fmcg supply chain

The Shift From Quicker Predictions to Quicker Responses in FMCG Supply Chains

Any doubts that business owners in the FMCG sector had about the importance of resilient supply chains were fulfilled by the unexpected Covid 19 pandemic attack, which demonstrated the vulnerability within the supply chains.

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FMCG companies have spent decades developing global supply chains and reducing inventories, thus optimizing returns. The rise of trade barriers had already been challenging this model before the coronavirus outbreak. The pandemic simply accelerated what had already been in the sector.

Of all the trends, the Covid pandemic has surprisingly had the largest impact, particularly in Africa. The shortening of supply chains also called the ‘near sourcing ‘seems to be a strategically important response to the current complex crisis. Cost considerations have been a global issue, with some business owners choosing to lower costs instead of looking for better profit margins that can be achieved with more sophisticated products.

The growing importance of sustainability: Labor conditions and salaries are the most significant sustainability issue in the supply chains, as companies tend to focus on their most outstanding problem. While the Covid crisis has demonstrated the importance of supply chain resilience, it remains cost-controlled for most. The change will come through changing working patterns rather than increasing spending.

Keeping up with product innovation and high fluctuations in customer demand are the biggest challenges facing FMCG supply chains. A lack of end-to-end visibility, lack of collaboration between supply chain stages, and conflicting key performance indicators are equally viewed as key challenges.

Making major changes to sourcing strategy in the form of near-sourcing by FMCG companies is the second most important strategic objective.  Although the process was ongoing before Covid-19, it has been catalyzed by it and is therefore still very much in development. The main advantages of near-sourcing are; stronger relations with suppliers, improved flexibility, and increased responsiveness. Prioritizing local sourcing wherever possible is one strategy for the shift to faster response in your supply chain.

The major components in the significant consumer trends in the sector are the shift to digital, the increase in the importance of sustainability, and the general shift. Focusing on the integration of the digital experience and the reconfiguration of the supply chain to increase agility, will help FMCG companies to shift from faster prediction to faster response.

There is a broad range of technologies that are being used to enhance both resilience and flexibility, it is clear that FMCG firms need to be keen on introducing cutting-edge technologies into their supply chains. Companies that do not have resilience in their supply chains simply cannot deploy any other capabilities effectively. The most popular way of achieving supply chain resilience has been the adoption of new processes, such as centralized organization and production rescheduling, and developing deeper relationships with suppliers.

Business owners in the FMCG sector should see sustainability and safety both with regard to the company’s products and for its employees, as a fundamental issue throughout the supply chain. Such sustainability is driven by the consumer but also by employee expectations.

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In conclusion, the shift in the role of technology from faster prediction to faster response means that the FMCGs future has become a new aspect of supply chain management. Additionally, Connectivity based on increased and virtual reality will be critical and will allow FMCG companies to react fast to any kind of disruption, combined with robotics and automation. Lastly, the creation of a truly end-to-end digital ecosystem in the supply chain will strengthen planning, visibility, and partnerships with suppliers, logistics providers, and equipment manufacturers.

Mombasa, Kenya.

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