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In 2018, analysts at McKinsey documented the "stagnating" nature of the global FMCG market. The problem? FMCG companies had long been favouring and following traditional value-creation models. For instance, they had been relying on "mass-market product innovation" — a strategy that was bound to fail in the wake of the millennial (and now Gen Z) generation's embrace of conscious consumption.
Then there are local competitors, eCommerce disruption, digital intimacy, and the emergence of brand-driven services and products. All point to the fact that if FMCG players want to stay competitive in the future, they'll need to overhaul their product innovation and investment strategies.
But why mention all this when the talk's about plant operations, in particular?
Well, it is all connected.
As part of the "product innovation and investment" overhaul, FMCG players need to take a page out of the eCommerce disruption playbook — and invest in digital, serialised production.
Product serialisation is the process of tagging each product with a unique ID. Once it has been tagged, the data pertaining to the ID can be collected, extracted, and analysed either online or offline.
It, quite simply, is the key to not just shortening your sales and inventory cycles but also transforming your plant operations. For the purpose of this article, we'll focus on the process of setting a plant up for serialisation and how product serialisation will take your plant operations to the next level.
Product serialisation goes deeper than just tagging. It also enables you to forecast and measure key performance indicators (KPIs) like throughput, cycle time, changeover time, energy cost per unit, scrap rate, etc. Plus, it's ideal for use as a tool for data-driven product design and product planning.
Let's consider a scenario where you're trying to forecast demand for, say, consumable office supplies. You can use serialised data to estimate product volumes and, more importantly, forecasting data.
Once you have a product forecast in hand, you can then use a combination of statistical and mathematical analyses to spot trends that might emerge.
Serialised data is also crucial for the process of improving product quality. After all, one can't improve without knowledge.
For instance, say you organise an audit for the consumable office supplies. You'll be able to spot areas where there's been a disparity in volume between different batches.
Doing so would help you make necessary improvements, thereby boosting quality.
Just like product quality, customer satisfaction and service guarantees are important benchmarks in the FMCG industry. A lot of FMCG companies provide warranties and guarantees for their products.
Customers, of course, expect product manufacturers to honour these guarantees. The question is, how do you do it?
The answer lies in serialised data. This is because the data can help you keep track of product inventory and sales, thereby providing a steady stream of information for your product guarantee and warranty policy.
So, even if the guarantees and warranties for the same product start at different times (which is natural) and end at different times, you can rest assured that you have enough product in stock.
Product recalls are a big deal in the FMCG sector - not just because of potential legal issues but also due to potential disruption to the sales and inventory.
Let's say you've decided on a recall for your consumable office supplies. As part of your recall policy, you'll need to send out notifications to all those who have purchased the product.
But before you allocate your resources toward this task, it's important to know the details of who has purchased the product and when.
This is where serialised data comes in. It can help you organise your products (by brand, type, and potentially type of consumer) and then provide visibility into when the product was purchased.
At the plant level, you can then use this information to identify and allocate resources toward your recall. This would translate to more efficient product recall — as well as a reduction in the risk of product shortage and regulatory fines.
As mentioned above, serialised data plays a crucial role in the process of product quality assurance. In fact, it is capable of helping you track product compliance from the factory to the warehouse.
For instance, in the FMCG industry, product compliance can go beyond the industry standard voluntary labelling requirement. This is because of the need to track product compliance with safety and quality standards.
In essence, serialised data can play a crucial role in helping you understand your product compliance status across the supply chain.
Considering all the above, serialised data has the potential to significantly lower a company's operational costs. These include costs from producing excess inventory, managing quality issues, ensuring product compliance, and complying with the product recall requirements.
For instance, say you have a product recall on a particular batch of consumable office supplies. Instead of recalling the entire product, serialised data can help you isolate a batch that is defective.
The same concept can be applied to production. Serialising your products can help you allocate resources on a product-by-product basis, thus, limiting the expenditures.
The FMCG industry is all about filling the gap between demand and supply. As a manufacturer, you're only as good as your last order.
That's precisely why product serialisation is the need of the hour. It can help you ensure tighter inventory control, which translates to waste management, brand or customer loyalty, and improved compliance — all at a very modest cost.
And that's not all. You can employ serialised data to predict future demand and ensure compliance with the market trends. All in all, your plant operations are about to get a lot smarter.
Reach out to learn more about how we can help you serialise your production.
