FMCGs Push For Efficiency Drive

The new

and upcoming usage of IT in the FMCG sector is likely to be geared towards

meeting some of the imminent challenges that the vertical is facing today.

Burgeoning retail outlets on one hand and the newly found potential in the rural

markets on the other hand are adding another dimension to the companies' IT

strategies. 

Most FMCG companies in

India have already been successfully leveraging IT to reduce the costs and

improve productivity. Some of the major applications in use are: ERP

systems-includes all the (integrated) modules of supply chain, sales and

financials. Other systems such as payroll, distributor management system,

budgeting etc.

On the buying side, the

trend is moving in the direction of leveraging the Web to bring in efficiencies

and cost savings into the procurement process. As a result, there will be focus

on systems like e-procurement and reverse auctioning, which will start moving

towards more widespread usage and greater maturity. There is demand on the

availability of high quality assortment of products at competitive prices and

this demand in return is forcing FMCG companies to bring higher efficiencies in

their supply chain

On the selling side,

the concern area for these companies relates how to best leverage technology for

going beyond their immediate customers, which are the distributors. The IT

systems with respect to the primary sales information, i.e. company to

distributors, are already well in place and reached maturity levels. The focus

for the companies will now be on deploying IT systems that are geared towards

capturing the next levels of secondary sales information, i.e. from distributor

to the retailers and 'Off-take' sales information, i.e. from retailers to

the end consumers. While a few of the companies have already started automating

the secondary level in the last 2-3 years the technology invasion at the latter

level is yet to happen. While Internet and web-based applications will hold the

sway in automating the capturing of secondary level sales information, mobile

technology will gain traction in capturing the information at the retailer to

end consumer level. However, the cost benefit ratio of leveraging technology at

this level will currently work out in 'key account' environment, i.e. the

big retail outlets like the Big Bazaar, etc. 

With the basic SCM

systems already in place, the next level of investments will also go into new

tools like demand and supply matching kind of applications for advanced planning

and optimization. The trend is clearly visible in the large organizations and to

some extent even the mid-sized companies are now eyeing these advanced tools.

Tools such as Business Intelligence are going to sway the IT investment

decisions over the year. FMCG companies are faced with the ever-growing

challenge of introducing new products at quick intervals, determining innovative

marketing strategies, and battling tight margins.

Shipra Arora 



shipraa@cybermedia.co.in