Furthermore, emerging markets have opened up new doors of opportunity for FMCG companies. So, it has become crucial for businesses to identify different supply chain strategies to reach out to these customer segments effectively. Also, consumer goods companies are increasingly embracing globalization. This has not only sparked complexity in supply chain and other processes, but has also bloated inventory levels, depleted the working capital requirements for new products, and reduced margins.
The FMCG sector is highly sensitive to changes in disposable income or, in other words, very demand elastic. The market share of the FMCG sector is expected to increase significantly over the next few years primarily due to macroeconomic factors such as rising disposable income, improving demographics, and expansion of organized retail in developing countries.
Additionally, the FMCG sector firms are now increasing their focus on e-commerce due to the increasing mobile internet penetration. Poor supply chain infrastructure: Lack of storage and transport facilities coupled with rising costs of raw materials and energy has been a significant challenge for the firms in the FMCG sector.
For instance, food items tend to have a significantly shorter shelf life and require quick delivery systems, regular replenishment of products on the shelf, and vastly different distribution and storage requirements.
Multiple micro-markets across geographies have distinct needs, which triggers category preferences that vary from state to state.
This poses a continuous challenge for players in this sector to balance out the market needs, and the inefficiencies related to customization. The Business Challenge and Journey Client background: They produce convenience food products and snacks through its manufacturing facilities, which are present in more than 15 countries across the globe.
The client sought to identify and implement cost-saving methods to reduce its overall operational spend in the Asia-Pacific region and identify the latest FMCG trends and their impact on the business. The client had a long-term relationship with a major premix manufacturer, and the premixes were being single-sourced.
The pricing of these premixes was on an upward incline due to the depreciating value of the currency and suboptimal weather conditions affecting the supply of raw materials.
To generate significant savings, the cost of premixes had to be optimized. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to identify the key negotiation levers to dictate favorable price terms with the premix supplier and the latest FMCG trends.
During the course of this category management engagement, the FMCG sector client identified the key cost drivers impacting the overall premix cost. These included the cost of packaging, blending, transportation and losses owing to wastage, along with the cost of quality control, and clearing and handling charges.
Additionally, the client was able to work with the supplier to develop a mutually beneficial periodic review and price revision mechanism. Additionally, they established a supply chain model connecting the premix manufacturer and their raw material supplier to reduce costs.
To know more about our category management solutions.Top Supply Chain Challenges That FMCG Companies Need to Overpower. To know more about the supply chain challenges in the consumer goods market. Spend Analysis & Benchmarking Case studies; Supply Chain Risk Management Case studies; Supply Market Intelligence Case studies; Thoughts;.
ISSUES AND CHALLENGES OF SUPPLY CHAIN MANAGEMENT IN FMCG SECTOR DR.
P. RAJAN CHINNA Assistant Professor, The fast moving consumer goods (FMCG) sector is the fourth largest sector of the economy The Dabbawalas of Mumbai case. Supply Chain Management in FMCG Industries. Introduction: Supply chain management is a function which encompasses clear accountability chain Concepts,Startegies and case studies.
New York; Irwin McGraw Hill, Second Edition, , pp Establish, Inc. is a management consulting firm specializing in the supply chain. Our supply chain consultants focus on warehousing, transportation, supply chain strategy and supply chain analytics.
Establish, Inc. is a management consulting firm specializing in the supply chain. This section features the supply chain case studies of H&M, Benetton, Zara and Adidas.
– H&M aims to be the price leader in the fashion ph-vs.com order to materialize its vision, H&M tries to eliminate the middlemen in various stages of supply chain and consolidate the buying volumes. Top Supply Chain Challenges That FMCG Companies Need to Overpower The overwhelming competition in the FMCG space has put players in the industry in a ‘survival of the fittest’ situation.
In the present scenario, it is not just about tailor making the products to suit the customers’ needs, but the deciding factor of your success in the.