Enhancing Supply Chain Operations and Reducing Operational Cost by 27% for a FMCG Company – Demand Planning and Forecasting Analysis
FMCG Industry Overview Fast moving consumer goods or FMCG market is anticipated to witness substantial growth owing to the surge in the trend of online shopping and rise in disposable income of consumers. Besides, the expansion of FMCG network in rural areas of developing countries is expected to contribute to the growth of the FMCG [...]
FMCG Industry Overview
Fast moving consumer goods or FMCG market is anticipated to witness substantial growth owing to the surge in the trend of online shopping and rise in disposable income of consumers. Besides, the expansion of FMCG network in rural areas of developing countries is expected to contribute to the growth of the FMCG market. On the other hand, the entry of new players, inefficiency to deal with complex taxation structure, and lack of coordination between supply chain tiers are expected to hamper the global FMCG market growth. Owing to such challenges, companies in the FMCG market are focusing on providing customized solutions to customers and enhancing the customer experience to gain a significant share in the market.
This success story highlights how our demand planning and forecasting analysis helped a company in the FMCG market to tackle supply chain challenges coming their way and slash inventory cost.
The client is a FMCG company based out of Germany. The company supplies food and beverage, personal care, health care, and home care products.
Our client, a FMCG company, wanted to streamline their supply chain activities for improving customer targeting, meeting market demands, and managing inventory requirements. Unexpected fluctuations in the product demand made capacity planning challenging for the client. Due to this, the client also faced difficulties in maintaining the right balance between supply and demand. This subsequently resulted in customer dissatisfaction, increased expenses, and loss of sale for the company. They chose to partner with Infiniti Research to leverage their expertise in offering demand planning and forecasting solution.
Other challenges that the company in the FMCG market encountered were:
FMCG market challenge #1: Lack of end-to-end visibility and collaboration in a multi-tier environment
The client noted that leading companies in the German FMCG market have already started leveraging multi-tier supply chain visibility techniques to enhance visibility into suppliers’ supply chain processes and get products to market more efficiently. The client, therefore, wanted to analyze their competitors’ supply chain processes and identify cost-effective technologies to gather actionable and real-time supply chain information.
FMCG market challenge #2: Lack of planning and coordination between supply chain tiers
The client’s lack of access to timely and accurate data from supply chain parties made it difficult for them to synchronize supply and demand. This also increased customer churn as the client failed to deliver products to the right locations at the right time. The company in the FMCG market, therefore, wanted to analyze factors impacting the product demand and build a contingency plan to tackle this challenge.
FMCG market challenge #3: Dealing with unexpected and seasonal changes in product demand
The unexpected and seasonal changes in product demand increased conditions of over-stock and stockouts for the client. This pressurized the company in the FMCG market to outsource work to third-party logistics providers during periods of high demand. The client, therefore, wanted to identify the right partners to support them in their operations during periods of peak demand.
The experts at Infiniti Research adopted a five-phased approach that involved:
Market research study to analyze the German FMCG market. The factors such as FMCG market trends, market size, industry developments, and market potential for the next five years were analyzed.
Market opportunity assessment to analyze profitable opportunities in the German FMCG market. This phase of the engagement also involved analyzing factors impacting the product demand in the market.
Inventory management solution to analyze the supply-demand patterns for the past five years and identify periods where demand peaked or experienced a significant drop.
Demand forecasting analysis to evaluate the potential demand for products by considering the past sales data and market demands.
Competitor analysis solution to identify cost-effective technologies leveraged by the top companies in the German FMCG market to track the flow of inventory throughout.
The insights obtained from Infiniti’s demand planning and forecasting solution helped the company in the FMCG sector to analyze the potential demand for products in advance and integrate supply and demand planning. Also, the client was able to build a contingency plan to better manage inventory activities. By identifying similar cost-effective technologies leveraged by their competitors, the company in the FMCG market was able to increase real-time visibility into their supply chain processes. In addition, the client was able to reduce communicating gaps between staff, drivers, and distribution center by having a proper track of the flow of inventory through and around the distribution center.
With Infiniti’s demand planning and forecasting analysis, the client was able to slash inventory cost and reduce time to market. In addition, they were able to identify the right business partners to support them at times of peak demand. They were able to reduce operational cost by 27% and profits by 13%.