Globally, FMCG supply chains have been disrupted and the critical shortcomings in the current system have been exposed. Studies show that 40 percent of all multinational companies have had their supply chains recently disrupted. Many manufacturers have seen production halted due to a shortage of materials, while others have been unable to cope with the rapid fluctuations in demand. This had led to the familiar images of empty shelves, as customers could not access necessities like toilet paper, pasta, and flour.
Now, adaptability and supply chain resilience are the keywords of the FMCG industry, as over 90 percent of FMCG brands plan to change their supply chain networks and more than 40 percent expect to increase their investment in supply chain management with the primary aim of improving speed, resilience, and agility.
Why FMCG distribution chains must evolve
The traditional FMCG distribution chain is a series of largely discrete, siloed steps and is further complicated due to the fragmented nature of the retail industry in emerging markets. Traditional trade still accounts for 70 percent of all consumer goods sales across emerging markets. Therefore, driving growth with this distribution model will require FMCG brands to reach large volumes and many different types of retail outlets, while understanding the different role each outlet plays to the customer, as well as how to influence demand at the retailer.
What products a retailer stocks, how much they stock, the price they are willing to buy, the distributor that delivers the products, and how often the stocks are replenished are all vital information that FMCG brands need to create the right sales and marketing strategies to drive growth. However, there is a severe lack of visibility across the traditional supply chain as brands are left in the dark, unable to gain insight into who is buying their products, and properly collaborate with channel partners.
If supply chains do not evolve, the consequences will be dire for both brands and consumers in developing economies. Empty shelves in developed economies might be a minor inconvenience that is quickly solved, but it is a far more serious problem for the lower-income consumers in emerging markets whose survival depends on the availability of essential products like milk, pasta, baby food and diapers, and the small businesses who also depend on daily sales to make ends meet.
Future-proofing the distribution chain with digital technologies
FMCG leaders are beginning to see the need to transform their supply chains and make them more resilient, as a survey of 500 FMCG executives showed that end-to-end visibility was ranked as the top factor responsible for creating a successful supply chain. To achieve end-to-end visibility, FMCG brands need a digital solution that gathers real-time insights on market demand and displays the data collated into easy-to-understand dashboards, so that sales, marketing, and supply chain leaders can leverage the collated data to generate sales and drive growth.
To build resiliency and agility into the FMCG distribution chain with digital technologies, the solution chosen must capture data seamlessly across the entire distribution chain, from the manufacturers warehouse to the shelf of the smallest merchant. It must also provide real-time visibility at POS, so that brands can anticipate and react to changes to demand in the shortest time possible.
Build a resilient supply chain with RedCloud
The most agile and resilient supply chain will be an interconnected ecosystem of brands, distributors, and retailers, where data silos are dissolved, and each channel partner will have full visibility into the needs and challenges of other players. Stock shortages, rapid increase in customer demand and other important information will be visible throughout the system in real time, allowing brands to react and plan accordingly. This is the RedCloud solution.
RedCloud has built the world’s first open commerce platform, a platform that provides FMCG brands in emerging markets with visibility across their distribution chain. For the first time, a brand can see in real-time, every single merchant that buys their products, the prices of the product, how often they restock, and other valuable information. For example, a soft drinks brand might observe a merchant that places orders frequently and offer them a branded refrigerator. This could potentially increase the merchant’s average order value and enable them to generate more sales.
We have also built the world’s largest payment network, with over 2 million cash-in points across 100 countries, so brands can seamlessly accept digital payments from merchants who may not have access to bank accounts.
Book a demo with us today to see how RedCloud is helping FMCG brands across emerging markets build more resilient supply chains.