FMCG supply chain
08/08/2018 Blog

FMCG supply chain challenges and overcoming them

by Dr Arunachalam R, Chief Executive Officer.

The FMCG sector is one of the most interesting sectors in India today because of its potential. It is expected to reach US$ 103.7 billion by 2020 from US$ 49 billion in 2016.

Emerging technology channels like E-commerce companies / marketplaces and new channels like modern retail and specialty stores are growing extremely fast, paving the way for Omnichannel.

New technologies like Blockchain are also being harnessed in the value chain. Contracts including warranty contracts between the involved parties are materializing as Smart-Contracts thus bringing quickness and transparency in the process. The immutable, transparent nature of block-chain helps arrest food-frauds, offers high visibility & traceability and enhances trust between the parties involved in the supply chain. It enables Product transparency to a consumer providing history and authenticity of the item purchased.

These new rapidly evolving developments has also given a new set of challenges to FMCG supply chain players-

  1. Rising costs of distribution
  2. Wide variation in last mile execution in retail
  3. Increasing number of SKUs resulting in complex assortment and channel mix strategy
  4. Significant engagement required for new age channels like modern trade, e-commerce and specialty stores.
  5. Changing Strategy to reach rural markets effectively

These challenges can be overcome with a great 3PL partnership.

  1. Clear distribution strategy and aligning 3PL with the same
  2. Higher consolidation to reduce overall costs
  3. Increase transparency in operations
  4. Investments in IT systems and monitoring mechanisms. Integrating IT systems with 3PLs’ for better order processing.
  5. Replenishment based supply chain and getting 3PLs’ WMS to support
  6. Visibility of goods-in-transit
  7. Last Mile fulfilment for smaller and frequent orders through multiple modes- Bikers, small vans etc.

ProConnect, as a 3PL, has successfully partnered with FMCG supply chain companies on all the above with an added focus on cost reduction. ProConnect has successfully implemented models to improve warehouse productivity, designed and upgraded infra for faster throughputs and better handling and is agile enough to adapt to changing market requirements & technologies.

There has never been a better time than today for FMCG companies to gear up and convert challenges into opportunities.