The FMCG industry typically depends on efficiencies in logistics, supply chain management and procurement and has one of the highest inventory turnover ratios among diverse sectors of business and economy. Moglix Business partners with FMCG companies to enable them to become ready for industry 4.0 and leverage lean supply chain management to create a competitive strategic advantage.
The FMCG industry has been witnessing steady growth in emerging economies and mild to moderate growth in matured markets. FMCG players in emerging economies have registered substantial growth in volumes of SKUs and revenues on account of larger spend on lifestyle, personal care and comfort products.
Logistical costs comprising both inbound and outbound account for 6.7 percent of the total supply chain cost and the storage and warehousing cost account for 3.86 percent of the gross sales. With increased price competition and large investments for product differentiation and the creation of brand equity, the FMCG industry needs to explore new avenues of cost optimization in supply chains and procurement networks and packaging solutions that deploy less single-use plastic items and are compliant with evolving environmental regulatory frameworks.
Supply chains and procurement networks of FMCG companies face major challenges of aligning inventory planning, forecasting and execution capabilities across the organisation, extracting inferences from large volumes of data at SKU locations at periodic intervals to improve forecasting, identifying and addressing gaps in catalogs for competitive pricing, managing data stored in massive legacy systems run on ERP enabled technologies and fast order fulfilment through multiple levels and high inventory turnover rates to ensure smooth operations and managing complex distribution system comprising multiple layers of numerous small retailers between the company and the customer.
Procurement networks of FMCG companies are characterized by a highly diversified supplier portfolio that brings together intra-supplier variances in the pricing, quality standards and delivery schedules in addition to engagements of resources, efforts and time in managing complex procurement processes.
In the face of increasing pressure on corporate margins, FMCG companies can unlock growth by investing in the deployment of data integration and risk management capabilities, aggressively adopting vertical integration and vendor consolidation to insulate procurement networks and downstream supply chain activities from cost and supply-side shocks.
Cloud-hosted data integration systems, contract analytics and predictive analytics can enable FMCG companies to get a single-window insight into gaps in procurement networks, supplier performance KPIs and deploy strategic supplier selection practices to streamline supply chains. Artificial intelligence and search-driven analytics can enable FMCG companies to effectively monitor procurements and payment data and identify optimal levels of inventory holdings against lost sales, generate accurate demand forecasts through statistical analysis of data across outlets, access order quantity recommendations to reduce the out-of-stock frequency and replenish inventory stocks on time.
In order to strengthen and sustain brand equity and product differentiation, FMCG companies need to outsource non-core activities like sustainable packaging lines to vendors that reduce lead times, rationalize costs and augment the security and safety of finished products to ensure compliance with quality standards and environmental guidelines mandated by regulatory agencies, optimize capital expenditures and reduce exposure to risks of spoilage, wear and tear and pilferage.
How Moglix Enables Smart Supply Chain Management for Your FMCG Enterprise?
As a supply chain consulting and technology suite company, we collaborate with FMCG companies in their journey towards creating smart supply chains of tomorrow that shall be more cost-efficient, transparent, sustainable, flexible and faster.