Industry 4.0 has taken every industry by storm, with companies embracing digital transformation in their core strategic and operational processes. FMCG firms are all set to harness the power of digitization to make supply chains more efficient, agile, flexible and adaptable. What’s more, these companies are embracing cloud to enable digitization across every step of the chain, starting from planning, manufacturing to distribution, and logistics to eventual end retail or consumer experiences. This is because in today’s digital growth era, cloud is the tour de force towards achieving a competitive, powerful and resilient supply chain.
This blog will delve deep into how FMCG companies can modernize their supply chains on cloud.
What are the Limitations of a Traditional Supply Chain?
With the pandemic, climate change issues, tumultuous socio-economic conditions and port backups sending shockwaves across global supply chains, FMCG companies are compelled to reimagine their operations to cope with the ever-evolving market conditions.
Simply put, traditional supply chains are not cutting the mark. They are reactive in nature. Meaning, they function solely on historical transactions and standalone systems that work in siloes thus limiting the scope of collaboration and data-sharing. These siloed supply chains make key stakeholders lose sight of their partners, goods, products and customers across the supply chains. Since these supply chains are dedicated to production and provision, they fail to capture evolving customer needs. They are not equipped with real-time intelligence or data to rapidly spot issues in the supply chain. Even if an issue is identified, it takes a long time to resolve the problem, leaving room for more delayed production, errors, and increased time-to-market. All of these can put a dent into the end customer experience and evidently profitability. Other than these, here are other reasons why firms should shift from a traditional supply chain to a digital one:
- Reduced visibility
- Hampered performance analysis
- Lack of accountability
- Hindered quality decision-making
- Poor ROI
- Inflexible towards responding to dynamic market conditions
How Cloud is Modernizing Supply Chains for FMCG Industry?
With cloud platforms offering centralized, cross-business visibility, businesses can gain higher efficiency and responsiveness. Here are ways in which cloud helps in supply chain modernization
1. Accelerating Process & Product Innovation
Cloud platforms come with enterprise innovation management systems that offer real-time consumer insights and connect with employees and customers simultaneously. FMCG companies can utilize customer feedback to churn out new and innovative products while applying ways to improve the product development process. Along with this, the cloud helps to execute iterative experiments in testing these products.
2. Slashing Costs
With the adoption of the cloud, budget overruns won’t be an issue as the FMCG companies do not have to shell out money for installing, maintaining, improving or enhancing expensive hardware. Instead, the employees can invest their time and efforts in core business and strategic planning. On top of that, cloud platforms follow a pay-as-you-go pricing model. Meaning, the companies need to pay only for those services they want to use on the cloud.
3. Offering Complete Visibility
For any FMCG company, getting 360-degree visibility into supply chain data distributed across several systems like SAP, spreadsheets, and CRM becomes a challenge. With the help of the cloud, businesses can integrate all the business applications, systems, partners, manufacturers, and suppliers into one holistic system. By streamlining supply chain management on cloud, enterprises can quickly identify problems and resolve them immediately and track evolving consumer and market demands.
4. Planning and Forecasting
With cloud-powered analytics integrated with social media, FMCG enterprises can gain better market insights that will help them in understanding evolving customer segments, analyze customer preferences and dissect responses towards new product releases and promotional activities. This is because cloud-backed data management platforms can integrate customer data with media performance data and its in-built applications can offer real-time in-store responses and insights from the sales team. At the same time, these analytics will also help you in demand forecasting and automatic order generation. Companies can seamlessly produce goods and maintain inventories with supply chain partners.
5. Bolstering Manufacturing and Supply chain
Cloud offers in-store intelligence for identifying loopholes in supply chain, product lifecycle management and mobile services for distribution. With automating field-manufacturing processes, cloud simplifies the entire logistics management process.
6. Advancing Security
Cloud- powered supply chains enable DevSecOps to safeguard against these attacks. This process includes discovery of all components in the supply chain, end-to-end visibility into these components and securing these components, cloud-native applications and infrastructure across the development lifecycle.
7. Streamline Administrative Operations
Since supply chains need to comply with government regulations, FMCG companies spend a lot of time filling out forms and inputting data. Cloud applications can help in automating the archiving of records and can be scaled to meet the regulatory needs of supply chains.
How Cloud- based Technologies Can Optimize your Supply Chain?
Integrated Planning and Execution Platforms
With collaborative cloud-based platforms, FMCG companies can communicate with supply chain stakeholders easily. All employees within the strategy and planning team can share data on demand, and offer real-time feedback and suggestions on eliminating potential bottlenecks in the supply chain. This integration process enables the stakeholders to plan strategically as they employ data and information to run scenarios and calculate trade-offs among variables like cost, delivery, margin, capacity, fill rate and performance. By doing so, companies not only accurately estimate the delivery time of the finished products but also reduce their delivery lead time and freight costs.
Achieving complete transparency in supply chains is challenging as it demands a sleek combination of technical dexterity and human intelligence. This is how the cloud can help FMCG brands establish a proper logistics visibility framework.
- Data sourced from internal and external sources is collected into a single platform.
- The collected data is integrated and furnished with additional information such as events affecting shipment, weather, traffic, news and social media.
- This furnished data is subjected to analytics and simulation runs enabling strategic optimization through carrier performance reviews and route network adjustments.
- After this step, the data is inputted into a control center that manages and monitors the movement of logistics and is subjected to advanced prescriptive analytics.
- Once the single source of truth is achieved, companies can use the insights and tailor it to their business needs. This may include sending alerts to warehouses, plants and customers about delayed arrival times and even enabling mitigation actions. Visibility into your supply chain systems can help prepare you to tackle the risks that come along with the process.
- Applying ML can automate these tasks and let you concentrate on core business objectives. The ML algorithms are specifically designed to reduce workloads and make the supply chains even more efficient.
Track and Trace Technologies
Next-generation track and trace technologies have redefined ways in which companies track the movement of products and goods via transportation systems. Technologies like Radio Frequency Identification and Bluetooth are employed to track the internal movement of goods in warehouses and factories. 3D printers are used to produce readable sensor tags that are attached to the products and offer insights into temperature and humidity. Global systems for mobile communications and satellite tracking are usually deployed in maritime transport to monitor engine performance.
So, how does the cloud enable these track-and-trace technologies? With comprehensive supply chain visibility, enterprises can develop a high-performing track and trace system that lets them monitor the status of the shipment of goods and products through a robust transportation system. This data is collected through cloud-based enterprise resource planning platforms and third-party systems. Enabling GPS technology can offer companies exact shipment locations while field sensors can update real-time environmental conditions such as weather, humidity, temperature, air quality index, etc. And even protect goods from theft and pilferage.
What does a smart warehouse look like? When the trucks reach the warehouse, their location and arrival time are fed into cloud warehouse management systems. The RFID sensors reveal what has been delivered and this information is sent across every supply chain point. The cloud warehouse management system captures this data based on which it allocates storage space for delivery and assigns relevant equipment to move the goods to their designated locations. The software will continuously update real-time information about inventory from the sensors. Based on this, the system will enable flying drones, help in taking the inventory to its assigned location.
Once the products are placed, robots are assigned to help in packing these goods based on the data containing customer and product packaging requirements. The warehouse management software controls the warehouse’s environmental conditions including setting the right temperature, humidity and light to protect the quality of the goods.
3D Printing enabled FMCG brands to develop creative packaging solutions. These include customized shapes, logos and intricate designs. This technology enables quicker production cycles since complex designs can be finished in a fraction of the time. The 3D blueprints are designed which are stored on the Cloud. They are then sent to the in-house 3D printer for production. 3D printing can drastically reduce the costs associated with this. In fact, a study by Duke University implies that FMCG companies can achieve 40% cost savings by using 3D printing technology.
Autonomous on-site vehicles are turning heads in the world of supply chain management. These vehicles are designed to move raw materials, components and spare parts on their own sans any human interference and choose the best routes possible. When they are integrated with the cloud ERP system, the vehicles can self-sufficiently assess which goods need replenishing, collect them from the storage systems, drop them off at their designated location and gather returnable packages. With the contactless sensors and safety bumpers integrated with these vehicles, the Cloud ERP systems will offer insights and suggestions for improving on-site worker safety.
Going beyond predictive analytics, FMCG companies are slowly adopting prescriptive analytics. Meaning, they are deploying analytics to know how they can run supply chains smoothly and effectively. Prescriptive analytics dig deeper and offer granular details into every step of the supply chain process. These may include suggesting the best ways to boost delivery time, how to optimize the supply chain to boost profits or how to manage risks if the supply chain is disrupted by a natural disaster.
Cloud data warehouses help in deploying prescriptive analytics. While storing massive amounts of data and leveraging a combination of machine learning, business rules, artificial intelligence, cloud data warehouse offers secure, real-time and accurate insights into business problems, recommendations and suggestions to meet the objectives.
How to Build a Digital Supply Chain?
Here is a 5-pronged approach towards developing a robust digital supply change management framework on cloud
Detect Issues in the Supply Chain
Collaborate with supply chain ecosystem partners like suppliers and logistics service providers (LSP) to carry out risk assessments. These risk assessments are conducted to study the changing demand and inventory levels to detect loopholes in production, supply, capacity, warehousing and transportation.
Trace the Source
After identifying the issue, it's important to analyze the root cause of this issue. Meaning, businesses need to study their operations data in detail to understand how these problems are affecting the supply chain. These problems can be delays in deliveries or errors in manual appointment scheduling processes. Detecting problems can help supply chain leaders craft tailor-made solutions.
Get in touch with cloud service providers who have skills and experience in digitizing supply chains and offer customized managed services for optimizing your supply chain. Together, the company and the cloud partner should create actionable short-term and goal-oriented resilience strategies based on scenario analysis and deploy a fact-based dashboard to include KPIs for supply chain visibility.
Automate Supply Chain & Generate Real-time Data
With a robust manufacturing excellence program, companies can automate labor-intensive processes. This will encourage the standardization of redundant tasks and minimize reliance on manual labor. Deployment of IoT technologies can assist in combining a digital ecosystem with connected systems that offer managers real-time, accurate data for informed decision-making.
Create a Holistic Risk Management Process
FMCG companies should formulate a methodology that lets them assess and measure risk for each supply chain component that includes warehouse, factory, supplier and transportation.
Power your FMCG Supply Chain with Cloud4C
The best supply chain is the one that utilizes data to its competitive advantage. Cloud managed service providers help to resolve supply chain disruptions and drive sustainability goals through the right utilization of data and digital technologies.
Cloud4C, one of the leading cloud managed service providers, offers SAP Digital Supply Chain Management solutions that streamline every stage of the supply chain process starting from planning, procurement to manufacturing, delivery and support.
We architect and deliver customized SAP Supply chain management solutions on the cloud. These solutions are designed for warehouse design & management, capacity planning and transport planning and suggest recommendations for performance improvement. In this way, we help companies minimize their manufacturing/logistics costs, lead times, gain on-time delivery, and improve customer satisfaction. With our hybrid cloud services, FMCG brands can resolve the gaps in supply chain chains as they can run mission-critical applications on public clouds without refactoring or disrupting the existing business applications. This public cloud scalability helps them to address short-term supply chain constraints.
If you want to know more about our SAP digital supply chain management services, visit our website or get in touch with our representative today.