Supply Chain Management in FMCG Industries

FMCG products are closely associated with direct end users. The influence of consumers related to choice, like and dislike, demography, seasonality, brand, marketing etc are peculiar. The volume of products, movement of goods is quite large in comparison with other types of products. Distribution channels are wide and complex in FMCG industries.

Supply management is evolved through various phases in the industry starting from traditional storekeeping, purchasing, logistic, material management, and integrated material management to supply chain management. Its performance is measured through parameters and attributes like reliability, responsiveness, flexibility, cost and asset management for better clarity and understanding of the function. The function is supported with resources like hardware, software, assets, and manpower.

Supply Chain Management refers to the way that materials flow through different organizations, starting with raw materials and ending with finished goods receipt to the customer. The Council of Logistics and Management defines Supply Chain Management as "The process of planning and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of confirming to consumer requirements".

The supply chain is a sequence of suppliers, warehouses, operations and retail outlets. Different companies may have different supply chain due to the nature of their operations and whether they are primarily a manufacturing operation or a service operation.  

Supply Chain Management is a concept which involves the integration of value-added components in the supply, manufacturing, and distribution process, from raw material to the distribution and end-user consumption. The objective is to maximize customer service (satisfaction), compress lead time and reduce inventory. 

 The following are five basic components of Supply Chain Management

1. Plan (the strategic portion of SCM)
2. Source (sustainable supplies of goods or services)
3. Make (manufacturing step)
4. Deliver (logistics to end users)
5. Return (customer service: receive defective / excess delivered product / complaints)

The objective of SCM:
  • To maximize the overall value generated
  • To achieve maximum supply chain profitability
  • To reduce the supply chain costs to the minimum possible level
  • To generate synergy among supply chain components by ensuring reduction of communication gaps
  • Motivate and encourage innovations and constant update of application and knowledge
  • To enhance company's top and bottom line and ultimately competitiveness through improved manufacturing and service capability, faster response to market and building healthy customer-supplier re-supplier-ness.

SCM Development Trend

SCM gone through from disparate function of logistics, transportation, purchase, stores, and warehouse management to a focused integration with visibility on cycle time reduction, integrated purchasing strategy, supplier as a business partner, supply base management, strategic alliances, link synchronization to an fully SCM. Various SCM trend are tabulated as:

Within a manufacturing organization, the supply chain includes functions such as new product development, marketing, operations, distribution, finance, and customer service. A typical supply chain may involve the following stages:
• Customers
• Retailers
• Wholesalers/distributors
• Manufacturers
• Component / raw material suppliers

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