Increasing demand for consumer goods in smaller towns, coupled with a sharp spike in the number of stock-keeping units that FMCG companies offer, planning and forecasting becomes a challenge, and a lack of planning can have a direct impact on logistics costs.
PUNE: When Kolkata-based icecream maker Rollick wanted to fix issues in its cold supply chain, it turned to Locus, a three-year-old startup that focuses on logistics management. Locus implemented a set of solutions, including route optimisation, which resulted in an 8% savings on costs and three hours of daily planning time.
Similarly, when Chennai’s Manna Foods wanted to expand its presence across the country, it turned to Obopay for data on what was working with the distribution, and where interventions were needed.
At the other end of the spectrum is Credable, a fintech firm working with vendors of fast moving consumer goods (FMCG) firms to offer better credit terms to help ease cash-flow pressures and help them manage supply chains.
Over the past few years, startups have woken up to the massive potential in fixing underlying supply chain issues that plague consumer goods firms.
In India, traditional retail still dominates the market, which comes with a unique set of challenges. Increasing demand for consumer goods in smaller towns, coupled with a sharp spike in the number of stock-keeping units (SKUs) that FMCG companies offer, planning and forecasting becomes a challenge, and a lack of accurate planning can have a direct impact on logistics costs.
ADVERTISEMENT
Harsha Razdan, partner, KPMG India, said, “To ensure customer stickiness, large ecommerce and FMCG players tend to spend more on logistics to ensure quick and seamless last-mile delivery, leading to reduction in margins. Lack of integrated technology platforms across planning, forecasting, manufacturing, delivering and inventory management is also a challenge which various FMCG companies are facing.”
“In India, the supply chain responsibility is with the consumer goods company and they are all concerned about how to increase their organic reach. Route optimisation solutions help keep the time spent on the road to the minimum and maximise the time spent in stores. It drives efficiency and helps fulfil demand at a lower cost,” said Nishith Rastogi, CEO, Locus.
For larger firms too, tech-enabled solutions that provide end-to-end visibility are essential. While most large companies have implemented their own solutions over the past few years, smaller firms still rely on basic Excel and penand-paper methods. These startups primarily bring in tech-based solutions that these companies would have struggled to come up with on their own.
“In consumer goods, stocks are constantly moving so IoT-based solutions can give real-time visibility on inventory. Large companies are dealing with thousands of distributors and retailers and a tech solution that can help with real time inventory management is useful for both the company and the distributor,” said Anshul Gupta, senior director analyst at Gartner. Fintech firm Obopay also provides a solution which allows companies to monitor and track the movement of goods to the distributor and retailer.
ADVERTISEMENT
“While the large companies have their own software, 90% of the retailers still depend on pen and paper. Here the information is transmitted real-time and everyone has timely access to information. This also captures how the product is being sold, whether on credit or cash, and who it is being sold to,” said Shailendra Naidu, the CEO of Obopay.
How Gen Z became the most important customer in FMCG
