How FMCG companies manage risk with integrated logistics partners

Affected by pandemics, wars, and the impacts of climate change our globalised world is more unstable than ever. These unpredictable factors make it easy to see how often disruptions and delays can take place within the complex system of the global movement of goods.

The Importance of Visibility in FMCG Supply Chains

Supply chains are strings of potential obstructions – each linking point in the system an opportunity for a bottleneck or a delay. Fast-moving consumer goods (FMCG) companies are intricately intertwined within a far-reaching global system of production and distribution. Thus, FMCGs (Fast Moving Consumer Goods) are more likely for their supply chain links to be affected by disruptions stemming from political or environmental unrest.

In particular, FMCG companies with overly complex supply chains struggle with these volatile conditions. When each link in the FMCG company's supply chain is managed by a different supplier this can lead to greater possible risks throughout the sourcing, manufacturing, warehousing, and shipping process – and less visibility in every step of the way.

Paradoxically, the increased risks to FMCG supply chains means excellent visibility is extremely important to these companies. Gunnar Pflanz, Global Vertical Excellence Manager FMCG at A.P. Moller – Maersk explains his perspective saying, "having really complex organizational structures within FMCG companies, also related to mergers, acquisitions, brand strategies, and global presence; is actually limiting current the possibilities to have global visibility." This lack of visibility is a real issue for FMCG companies whose success hinges on flexibility and reliability, and a radical change is needed to mitigate risk.

Reducing Links in the Supply Chain

Gunnar Pflanz explains that reducing complexity is, in turn, an investment in supply chain simplicity. This investment in simplicity leads to greater end-to-end visibility, allowing FMCG companies to react more quickly and become more agile when these disruptions take place, solving problems before they occur.

While FMCG companies used to prioritise a multitude of logistics providers to get their goods from production to retail – they have found that these complex supply chain systems hinder their ability to deliver in a timely and predictable fashion. Thus, an obvious solution for FMCGs (Fast Moving Consumer Goods) looking to simplify is to eliminate excess providers within their supply chain.

However, with less stakeholders to supervise, companies still must wade through the difficulties in managing disparate data systems and a lack of communication between providers. Thus, FMCG companies have found that partnering with an integrated logistics provider can best ease these pain points in the links of their supply chains.