FMCG Supply Chain Complexities: How Can Visibility Untangle the Inefficiencies?

According to Allied Market Research, the global FMCG logistics market was worth $1056.58 billion in 2019 and is expected to reach $1400.80 billion by 2027, with a 4.6% CAGR from 2020 to 2027. The sector’s growth is driven by several factors like intermodal and multimodal transportation, an increase in consumers adopting eCommerce/Q-commerce, and frequent changes in consumer buying patterns with the upgrades in lifestyle and technology.

Several fast-moving consumer goods have a short shelf life because they are frequently demanded or perishable by nature. Consumer goods range from highly perishable goods like personal care products, vegetables, fruits, dairy products, and baked goods to pre-packaged goods like soft drinks, over-the-counter medicines, and toiletries, which have a high turnover rate. Due to their perishable nature, they must be distributed to retail stores within a stipulated period so they can be sold ahead of their expiration date. The FMCG supply chain begins with production and ends with the distribution of products by e-commerce companies or dark stores in the case of Modern Trade and at Distributors/Retail stores in the case of General Trade.

Let’s jump on to the problems we see in the industry, which makes the supply chain complex.

3 Major Challenges For Consumer Goods Supply Chain

1. Inadequate Infrastructure – The supply chain’s infrastructure inefficiency results in higher overall logistics costs, significantly affecting deliveries and other operational effectiveness. This, in turn, poses challenges in the timely distribution and availability of products in the stores. Poor road infrastructure continues to persist, and way economic modes like rail remain less explored because of poor network. Moreover, the lack of technology solutions bears issues with the safety of goods in transit.

2. Availability across channels – Making sure that the products are available on the shelf 24×7 is a big challenge because that not just requires extensive coverage across various distribution channels but also needs companies to be highly competitive.

3. Close Collaboration & Accountability – Bringing together different FMCG supply chains stakeholders, such as suppliers, shippers, transporters, warehouses, and customers, is essential for smooth operations. Insights from these parties can help companies always stay on top of shipments and receipts.

Handling Complexities with Real-Time Visibility

For quite some time, the digitalisation of processes in the complexity of the FMCG industry has been a significant challenge for businesses. To deal with this, global marketers need to use cutting-edge technology and add the digital transformation to their SCM strategies. There are a few ways through which companies can create a resilient, productive, and efficient system.

1. Supply Chain Visibility: Visibility helps identify factors affecting the delivery performance and indicates solutions to achieve process efficiency. But there are various constraints to attain it, which can be enabled with the right technology. These include:
   – Big Data: Data insights can be used to conduct real-time order fulfilment, track inventory, spot trends, and perform objective KPI assessments.
   – Internet of Things: IoT is making an ideal impact on visibility and inventory tracking. Technologies like QR codes, barcode scanners, motion sensors, and real-time updates allow for a unified report for all in the supply chain.
   – AI-powered Analytics: Artificial Intelligence takes data from several fields by using an algorithm to turn it into predictive insights. AI can also be used to integrate with other systems to automate operations, reduce delivery time, improve partner relationships and drive innovation.

2. Demand Planning & Promotion: Demand planning enables companies to meet customer demands while reducing excess inventory and supply chain disruptions. Demand planning is influenced by data insights about customer trends, customer behaviour, sales history, and productivity to satisfy customer demands with the best possible accuracy.
   Modern supply chain automation transforms demand planning from a reactive to a strategic factor in day-to-day operations. Once integrated with SCM, businesses can make informed decisions and achieve accurate forecasting.

3. Predictive Analytics: Modern retail supply chain systems organise and store massive amounts of data using AI and machine learning predictive analytics strategies, effectively analysing that data and increasing supply chain efficiency. So, as the economy grows and supply chains get more complicated, businesses worldwide will have to keep using predictive analytics.

4. Agility & Scalability: Implementing advanced technologies results in the ability to operate quickly and adapt to changing demands. It can now obtain a comprehensive supply chain analysis, enabling better demand planning, risk assessment, and precise forecasting through big data. Businesses can work on supply chains without the earlier rigidity and lag time.

Conclusion

To compete and grow in the global market, it is crucial for consumer goods companies to make proactive decisions based on real-time transportation data and predictive ETAs so that their products reach stores on time, meet retailers’ needs, and they can reduce their overall logistics costs. A real-time supply chain visibility solution can provide better control and flexibility in operations and help turn the challenges and complexities into a competitive advantage. Intugine offers a plethora of services that helps in resource optimization, improve coordination between stakeholders, and assist in performing better during volatile demands. Reach out to us to learn more.