Introduction In the last few decades, dramatic growth has made the FMCG industry in Bangladesh one of the largest sectors of our economy. Like any other industry, Covid-19 has also vastly affected this industry’s supply chain. One thing we can guarantee, whether it’s COVID-19, Brexit’ or other geopolitical tensions, there will always be disruptions in this never normal world. To tackle such disruptions, global companies have constantly been pushing towards innovative strategies and developing existing processes. 1 Analysis of Bangladeshi FMCG Industry 2 Breakdown of Supply Chain 4.0 3 Material Sourcing 4 Manufacturing 5 Distribution Case Objectives Overview: FMCG Bangladesh Fast Moving Consumer Goods (FMCG) refers to the final products, goods, and services used for household consumption or private consumption. Global market size of FMCG is expected to reach $1.54 trillion by 2025. In contrast, Bangladesh Consumption expenditure clocked at 97% of national income, with annual domestic consumption standing at over $130 billion. Factors Accelerating the Growth of Bangladeshi FMCG Sector 01 Enlarged urban population’s behavioral change 02 Strong economic growth of 12 million people belonging to MAC 03 Newly created EPZs and other manufacturing industries 04 Easy availability of raw materials & cheap labor 05 Sharp increase in rural consumption Currently 25% People belong to Middle Class Currently 12 Million people are in MAC Middle & Affluent Class (MAC) 33% People will belong to Middle Class by 2030 34 Million People will be in MAC by 2025 S ● ● ● ● Low operational costs Established distribution networks Presence of well-known brands Geographical Position W ● ● ● ● Low investment in technology Low exports levels Illegal production of Me-too products Lack of quality products O ● ● ● ● Untapped rural market Rising income levels Large domestic market Export potential ● ● ● ● Removal of import restrictions Unstable political condition Fake products Export Restriction T FMCG Bangladesh Our Solution Supply Chain 4.0 “Supply Chain 4.0” is the re-organization of supply Chains – design and planning, production, distribution, consumption, and reverse logistics – using technologies that are known as “Industry 4.0”. Continuously data-generating devices are at the core and lead the digital transformation of supply chains. As a result, supply chain management will be highly dynamic. By taking previously collected data sets and analyzing them, companies can now find new ways to optimize the processes that have the most significant effect on yield. Material Sourcing Supply Chain Financing Supply chain finance (SCF) depicts a set of MIS-based solutions that aim to lower financing costs and improve business efficiency for buyers and suppliers connected in a business transaction. Feasibility This methodology works by automating transactions and tracking invoice approval and settlement processes, from initiation to completion. Under this program, buyers agree to approve their suppliers' invoices for financing by a bank or other outside financier and provide short-term credit that optimizes working capital and provides liquidity to both parties. Deliver services, goods and invoice as agreed in the commercial contract Supplier Bank purchase the approved invoice from the supplier Buyer 1 3 Send Approved invoices of selected suppliers to be included in financing flow Bank 2 Buyer pays the invoice amount to bank on the due date 4 Benefits of SCF Buyer ● ● ● Longer Payment terms, thereby unlocking working capital Reduction of administrative cost to attributable to improve process capability in invoice receipting, approving, electronic invoicing, and overall procurement Improving supplier relationships and control over the supply chain Supplier ● ● ● ● Reduction of trade receivables and increase in cash position Faster access to cash at advantageous rates Strong Cooperation with buying the company creates a competitive advantage Faster Cash Conversion cycle from delivery to cash Benefits of SCF Financial Intermediary ● ● ● New Interest and fee generation interest Increase the potential client’s portfolio Competency in assessing the credit risk of the buyer based on other business relationship Supplier Diversifying Supplier diversification means broadening the range of suppliers a company work with to increase choice and abundance of supplies. Feasibility Supplier Supplier Supplier Supplier Supplier Firm Current Product x With the help of a global database, companies will choose from a diverse range of suppliers. Before selecting suppliers, they must focus on mapping processes to ascertain suppliers, site locations, methods, and even sub-suppliers. In addition to triggering events, transportation links between suppliers and their sub-suppliers also need to be considered, such as shipping, air freight, rail transport, etc. 01 Creating a database of global vendors for the FMCG industry. 02 Identifying backup suppliers and not just additional suppliers. 03 Finding different manufacturers. 04 Finding diverse dropshipping suppliers and third-party logistics providers. 05 Breaking up contracts into smaller parts. 06 Basing supply chain on issues like natural risks Ways to Implement Supplier Diversification MIS for better Forecasting Implementation of Management Information Systems (MIS) based software and technologies can provide accurate real-time data. For this, we have chosen Power BI as the most compatible tool. Impacts of Power BI Demand Forecasting Analytics performed on historical data, can predict consumer demand. Supplier Performance Get an overview of supplier performance over a period of time, based on delivery time and quality of packages. Damage and Loss Analysis Receive trend reports behind various losses and damages for different warehouses across various loss categories and reasons. The KPIs that Power BI Supply Chain dashboard should consist 01 Inventory turnover 04 Return reason 02 On time shipping rate 05 Inventory velocity and Inventory days of supply 03 Days of supply 06 Freight bill accuracy Ways to analyze Demand Signal by using Power BI Time-series Approach Clustering Analysis The demand for perishable products can be forecasted using Autoregressive Integrated Moving Average (ARIMA) and Holt-Winters (HW) models. Clustering algorithms like K-means and self-organizing maps (SOMs) can be used to segment similar customers according to their behaviour to identify customer segments. Hierarchical Forecasts Hierarchical forecasts of sales data are performed by clustering and categorizing sales patterns. Manufacturing Automation Automation is the creation and application of technology to monitor and control the production and delivery of products and services. Feasibility Robots perform each task, from processing the products to packaging them. Each step of the way, the computer vision guides the process. This ensure the availability of real-time data, enabling the geographic distribution of operations and manufacturing, and improving operational efficiency, processing time and operating and management costs. Machines Gantry Robots Packaging Production Automated Plant Robotic Arm Manipulators Impacts of Automation Higher Production Rate Robots can fill all slots, contributing to an 80% increase in an oven’s capacity. More Efficient Use of Material Automation remarkably reduces material wastage. Reduced Costs Better Product Quality Improved Safety Shorter Workweeks Automation typically results in 40%- 75% cost savings, with the payback ranging from several months to several years. Highly reduces the human errors that occur during production, thus improving quality. With intelligent robots, human handling of materials and objects on assembly lines can be reduced by up to 75%, enhancing safety. Implementation of automation significantly reduces the workload of the employees. While the initial implementation of these technologies can be expensive, the automation of repetitive tasks ultimately increases productivity and can lead to cost savings and increased profits. Sustainable Packaging Sustainable packaging refers to sourcing, developing, and using packaging solutions with minimal environmental impact and footprint. It promotes the optimal use of renewable or recycled source materials. Urge to use Recycled plastics Bio-based plastics Plastic-free alternatives Sustainable Packaging In 2020, the top ten global FMCG firms (including Coca-Cola, PepsiCo, L’Oréal, and Unilever) set an ambitious target of 100% sustainable packaging by 2025. By making such commitments to develop increasingly sustainable packaging solutions for consumer products and link up the circular supply chain, FMCG companies of all sizes can fulfil demand while keeping harmful materials out of the environment. Implementation Reducing Packaging Weight 01 Positively affecting resource consumption, carbon emissions associated with resourcing materials, production and transport and the fees related to EPR. Reusability 02 Creating a circular economy around the packaging, extending its lifecycle and usability. 03 Minimising the production process, supply chain and carbon footprint. 04 Improving the percentage of packaging that is recyclable, compostable and reusable. Minimizing Production Process Changing Ingredient Percentage Upskilling Employees Upskilling workers means facilitating continuous learning by providing training programs and development opportunities that expand an employee's abilities and minimize skill gaps. What Makes Upskilling so imperative! Percentage of existing jobs at potential risk of automation by education level across waves OECD unemployment rate (% of Total labour force) Notable Upskilling Strategy Job-specific upskilling and credential programs 01 Personal development plans 02 Devote time during the workdays 03 "Lunch-and-learn" sessions 04 ● Offering employees training specific to their jobs ● Providing credential programs with a professional certificate ● Allowing employees to create their personal development plan addressing their needs ● Implementing developments plans during the workday to dedicate to their upskilling efforts. ● Utilising lunchtime for the training of busy employees Distribution Omnichannel Distribution Omnichannel distribution is a several sales channel with one seamless integrated system taken by companies to give customers a way to purchase and receive orders. You see an ad for the discount on oatmeal How this works? You browse for those oatmeal at home. You receive the Parcel the next day You receive a confirmation email. The Modern Shopper’s “Omnichannel Journey” You see a shirt, scan the OR Code and request Home delivery. You look for the nearest store to pick up the product. The retailer brings Your desired product. This distribution system works by integrating an online channel and an offline channel as a holistic approach. Omnichannel creates one seamless, integrated system for smooth customer experience across all channels, takes digital interactions, such as social media and e-commerce purchases. Also, it requires all departments to work together. Impacts of Omnichannel Distribution 01 Unified message across all customer interactions 02 Real Time Inventory Visibility 03 Customers spend more time shopping Due to the pandemic, Walmart swiftly adapted online services to help facilitate the online and offline experience. In 2020, Walmart’s marketplace grew to an estimated 70,000 sellers. This pandemic has significantly impacted consumer behaviour, which is likely to affect business operations and technologies even after the pandemic. A shift to omnichannel is a response to adapt and sustain in this competitive era of customer-driven supply chain strategies 01 Prioritize Customer Experience 02 Prioritize Accurate Inventory 03 Implement Data Driven Approach 04 Segment Customers 05 Personalize the Delivery Process 06 Make Payment Process Seamless 07 Train Employees Across Channels Ways to Implement Omnichannel Distribution Smart Warehousing Smart Warehousing means storing goods and using IoT, warehouse management software and other tech to automate workflows while driving efficiency. Warehouse Manager How this works? This distribution system works by integrating automated and interconnected technologies to create a technological environment where all sorts of warehousing operations, such as tracking, storing, sorting, recognizing, and shipping, can be done automatically. This integration of technologies reduces errors and minimizes workers involvement which allows them to increase productivity, quality, and efficiency. So ing niz g co Re rti ng Fork Truck gis Lo s tic er liv e D s ck u r yT Warehouse Sh ipp ing Impacts of Smart Warehousing Automate Decisions Using IoT or AI Reduce the Chance for Error Using AI to detect the demand for each product in storage and calculate how often and how much of each product will be ordered using data algorithms. Reducing the involvement of human workforce and the smart system decreases the risk of errors caused in daily operations. Alibaba e-commerce launched an IoT-powered robotic warehouse in 2018 that could handle 800 million orders during the shopping festival. Smart warehousing system might be costly, but companies can start small and then scale up later to IoT and AI. Last Mile Delivery Last-mile delivery optimization is primarily about putting the right product in the right place at the right time. Third-Party Distributors: Third-party delivery platforms can enable the FMCG companies to offer delivery to customers doorsteps. 3PL companies provide a wide range of services, including transportation, picking and packing, order fulfilment, and freight forwarding. Instacart allows connections with personal shoppers in the needed area to retrieve and deliver groceries to the consumers’ doors. Real-Time Tracking: The usage of IoT sensors attached to products can provide real-time visibility, delivery status, traffic flows, etc to consumers and improve the last-mile delivery experience of FMCG companies. ‘Amul’ installed temperature sensors inside their vehicles to monitor the products condition, traffic and provide this real-time data to a central routing computer which alerts them about potential disruptions and recommends backup or alternate ways to go instead. Conclusion Our proposed supply chain model, “Supply Chain 4.0”, preserves maximum possibilities to tackle every disruption based on the current scenario. In the context of Bangladesh, this may seem expensive; however, to manage this risk and improve efficiency and sustainability within the supply chain, uptake of this digital supply chain model will undoubtedly accelerate. Total Words: 1996 words (Annexure excluded)
