FMCG supply chain 'facing information overload'
More evidence has emerged of the torsion being felt in the supply chain due to changing consumer demand and the furious growth of information about their behaviour.
IT firm Intermec by Honeywell reports that 62 per cent of store delivery suppliers surveyed in the Australian and New Zealand fast moving consumer goods (FMCG) industry admit the amount of consumer data they can now collect exceeds their capability to process and act on it, therefore reducing their ability to compete in the marketplace.
The finding comes from a worldwide study into the new hurdles the sector is facing.
It was just one of a number of significant challenges cited by 350 C-level executives and directors from across the globe, including Australia and New Zealand, 63 per cent of whom believe their business is becoming more complicated and is impacting their ability to meet consumer and retailer demands.
Pressure to deliver lower prices, increasing competition, retailer relations and government regulations were named by respondents as the most significant challenges that are troubling to their business, the survey finds.
In addition to overcoming these challenges is the need for store suppliers to share more supply chain data with consumers.
Globally, 57 per cent of companies say their consumers are placing them under pressure to show better traceability.
However, this demand is not echoed by retailers, with just 35 per cent of suppliers claiming they are put under much pressure from their retailers to improve traceability.
"These survey results are proof that Australian and New Zealand store supplier businesses are experiencing more pressures than ever before from consumers, competitors, as well as industry and government," Honeywell Scanning and Mobility Country Manager, ANZ Tony Repaci says.
"Many businesses have reached a point where they are seeking new ways of dealing with these pressures and better competing in their industry.
"They are looking at how they can change their processes and upgrade their technology systems to increase efficiency and productivity, which will have the benefit of cutting costs and raising profits."
The top areas of pressure faced by Australian and New Zealand FMCG store delivery suppliers were:
- Lower prices
- Introducing more new products
- Competition from private label/own brand products
- Analysing and leveraging customer data
- More frequent visits
- Increased levels of trade spending.
This leads to only 40 per cent of the Australian and New Zealand companies involved in the study responding that their route sales representatives have the tools they need to do their jobs effectively. And a similar amount of Australian and New Zealand companies (46 per cent) believe that their DSD systems are fit for the future.
"A first step highlighted by all respondents for addressing these issues is a re-engineering process to review the performance of current operations, technologies and systems, a step that just 30 per cent of Australian and New Zealand store delivery suppliers have undertaken in the past year," the firm adds.
"But of those companies that have recently gone through process re-engineering on average they have received, or expect to receive, annual tangible cost savings of A$624,000."
The full report can be found here.