Paving a path to build resilience within the FMCG industry

The regional FMCG industry has been slightly on a challenging path, as GCC markets continue to endure significant economic changes, whether related to the current Covid-19 pandemic, or the decline in oil prices.

This has led to a dwindling economic spend and has put pressure on the volumes which are down year on year (YoY).

However, every crisis presents a silver lining, and the key is to tap into the opportunity and emerge stronger and resilient. For example, the outbreak of Covid-19 triggered a series of challenges within the global FMCG industry which impacted the productivity and increased the cost of operation, such as:

Product and channel mix: During the Covid-19 crisis, the sales channels and product mix have been altered, almost no longer supplying for food service clients.

The focus has been diverted more towards retailers to push the volume of products to the market, and of course, having different products, brands, categories, sizes and packaging available for swift use.

Limited spending: The pandemic has raised enormous concern about job security and income, which has led to a reduction in spending. A recent survey by McKinsey on the consumer sentiment amid the pandemic, reported that 60 per cent of consumers are uncertain about the economy, which is preventing them from making purchases, or investments. Moreover, stay-at-home directives have also limited the trips consumers make to stores to stock up their pantry.

Reliance on reputable brands: In times of uncertainty consumers tend to opt for brands they know and trust, and are willing to pay a premium since it gives them confidence. Basket sizes might decrease, but quality is paramount. Safety is one of the most sought-after values, especially when within the food business, and this is particularly evident during the pandemic.

Digitisation: The number of consumers moving towards online shopping instead of visiting brick and mortar stores is rapidly increasing, which has spiked demand of quick deliveries and highlighted the need for stronger, agile inventory, supply chain operations, and last mile deliveries.

These challenges have compelled FMCG companies to elevate their interaction and approach to efficiently meet the needs of the communities they serve. While some have been successful in their efforts, many are still re-evaluating their business strengths and market position.

If you are one of them, here are some key steps that will support your business in expediting the journey of assessment:

Consumer centric decision making: Quick decision making has always enabled businesses, irrespective of their size, to ensure business continuity. This stands true even more today. Centre your decision-making process around the safety of people and communities.

This will enable the whole organisation to adapt quickly to the new way of operating, that is more digital and less physical, but at the same time maintain a close proximity with your team members who are on the field on a daily basis. Also, this approach ensures that all concerns from employees can be gathered and communicated to the top management and the HR department, so actions could be taken to mitigate any potential risk that was identified on the ground.

Operations: Implement strict precautionary measures and protocols that comprise of social distancing, mandatory sanitisation of all production facilities, equipping distribution centres and trucks with proper PPEs; and exercising new shift patterns for production and operations with 30 per cent of your workforce capacity.

These precautionary measures will not only augment your contingency plan that maps all “what if” situations to ensure business continuity and availability of essential products, but also support in building trust and credibility within your workforce and consumers.

Effective communication: Of course, in the beginning of the crisis, information was scattered, and it took a while to have a consolidated set of guidelines, as governments and institutions worked on new measures and precautionary standards.

Now that safety measures are in place on a country-level, monitor the situation and openly communicate about it with your employees and consumers. Empowering your team with the right resources and information and informing your consumers about your supply and production process, can ensure a sustainable business through these trying times. More so it is key to establish a “Digital & Online” communication channel with every single team member to guarantee speedy and up to date information flow across all departments.

Resilient supply chain: A resilient and efficient supply chain is a must during and post Covid-19. Perform a comprehensive risk assessment to identify gaps and red flags in your supply chain and distribution networks.

Evaluating network risks, bridging the gaps immediately, and working together with your logistics partner can enable you in diversifying your product footprint with more localization to cope with other challenges that could come, especially in times of travel restrictions and border closures.

Automation and digitisation in supply chain: Trends such as digital transformation that was moving at a steady pace, have accelerated due to Covid-19.

Today automating supply chain processes and delivering digitised solutions are the need of the hour, and hold the potential to reshape business models and provide much-needed flexibility to your business.

Regardless of the situation, consequences and events, the FMCG sector stands resilient with its main products representing almost 70 per cent of the essential goods consumed by people and communities.

FMCG companies have been working hard, adhering to their commitment to ensure service excellence and availability of essential products to consumers in the safest way possible.

Walid Hajj is the head of logistics at Sadia BRF, GCC and Turkey