracts, invoices, purchase orders, BOMs, demand and production plans -- free of complex and error-prone formulas. Now, what takes weeks can be done in less than an hour.

With Mammoth, every CPG company can have the supply chain capabilities of the Fortune 500. Our co-pilot runs your monthly cost and order reconciliation, contract depletion and order allocation workflows automatically, and provides cost and service-level performance insights with the click of a button. All of this frees you up to focus on more strategic drivers of value - finding the best suppliers and driving down material cost. If you’re interested in seeing the platform in action, feel free to book a demo here, or sign up for our 30 day free trial.

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