Consumer needs are evolving rapidly. As Jeff Bezos says, yesterday’s wow has quickly become today’s ordinary. While this spells good news for consumers as they get to choose from the best products and experiences, the FMCG industry faces issues because they have difficulty keeping pace with consumer needs. It has put pressure on FMCG manufacturers to adopt agile methods to ramp up production and improve the supply chain to cater to constantly changing consumer demands. Although this trend has been going on for a long time, last year’s pandemic was a litmus test for the FMCG companies. Due to the pandemic and the increased demand for FMCG products, the labor shortage compelled FMCGs to consider automation.
In fact, automation is now proving to be a secret weapon for FMCG companies to stay ahead in the competitive space.
Let’s look at how it’s helping them to grow and earn more revenue.
How Automating Demand And Production Has Proved To Be A Secret Weapon For FMCG
As FMCGs expand their presence locally and globally, managing their inventory becomes challenging. Imagine if a consumer places an order for a product on a website, pays for it, and then realizes that it is out of stock. It’s not the experience consumers should face. Automation has simplified the inventory management process. It can tell the company what products are being sold and what is still on the shelf. Based on these insights, the company can determine which products need to be manufactured and distributed more.
Take the example of this global manufacturer of personal care products. They gathered real-time demand trends to produce the exact amount of inventory instead of producing based on historical data. This helped them to keep track of their inventory and reduce forecast errors by 35%. The other benefits of automating inventory management include:
- Reducing human errors
- Making the entire process scalable depending upon the demand
- Saving workers’ time on manually tracking and entering data about the inventory in spreadsheets
Traditional forecasting techniques involved siloed teams, disparate and legacy systems, and working manually on spreadsheets. While this worked well for forecasting predictable variables such as trends, seasons, and cycles, it did not account for unpredictable situations like the last year’s pandemic. Take the example of Reckitt Benckiser. It had to increase the production of Dettol last year during the pandemic. The Dettol brand grew globally by 62% as compared to the same period in 2019. Sometimes, there could be a sudden surge in demand. Automation can help companies meet that demand. It can provide actionable insights into other variables too, such as internal and external factors. It prepares the company for all kinds of unprecedented situations and predicts the demand for goods in the future. It improves sales and enables companies to save money.
Supply Chain Management
Supply chain management has become very complex, especially after FMCGs have started to expand their presence in global markets. Every location has different regulations to add to the woes, and the processes and departments function in silos. So, complying with these regulations and coordinating with different departments across various locations becomes a challenge. And then, there is rising customer expectation that needs to be fulfilled quickly to build customer trust. Supply chain automation can solve these issues. It can solve issues such as order tracking, stock discrepancies, and demand forecasting. It brings transparency within the supply chain and offers solutions to solve issues such as challenges in the delivery process. Most importantly, supply chain management allows FMCGs to comply with industry standards by standardizing the products and pricing.
Production and Productivity
FMCG is a fast-paced industry. FMCGs have to increase production without compromising on their quality to meet the increasing consumer demands. Automation for all kinds of manual processes can be leveraged to improve both production and worker productivity. The best part about automating production is that the product quality is standardized, and there are minimal chances for errors. Also, considering that automation can happen 24/7/365, FMCGs can increase their production and reduce manufacturing time. Dabur India, an India-based company, for instance, is planning to automate its production units to address the labor shortage and to accelerate production.
As FMCGs add more distribution channels, managing a vast network of wholesalers, retailers, and dealers can become a herculean task. New and emerging channels such as social media and eCommerce have further added to the complexity of distribution management. Automation can help in streamlining the distribution management process. It can help FMCGs track all products from their origin and monitor the flow of data and transactional information to all distribution channels. For example, an automated system can track all the sales made by individual distributors, gain insights on locations and products that are performing well, track the inventory, and monitor all the payments done through QR code generated.
Manufacturing and delivering FMCG products in today’s times have become extremely challenging. As the world becomes more connected, FMCGs have to ensure that their products reach local and global consumers on time. They have to manage hundreds and thousands of stakeholders, including their retailers and distributors, to ensure that they have enough products in the inventory to meet consumer demands. They have to work in sync with distribution channels. They also need to pay attention to new and emerging channels such as social media and eCommerce to ensure that consumers get the ordered products. In a nutshell, the FMCGs have to collaborate with manufacturers, distributors, and deals closely to serve the customers better. Managing a vast network can be quite a challenge. Automation is the only way to solve this problem.
Orane Consulting has designed a solution called Orane DealerPro to help FMCGs automate their demand and production and manage the entire operations efficiently and cost-effectively.