Use Cutting Edge Technology To Stay Ahead Of Competition In The FMCG Industry
The FMCG sector has always been in the forefront for early adoption of technology, and is seen as an attractive proposition for IT vendors-be it infrastructure, network, security, application or collaboration software.
Gone are the days when market growth in the FMCG sector was a foregone conclusion. Consumers were bound to stick with one brand, due to unavailability of choices. Today, with more and more players flooding the market, the level of competition has increased ten-folds. Consumers have a wider variety to choose from. Today's consumer is also extremely quality conscious. Due to these factors, and also aided by the sluggish growth of most FMCG corporate, the FMCG sector is looking at information technology to reduce costs in the value chain, integrate business processes across the extended enterprise, including suppliers and customers, sense changes in market conditions rapidly, and build the agile enterprise to respond quickly.
Listed below are some of the major IT initiatives most FMCG organizations have embarked upon in the recent past
ERP: FMCG sector was an early adopter of ERP packages. Nobody questions the need for an ERP now. Over the years, it has transitioned from an IT initiative requiring top management deliberations and decision, to something that is more essential to run the business. It is as essential for running an organization as basic infrastructure. It is such an integral part of the organization that it gets noticed only when there is a downtime. It has now become an important platform on which various e-initiatives are built.
Supply Chain Initiatives: FMCG organizations have since then looked at extending their IT initiatives to touch business partners like suppliers on one hand and the distributors on the other. Extending the IT chain to link the distributors for instance, would be of mutual benefit. This would propel a movement from a ‘push' based system to a ‘pull' based system, translating into inventory efficiencies right from the distributor stock point to the CFA and to the manufacturing location. The primary role of the sales force in the FMCG sector has undergone a transformation. In the past, focus would be to fill-up the shelves of the distributors (selling to the channel). Today, the primary focus is to empty the distributor shelves to be replenished automatically (selling through the channel). This has resulted in faster inventory turnaround. Hence, it would generate better ROI for the distributor, thereby strengthening the relationship with the organization. Besides, the organization would have a regular view of the secondary sales (from the distributor to the retailer) translating into a higher degree of accuracy in forecasting and demand planning.
Connecting to the suppliers on the other hand has allowed FMCG organizations to move towards Vendor Managed Inventory (VMI) type of a relationship. Hence, the supplier can not only control the inventory at his level, but also at the organizational level. He also gets a view of future requirements, which allows him to plan his production schedule efficiently. The inventory at the organization would always be at a balanced level.
FMCG organizations have since then looked at extending their IT initiatives to touch business partners like suppliers on one hand and the distributors on the other
Mobile Devices & PDA: Awareness of the use of Java based mobile phones is definitely increasing, and more applications are being built for this platform. FMCG companies are looking at automating their sales force with the help of such applications. It is envisaged that the efficiency of the sales force would increase by at least 15-20 percent with the help of such packages. This would have a direct and a favourable impact on top line growth. Most of the planning activities of the sales person, like the retail outlets to be visited during the daily 'beat', and the order-taking process at the retailer's outlet, would be automated, thereby allowing him to spend more time with the retailer for selling.
However, FMCG companies deploy distributor's sales force for front line selling. Providing them with PDAs is a difficult option because of prices and usability. In spite of this drawback, big FMCG majors have ventured into this area and have been successful. This is certainly the future. If we do not get this going, we are only delaying the inevitable.
Business Intelligence & Collaboration Tools: Organization with a consolidated and comprehensive data bank will always have a competitive advantage. But the job is only half done. The management would need to arm itself with the type of proactive market, operational and financial intelligence, which allows it to be one step ahead of the pack. This is where Data Warehousing/Business Intelligence tools come to the fore. While ERP and supply chain packages would allow for data collection, data warehousing tools would allow the information to be extracted. The same information can be viewed in numerous graphical outputs, adding more value to the same data. A powerful visual representation allows various departments to have a fast and a meaningful feedback.
Then again, if someone is sitting in one corner of a corporate office and analyzing the data using such tools and then presenting it to the management, it does not benefit the organization much. The decision making process becomes a post mortem in such cases, since necessary delays have crept into the system during the to & from information exchange. Therefore, it is necessary to analyze the data jointly across different geographic locations through collaboration. This is where collaboration tool has a major role to play. Analyzed data can be shared across locations through a single meeting place, and instant decisions can be taken. Albeit this trend is yet to catch on in India, but it certainly is the way forward for the future.
Besides the above, most FMCG companies are looking at improving the communication process among employees, and at streamlining operational efficiencies through initiatives like Employee Portals. Employees are also being educated on the importance of guarding the information infrastructure. Stringent IT security policies are in place to protect the `Information Assets' and prevent its misuse.