Consumer Goods Defined

Defining Consumer Goods

Consumer goods are good that are provided to a customer that will satisfy their wants and needs. There are three kinds of categories that consumer goods fall under, durable, nondurable, and services. To be considered a durable good, the good must have a life span of three years or more. Nondurable goods are goods that must be used immediately or within the next three years. Consumer services are products or actions that are bought and consumed at the same time.

Examples of Consumer Goods

Durable or hard goods are goods that can stand up to time. Some examples of these kinds of goods are things like cars, cell phones, and appliances. These goods can stand up and last for at least three years or longer. Even though most people change their cell phones every year or so but the can work longer.

Nondurable goods or soft goods are things that have a lifespan less than three years. These are things like cosmetics, food, cigarettes, medication, and cleaning products. All of these things need to be used or consumed in less than three years and clothing and footwear fall in this category because they wear out in that time period.

Consumer services are services that a consumer wants or needs but they are offered in a different way. Some examples of consumer services are haircuts, landscaping, and repairs to like your car or home.

2014 Top-of-Mind Infographic

src: The Consumer Goods Forum

 

 

 

Consumer Packaged Goods

Consumer packaged goods are goods that are consumed by people every day or often. These goods don’t have a very long shelf life and their consumers use them often. Consumer packaged goods or CPGs are things like food, drinks, toilettes, and other household items that are used daily that don’t have a long life. These goods are ones that bring close to two trillion dollars a year for the companies in these kinds of goods. Places like Johnson & Johnson, Proctor & Gamble, and Phillip Morris because cigarettes fall under this category.

Consumer Goods Inventory Concerns

Consumer goods can be a hard thing to keep inventory of because there are so many factors go into the ordering and selling of the products. If you do the inventory wrong, you could end up throwing away items if you purchase too many or not have enough to sell to your consumers. It is easy to sell durable goods and services because they last longer or don’t expire but nondurable items can expire if you don’t sell them, which means lost money. If you want to improve your inventory for consumer goods, there are some things that you need to remember.

If you want to have good inventory management in your business, you have to keep track of your inventory and keep it up to date. About every three to six months you need to go over your numbers to ensure that you are getting the right amount of inventory. If you want to do this, you have to know what to look for in your inventory. You first want to make sure that your products are available to your consumer. You want to make sure that your out-of-stock products are less than 10% of your inventory, you can use quite a bit of business if you don’t have all or at least most of your goods in stock.

You also want to reduce your volume of goods that are obsolete or items that you will mark down because they didn’t sell well. This kind of inventory can be minimized if you take a look at the demand that is forecasted for the product. But this can’t always be avoided if you are getting rid of end of the season items, like holiday or seasonal clothing but you still get to sell the excess and your customers get a good deal.

While all margins can be prevented in your business like fuel cost but you can make sure your business is more profitable if you have an effective demand management program. Business owners that have uses these kinds of programs have seen about a five percent increase in their gross margins, which will help them save money and give them a better idea of their inventory.

If you want to get your goods to your consumers in a reasonable amount of time, you have to look for vendors and suppliers that are organized and can get you the products you need in the time you need it. They need to have real time visibility of the products that they have in stock and you need to make sure your products are seen in real time as well because this will help you keep your customers happy.

Your inventory also needs to have an accelerated replenishment to ensure that you have to products that your consumer needs. You need to meet or exceed your consumers demand for different products. This means you need to know your inventory, if you are getting low, you need to reorder before you are completely out. Keeping your inventory accurately stocked, will get your products to your customer faster and will keep them happy.

Perpetual Inventory for Consumer Goods

A perpetual inventory or continuous inventory is how businesses keep track of all of their sells and their stock. This is done using computers, if a product is sold online or in store, that information goes to the computer program that will tell them what needs to be replaced in the store or in their warehouse. This helps businesses keep their items in stock. This kind of system also keeps track of any missing inventory that could have stolen, broken, errors scanning or any products that have been untracked, which could be a system error. While perpetual inventory isn’t always perfect, it does help keep track of all of the consumer goods that are sold by the company. If you want to make sure you’re giving your customers the product they want and need, you have to have a good inventory system in place. This will help you keep your business going and give your customers the goods they want or need and if you fall short, you lose money.

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