5 Distribution Disasters FMCG Companies Need to Look Out For
Updated: Sep 15, 2021
FMCG Companies understand that most, if not all, of their customers, take it for granted that the products they desire will be available in stores whenever they want to make a purchase.
This is because customers have acquired a taste for prompt satisfaction and FMCG Companies, in particular, have to do everything possible to meet and exceed their customers’ expectations, if they are to remain profitable.
To keep satisfying their customers, FMCG Companies need to be on high alert for pitfalls capable of throwing their distribution networks into disarray.
In this article, some of the disasters FMCG Companies need to protect themselves from will be explored.
In this era, customers won't tolerate any company that keeps them waiting for products or services they need immediately. As a result, FMCG companies with a reputation for keeping the customers waiting won't be around for long.
To be fair, some FMCG Companies have fared well when it comes to satisfying the customer's need for instant gratification; they achieve this by striving to get the right products to the right place at the right time with the aid of impressive technologies.
The issue is that the "impressive technologies" of yesterday won't be that impressive today because customer expectations are bound to evolve over time.
In this era, FMCG Companies need to co-opt predictive AI-based technologies in order to satisfy customer expectations.
2. LOSS OF PROFIT CAUSED BY USING ARCHAIC TECHNOLOGIES
Most FMCG Companies struggle to keep up with the pace of technological advancements in the logistics sector because they often have to deal with a massive internal bureaucracy and a skeptical workforce.
The workforce often prefers to maintain the status quo. As you can imagine, customers’ expectations are a moving target and FMCG Companies that want to remain profitable and relevant need to do all they can to keep the customers satiated.
Getting the right products to the right place at the right time, all for the benefit of the customer, is not a small feat and as a result, FMCG Companies must protect themselves from profit losses caused by using outdated technologies and systems.
As earlier hinted, a lot of highly complex operations go on behind the scenes in FMCG Companies that successfully meet and exceed the expectations of their customers on most occasions.
What most of these companies have in common is the aid of predictive AI technologies when making decisions about things like distribution channels, distribution timing, route planning, delivery route optimization, distribution fleet management, to mention a few things. They're also fantastically profitable companies!
3. A LETHARGIC WORK-FORCE
Advanced technological solutions acquired by FMCG Companies will be useless or underutilized if the companies don’t have experts that thoroughly understand the technologies at their disposal.
Often times, these logistics experts function effectively as consultants because of the bureaucratic nature of most FMCG Companies.
It's not enough for an FMCG Company to have all the latest technological systems deployed on its behalf; there's a need to have experts utilize the solutions on the company's behalf so that the productivity of the workforce can be enhanced.
If experts are not involved in the distribution efforts, the workforce won't be as productive as they can be; they'll mostly be frustrated by customer complaints and returns.
4. LOSS OF MARKET SHARE AND COMPETITIVE EDGE
Obsessing about the cost of advanced logistics technologies without regard for meeting market demands is a disastrous thing to do as an FMCG Company.
An FMCG Company can be said to be penny wise but pound foolish if it strives to cut cost in a manner that affects customer satisfaction in the long term.
Some FMCG Companies fail to embrace new technologies and consult experts in the logistics sector because they think it's expensive.
But is it really an expensive investment if it allows the company to meet market demands and cultivate significant competitive advantage in the market over the long term?
Keeping costs in check is a great business practice but as earlier noted, meeting and exceeding customer demand is the principal thing for FMCG Companies that want to maintain or grow market share.
Every decision or investment made by a company must be weighed against the customer satisfaction standard and in this case, investing in AI-based technologies is the right thing to do.
5. THE INABILITY TO UNDERSTAND LOGISTICS DATA
Again, when you examine the data, you'll find that the growth of e-commerce is both a blessing and a source of concern for FMCG Companies.
At a glance, the challenges caused by the popular adoption of online shopping in recent years is considerable for FMCG Companies as they have to make satisfy lots of customer expectations in record time.
Fortunately, technological solutions have emerged to make distribution less of a hassle for FMCG Companies. Collecting, disseminating and using data derived from the overall operations of FMCG Companies in the right manner is crucial to the growth and profitability of FMCG Companies.
FMCG Companies can't remain competitive if they fail to collect the right data and glean valuable nuggets from them for future use.
This is because data is now at the core of company's distribution efforts.
Granted. Collecting data and making sense of them can be a tough task for the uninitiated, especially when archaic technologies are being used.
How Ai Solutions Can Help FMCG Companies Improving Distribution Operations
All the pitfalls highlighted above can be averted if an FMCG Company embraces AI and machine learning technologies for its logistics efforts.
By sifting a company's data and public data with our proprietary software, we help the company gain actionable insights on how to save time, cost and grow profitability.
Since FMCG Companies can't grow or remain competitive for long without satisfied customers, our solutions enable FMCG companies to glean valuable lessons from past deliveries so that the right number of vehicles, the right type of vehicles, the right delivery time, the right route, among other things, are determined for successful future operations.
Our algorithm helps FMCG Companies reduce the number of vehicles used by up to 35%, the number of miles driven by up to 22% and optimize the time spent on the road for delivery purposes by up to 45%.
In fact, the use of NORMA proprietary software is guaranteed to reduce an FMCG Company's operation costs by up to 26%.
Our AI-BASED software can be used independent from other systems but for FMCG Companies with 'indispensable' existing systems, there's nothing to worry about since our algorithm can also be integrated into existing systems without hassle.
In summary, using a route optimization software like Norma helps prevent late deliveries, loss of profit as a result of inefficient distribution, a lethargic workforce, loss of market shares and competitive advantage, to mention a few disasters routinely faced by FMCG Companies.
To be clear, NORMA has been successfully deployed with outstanding benefits by FMCG Companies and government organizations across the region.
For more information, request one-to-one demo to find out how NORMA can help your FMCG organization improve its distribution operation.