Why SC in FMCG?

One strategy that the FMCG company and its logistics partners can adopt is to avoid goods ever entering the warehouse where possible and this is where network management, cross docking, dynamic sourcing and routing is becoming increasingly attractive in the FMCG supply chain. By receiving goods and shipping them out the same day, warehouses can dramatically reduce costs. The key, of course, is software that gives visibility of the opportunities to cross dock and can then set up and manage all of the required activities, within the transport schedules. In a cut-throat market like retail, this impact on the bottom line shouldn’t be under-estimated.

 

In addition to the above idea, some retailers are raising the bar on how responsive an FMCG supply chain needs to be. As goods quickly move off store shelves, retailers are demanding fast replenishment by the FMCG supplier. By identifying daily or seasonal ‘fast movers’ and getting the right stock in the right location within the warehouse, the picking process is speeded up and the warehouse optimized through dynamic pick faces. By using historical data and forecasting for peak times, suppliers are much more likely to be able to fulfill orders and avoid stock-outs at busy times.

 

Retailers may drive the FMCG supply chain, but, they are themselves responding to customer centric strategies to win and retain high spending customers and IT is helping them to better serve their customers. A new trend is how the FMCG supply chain is being extended direct to customers with the rapid growth of Internet retail for FMCG goods like food and cosmetics. Online retail is associated with low prices and competitive delivery rates but fulfilling customer orders requires a slick supply chain and maintained stock levels.