The Consumer industry in Mexico is one of the most important, with increasing growth in the last years. It has evolved from being focused on cost reduction to having greater integration and interaction among the participants in its chain: focusing on maximizing the benefits for each one.
The consumer products industry is composed of companies involved in manufacture, distribution, and commercialization of food, beverage, tobacco, personal care products, and home care products.
The behavior and growth of the industry is in function of the basic needs and perceived income of the population.
In Mexico, 47% of the population’s monetary spending is spent on products from the consumer industry. The products with the highest consumption are: meats, personal care products, cleaning/home care products, cereals, milk and its derivatives, vegetables, and beverages.
Structure of this Industry in Mexico
Each one of the companies that belong to this industry has specific needs and characteristics.
The three main factors are:
- Manufacturers
- Channels
- Consumers
The main business indicators used by consumer goods companies are:
- Sales volume and margins
- Market share
- Horizontal and vertical customer coverage
- Customer service
- Operation costs
Currently, the consumer industry is in a state of continuous and accelerated change, much greater, even, than the capability of the companies to align their organization, products and services toward the market.
Challenges and Tendencies
Challenges
- Growth continuous and profitable.
- Fulfill the service offer in accordance with the business strategy for the different sales channels (retail, wholesale, self-service).
- Align the sales force with the expectations of the different channels or client segments.
- Manage variable demand in volume while maintaining a high level of service.
Having greater speed in planning and execution of the complete life cycle of the products from their launching to their entrance into the market.
- Have low logistics costs achieving efficiency through the integration of processes and operations throughout the chain.
- Adapt the organizational structure of the companies focusing on the consumer and service.
- Take advantage of the technological developments found in the information systems to optimize and support the operation, from the manufacture to the sale of the products to the consumer.
Tendencies
- Global Competition. Greater number of agreements with the rest of the world.
- Greater product development. Product life cycle is shorter and with greater focus on the needs of the consumer.
- Concentration and development of the commercialization channels. High concentration in the supermarket channel.
- Consumers with greater sensibility toward prices; with greater social and demographic changes and more access to information about products and services.
- Demand is more pulverized, complex and more difficult to predict
- Integration of the links in the process. The quality of the product is no longer as essential as quality in the entire process, involving the price, sale, delivery and even the post-sale service.
Our Experience
Integral experience in the Value Chain
The projects carried out, range from defining value propositions toward the market, in accordance with needs and requirements of different client segments, to the alignment of supply processes in order to fulfill, in the most efficient manner, the obligation to the market. The alignment is designed in the strategic, tactical and operative processes.
Knowledge of problems and challenges of the industry
Given our experience with companies in this industry, we offer solutions that are adapted to the conditions of each company, with previous knowledge of the primary needs of the industry.
- Giving differentiated attention by channel type
- Organizing the sales force to maximize its productivity.
- Increasing the level of service in a profitable manner, efficiently fulfilling the demand.
Experience in projects that involve the different channels of sales and distribution
Such as self-service, convenience stores, distributors, wholesale and retailers. We know the processes, cost structure, and infrastructure required by each of the most common channels of service, sales and distribution of consumer products.
We design and implement solutions together with our clients
Solutions adapted to the particular problems of the company in the short term using the available resources and infrastructure.
Additionally, we propose future scenarios that are feasible to achieve in the medium and long term, involving the general challenges that confront the industry and the combination of processes and practices of each company.
This makes it indispensable to have a particular focus, appropriate for each organization, both in the design and in the implementation of our solutions.
Business Case
The Challenge For Minsa in How to Reach their Market
Minsa is an international company dedicated to the production of corn flour that has undergone a process of nixtamalization. They have 6 plants in Mexico, 2 in the USA and 1 in Central America.
Their market focus is based on 4 business units, which are divided in the following manner:
- MINSA- Corn Flour, ALMER- Storage Services,
- FINCO- Maize CP MASA- Packaged Tortilla
In the last years, the market serviced by Minsa has suffered a 37% reduction in consumption per capita, mainly caused by a 100% increase in the price of the tortilla compared to substitute products (bread), additionally a change in customer preference from tortillas made with corn flour to those made with only corn.
Main Challenges
Faced with this market situation, Minsa’s strategy was divided into two main lines of action:
- Promoting structural changes in the market that would stimulate consumption per capita.
- Increasing the competitiveness of the company, focusing the organization towards customer service, in a more efficient manner (better service at minimum cost).
The difficulties that they faced in order to resolve this situation successfully were the following:
- Lack of a methodology that would determine the needs and expectations of different groups of clients.
- Power struggles between executive directors.
- Availability of people’s time.
- Resistance to change due to deeply rooted practices.
- Simplification of the Group’s operation (cost reduction) without affecting the level of service offered and market participation.
Given this situation, they decided to involve a consulting firm capable of analyzing the situation from an external point of view and that, additionally, had proven experience and methodologies.
Sintec’s Solution
Sintec’s solution included three great initiatives:
- Design of a Service Offer
- Adapt a centralized system of functions
- 100% assertive supervision
For the first initiative, we defined a service offer for each of the four defined client segments, based on their profitability, volume, service needs and service given by the competition.
This service offer, in accordance with the importance of each client group, contemplates the following aspects:
- Attracting orders – Through different types of vendors or the customer service center.
- Customer service – Frequency of vendor visits and collection through bank deposits made by the client.
- Filling orders – Delivery time in days and minimum order size.
For the second initiative, we defined the centralization of management, client service, planning and production programming in order to simplify the operation of the business. Only simple activities of execution and monitoring were left to each region.
These initiatives were possible thanks to the implementation of a central information system (ERP), which allowed a detailed monitoring of each of the discrepancies between the planned actions and those executed.
This central information system was also the basis for the third initiative, allowing a more effective establishment of mechanisms for control and supervision of the operation.
- Exception reports.
- Monitoring client performance based on their behavior.
- Personalized supervision of the entire organization.
“The results obtained were very important… even though the first step was to achieve stability in order to survive… The situation we were going through at that time was so complex that the main preoccupation was to stop falling… AND WE MADE IT!
“We achieved the stabilization of sales volumes, reduction of expenses and past due accounts, and to improve customer service. All of this helped us to have a completely different position, that allowed us to confront a market as complicated as the one we have lived through”
José Cacho, CEO, Grupo Minsa
About Sintec
Sintec is the leading consulting firm focused on generating profitable growth and developing competitive advantages through the design and execution of holistic and innovative Customer and Operations Strategies. Sintec provides a thorough and unique methodology for the development of organizational competencies, based on three key elements: Organization, Processes and IT. Furthermore, Sintec has successfully carried out more than 300 projects on Commercial Strategies, Operations and IT issues with more than 100 companies in 14 countries throughout Latin America. Our track record of more than 25 years makes Sintec the most experienced consulting firm in this area of expertise in the region.
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