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The Key Challenges of FMCG Distributors and How Technology Can Help


2021 is nearing its final lap, and the COVID-19 pandemic is still a looming threat that is being gradually weakened through vaccinations. Considering the situation where available vaccines can combat emerging variants and strains of the virus, we should be able to finally stop worrying about the Coronavirus in a year. But even if we reach that stage, the habits cultivated for the COVID era are likely to stay for a longer time. One of them is the dependence on digital for everyday needs from shopping to banking, entertainment, and even education. One sector that may ultimately face disruptive effects due to the new normal is FMCG distribution.

Customers would opt for a mix of online and physical retail experiences for shopping, and this will further complicate the already messed up complex web of operations for FMCG distribution. Predicted to reach a market size of USD 15.36 Trillion by 2025, the FMCG industry is experiencing a paradigm shift in the way consumers demand the supply of their favorite goods. Subscription models, localized preferences, home delivery, and replacements are putting extra pressure on the already constrained supply chain of FMCG distributors. As always, they can turn to technology to ally their biggest fears and mitigate their toughest challenges.

Let us examine the top four challenges for FMCG distributors and how technology can help in mitigating them:

Rise of eCommerce

Even before the pandemic, the retail industry as a whole was pivoting towards an online-first model of business. Even established FMCG brands with thousands of stores in a country were forced to ramp up their online presence either through popular marketplaces or through direct eCommerce stores. For distributors, this became a nightmare as they had to manage orders flowing in from different channels and ensure that the required stock is available at the nearest sales point, a last-mile delivery partner, or a local store near the customer’s residence. However, they could rely on emerging technology solutions to predict the demand from consumers and align their operations to meet surging demands comfortably. With the right data inputs such as spending habits, demographic preferences, product demand behavior, etc. FMCG distributors can know which product or products to stock well ahead according to different seasons or market trends.

Speed of delivery

The eCommerce boom also resulted in the requirement for an accelerated performance for the supply chain to ensure seamless last-mile delivery. FMCG distributors required logistical fluidity to ensure that warehouse associates can locate inventory faster and ship them out through different delivery channels. This was especially true for perishable goods that had very low shelf-life and had to reach customers faster. Leveraging the right Warehouse Management System (WMS) combined with intelligent logistics solutions to plan delivery routes efficiently can help FMCG distributors keep up the pace of delivery required in today’s intense market conditions. WMS can also be integrated with IoT and AI systems to enable autonomous operations thereby improving performance even better.

Need for product diversity

Not only are the channels of business changing rapidly, but FMCG distributors have to increasingly adapt their infrastructure to accommodate newer brand entrants in the market. New brands may gain viral growth in a matter of days fueled by recommendations by celebrities or social media influencers. FMCG distributors may need to scout for extra bandwidth in their storage and logistics network to help the new brand enter seamlessly into the consumer market through various sales channels. Newer products mean more back office and administrative processes to accommodate their market entry. However, technology like AI-enabled demand forecasting, RPA, and big data analytics can enable seamless capturing and management of data across different channels. Using them, FMCG distributors can onboard new brands and products seamlessly, integrate, track and manage their inventory along with their existing network and ensure demand spikes are met meticulously.

Workforce mobilization

A key challenge plaguing FMCG distributors is empowering thousands of staff who work with different retailers and partners, collecting orders, setting commitments, informing warehouse or distribution associates, arranging logistics, and enabling seamless transition of supply to demand. Manual efforts in all these areas pose huge challenges in effort estimation, work order fulfillment, and in the form of erroneous data inputs. Mobile-based field management solutions can empower field associates to automate their entire range of operations with real-time information exchange and instruction delivery to concerned stakeholders. This will ensure that FMCG distributors can alleviate the complexity of ensuring smooth operations irrespective of the diversity in products and markets they serve.

The FMCG distribution sector will become a key pillar of the new normal of life in the post-COVID era as consumers increasingly demand innovative access to retailing, which ultimately require distributors to ensure seamless flow and storage of inventory to meet demands. Investing in the right technology is critical for distributors to stay on top of the disruption that retail markets are witnessing. Get in touch with us to explore how your FMCG distribution business can be digitally enabled to serve customers of today.

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