Why Business Networks Are a Key Ingredient for Consumer Products
E.J. Kenney, Senior Vice President of Consumer Products, Life Sciences, and Healthcare, SAP
The consumer products landscape is increasingly complex. Demand for products tailored to consumers’ specific wants and needs has led to an explosion in the number of product ranges that you must develop, manufacture, and distribute to a proliferation of new customer microsegments. Whether visiting a retail outlet, purchasing through an online marketplace, or directly through your brand’s Web site, customers also expect to be able to choose how they buy and receive products.
Competing as an ecosystem
This profusion of product choices and purchasing and delivery options means it’s no longer viable to do business alone. To compete, you must develop a robust ecosystem of partners that can help you satisfy consumer demand in an efficient and profitable way.
That’s the reason why, according to a recent IDC survey, outsourcing in the consumer products sector will approach 45% by the end of this year – increasing from just 34% two years ago.
But how can you run smooth business operations across a diverse external network of suppliers and subcontractors? How do you make sure that you are on-target to meet production goals? And how can you be certain that statutory regulations and compliance requirements are adhered to?
Digital collaboration using business networks
To meet your business goals, operational visibility and close collaboration with partners is crucial. And processes based on paper forms, spreadsheets, or ad-hoc e-mail communications will no longer cut it. You need a solution that enables the digitalization of end-to-end processes across your partner ecosystem – from initial product development to materials sourcing, manufacturing, and logistics. According to the IDC survey, digitalized collaboration offers significant business benefits including, improved information accuracy (cited by 41% of respondents) and fewer data entry errors (cited by 38% of respondents).
To meet this need, a growing number of consumer products companies are deploying business network solutions such as SAP Business Network. Providing digital connections across your extended value chain, this cloud-based solution helps you achieve transparency by connecting people, processes, and systems across procurement, supply chain, logistics, asset management, and finance.
How can a business network help you succeed?
Business networks help you deliver on your profitability and growth goals in a number of ways:
Supply chain resilience
In recent years, we’ve seen increased disruption in supply chains – at first due to the COVID-19 pandemic, and then due to geopolitical events and climate-change emergencies. This volatility has led to consumer products companies reversing the previous trend of simplifying supply chains and reducing supplier numbers in an attempt to reduce costs. Instead, a model that uses multiple suppliers helps ensure that you can quickly and easily find alternative sources of supply when a disruption event occurs. Business networks help you manage relationships with multiple suppliers and move quickly to switch suppliers when needed to help ensure continuity of supply.
It’s a challenge to comply with growing regulatory compliance requirements across an increasingly complex partner ecosystem. With a business network, you can digitally obtain access to product traceability information across your value chain when required, helping you ensure product safety and minimize your brand’s exposure to compliance risk.
Increasingly, growth for consumer products companies comes from selling new products to existing customers. This makes innovation in products, packaging, and manufacturing processes a cornerstone of your growth strategy. Market leaders have discovered that good ideas can come from anywhere and a business network can help you find them outside your company. Digital connections to your supply chain partners can help facilitate the new product ideation process and enable you to take a collaborative approach to commercializing your ideas. And even when you are developing new products in-house, a business network enables you to directly access supplier product catalogs to dramatically speed up innovation.
Having an environmentally conscious approach to business has become a key differentiator in consumer products markets. Consumers want to understand the impact that their purchases have on the environment and increasingly look for a brand that offers transparency on the country or region of origin of product ingredients or components. A business network helps you identify suppliers that align with your organizational sustainability policies – whether in their packaging or processes, or the materials they use. Solutions such as SAP Business Network enable suppliers to provide self-assessments against key criteria, gaining a rating indicating their overall level of sustainability. In this way, you improve sustainability across your supply chain, helping you build consumer trust and loyalty.
Learn how a business network can help you
Visit us online to learn more about how SAP Business Network can help you create a more agile, resilient, and sustainable supply chain.
 “Business Networks Enable Visibility and Resiliency for Consumer Products Companies”, IDC Info Snapshot, 2023, https://www.sap.com/documents/2023/07/ec54f354-847e-0010-bca6-c68f7e60039b.html
 “Driving Best-in-Class Supply Chain Collaboration with a Business Network,” IDC e-book , 2023, https://www.sap.com/documents/2023/07/ec54f354-847e-0010-bca6-c68f7e60039b.html