Over the last few years, startups have woken up to the massive potential that exists in fixing the underlying supply chain issues that plague consumer goods firms.
When Kolkata headquartered ice-cream maker Rollick wanted to fix the 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 eight per cent savings in logistics costs and three hours of daily planning time.
Similarly, when Chennai based 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 some kind of interventions were needed. On the other end of the spectrum is Credable, a fintech firm that is working with vendors of fast moving consumer goods firms to offer them better credit terms to help ease their cash flow pressures and in turn help FMCG companies better manage their supply chain.
Over the last few years, startups have woken up to the massive potential that exists in fixing the 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 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. Even for firms with a well-established network, there’s still enough potential to grow their reach and improve the effectiveness of their sales teams.
Harsha Razdan, Partner and Head – Consumer Markets, KPMG in 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.”
Nishith Rastogi, CEO, Locus said,
“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 amount of 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.”
For larger firms too, tech enabled solutions which can help provide end-to-end visibility are essential.
While most of the larger companies have implemented their own solutions over the last few years, smaller firms still rely on basic Excel and pen and paper based methods. These startups primarily bring in tech based solutions which these companies would’ve struggled to come up with on their own.
Anshul Gupta, senior director analyst, Gartner said,
“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.”
Fintech firm Obopay also provides a solution which allows companies to monitor and track the movement of goods to the distributor and retailer. Shailendra Naidu, CEO, Obopay said, “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.” This has also helped tackle another common problem in the industry – sales executives selling products to non-authorised distributors, or last mile traceability of products.
Mumbai based Credable offers supply chain financing to vendors of large consumer goods firms. Nirav Choksi, CEO, Credable said, “This can help shrink the sales outstanding and help companies get paid faster and helps the consumer goods firms with better cash flow and balance sheet management.” The company provides financing to vendors of large companies against their invoices irrespective of the size of the company.
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