Manufacturers in the Fast-Moving Consumer Goods (FMCG) industry deal with large-scale production, and function on medium-to-low margins. Maintaining a high volume of sales is important for such businesses. The process of manufacturing fast-moving consumer products involve complex functions in addition with inventory management, supply chain, store order, warehouse, quality control, and more.
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In the expansion and growing phase of FMCG business, it is crucial to organise various functions using an Enterprise Resource Planning (ERP) software. ERP software plays an essential role for the FMCG business for functioning effectively and scaling it seamlessly. Let’s dive deeper into understanding why integrating ERP software is crucial for FMCG businesses.
Reasons Why ERP Software is Imperative for FMCG Companies
1. ERP Automates and Streamlines Processing Functions
The ERP software maintains a centralised data storage accessible to all departments. The software provides real-time information to users and helps monitor the progress of all functions. The end-to-end transparency of processes allows smooth integration and effective collaboration of all departments. This increases productivity and accelerates all tasks making processes efficient.
2. Improved Customer Relationship Management
In FMCG business, you deal with different stakeholders including suppliers of raw materials, retailers, wholesalers, while your customers may include store owners, retailers, and wholesalers. With ERP, all these data can be tracked.
The CRM module of ERP software allows mapping the workflow and communication between these stakeholders giving transparency. The platform is capable of capturing all information in addition to categorising them. It helps you make strategic decisions regarding the order acceptance, production and sales of your goods.
3. Better Supply Chain Management
To ensure that the supply chain functions effectively, ERP enables complete material traceability and tracking. The supply chain management requires communication with various suppliers and partners for procurement of raw materials to ensure timely delivery of complete goods for sale. With ERP installed for your business, you can eliminate waste, implement an improved workflow, and ensure efficient management of the supply chain for your FMCG business.
4. Ensures Maintaining Consistent Quality
Consumers are loyal to a brand not because of its popular name but due to the quality of products that are delivered to them. So, the quality cannot be compromised at any cost. Most ERP software consists of a module that takes care of all quality parameters and industry compliances. In an FMCG business as well, it becomes crucial to maintain the quality of all products that are processed and packaged. Right from the vendor’s inspection to the quality check of finished goods, adhering to quality parameters is essential.
To ensure consistent standards; traceability, labelling, audit reports, shipping documents, and more become part of quality control. SourcePro ERP solution’s Quality Control and Assurance module comprise advanced features to manage quality control at all levels.
5. Helps to Boost Sales
As a manufacturer of fast-moving consumer goods, you offer small-value goods that consumers buy frequently. Therefore, the volume of sales play an important role in the growth of business and profits. A software like ERP provides detailed analysis and reports, thus helping to predict an estimated demand that may arise in the near future. Such analysis helps you prepare for incoming orders and increase production and sales by identifying these opportunities.
SourcePro offers comprehensive ERP software for FMCG businesses. The New Horizon Enterprise software is made especially for manufacturing companies to streamline and automate their vital functions in the business.
Better Insights by AI-Powered ERP
By integrating ERP, organisations can leverage Artificial Intelligence to scan a vast amount of unstructured information and gain insights. These insights help to predict various trends and form intelligent business strategies. For example, if an order is accepted, ERP functionalities help optimise resources to deliver the order will reduce inventory carrying costs to optimise supply and labour schedules to lower costs and increase productivity. Therefore, ERP with built-in AI can aid the management of business functions efficiently.
Customisation
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Companies aim to deliver customised experiences to their customers. So, they seek ERP capabilities that can help them implement their business-specific process with the help of customisable dashboards. Consider the example of AI-based conversational user interfaces such as chatbots.
To understand how ERP software can transform your manufacturing business, consult our experts at SourcePro.
Fast-moving consumer goods (FMCG) have their own risk profile, which can be quite different from other businesses. As recent supply chain issues have shown, even the everyday consumables we take for granted, can be subject to the changes of geopolitics, climate, or the consequences of a global pandemic.
As Arabian Business recently reported, some FMCG suppliers are still struggling with the rising cost of materials, combined with global inflation post-pandemic. However, even outside of unusual events like COVID-19, FMCG operations require specialist insurance coverage.
From manufacturing equipment and production lines to logistics fleets and packaging, there are a host of business-critical elements to insure in FMCG. Should a manufacturing plant suffer a power outage, flood, or fire, this will inevitably affect production and supply, potentially damaging revenue.
Assets can also be defined in terms of inventory, intellectual property, and brand integrity. Fraud and theft are common risks in FMCG, beyond the GCC markets. The Middle East shows less tendencies to write crime cover, given the prevailing low rates of crime recorded in the region.
Particularly, when large volumes of goods are stored in preparation for transportation, this creates risk, as does the transportation . It’s vital that companies fully cover the cost of goods lost in maritime, rail or air transportation disasters.
The food and drink area of the FMCG sector can be especially susceptible to liability risk. If goods aren’t properly refrigerated, if there are hygiene issues in a manufacturing plant, or even if goods have been badly packaged or handled in transit, these errors can invite lawsuits.
While many such problems can be traced back to logistics providers or suppliers, the result is the same – a brand may suffer reputational risk, especially if health or hygiene concerns are publicized, or there’s a requirement for a product recall – an expensive activity with significant deductibles, but also a rare sight in the Middle East. In alone, the UAE Ministry of Economy recorded 100 product recalls -- not a huge number, perhaps, but significant for each FMCG business affected.
Another key area for liability insurance relates to workers injured or killed in industrial accidents. Whether or not the business is found wanting in terms of its health and safety procedures, such occurrences often attract press attention and reputational risk pertains, in addition to damages awarded or legal costs incurred. A strong risk management philosophy which holds a strong health & safety culture at its helm should be established in order to eliminate and mitigate the risk of similar eventualities.
With FMCG largely dependent upon the supplier model, credit line extensions in a time of supply line attenuation, paved way to shortcomings in timely fulfilment creating a significant risk factor. Credit risk assessments must be run before signing supply contracts, but even the best-written risk assessment can’t foresee everything.
The slowdown in global economies following the -21 pandemic had knock-on effects on production and distribution. Meanwhile, the war in Ukraine temporarily halted grain supplies from one of the planet’s largest providers, with negotiation required to reopen supply lines. Such large-scale problems tend to have longtails. As a result, many third-party suppliers and retailers went out of business in and .
With retail outlets forced to close for months on end, liquidity became problematic, forcing lines of credit to pursue alternate risk transfer methods, with extensions being one of them. However, such emergency fiscal measures couldn’t prevent many companies from going into administration including NMC Healthcare, which has only recently escaped from its credit doldrums. Meanwhile, retailers such as Maison Clad had to restructure their business model during lockdowns, moving more of their sales online, in order to survive.
When companies are owed large sums of money from retailers who may be at risk, this extends the risk to their own cash flow. Unpaid or late paid invoices can further contribute to credit risk. These factors can be challenging to monitor or predict, so they require adequate cover.
As we have already seen, supply chain issues can create significant risks to revenue. The throughput of stock creates a risk for companies that import or export substantial amounts of materials or goods. The FMCG sector is particularly vulnerable, especially when goods such as fruit and vegetables, dairy and other refrigerated products are highly time critical.
Marine cargo insurance covers maritime disasters caused by weather or third-party failure. Reuters recently reported statements by shipping magnate Sultan Ahmed bin Sulayem of DP World, speaking at Dubai’s Expo , where he admitted that the knock-on effects of these shortages might take many months to clear. “The problem is complicated because you have a backlog of cargo,” Sultan Ahmed admitted.
While FMCG companies wait for the world’s shipping routes to return to some semblance of normality, timely and forecasted risk assessments, risk identification practices, and the establishment of potential risk transfer mechanisms are proven to be effective to ensure minimal impact on the way of doing business.
Loss from cyber-attacks, including ransomware attacks, data theft and service shutdowns, are worth covering against, in a world ever more reliant upon e-commerce. It was reported that the UAE suffered over 400 commercial cyber-attacks per week in the fourth quarter of , an increase of 70% compared to . Loss of revenue due to these events and the steps that must be taken to counter them is well worth covering.
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