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CPG Companies Reap Major Benefits By Managing Complexity

December 1, 2016: 12:00 AM EST
Consumer packaged goods (CPG) companies need to constantly launch new SKUs to keep up with changing consumer preferences and new retail formats. But introducing new SKUs inevitably leads to increased complexity in the whole business, and that’s not a trivial challenge. Complexity among food-and-beverage manufacturers, for example, costs as much as $50 billion in gross profit in the U.S. alone. But, according to McKinsey & Co., controlling complexity in CPG doesn’t have to be a long-term or even difficult job. It can be done in three or four months. Companies need to assess the situation and identify relevant “complexity-management levers.” They need to prioritize, plan and implement initiatives. The results? A simpler supply chain system that leads to better financial performance, faster innovation, and greater customer satisfaction.
Christina Adams et al., "Simpler is (sometimes) better: Managing complexity in consumer goods", Report, McKinsey & Company, December 01, 2016, © McKinsey & Company
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