Fast-Moving Consumer Goods (FMCG) has become the life-blood of the supply chain. The toothpaste you use in the morning and daily vegetables we consume are all consumer goods. But to stabilize growth and create value, FMCG needs strong supply chain support that is augmented with technology and automation.
The dynamics of the supply chain are changing constantly. The supply chain now works at an organizational level helping companies in the design planning, production, distribution, consumption, and reverse logistics leverage its operational efficiency. Increased automation in the supply chain is a significant factor that has led to this change. Automated production at factories, autonomous trucks to warehouses, automated warehouses, predictive shipping, shipping rerouting to consumers and last-mile delivery are making the supply chain more resilient towards disruptions.
Why FMCG Needs Supply Chain 4.0?
As time demands high operational capability and increased visibility into the supply chain system, it is crucial to integrate a technology-driven strategy to stimulate growth. It's time to shift our focus from the traditional linear supply chain model and adopt a new supply chain model that allows organisations to be more responsive and agile to survive in the digital race.
Supply Chain 4.0 is the application of the Internet of Things, big data and other smart technologies into your supply chain system. As the changing time demands fast-moving goods and fast-paced technology, it is important to utilize the opportunities in Industry 4.0. When it comes to consumer product supply chain, lack of end-to-end visibility, inability to link product design, manufacturing, and fulfillment, conflicting KPIs, inability in planning & demand forecast are key challenges every FMCG faces while moving ahead in the race.
Digitization is a crucial step every FMCG needs to take to leverage competitiveness. The market is changing constantly and consumer behaviour is changing. It's important for every FMCG retailer to:
- Understand the changing market and frame an online marketing strategy that satisfies the demand of tech-savvy consumers.
- Improve competency by reaching a wider audience through scalable technology-driven supply chain solutions.
- Reduce complexity inventory management, logistics and seasonal complexity by improving customer experience and productivity.
- Boost transparency in manufacturing, labelling and packaging to improve credibility.
The Future of FMCG- Market Growth & Key Challenges
The FMCG market is expected to increase at a CAGR of 14.9% to reach US$ 220 billion by 2025. Rapid urbanisation, shrinking households, crowded transport, evolving gender roles, and an uptick in technology have augmented the growth of the FMCG sector in India. Fast-moving consumer goods and eCommerce are two avenues mutually growing by providing customers with ease and availability. Investing in fast-moving consumer goods is considered safe and revenue-generating as even the government initiates favours for FMCG.
The exponential growth in eCommerce has also given FMCG a high boost in recent years. Many FMCG retailers have launched their products on eCommerce platforms before it was sent to physical stores.
The onset of the pandemic has also brought a massive shift in the FMCG industry. With more customers turning to online shopping and demanding fast delivery, FMCGs are in a rush to stabilize their presence and service in the eCommerce marketplace.
Top Supply Chain 4.0 Trends That Are Reshaping FMCG
Growth in the urban workforce is primarily one of the reasons why FMCG is in high demand. Even, the government of India has taken significant initiatives to promote the growth of FMCG to make India Atmanirbhar Bharath. The Production Linked Incentive Scheme (PLI) Consumer Protection Bill and 100 FDI in food processing are some of the initiatives the government has taken so far to improve FDI. So, investing in the FMCG supply chain will be beneficial in these times when the market is undergoing a massive shift. Here are some supply chain 4.0 trends you must know to uplift your FMCG brand value:
Big Data & Supply Chain Visibility
Data plays a key role in securing the future of FMCG as it helps in value creation and achieving scalability and visibility. Every FMCG needs accurate and consistent data flow to understand consumer demand, market fluctuations, warehouse management, and optimize delivery networks.
Research by Accenture says that integrating big data analytics in operations leads to a 4.25x improvement in delivery, with 46% of companies experiencing a 2.6x improvement in supply chain efficiency of 10% or more.
Data brings insights into customer preferences and patterns, which helps FMCG retailers understand consumer requirements and deliver products at the right time. Big data innovations like data mining, business intelligence and predictive analysis are also helping FMCG retailers create products that directly cater to consumers' needs. Moreover, for effective brand positioning, messaging and achieving supply chain visibility, data is a necessary supplement.
Supply Chain Agility for Quick Reactions
Achieving supply chain agility is critical in these changing times. As your order increases, you are more prone to face ever-increasing complexity, disruption and competition in the market. Building an agile supply chain is the only way to make your business resilient towards the changing market dynamics and disruptions. Consumers and markets demand a rapid response to customers' demands. You have the best quality products in the required quantity, but if you fail to access the market at the right time, you will lose the game, especially when it comes to FMCG industries.
Here are some crucial tips to build an agile supply chain:
- Synergize your organization and eliminate enterprise silos to achieve transparency. Train your team to make decisions.
- Create goals and establish key performance indicators to streamline your supply chain journey. Understand your consumers' challenges and frame goals that are solutions.
- Strategize your distribution network to reduce delivery time. Utilize last-mile delivery strategies and route optimization technology to streamline logistics operations.
- Boost your inventory accuracy to reduce shrinkage and prevent theft. Improperly managed inventory increases expenses and hinders market penetration.
- Enhance your IT capabilities and technical experience to simplify complexities in operations. Robust IT team deployment helps every FMCG supply chain evolve with the changing IT landscape.
Sustainable Practices & Green Supply Chain
Today, consumers are more aware and concerned about social and ethical brand behaviour. Sustainability is a hot topic for today's generations. When it comes to FMCG, where customer order behaviour is more frequent, there is a need to strictly adhere to sustainability policies. Every supply chain-based business needs to leverage economic, social, and environmental interests to appear loyal and credible.
Sustainability change, if rightly optimized, will help you reduce operational costs, along with contributing to ecological wellness. Here are some sustainability tips you can utilize to bring sustainability:
- Collaborate with competitors and other companies to utilize the benefits of shared space - co-load and co-freight.
- Choose the right transport medium. If possible, utilize railway fleet management.
- Utilize the right packaging strategies to reduce resource optimization, freight space utilization and expenses.
Suggested Reading: 6 SMART TECHNOLOGY-DRIVEN HACKS FOR GREEN LOGISTICS
Omnichannel Capabilities and Fulfilment
Omni-channel marketing is the new norm. It helps to improve your route to market and enter the Direct-to-consumer landscape. Customers are spread across various eCommerce platforms and social channels. So, improve your supply chain capability to receive orders from omnichannel.
This is the time to redefine your fulfilment strategy to boost omnichannel sales. With same-day delivery and last-mile delivery capturing the market dynamics, it's necessary to optimize your logistics operations to leverage fulfilment capabilities. Hiring a robust 3PL partner is the best decision you can make to improve your fulfilment logistics operation. If rightly optimized, omnichannel fulfilment helps to:
- Improve customer satisfaction by delivering the right products at the right time to the right place
- Boost total revenue by optimizing the route to market
- Ensure high order efficiency and accuracy
- Enhance brand images and build brand awareness
Recommended Reading: OMNICHANNEL SUPPLY CHAIN STRATEGY: ENHANCE UNIFIED CROSS-CHANNEL DISTRIBUTION TO LEVERAGE CUSTOMER EXPERIENCE
Social Media for Building Network, Sharing & Retrieving Information
Customers demand real-time interaction and information. As FMCG brands enter the D2C market, there is a need for nurturing relationships with consumers and people involved within your business. Social media plays a crucial role in stabilizing internal marketing and sharing information with customers. It's a platform to directly engage with customers and improve your brand value.
Social media platforms like Facebook, Twitter, and LinkedIn play a significant role in sharing information about products, brands and your take on social and ethical issues. Moreover, it is a goldmine to gather data about your customers and their unique marketing needs.
Third-Party Businesses to Reduce Complexity
When it comes to delivery and warehousing, it might be difficult for FMCG brands to run an in-house logistics department. Every stock has unique requirements. There are seasonal products that require seasonal warehousing requirements. Also, technology and consumer demands are evolving day by day. Updating your logistics department and warehouses frequently consumes time and money. So, it is always wise to partner with a 3PL service provider to simplify your operations, save time and cost spent running an in-house warehouse and fleet.
A Winning Supply Chain Model for FMCG-Spring Into Action
It's time to understand the changing dynamics of the supply chain and consumer behaviour. We are living in a time where consumer goods have become an inevitable part of our daily life. For the last many years, FMCG has shown undeniable growth. But, the challenges and disruptions in performance can sometimes become a roadblock.
To mitigate disruptions and challenges, FMCG needs tech-led solutions to build an efficient, resilient, and agile supply chain that maintains continuity and provides a competitive edge. Prepare for the next leg of the journey by partnering with third-party solution providers. Reduce your business complexity and maximise value creation with the assistance of a third-party logistics provider.
