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Consumer products companies new ‘winners’ of the recession

Very interesting article from E&Y. Thought you would find it interesting.

-DF

Consumer products companies new ‘winners’ of the recession
Published on Monday, August 31, 2009

ernst_young London, 19 August 2009 — More than two-thirds of global consumer products (CP) companies say they have achieved their target cost reductions effectively in the recession. CP companies also see greater opportunities for further cost reduction than firms in other sectors, particularly across the supply chain, with 62% eyeing additional gains versus 48% across all sectors, according to Ernst & Young’s Opportunity in Adversity research released today.

The survey of board-level executives across the industry reveals that the CP industry has fared better than many other sectors during the recession. And although the slow-down in consumer demand is producing tough challenges for CP companies, many have been very responsive in the areas of pricing, cost management, supply chain, customer management and working capital to drive opportunities for their businesses.

Howard Martin, Global Consumer Products Leader at Ernst & Young, says: “On the whole, CP companies have ridden out the recession relatively well. In part, this is due to the natural resilience of much of the sector to downturn. But it also reflects these companies’ ability to execute faster and harder on many of the performance improvement initiatives already underway before the recession struck.”

Working capital management has been a key area of focus. Eighty percent of CP respondents have undertaken a top-down review of their current cash management and cash flows, compared with 73% across all sectors CP companies have also shown consistent attention to improving the effectiveness and efficiency of their supply chains and operations. Yet 62% of CP companies surveyed also believe that their work is far from done, and they are already looking at further cost reduction opportunities for the next 12 months.

“Done properly, both supply chain and cost reduction programs can become ‘embedded into the DNA’ of the organization, helping successful CP companies achieve market leadership and greater resilience in the face of the recession,” continues Martin.

CP companies’ plans of action, according to the survey, include emerging stronger than their competitors, notably in accelerating time to market (56%) and in expanding their presence in emerging markets – not just in the major developing countries such as China, Russia and India but also in less established markets across Asia, Latin America and Africa (41%).

“Once the world economy emerges from the recession, those CP companies that are better prepared to drive volume growth on a global scale, will undoubtedly become the sector’s winners. Indeed these companies will be using these difficult times opportunistically to get fitter, leaner and in the best possible shape to take advantage of the good times when they return,” says Martin.

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Written by David Frederick

September 3, 2009 at 9:27 PM

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