Every consumer goods company wants a supply chain that runs smoothly from end to end; however, various challenges, such as the rapid shifts in customer expectations and purchase habits, inflation and the rising prices of commodities, and a looming energy crisis, among others, have made planning for this almost impossible. The case is even worse in emerging markets, where FMCG brands depend on an inefficient manual distribution model to reach the fragmented retail market.
Research shows that supply chain disruptions that last a month or longer now occur every 3.7 years on average, with a cumulative cost to consumer goods companies of one-third of annual earnings every decade. As the costs of these disruptions continue to rise, FMCG leaders now recognize the need to prioritize resilience and adaptability. A survey of 60 senior supply chain executives shows that 93% plan to increase resilience in their supply chains, and the primary way for brands to build this resilience is by rethinking their planning practices.
Over the next decade, the existing planning capabilities that FMCG brands, especially in high-growth markets, have relied on will prove insufficient, and the increased frequency of disruption will only make things more difficult for supply chain managers in the consumer goods industry. Therefore, the only way to survive and drive growth is to completely reimagine planning operations and capabilities – a true end-to-end planning transformation.
Why is it hard for FMCG brands to effectively manage their supply chain?
Managing FMCG supply chains are inherently a cross-functional activity, as they connect the company’s internal functions – marketing, sales, and distribution and its key external partners – suppliers, distributors, retailers, and end consumers. Therefore, the only way to build a resilient supply chain capable of resisting disruptions and driving growth is by close alignment and coordination among all supply chain participants, both internal and external. However, while many FMCG manufacturers in emerging markets recognize that operating in organizational silos prevents their supply chains from performing well, they still struggle to coordinate among multiple departments and channel partners.
For example, where distribution centers want to control inventory levels to reduce handling costs, sales teams cannot accurately predict demand across the fragmented market in real-time, as they do not have visibility across the entire supply chain and must rely on physical visits by sales reps to distributors and retailers. This makes inventory planning harder, leading to increased handling costs or low service delivery to customers.
Ultimately, these disconnects, lack of visibility, and cooperation make it harder for FMCG companies to plan effectively and meet growth targets, as every department and channel partner seems to be pulling in a different direction.
The only way forward is with advanced supply chain planning, which can increase revenue by up to 4%, reduce inventory by up to 20% and reduce supply chain costs by up to 10%. In addition, a high-performing planning function can provide FMCG manufacturers with the ability to capture value across both the top and bottom lines.
To unlock this value and capture the much-needed growth, supply chain leaders in emerging markets must answer this question – how do you build advanced supply chain planning capabilities when the market is fragmented, and there is no visibility across the distribution chain?
How to build a planning analytics center of excellence
Digital planning solutions hold the potential to dramatically improve the supply chain performance for FMCG manufacturers in emerging markets, but most brands are severely limited by the lack of choices available. In addition, most planning solutions, like ERP and SAP systems, tend to focus only on internal, individual processes but provide almost zero visibility across the entire supply chain.
To successfully transform planning and reach new levels of growth, FMCG brands need a solution that provides:
- Full supply chain visibility: Real-time data captured across the supply chain will help FMCG companies identify risks and exceptions earlier and develop potential countermeasures. Supply chain leaders, for example, can identify spikes in demand for particular SKUs and reorganize inventory and distribution in real-time to meet them if distributor and retailer demand can be syndicated and displayed on a dashboard in real time, rather than having to depend on manual reports from multiple field agents.
- Advanced analytics enablement: CPG companies need a solution that captures relevant, valuable data and leverages the data to provide actionable insights across multiple teams. Without this capability, brands often cannot make accurate demand forecasts, plan optimal delivery routes or deliver products to retailers in time to keep shelves stocked.
- Cross-functional integration: By leveraging cloud-based planning solutions that are relatively easier to deploy and access from multiple locations, multiple departments and channel partners collaborate closely.
For example, with a cloud-based solution that is easy to use, field agents can access valuable data in real-time and use the data to drive sales growth while simultaneously feeding data back to other teams. This enables cross-functional integration across the supply chain, both internally and externally.
- Optimized, flexible planning: Brands must also develop the capability to manage different planning activities (e.g., demand forecasting, inventory, trade promotions, and scheduling) to produce the best decisions for the entire value chain.For example, if an FMCG marketing team decides to release a new trade promotion aimed at driving growth across specific geolocations, the distribution center must have the capacity to react in time and adjust the distribution plan to ensure that the added demand is handled with zero disruption to service delivery.
There is only one solution that provides all of these and more.
That solution is Open Commerce.
Transform your planning end-to-end with Open Commerce
Open Commerce is a revolutionary digital commerce platform that unlocks the full value of the traditional supply chain by providing end-to-end visibility across the entire value chain. It is a new, digital way of trading that connects every player across the distribution chain and captures real-time live data across the market. Now, with Open Commerce, FMCG brands in emerging markets can dissolve data silos, gain full visibility into the needs and challenges of other channel players and build a truly resilient supply chain.
RedCloud has built the world’s first Open Commerce platform, Red101 Market, a simple, easy-to-use digital solution that makes advanced planning analytics possible. With Red101, brands can now provide distributors, wholesalers, and retailers with a digital platform where they can order their products anytime and anywhere instead of having to wait for field agents to visit their stores. However, unlike traditional e-commerce, where sellers lack visibility and lose control of their supply chains to third-party marketplaces like Amazon or Jumia, FMCG brands can now see in real-time where the demand for their products is across the entire market and build dynamic, resilient supply chains that ensure adequate levels of service delivery at the touch of a button.
Schedule a demo today to see how RedCloud’s Open Commerce platform can help you develop advanced planning capabilities and transform your supply chain.