Will COVID-19 change the way FMCG companies do business?

Updated : April 08, 2020 01:24 PM IST

Factories are operating at 25 percent capacity and staff at warehouses is very thin.

“We are taking it one day at a time,” a top official at an FMCG company told CNBC-TV18, about the challenges his company, as well as the industry in general, has been facing since the 21-day nationwide lockdown began last month. He could well be echoing the mindset of almost every industry.

Manpower shortage, transport and logistics problems have FMCG companies struggling to get essential items across to consumers.

"No MBA or management lecture has taught us how to deal with such a situation. Every day there are new learnings,” the official said.

While the government is doing its bit to ensure adequate approvals are granted to ensure that essential items reach consumers, the industry too is figuring out creative solutions.

"It is time for the industry to reflect on the opportunities out of this event. Typically from such shocks come great learnings. There is an opportunity to build a stronger and more efficient supply chain," said Richa Arora, COO, Tata Consumer Products.

In this scenario, FMCG companies are charting out ideas of 'collaboration' in order to produce and move goods efficiently. Given the shortage of transportation and truckers, companies are working to collaborate with each other on logistics to ensure that trucks do not return empty.

"This is an efficiency which is desirable to have in the system whether you're in this situation or not. It is positive for both the environment as well as business," said Arora.

Shortage of labour has been a big issue for FMCG companies. Factories are operating at 25 percent capacity and staff at warehouses is very thin.

"The issue of migrant labour has not been a new one," said Bharat Puri, Managing Director, Pidilite Industries. The industry needs to now work together to find creative solutions on labour as well. "Companies faced the issue of migrant labour crunch last year as well during election time. We will have to work again at the granular district level and with labour contractors to find a solution," said Puri.

FMCG companies are also talking to consultants on ways to increase automation at warehouses. This will help reduce the dependence on manpower. "Companies are in a reactive stage right now. They are reacting to the demand-supply situation on a day to day basis. Automation will also require a huge amount of investment," said a consultant.

Companies are running very tight ships at present. Strong focus on cost control is going to be important over the next few months, say industry officials. Alternate sales and distribution strategies are also going to play a huge role in saving costs as well as improving outcomes. For instance, owing to strict protocols companies are implementing the concept of 'tele-selling.'

Companies like Marico have tied up with online food delivery platforms like Swiggy and Zomato to deliver essentials like oil and oats to consumers. "We are innovating constantly to work with constrained capacities. The government has been proactive to help getting things back on track and we are hopeful that things will improve over the next 2-3 weeks," said Saugata Gupta, MD, Marico.

Will COVID-19 change the way FMCG companies do business?

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