Concepts Effect in FMCG Products: Supply Shocks

Concepts Effect in FMCG products
Supply shocks has affected the FMCG goods

SUPPLY SHOCKS also. Due to COVID and lockdown many
supplies from other countries was not reaching
A sudden change in the supply of a timely and there were problems in both finished
commodity or service due to any and raw materials due to the unavailability of
considerable changes in the economy. Here goods. Consumer products are not in short supply
in the Early COVID scenario there occurred but panic buying, however, has made it
disruptions in the availability of goods impossible for firms to keep inventories and
sourced from china control supply chains. In turn, the lock-down has
triggered both production and supply chain
disturbances. A disturbance of the supply chain
allows the manufacturers' inventories to dry up.
To tackle demand visibility issues of manual

SUPPLY CHAIN RESILIENCE scenario preparation and lack of cross-functional
coordination and collaboration, there develop
The supply chains ability to cope up with end-to-end supply chain visibility infrastructure,
the unexpected risks. Many companies dashboards, and analysed a suite of analytics
adopted this technique to deal with the tools to enhance segmentation, demand sensing,
unexpected disruptions in supplies and scenario creation. Effective systems thinking
allows the supply chain to be viewed as a whole
rather than as the different components that
underlie it. Systems thinking considers
challenges within the entirety of the system and
not just the section of the system where the
challenge resides. By zooming out on the supply
chain, an increasingly holistic view emerges.
As a result of panic purchasing, fast-moving food

DEMAND SHOCKS goods such as flour, wheat, edible oil, pasta,
spices, sugar, salt, dairy products, corn, pulse,
It represents the sudden increase or decrease cookies, washing equipment, and detergents
in the demand. COVID situation has created slowly fall off the shelves. Sanitizers are out of
a sudden increase in demands of products. stock in a few retail stores. But moreover, there
People started to stock up large quantity of were drastic decrease in many other products
goods due to the fear of unavailability of such as cosmetics, candies, beverages, prepared
goods meals, office supplies, clothing etc
With people confined to their homes during the

AFTER SHOCKS lockdown, the demand for consumer goods has
reduced drastically. The biggest FMCG brands
The result of these major events causes after have announced massive cuts in their production
shock events. Bullwhip effect and the and are continuing with a much-depleted
shortage game. workforce. Most brands are forced to suspend
their production because of severely curtailed
supply chain and near elimination of distributors.
The measures have resulted in many of these
brands shifting their focus to only the essential
Bullwhip effect may impact a major commodities and healthcare equipment.
increase in the manufacture side due to the Since the lockdown, FMCG giants like
unstable changes in the consumer end. Hindustan Unilever, Marico, Dabur, Nestle, and
Shortage gaming are also affected in the Emami have either scaled down their
market. The fear of unavailability of manufacturing or have entirely shut down. The
products the consumers might have enabled lockdown has forced businesses to recalibrate
the shortage gaming and it may impact a their priorities in an unprecedented way. ITC has
very large effect in the manufacturing firms. suspended the manufacture of cigarettes—its
biggest revenue generator—and has shifted its
focus on essential items. Industry insiders have
predicted that the lockdown may shape the post-
COVID market in fundamental ways, with a
sharper turn to e-commerce and the emergence of
sophisticated and novel healthcare and hygiene
products.
Most FMCG companies forged swift tie-ups with
THE NEW NORMAL delivery companies such as Zomato, Swiggy,
Dominos, Big Basket and Dunzo to ensure that
Covid and lockdown has affected the their products reach the customers ordering
economy very badly. Predictions for deep online. Companies expect this demand to
recessions for unknown length also the increase over the pre-Covid levels since the
spinning supply chains are hard to keep up. lockdown prompted people to get used to online
Inventory bounce is the major impact of all ordering and the convenience of home-delivered
the aftershocks created by the COVID groceries. Seizing the opportunity offered by
situations. There will be cutdown of the Covid, almost every FMCG company launched
production in order to maintain the new its brands in the hygiene categories of hand wash
steady state. On contrary there are chances and sanitizer, adding to the clutter in these
of production increase foe new essentialities categories that were otherwise small and niche. .
post COVID. Cost control is a major tool for the companies to
improve the margins. Tighter credit terms,
Inventory Bounce judicious advertising and effective use of digital
marketing will help companies rein in costs. For
Inventory bounce is a term used in instance, HUL’s investor presentation for the
economics to describe an economy`s bounce March quarter listed laser focus on receivables,
back to normal GDP levels after a recession. dynamic inventory management, unlocking cash
Firms usually keep a certain amount of from surplus assets, optimising capex and
inventory. When an economy faces a restructuring spends as measures towards
recession, sales might be unexpectedly low, controlling costs. For companies selling staples
which results in unexpectedly high foods, the lockdown period has seen super-
inventory. In the next period, firms cut normal sales with increased home consumption
production so that inventory will be utilised. and also stocking up. In contrast, companies with
largely discretionary portfolio are likely to report
subdued off-take. Biscuit companies such as
Britannia and Parle Products, for instance,
reported a sudden jump in sales in March due to
lockdown and are likely to similarly report
exceptional sales in the June quarter, which bore
the brunt of lockdown the most.

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Concepts Effect in FMCG products

Supply shocks has affected the FMCG goods

To tackle demand visibility issues of manual

As a result of panic purchasing, fast-moving food

With people confined to their homes during the

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