The fast-moving-consumer-goods or FMCG, sector covers everything from food and beverage items to household goods such as toiletries, washing powders and counter medicines. As you can imagine, the nature of the products produced in this sector are produced and consumed in extremely high volumes and make a significant contribution to the economy of the country.

However, it is difficult to measure the value of this strategic supplier relationship, as so many of the benefits are often intangible. However, these are the 4 key factors that all build on to build a return on investment (ROI) in your strategic supplier relationship:

1. The best price available

This is not necessarily the lowest price, but a fair price for both the supplier and the customer, both of which can benefit from a sustainable margin.

2. Operational efficiency

In effect, a measure of the technological expertise of your supplier can be expressed in two ways:

(I) Consistency of supplies

• In time

• Within budget

• Simplified use of resources

• Fast response to increased demand

83% of decision-makers in the FMCG industry referred to 'being out of stock' as the number one factor affecting ROI. Supply chain disruption can cost the manufacturer up to $5 million, irreparably harm the brand and drive customers straight to the competitor's door. Strategic supplier relationships can prevent this kind of disruption.

(ii) Speed on the market

To what extent does your supplier contribute to your efficiency in capitalizing on new market opportunities? To be the first on the market means:

• Locking up a competitor

• To be the first in the mind of the consumer

• Greater market expansion;

The length of time it takes to bring a new product onto the market is of crucial importance to ROI.

3. Quality

There are two influences to consider ROI:

• Consistent quality in line with the promise of the brand, no matter where the product is made.

• Maintaining this quality during a rapid increase in demand;

Quality is a race of arms between you and your competitors. Each time your competitor improves their product, they change the basis for competition. ROI is well satisfied by a supplier who can cope with dramatic improvements.

4. Innovation and technical knowledge

Brands must either innovate or die. Some 96 per cent of all new projects fail to meet or defeat the ROI targets of the companies.

Increasingly, brands do not have the resources to innovate effectively.

• Less than 25% of companies have adequate resources to carry out all their planned projects.

• On average, development personnel are overcrowded by 75%

• Many companies face up to 37% of their innovation projects becoming 'at risk' every year.

That is why FMCG experts believe that the extra value of suppliers, through technical expertise and innovation, has the greatest impact on the ROI of a strategic supplier relationship.

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