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CPG Companies Report Record Supply Chain Performance Despite Global Economic Downturn

WASHINGTON, D.C. – Consumer packaged goods companies reported that logistics costs as a percentage of sales have decreased from 2005 and 2008 levels, when they held steady at 6.9 percent, to 6.75 percent in 2009. These overall cost reductions are more impressive in the context of rising freight costs, which were up 11 percent from 2008 levels, according to a study released today by the Grocery Manufacturers Association (GMA), the 2010 Logistics Benchmark Report. Conducted by IBM’s Institute for Business Value on behalf of the GMA Logistics Committee, the report is issued every two years and is based on a survey of logistics executives at CPG manufacturing companies.

“In the face of a global recession, food, beverage and consumer product makers are reporting overall supply chain performance improvements in all categories of cost, service and time,” said study author Karen Butner, supply chain management global leader, IBM Institute for Business Value. “These improvements are the result of a vigilant focus on customers and containing costs.”

In addition to reducing cost per case, survey respondents reported that on-time delivery rates to customers, case fill rates the number of cases shipped on the initial shipment versus the amount of cases ordered) and inventory management all markedly improved over the past two years. The report indicates that supply chain executives are gearing up for demand-driven supply networks, enhanced supply chain visibility, sustainability initiatives, and risk management issues as emerging priorities.

“The 2010 Logistics Benchmark Report confirms that a key to continued improvement for companies will be more accurately predicting customer demand and reacting to demand variability,” noted Bruce Hancock, director, supply chain management, The Hershey Company and Chairman of the GMA Logistics Committee. .

The 2010 Logistics Benchmarking Report is based on the responses of 26 senior logistics executives from GMA member companies to a 50 question survey. The average annual revenue of responding companies was $5.8 billion. The report is available online at