The entire focus, which once was on mass production to meet the global demands, the structural efficiency and management of workers’ productivity, is now shifting towards the time-based competition. Now, the time-based competition is in regards to the reduction of production and distribution times and the time required for products to reach to the market. In recent times, the time factor has become a source of competitive advantage. Few firms are aggressively looking towards this trend with their flexible and strategic responses. This study aims at understanding the importance of time in production, distribution and reaching of products to its end users. It also discusses an organisation which has its focus increasingly shifting towards the speed factor.
A brief overview of time-based competition and how organizations have evolved to make their supply chain process faster
Today in the digital age, mobile customer base responds faster than any other customers to any new product or service. Customer nowadays purchases seamlessly through a number of purchasing channels. They also actively participate on social media platforms to share their feedbacks and remain updated with latest from their brands. These practices do not just create enormous opportunities but also a number of threats. Consumers nowadays do not just expect the quality products but also a responsive approach from their brands. They want their disappointments being treated on an urgent basis (Roh, Hong and Min 2014). These situations just make a sense that agile companies can only fulfilthe increasingly growing demands of consumers.
The digitalization of purchasing and feedback sharing on products & services create a huge amount of data. However, such an unprecedented amount of data can produce the results only if these data are accessed in real-time. Retailers are now increasingly becoming acquainted with the practices needed to respond to the urgency. Digital vendors such as eBay and Amazon.com are reacting on a speed note to this increasingly changing consumer behaviour. Now, if FMCG companies want to maintain and retain their strong position in the market, they need to boost theagility in supply chain and manufacturing(Bcg.com 2018).
According to BCG in the benchmarking database, top FMCG companies are producing products at 7 months faster than other companies. As per BCG, beauty and cosmetic product making companies were the fastest to adapt to this rising Trend. Companies under the heavily regulated industries such as tobacco and alcohol were among the slowest of companies to follow the trend for agility. In the fashion industry, Zara tops the list in terms of designing, producing and delivering the products. It takes around only two weeks to produce new products whereas the average time taken by any other fashion companies is around 10 months. The average time consumed by companies other than Zara is still much faster than the speed leaders in the FMCG industry. In the context of the FMCG industry, agility in productions and promotions may be particularly useful in countering the competitive actions or reacting to market dynamics. Leading FMCG companies are heading to accelerated development. They, on an average,can deliver products to market in just 4 months. The time span is one third lesser than the time consumed for the production of most new products. On the other hand, ordinary performers takearound 6 months on an average to produce the products on the market(Bcg.com 2018).
As opined by Yusuf et al.(2014), the upstream division of the oil and gas supply chain is specifically influenced by the speed factor as huge numbers of small and medium-sized enterprises are heading towards the concept. It all now depends on how effectively the oil and gas companies manage this new trend. They are still to make a bigger impact in regards to supply chain and production agility.
As stated by Ecksteinet al.(2015),both supply chain adaptability and supply chain agility can positively impact the operational and cost performance. Samples collected from 143 German forms did help to identify the relationship between supply chain adaptability and agility. Samples were investigated for the impact of supply chain adaptability and agility on cost and operational performance. The method that was used for this research was hierarchical regression analysis. The investigation was grounded in terms of contingency theory and dynamic capabilities view. The research could identify the supply chain agility as the link between supply chain adaptability and performance. It means that the speed factors such as to produce, distribute and get the products delivered to the market in comparatively less time will also positively impact the supply chain adaptability.
According to Chan, Ngai and Moon(2017), responsiveness to market and customers have now become an indispensable needs for all industry especially the fashion industry. The article finds strategic and manufacturing flexibilities as the critical antecedents to attain the supply chain agility. It indicates towards flexibility in strategizing the plans and manufacturing capabilities. To validate the fact, the authors collected a sample of 141 garment manufacturers. The samples were analysed using the structural equation modelling. The results were as expected, which proved that strategic and manufacturing flexibilities do positively impact the supply chain agility. However, there is a difference in the level of impact between strategic flexibility and manufacturing flexibility. Strategic flexibility was found directly and significantly influence the firms’ performance whereas manufacturing doesn’t. The study finds and confirms the importance of supply chain agility in and across industries especially in the fashion manufacturing industry.
As stated by Zhonget al.(2016), there are ample financial and non-financial benefits of agile production. Companies with greater agility will have maximum potential to boost the top and bottom lines of the company. Such companies will also be highly flexible with consumers’ demand. Financial benefits of agile production are more, which directly outplays the cost incurred in delivering products to market in a speed-to-market format. Products, which reach to market in relatively lesser time will probably have the less competition. Hence, profit-making opportunities will be more there. Thenon-financial benefits are even bigger than the financial. This is because of an increased agility in supply chain and production that allows companies to fulfilthe changing consumer demands. The supply chain agility also helps companies to respond faster to the competitive moves. On top of all, the speed factor can also promote the company’s image, which impactsthe employee satisfaction.
In the opinion of Govindanet al.(2015), production and supply chain agility can improve the market forecast capability. This is for a fact that the elapsed time between designing a product and releasing it to the market is comparatively shorter. Marketing executives who are engaged in making forecast can easily understand the supply and demand, especially for trendy products. Supply chain agility can help to raise the brand value. It can do so by fulfilling the consumer needs and getting the products to the market in comparatively lesser time. The efficiency to produce products in a shorter time will also allow selling the products at premium pricing. It is more effective than private-label products.This will also help to attract the skilled talent and enhance the employee retention rate (Cooper 2016).
As discussed by Dubey, Gunasekaran and Childe(2018), an innovation project has to pass through a number of departments within a company. For example, it moves from central brand groups to production and Research & Development (R&D) to regional marketing and distribution. Such a process is very time consuming and can be a barrier to an agile supply chain. However, if a single project leader is assigned to all such transition having authority over timelines and processes, a smooth transition of innovation from one to another department can then be ensured. A project manager can also be a resource to the knowledge base. There are some companies who are smoothly managing the transition of information between departments. Project teams in such few companies carefully track their own work from the start to finish and then handover the completed task to another department. This is how those few companies are able to smoothly manage the flow of information between several departments.
As opined by Wardet al.(2018), speed-to-market is not just about speeding up some projects while compromising with others or keeping it in queues. It is rather about prioritising one or a few projects and streamlining the others. It means that some projects deserve that extra push to make an impact. It generally happens with trendy products. Companies especially the FMCG companies are focusing on standardizing the production method. For example, British American Tobacco Company established a board-level innovation panel to demonstratea senior level commitment to the process and ensure the transition of information between departments. The innovation board aims to prioritise and accelerate different projects based on their explicit criteria. The urgent or valuable projects travel through a separate ‘fast track’with the help of extra resources and priority treatment.
As stated by Gligor, Esmark and Holcomb(2015), projectsare delayed due to a number of signatories involved in the transition process. It goes through various departments before it reaches to the market. It is, therefore, important to map both formal as well as an informal decision as it defines the decision practices. Large organisations, in particular, are involved in a huge number of signatories on different levels. A significant amount of time gets wasted just for seeking the approvals. There is a need to reduce the number of authorities involved in signatories to facilitate the agile supply chain. The decision makingwill then become much faster and efficient too (Bell, Autry and Griffis 2015).
Flexibility: It is required both at operational and strategic level
Signatories: The number of signatories needs to be reduced by reducing the number of authorities involved in the process.
Innovation panel: There should be an innovation panel, which will look after the innovation process and communicate with other departments. It will facilitate the flow of information between different departments in comparatively less time.
Forecast capability: Agile manufacturing and supply chain operations can enhance the forecast capability. One of the ways to enhance the forecast capability is to standardise the production process.
Financial & non- financial benefits: Profits will increase. Customer satisfaction and employee retention will also improve.
Responsiveness to market and customers:Agile production and supply chain facilitates to became known as responsive to market demands and consumer needs.
Operation and cost-performance: Speed-to-market approach positively impacts the operational and cost performance.
Management of speed-to-market
P&G in the 90s was already making the superior products in every six months. Products were of a variety of types. Lower-priced products were also being made. By launching lower-priced diaper products so frequently, the company was able to fend off the low-cost imitators. It just shows that P&G was already into the speed process. Procter & Gamble has been using the speed process since 1999. At that time, the company was able to cut the product development process by about 18 months. The key factor, which helped P&G to reduce the time span for product development was its step to reduce the signatories from 40 to 20. The strong support at the top has helped P&G to attain a highly formalized process and an efficient push towards the discipline process(Bcg.com 2018).
P&G is now actively expanding its consumer-centric model to include added features like customer’s needs. The company is trying every bit to maintain a quicker than ever response times. To enhance its ability to respond to consumer needs, the company is taking strategies like Mega distribution centres in attractive and strategic locations across a few countries. Such facilities can both receive and cross-dock products from the entire P&G’s business units. These facilities are being created to support the speedy and efficient delivery of truckloads. Additionally, the company is also shifting away from forecast-driven model to demand-driven replenishment model to efficiently fulfil the demands. The model will help the information coming from its retail customer’s base on point of sale (POS). Suppliers are also being encouraged to develop “supplier villages” close to its different plants to reduce the time consumed for transporting. The strategy is very much similar to a just-in-time model deployed by the automotive industry(Bcg.com 2018).
Political: (Chan, Ngai and Moon 2017)
Increased globalization of products and services is leading to the demands for mass production
Uncompetitive labour wages are encouraging to product standardization
Economic: (Ecksteinet al. 2015)
Increasingly growing purchasing capacityin emerging and developing nations
Increasingly growing consumer base in developing and emerging nations
Social: (Dubeyet al. 2018)
Changing purchase behaviour
Online purchasing has now increased
Increased tendency to give feedbacks and follow brands on social sites
Rising demands for getting the problems addressed on a faster note
Technological: (Gligor 2016)
Emerging and disrupting technologies are driving the supply chain operations
Possibility to attain an unprecedented amount of data with Big Data
Emerging technologies to support the utilisation of data in real time
Environmental: (Tarafdar and Qrunfleh 2017)
Increasing carbon footprint requires the utilisation of sustainable methods for production, distribution and the entire supply chain operation
Sustainability challenges to the development of solutions
Legal: (Dubey, Gunasekaran and Childe 2018)
An unpredicted increment in taxes
Strict policies for labour laws
The PESTLE analysis section explains that P&G has several external challenges, which are encouraging the company for a speed-to-market approach.These are in the form of external environments such as emerging technologies, political challenges, social behaviour of people and others have all prepared a platform of competition. P&G in the 90s was able to silence the rising threats from private-label brands by constantly bringing productsevery six months. Those products were cheaper also. In the same way, the company worked on increasing the number of distribution centres, so that, transporting time could be reduced. Suppliers were being encouraged to live near or next to the ‘Suppliers Village’, so that, the travel time between suppliers and manufacturing facilities is reduced. The external pressure such as the rising popularity of private-label brands and time-based competition have both encouraged P&G to think in an unconventional way. P&G as a company has constantly looked for using its innovating capabilities to produce an improved business experience for its stakeholders, shareholders and customers. The company fits well into the agile supply chain, which is now becoming a fact these days (Bcg.com 2018).
According to the BCG, companies in the FMCG industry are far more behind to Fashion retailers like Zara and digital vendors such as Amazon.com and eBay in terms of using the agile supply chain strategy. On a comparative note, BCG suggests that in order to maintain a strong position in the market, FMCG companies must utilise big data to support agility in operations. The impact of agile supply chain and manufacturing is higher on fashion industries. The average of companies apart from Zara in the fashion industry is faster than the top players in the FMCG industry in regards to speed (Bcg.com 2018).
Accelerated development is a rising trend. FMCG companies need to react to it to remain stronger in the market. Most of the top companies in FMCG can produce products every 4 months. The time span is one-third of the average time, which companies had normally required for product development. Average companies may be needing 6 months on an average to produce new products. On the other hand, P&G had already mastered the art of producing new productsevery six months. The company is doing this since the 90s to counter the rising popularity of private-label brands. Now, after nearly 20 years, P&G has the increased ability to produce products in quite a less amount of time. There are three key imperatives to time-based competition, which P&G seems like have mastered like standardise, prioritise and mechanize (Bcg.com 2018).
By 1999, both P&G and Unilever had required a time span of 36 months to produce new products. However, P&G then started to think strategically towards product development. The thought process had worked and the company was able to reduce the time span involved in product development from 36 to 18 months. Such a notable change was mainly due to one smart strategy, which was to reduce the number of signatories. Initially, a product had needed to pass through 10 people authorised for signatories, which was later on reduced to only 6. This is how P&G was able to bring agility into decision making and approval seeking process. It eventually impacted its production and supply chain capabilities(Bcg.com 2018).
P&G looks beyond to other FMCG companies in terms of speed-to-market approach. For example, Unilever is more focused on sustainable supply chain. The company is focused on reducing its environmental footprint impact to support & promote and improve the livelihoods of farmers and communities in which the company operates. FMCG industry as a whole is moving slowly towards speed-to-market approach than other industries. The fashion industry is comparatively more into the agile process. Online Giants like Amazon.com have also been fast towards the approach. However, in the FMCG industry, P&G is much more superior to other companies.
Conclusion
In summary, it can be said that agile production and supply chain operations are influencing the different industries. Fashion, retail and FMCG industries seem to like having the maximum influence of time-based competition. Zara is far much ahead to the best of FMCG industry in regards to cutting the time span for product development. Amazon.com is another retail company, which is making an impact with its agile supply chain. In the FMCG industry, Procter & Gamble appears ahead to the likes of Unilever in terms of cutting the production period and speeding the product development. The reduction of signatories from 10 to only 6, setting up a number of distribution centres and placement of suppliers close to the manufacturing facilities have all boosted the speed-to-market capabilities of P&G.
References
Bcg.com 2018. [online] Bcg.com. Available at: https://www.bcg.com/documents/file104158.pdf [Accessed 31 Aug. 2018].
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Chan, A.T., Ngai, E.W. and Moon, K.K., 2017. The effects of strategic and manufacturing flexibilities and supply chain agility on firm performance in the fashion industry. European Journal of Operational Research, 259(2), pp.486-499.
Cooper, R.G., 2016. Agile–Stage-Gate Hybrids: The Next Stage for Product Development Blending Agile and Stage-Gate methods can provide flexibility, speed, and improved communication in new-product development. Research-Technology Management, 59(1), pp.21-29.
Dubey, R., Altay, N., Gunasekaran, A., Blome, C., Papadopoulos, T. and Childe, S.J., 2018. Supply chain agility, adaptability and alignment: empirical evidence from the Indian auto components industry. International Journal of Operations & Production Management, 38(1), pp.129-148.
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