The Fast Moving Consumer Goods (FMCG) Supply chain is one the most Complex due to the below mentioned factors
- 1. Scale
- 2. Multitude of Stakeholders
- 3. Dearth of End to End Supply Chain Solution Providers
Scale -
Having to deal with a minimum of 300-350 SKU’s and ensuring adequate customer service levels across a wide range customer segments means the distribution channels must be agile and robust to meet the ever increasing consumer demands. This refers to Complexity in Scale
Stiff Competition and Price wars across different product lines highlight the relevance and importance of Lean Supply Chain & Distribution Networks.
Multitude of Stakeholders –
Unlike Developed Nations where the Modern Retail Formats are well established, In India modern Retail is just in its initial stages, The presence of 1000’s of Distributors, lakhs of Mom & Pop Stores (Kirana Shops) make the Supply Chain a very dynamic and care must be taken to ensure the demands of all the Supply Chain partners are met so as to ensure “The Right Product reaches the Right place at the Right time”
Dearth of End to End Supply Chain Providers –
As highlighted in my previous post, this is an area which promises to attract huge investments, to provide warehousing/logistics/material handling/documentation solutions right from the Raw Material Stage till the Finished Product reaches the end customer.
Vendor Managed Inventory Solutions acquire importance in such a scenario, IT Solutions which are compatible with the existing infrastructure present at the Supplier/distributor level and integration of the same with the Company ERP Systems holds the key. Customizable, Low Cost Packages wherever possible must be developed and implemented
However the trick to success of managing the Vendor Managed Inventory/Replenishment System is the setting/fine-tuning of the Forecasting & Inventory Parameters in the system.
The broad expanse in geography combined with different buying patterns of the Customers added with the Seasonal Factors makes the process of identifying the patterns and grouping data a very difficult task. Parameters are set for these groups For example, The Forecasting Technique is decided, the parameters for forecasting model are set then the Safety stock parameters are set.
Similarly Parameters are set to take care of New Launches & Promotional factors.
Though at very nascent stages of implementation, these systems will be the part of Supply Chain evolution irrespective of the Industry, which will ensure visibility across the Supply Chain, aid coordination and better cooperation among the working partners.
The prospect of being involved in live implementation of this system in one of the World’s Biggest FMCG companies makes me very happy. Hope it proves to be an enriching experience.
Will Share my experiences post the implementation.
Would love to know about similar implementations in other countries & Industries
Happy Reading!!
Dhanush
i am doing my research in this topic
I’m an undergraduate student. I planned to write a thesis through my research about VMI and CPFR. this article help know a bit further about VMI. is there any complete article. thanks.
regard