The FMCG industry is in a state of flux. Previously, decisions were driven by rigorous sales targets that aimed to push products to customers as quickly as possible. The most successful manufacturers were efficient, decisive and they knew what their customers wanted.
Although this aim hasn’t shifted too far, there’s now a growing need for FMCG companies to adapt to today’s consumers and understand their changing preferences. This post will examine how production can be more efficient once manufacturers bring together two business functions that currently work in silos.
IT and OT Convergence: An Overview
Convergence of IT and OT business functions is a concept that’s been considered and debated for some time now. It’s the bringing together of two previously siloed areas to improve a manufacturer’s agility, efficiency and security.
Alignment is a tricky sell to some individuals because of the supposed challenges the process raises. There’s no denying that convergence is a lot of work. Strategic goals, skills, training, tools and solutions all need to be brought together to ensure there aren’t any problematic bottlenecks.
All of that work is worth it once a manufacturer can effectively respond to market conditions, digitally personalise an order to suit a specific customer’s preferences and rest easy knowing they have a robust security network in place.
What This Means for the FMCG Industry
Increased Agility to Meet Demand
FMCG companies want to pull their products through the supply chain. There’s been a growing realisation that customer engagement isn’t as rigid as it used to be. As a result, it’s vital that manufacturers take steps to be more agile so they can predict customer behaviour and forecast demand accordingly.
There’s less flexibility when IT and OT work independently of each other. They both hold influence over the key decisions made within an organisation but the data they collate can’t shape these choices until alignment takes place.
When convergence does take place, IT integrations provide useful information that can positively impact production. This could be like a soft drink manufacturer increasing production because the summer is much hotter than previously forecast and more people are enjoying drinks outside.
This valuable data can be used to increase resource orders to ensure the plant has everything it needs to meet demand. The same applies in reverse. If demand should drop for any reason, then orders can be adjusted so that excess stock isn’t wasted.
Access to this real-time information ensures the plant is as efficient as possible. Key decisions are based on all of the required data to exploit lucrative opportunities and avoid costly mistakes.
This example ensures mass demand is met but closer alignment also allows for FMCG organisations to meet the changing demands of specific consumers. Digitally-savvy customers look for different things when deciding what to buy. Increasingly, one of these factors is personalisation.
Real-Time Adjustments to WIP Levels
Consider suppliers of coffee sachets or instant coffee packs. A globally traded commodity, coffee prices can have an impact on a manufacturing organisations 'Work In Progress' (or WIP) levels.
High WIP levels mean that more stock (and more money) is tied into your manufacturing process, which can have an adverse impact on the quarterly financial results, for instance. If the organisation is publicly listed, then this could also impact share prices. How does a modern manufacturing organisation know its WIP levels and how can it adjust them in light of a constantly changing global market?
The answer lies in IT/OT integration. By integrating the Stock Management system (which typically lives in the IT domain) with the OT system, Production Planners and Operations Managers not only have visibility, but also the levers to make crucial adjustments to their WIP in real-time. Taking it one step further, modern Operations Management interfaces don't just cater for IT/OT integration in this way, they also bring in third-party data from the outside to make this completely context driven.
Going back to the coffee scenario, the Production Planner is able to make an informed decision regarding WIP levels based on the information on their real-time Ops Management interface. Also, their CFO can see the global WIP levels across all their facilities, in context with real-time commodity pricing for coffee from third-party sources, together with their own organisation’s share price, on an Ops Management Interface being driven by the same underlying technology!
In this way, humans are enabled to make much better decisions based on real information, provided in context, at their fingertips. Global commodity price shifts mean that in the scenario described here, 'coffee' can of course be replaced by other raw materials.
But the need for IT/OT convergence still remains urgent in the FMCG market.
Personalisation Without Compromising Production
Some FMCG manufacturers have already taken steps to hyper-personalise their products. They’ve identified how consumers want to be sold to and are driving maximum revenue and profitability through all channels as a result.
It’s possible to digitally modify orders to suit the preferences of a single customer without detrimentally impacting the whole production line. Gone are the days where manufacturers would create one product to suit everyone. Now, consumers can personalise their product so it’s right for them and thanks to alignment, production lines can be modified to meet these requests.
Fail to provide these services to customers and they’ll simply take their business elsewhere. Instead, bring the IT and OT business functions together to work more closely and streamline the inefficiencies that are currently holding the organisation back.
The earlier the process of alignment begins, the sooner your business can begin to reap the many benefits. We've put together an eBook that's perfect for any business interested in convergence that's available below.
Download our IT/OT Convergence Roadmap
If you’re ready to bring the two spheres of IT and OT together so that you can reap the rewards, you’ll need a roadmap to get started. The process can be a challenging one, so it’s useful to have resources like the one below to make things a whole lot easier.
Download the roadmap now using the link below and get started on the convergence journey today.