Assignment task:
Massmart is a leading consumer packaged goods (CPG) business that serves retail markets locally and abroad. Massmart has a presence in more than 40 countries and offers a product portfolio that spans the grocery store market with well-known trademark brand names. Although it has a number of manufacturing facilities for producing a wide range of products, it also makes use of contract manufacturing and supply agreements.
Many CPG firms are struggling to align their supply chain strategy with business strategy. A number of typical challenges facing these types of business are:
1. Growth goals and innovation streams leading to more complex product portfolios that require new capabilities
2. Ever-changing customer requirements (for example, customisation, reduced lead times and increased fill rates).
3. Financial pressures from cost and capital performance requirements (fixed and working).
Many challenges have emerged over time for Massmart as product lines were purchased and sold off, product line portfolios' priorities shifted, assets rationalised, new technologies introduced, and customers increasingly provided with differentiated services. Massmart has multiple supply networks rather than a single chain, with each network reflecting different product families, trade channels and sourcing, manufacturing and distribution networks. Key business considerations for Massmart began to materialise. This included brand and technology growth rate, geographic, channel and customer investment focus and the capabilities for achieving differentiation in a market. The need to grow and innovate, coupled with financial objectives and relevant good business practices, collectively suggested that strategic third-party relationships were becoming crucial.
Most cost-focused supply chain improvements have in the past helped to improve Massmart's bottom line (examples include sourcing, lean manufacturing and contract manufacturing and third-party logistics). In the past, the company's supply chain was essentially thought of as little more than a required path from the factory to the retailer's warehouse. With this philosophy, Massmart was able to focus on manufacturing and marketing while retailers made the sale. The next strategic supply chain challenge is to achieve full alignment with the business intent of creating value and enabling growth. Massmart realised that they need to initiate a programme that will help them achieve full alignment between their business strategy and their supply chain strategy approach.
Q1) What would be a suitable supply chain strategy for this industry and type of business (given the level of supply and demand uncertainty)?
Q2) What business imperatives are highlighted in this case study and should be used to become supply chain drivers.
Q3) What approach can be followed to assist Massmart in gaining strategic alignment among the partners/ parties involved within the supply chain?