FMCG Operation- How to Win in a Rapidly Changing Environment
Executives, business owners, and managers need to develop and implement strategies that will enable their organizations to function in different ways. In response to the pandemic, fast-moving consumer goods companies were forced to an unusual transformation. Spikes in demand, shifting consumer preferences, and sudden control of public safety restrictions caused an exponential increase in difficulty. E-commerce exploded: in some markets, online sales volumes recorded larger traffic in a matter of months than they had in the previous decade.
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However, the vulnerability from the pandemic is still challenging supply chains, which indicates the crisis is far from reducing. FMCG companies need to accept that the near future will be defined by a continued commotion in the economy. A point to note; the consumer trends that the pandemic brought are here to stay and they may even become more accelerated. Meanwhile, the technologies that served as a support to companies will only accelerate the pace of change while adapting to the pressure across operations.
Business executives must reason with a handful of trends that are reshaping supply in the short term and will have far-reaching implications in the future.
Instability and uncertainty: Companies must now focus on managing instability in supply chains that have been constantly designed to be as slant as possible. As a result, supply-chain leaders should adapt their operating model to be more flexible and responsive, segmented, enabled by new technology, integrated, and cost and resource-efficient.
Customer-centric and personalized demand: Consumers are increasingly expecting options tailored to their preferences. Consumer-goods companies must closely monitor changing customer behaviors and preferences to ensure their offerings are aligned.
Rising inflation: Countries around the world have endured a steady increase in inflation over the past year. Difficulty in securing a steady supply of commodities has fueled rising prices across a range of FMCG categories. These higher costs across the value chain are putting added pressure on consumer-goods companies to explore the full range of remedies: expand sourcing options, negotiate prices or substitutions with suppliers
Executives have not been sitting still amid these trends. The pandemic required every organization to build new capabilities and accelerate decision-making. However, executives must now seek to develop and implement strategies that enable their organization to function essentially in different ways.
A McKinsey & Company report observed three themes that will be critical to elevating business operations performance in the coming years.
Supply-chain flexibility and resiliency; executives should concentrate on several areas. Collections aligned with and optimized for specific consumer segments can help companies generate more value and remain competitive. All consumer goods companies need to identify their strengths, most critical supply-chain objectives, and opportunities along the entire value chain to build a more resilient operating model. This exercise requires a cross-functional approach to problem-solving. Consumer demand will likely remain unpredictable.
Digital; One of the greatest potential antidotes to rising complexity in consumer-goods operations is the promise of digital technologies. Companies must also develop the ability to maintain and incorporate the latest tech solutions in more cost-effective ways. As with any technology, selecting a solution is one step in the process. Getting the most investments in digital technologies will require organizations to reassess and redesign their processes, structure, talent, and culture in tandem.
Organization, talent, and operations; FMCGs need to reconsider their current organizational structure and talent efforts to build capabilities to enable the supply chain of the future.
Equally important is evolving the operating model and incorporating new capabilities such as digital and analytics into the organization and operating model. The well-known shift in the nature of work requires organizations to focus much more on capability building.
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Consumer demand has remained unexpectedly high, leaving FMCG companies trying to ensure the availability of their products. In response, companies need to plan and execute a variety of actions to increase both service levels and supply chain resilience in the short and long term.
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