MACMobile: 'just in time' is key to optimising the FMCG supply chain
The ability to manufacture ‘just enough’ stock to cover orders and deliver ‘just enough’ product to every retailer is the optimal supply chain scenario in the Fast-Moving Consumer Goods (FMCG) industry. This is known as Just in Time (JIT) manufacturing and delivery.
However, while there are many benefits to this type of hyper-optimised supply chain, achieving it has historically proven to be challenging. Data analytics and insights lie at the heart of JIT, which requires line of sight throughout the supply chain as well as intelligent software. Armed with this knowledge, manufacturers are empowered with the ability to right-size their production for maximum returns.
When it comes to the FMCG supply chain, pre-sales is the most optimised route to market. Manufacturers know exactly what has been ordered and can deliver it as needed. The manufacturer can thus plan processes, staffing, resources and so on to cater to this need. The problem is that in many instances, distributors or wholesalers have to deal with a high volume of ad hoc and van sales. The manufacturer must produce extra stock of unknown quantities to cater to this, and often they do not get it quite right. This then leads to additional challenges, including repeated deliveries and the need to pass credit notes on pre-sales orders when required stock cannot be delivered.
Van sales are common practice in the African market, which are highly inefficient and mean that line of sight throughout the supply chain is impossible to achieve. Manufacturers might know what they have sold to distributors, and they might be able to get some sales data from retailers, but there is a distinct lack of visibility in many areas. From a distribution perspective, the distributor needs to maintain enough stock on hand to ensure that they can supply sufficient quantities to retailers.
The only way to achieve JIT manufacturing, and therefore JIT delivery, is to have a single, fully integrated system from the manufacturer to the distributor, through to secondary distributors and finally the merchant. The data gathered through this integrated system can then be analysed and predictive modelling applied to calculate the required volumes of each product. This insight can be generated to a completely granular level and broken down per distributor and even per retailer. Manufacturing can then produce the exact quantities required, optimising costs. Distributors can deliver the exact amount of product required to each retailer, eliminating the need for repeat deliveries and enabling the most efficient routes to be plotted.
In an industry where all parties are fighting for every cent in the value chain, the ability to streamline and optimise processes is a huge competitive advantage. Line of sight is crucial to understanding rates of sale, effective sales locations and more. Armed with this information, manufacturers can optimise their processes, distributors can optimise their deliveries and stock levels, and retailers can optimise their stock on hand and budget according to sales. Intelligent route to market software with predictive analytical capabilities is the key component in achieving the seemingly impossible nirvana of JIT.
Cainiao Network Launches Customer-Centric Logistics
As the logistics division of the Alibaba Group, Cainiao Smart Logistics Network has decided to provide its Southeast Asian customers with unsurpassed service during its annual shopping festival. Based on customer feedback surveys, the company will expand its real-time customer service support and speed up delivery times. ‘By expanding and deepening our services, we aim to provide a stronger logistics infrastructure that can bolster the booming eCommerce sector, support merchants’ expansion into new markets and diversify retail options for consumers’, said Chris Fan, Head of Cross-Border, Singapore, Cainiao Network.
Who Is Cainiao?
According to TIME Magazine, Cainiao ‘is far from a typical logistics firm’. The company controls an open platform that allows it to collaborate with 3,000 logistics partners and 3 million couriers. This means that merchants can choose the least expensive and most efficient shipping options, based on Cainiao’s real-time logistics analytics. The company’s goal is to ship packages anywhere in the world in under 72 hours—and for less than US$3.00.
For countless small business owners around the world, from coffee-growers to textile-weavers, this could change everything. Usually, it costs about US$100 to ship a DHL envelope from Shanghai to London in five days. Cainiao aims to change that. Said its CEO Wan Lin: ‘The biggest barrier to globalisation is logistics’.
What’s Part of the Upgrade?
Throughout the Tmall festival, Cainiao’s logistics upgrade will be divided into four critical segments:
- Real-time customer service support. Cainiao has launched a direct WhatsApp channel for customers to receive logistics updates and ask questions.
- Expansion of air freight parcel size and weight limits. Packages can now be up to 30 kilograms or 1-metre x 1.6 meters to help ship large items such as furniture.
- Daily air and sea freight connections. Shipping frequency will almost double to seven times weekly to maintain resilience and efficiency.
- Compensation for lost or damaged packages. Customers will be reimbursed up to RMB 2,000 (US$311).
Where is the Company Headed?
From June 1st to June 20th, the finale of Tmall, Cainiao will ensure that its customers feel confident in the company’s ability to deliver their packages. Despite global shipping delays due to COVID, the show will go on. Said Fan: ‘This series of customer-centric logistics upgrades reaffirms our goal of pursuing value-added services to enhance customers’ shopping experience while mitigating challenges posed by external factors’.
Furthermore, Cainiao has recently expanded its Southeast Asian operations, achieving revenue growth of 68% year-over-year. In Malaysia, the logistics operation has partnered with BEST Inc. and Yunda; in Singapore, the company has partnered with Roadbull, Park & Parcel, and the Singapore Post. And if its recent measures help retain and grow its customer base, the company will be well-poised to lead the industry in resilient and customer-centric global logistics. ‘COVID-19 made everyone realise how important the logistics infrastructure backbone is’, said Wan. ‘And it gave us a peek at what Cainiao should look like in three years’.