The fast-moving consumer goods (FMCG) segment in India is already the fourth largest sector of the Indian economy. While the last fiscal year saw a decent 11% growth in this sector, according to IBEF reports, the sector is poised to grow at 27% CAGR for next few years. What is more interesting is that the regional / small players and the rural India is going to be the two most important growth drivers for this industry. According to retail sales data of the FMCG sector provided by market researcher firm Nielsen, while the top 50 firms contributed to 60% of revenue in the calendar year 2018 with a healthy 10.6% growth, the smaller companies grew by a much higher 18.5%. What’s more interesting is that the growth difference is having a rising trend in four successive quarters. On the other hand, increase in disposable income in rural India, introduction of food security bill, direct cash transfer subsidy and other policy supports, rural India is already contributing to 45% of overall FMCG revenue and this figure is only going to move northwards.
With that kind of growth on the table and the entire pie up for grab, can an FMCG company really take the risk of not automating its sales and distribution process end to end? Even though there would be multiple challenges starting from multi-brand distributor issue to integrations woes, the answer is ‘NO’. While we can park the discussion on what are the challenges and how to overcome those for some other day, let’s focus on the key benefits a company can reap by using a Distributor Management System (DMS). While the benefits are probably endless, we have listed down a few which are probably the most important:
Real-time visibility of all business data: As an FMCG company, it is utmost important for you to have real-time visibility of all business data from your distribution channels. If you are not using a DMS, you will have to reply on the offline data shared by your distributors on a certain frequency, which is neither real-time nor authentic. But you cannot really compromise on some of the key information such as current stock available with distributors, orders pending for fulfillment, order being returned by the retailers and many more. Hence, to manage your distributors smartly, a DMS is what you need.
Know what’s happening even in the most remote place: With increasing revenue growth in rural India, FMCG companies are setting up distribution networks almost in all the districts of the country to facilitate faster product movement from manufacturing plant to retailer. With such kind of volume and at times remote geographical location of the distributor, it becomes impossible to gain visibility on your product movement from all your distributors. With a DMS in place, you will have all the data on your fingertips even for a distributor having its set-up in North-east or in a difficult to reach district of Chattisgarh.
A big support for your distributors: While you will initially face resistance from your distributors when you throw the idea of implementing DMS, it is actually a solution which will be nothing but extremely helpful in terms of streamlining and automating lot of their daily processes. Automation of all kind of goods movement, system generated invoicing, details of outstanding payments, intelligent alerts are a few examples how a distributor’s life is going to be simplified with a DMS.
Quicker claim settlement: Another big advantage that your distributors will get with DMS in place is better turn around time for claim settlement. With return, schemes, damaged receipt everything automated through DMS, there will always be transparency to distributors and the company on the receivables and payables. Further with online claim submission through DMS, all the claims will be settled much quicker than a manual system which usually goes through multiple round of iterations between both the parties.
Better control on trade promotion and schemes: For an FMCG company, promotion and schemes are two of the biggest drivers of the business. Companies usually spend a huge sum of money in these activities. But there are two pertinent questions which many a times remain unanswered – 1. Are the benefits being passed on the to the retailers? 2. How successful are my ongoing schemes? One of the simplest ways to get answer to these questions is to implement Distributor Management System which will ensure all necessary checks and balances at the time of invoicing and will also provide you an analysis of performance of each scheme.
Quicker stock replenishment: We all know how important it is for FMCG companies to maintain optimum stock level at different touch-points such as stockiest, distributor retailer etc. As a DMS gives you exact visibility on stock, expiry date, batch number, return etc. at distributor points, you can get intelligent alters well in advance and plan replenishment much earlier than otherwise.
Better production planning: Ideally your DMS should be integrated with demand planning module of your ERP. Once that’s done, the production planning engine of your ERP will have information on current stock level, orders pending for fulfillment at your distributor points. That will eventually ensure better production planning resulting in less or zero wastage of your production resources.
Process Standardization: Finally with one system in place for all the distributors, as a company you can ensure all your desired processes related to distribution are standardized and most importantly, as all the parties involved are referring to one system only, there will be only one version of the truth which will remove unnecessary back and forth at the time of any conflict.