The Indian FMCG market is the 4th largest in the country. And contributes to the Asia-Pacific segment, which dominates the industry in the world. The Indian FMCG sector was estimated at 110 billion U.S dollars in 2020, according to a Statista report. Household and Personal Care goods amount to 50 percent of the FMCG sales in India. While the Food and Beverages segment dominates in the global market.
With technological advances, the world market shifted from retailers and wholesalers, supermarkets, and malls to e-commerce. Therefore, buying and selling goods underwent a drastic change.
With a population of 1.36 billion, the rural and urban population with 45% and 55% dominates the total revenue share of the industry respectively. And to keep a large sector running on profits, the FMCG sector needs to effectively utilize technology at its foundation level, the distribution management system.
In a day and age, where every industry is tech-driven and adopting digitalization, FMCG sector cannot afford to stay behind.
The FMCG sector is powered by two players, e-commerce platforms and retailers and whole sellers. The sector needs to utilize technology at both, its front-end and back-end.
The tried and tested
The industry uses various technologies on a large scale. Some are integral for sector giants, while some might to helpful for a new business. The following are some of the methods which are in existing use-
Big Data- FMCG organizations are effectively utilizing Big Data in order to increase their ROI. Big Data provides customer insights like never before. It allows companies to get any minute activity data they find relevant. The key is to analyze the data. It provides a resilient supply chain system. Big Data techniques include data mining, predictive analysis, and intelligence tools. These techniques can be used to predict sales forecast and product demand too. Geo analytics provides a region-wise and demographic analysis of the customers.
Social Media- If a business does not utilize the potential of Social Media platforms, they are running a short run. Social Media platforms enable businesses to engage with their customers and keep a tab on their competitors. It helps you to stay in touch (real-time) with your respective supply chain. Thus, allowing you to be more efficient, effective, productive, and communicative. Additionally, social media allows a business to keep a track of what is in trend, what is not, which product is being loved, and which not.
Value chain logistics- Location Analysis, Inventory Diagnostics, and Supply Chain Diagnostics are some of the key aspects of an FMCG's value chain logistics. Based on geographical data, location analysis can help in figuring out an optimal location for a certain facility. Inventory Diagnostics helps in establishing a balance between optimal inventory level for delivery and a low holding and ordering cost. Supply Chain Diagnostics includes assigning SKUs, Order Number, Shipment Number, etc to existing products and orders. It helps in the efficient tracking of the orders in process.
The new mantra
Over the last two decades, the retail and consumer landscape distribution has changed gradually, first in the form of malls and supermarkets, and recently in the form of e-commerce. Digitization offers immense opportunities for FMCG companies to rationalize their operations and overcome existing shortcomings in their supply chain and distribution networks.
India’s FMCG industry was estimated to be $49 billion in 2017. By 2022, it is expected to reach a size of nearly $104 billion. It is also estimated that by 2020, nearly 40% of FMCG purchases across categories like baby care & fragrances, and laundry and toilet care, will be digitally influenced. By the same time, e-commerce as a distribution channel for FMCG is expected to reach a size of $6 billion.
To optimize the distribution network operations, and reduce risk and cost, the FMCG industry would need a robust distribution management system.
Artificial Intelligence – Artificial Intelligence helps dive deeper into the end-customer preferences and offer innovative products. AI is also helping companies harness the power of Big Data and analytics to study customer buying patterns.
Sales Force Automation Softwares (SFA) –SFA refers to software apps for sales management. SFA provides automated workflows that create a streamlined sales process to manage business leads, sales forecasts and team performance.
SFA may also be referred to as Salesforce Management. Companies like beatroute provides technology to maximize outcomes from customers, distributors, and influencers. Its technology is designed to inspire and augment sales reps and managers and maximize outcomes with intelligence.
Distributor Management Systems (DMS) - DMS will enable effective sales management and streamline operations. Digitization of sales management will help in operating in large capacities. Such a transition will result in significant benefits for FMCG companies, including improving productivity, ensuring uninterrupted delivery processes and optimizing the supply chain. It will also help them in responding faster to market and customer demands.
To conclude, in the times of COVID and even the post COVID times, the roles of intermediatory will extinct with time and definitely at a faster pace owing to the pandemic. Having said that it has also accelerated the digital transformation of the FMCG & CPG Sectors. Traditional retail channels will still continue to exist, but companies will need new approaches & technologies to get desired outcomes.