Maintaining Value Through the Retail Value Chain

For CPGs, managing the value chain is as important as the packaged goods.

As a business owner and leader, you might feel overwhelming pressure to perform perfectly while lowering costs and keeping product value. So, thinking about endless ideas for staying competitive and ahead can start using value chain techniques and chain analysis. 

Managing consumer packaged goods can be equally challenging as you need to understand quantity, timing, costs, and flexibility. In addition, keeping a good inventory and tracking it via value chain practices and analysis can help your profits skyrocket, increase customer impact, and lower waste and turnover.

If consumer packaged goods are one of the main aspects of your business, you might be having an even harder time with the current global and financial disruptions. However, you must be flexible enough to understand how to deal with fluctuations, timing, quality, and demand. That’s where value chain and optimization come in!  

What is a value chain?

In simple terms, the value chain refers to all of the various processes and activities in the company that might have added value to your services or products. For example, research from Investopedia indicates that “for companies that produce goods, a value chain comprises the steps that involve bringing a product from conception to distribution, and everything in between—such as procuring raw materials, manufacturing functions, and marketing activities.” 

Value chains can help businesses be more efficient and profitable and stay competitive. But, aside from the competitive advantage, this method can determine the best way to increase value for your customers. 

Types of activities/practices analysis

Value Chain Analysis evaluates said procedures in the business to increase production. The analysis helps with production while providing affordable and affordable value. Two ways of looking at analysis are cost advantage (attracting customers with low costs) and differentiation advantage analysis (attracting customers with benefits). 

In the 1980s, Michael Porter created a technique called value chain analysis. This technique has helped businesses accomplish a competitive advantage and understand costs and how different factors affect the product’s value. Porter’s analysis looks mainly at primary functions such as: 

  • Inbound logistics: raw materials and supplier relationships
  • Operations: all activities that turn into products/services
  • Outbound logistics: delivery of products
  • Services: customer support and credibility 
  • Sales and marketing: efforts of interactions activities   

Consumer packaged goods (CPG) product optimization 

Packaged goods in the CPG industry are an essential business factor in the value chain. Including inventory planning in your analysis can show the correlation between prices, maintain stock targets, reduce waste, and improve efficiency. Such optimization of your inventory will most likely need a multi-phased approach. Start by analyzing your strengths, weaknesses, ROI, inventory policies, governance, and central monitoring procedures. 

Value chains and their analysis offer great value to businesses and organizations. It helps to highlight every positive and negative aspect of business for efficiency. You can also make better decisions and learn what works and doesn’t to shift your plan in optimization, cost advantages, and competence.

Analytics and data help us see how everything plays on each other to decide how your company may want to invest moving forward. Re-prioritizing how your team spends its time, and the resources, channels, and efforts you invest in, are critical steps to achieving marketing success and improving sales. At DuartePino, our analytics experts analyze your business’ data to evaluate the performance of your marketing, content, and products and use your analytics insights to reach the right people. Contact us to learn what our trust advisors can do for you.

*This blog post was written by Maria Eugenia Ramirez, Marketing Advisor at DuartePino.