FMCG Company Stops Resource Drainage With Customized Inventory And Purchase Management Solution

Technology has brought massive changes in how fast moving consumer goods (FMCG) industry operates. The successful offline models of the past has lost steam as indicated by the slipping top-line growth. The present consumer is very different. There is a great pressure on the FMCG companies to accommodate the shifts in consumer purchase behaviour. In this client story we share how a mid-sized FMCG company gained better control, monitoring and valuable insights on inventory by streamlining their purchase and inventory management process.

The Client

A mid-sized FMCG company with 12 warehouses located at different locations. They procure their materials from both domestic and international market. The company has a wide range of product categories that includes more than 5000 stock keeping units (SKU). Their food category products are very popular and command a high demand in the consumer market.

The Challenge

Due to high demand and a wide coverage of geographical locations, the company on an average have to process more than 500 purchase orders(PO) in a month. In their existing system, the purchase and warehouse department used MS Dynamix as ERP but they did not have any system to process the POs. Each and every PO had to be checked manually and approved offline, which was time, cost and effort draining task.

The lack of a system to manage POs in real-time hindered in providing the true visibility of inventory, leading to frequent over ordering or under ordering of SKUs. This mismanagement had negative repercussions on the company in terms of blockage of funds in unmoving inventory, high warehouse cost, loss due to spoilage of unsold products in warehouse, and loss of sales due to high number of under serviced POs. Cumulatively, all these factors shunted the growth of the company.

The Solution

Designing a solution for the client was quite challenging as they had a very tight timeline because each day the company was bearing heavy losses due to the handicap of the existing process. Our team promptly got into action and gathered detailed information about the clients existing system. To avoid unnecessary cost to the client an efficient solution was designed that used the existing technology, MS Navision.

First, systematic categorization and classification of the SKUs was done. Depending on their sales history the SKUs were creatively classified into Runner, Repeater, Stranger and No Demand products. This helped to provide visibility of inventory and performance of every SKU. Next, minimal order quantity(MOQ) was set for Runner and Repeater SKUs to trigger automatic POs that ensured that there is no loss of sale due to shortage of stock. As per the clients requirement only a small group of SKUs that was high value or slow moving required manual PO approval.

The Result

· Streamlined the purchase and warehouse processes by eliminating costly and error prone manual processes.

· Prevented loss of sale by automating the PO processing of high-demand SKUs to ensure no stock out situation.

· Eliminated the problem of over stocking because of better control and visibility of the inventory.

· Helped management to get accurate insights on their entire product range performance.

· Provided quick fact based decision making with access to real-time inventory status.

· Improved performance of purchase and warehouse processes boosted the sales by 25%.

In Short / In Brief/ At A Glance

Client Industry:

Fast moving consumer goods(FMCG)

Business Situation:

· Lack of control and monitoring due to gap in the current technology system

· Fast-tracked solution to plug the resource draining bottlenecks in the existing system

· Automated PO processing system to eliminate costly, error prone, manual process

The Solution:

· Designed a customized system using the existing technology to meet the specific requirements of the client

· Automation of the PO approval prosses was designed with the flexibility to control the ordering of certain identified SKUs

· Streamlining of product range by classifying SKUs according to their sales turnover

Technology: MS Navision

Benefits:

· Round the clock access to accurate and real time inventory status

· Improved monitoring and control of the inventory, included warehouse wise, in-transit and current on hand stock visibility

· Elimination of manual and time consuming PO processing process

· Better future sales forecast