March 2018

Consumer Packaged Goods Trends

The Consumer Packaged Goods (CPG) industry is facing huge challenges with volatile commodity prices. Customers are highly sensitive to product pricing. Customer behavior and needs have considerably changed, due to a preference for healthier foods, high sustainability, transparency and decreasing brand loyalty. The industry is also experiencing limited pricing power; due to retailer consolidation. Amazon’s purchase of Whole Foods, along with Walmart’s purchase of Jet.com, have broadened their horizons, by operating retail stores and ecommerce respectively. Rising commodity prices, customer price sensitivity, changing customer behavior, and retail consolidations have resulted in lower profit margins.

Activity Based Management as a Cost Reduction Technique

Independent of the condition of the economy, at any point, there is an increasing need within organizations, in every industry, to have more transparency across the overall supply chain costs and the factors that influence it. Activity Based Management (ABM) is a technique used to provide this visibility, and thereby help improve strategic and operational decisions in the organization. ABM involves identifying activities that a business performs, and carrying out a value chain analysis, using Activity Based Costing (ABC).