FMCG majors brainstorm to ease supply-chain bottlenecks

THE significance of product tracking and recall could not have been emphasised more - even as the consumer grapples with issues such as worm-infested chocolates or pesticide-laced soft drinks.

And it is precisely such supply chain management-related issues that would be addressed at the third ECR India Conference to be hosted at Chennai on Thursday, where insights developed by ECR India, along with a host of fast-moving consumer goods (FMCG) majors, would be showcased to enable retailers and manufacturers to fulfil the consumer's demands.

Efficient Consumer Response (ECR) is a global movement in the FMCG industry with a focus on supply chain management.

In India ECR was founded in 1999 by companies such as Johnson & Johnson (J&J), Hindustan Lever Ltd (HLL), Procter & Gamble (P&G), Godrej, Nestle, PricewaterhouseCoopers (PwC), Transport Corporation of India Ltd (TCIL) and Food World, along with standards-based organisation EAN India.

Mr Ravi Mathur, CEO, EAN India, told Business Line that valuable insights would be revealed at the conference that would help corporates manage their costs and cut down wastage.

These insights have emerged from four projects done by the companies. Giving a keyhole view into some of these findings, he said, "The ECR war-cry internationally is that ECR initiatives could help bring down inventories by 50 per cent, even as it improves the availability of products by 50 per cent - an established reality in some global markets. Logistics is another factor that can be controlled, since it impacts up to 20 per cent of the product-cost to the end-consumer. The objective of the conference would be to manage pilferages and damaged consignments, among other things."

The first of the projects, led by Nestle and supported by J&J, HLL and Godrej addresses the `out of stock' situation - when the local retail store runs out of stock of a product. And while consumers are inconvenienced, stockists and the company revenues get impacted too.

"The average stock-outs in the FMCG sector is a staggering 20-25 per cent of sales and Indian companies lose revenues worth crores due to stock-outs," he points out. The study looks at removing stock-out bottlenecks.

Another project led by P&G and partnered by J&J and HLL looks at collaborative guidelines in organised retail, where key common grounds between manufacturers and retailers that impact non-competitive issues covering data sharing, product launches, inventory record accuracy, etc., are identified, he said.

The third study co-partnered by EAN, along with Food World and J&J looks at data flows and product classification, which in turn facilitate global data synchronisation electronically between trading partners of purchase orders, dispatch advices, etc.

The final project on logistics is led by TCIL and supported by J&J, P&G, and Godrej. The study looked at infrastructure optimising, sharing and outsourcing between companies. "The findings of the projects, to be presented tomorrow, would crystallise new supply-chain management ideas, look at costs and standardisation of processes in the supply-chain," he said.