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Challenges of FMCG logistics for 2020

When a company’s market is the world, logistics grows exponentially in importance. Many of the large consumer companies respond to this profile. They are those brands that we all know and that we expect to find normally in the supermarket of another country when we travel. It is difficult not to dream of being a big company, but the size also implies a series of added difficulties. We are going to review some of the challenges of FMCG logistics for 2020.

Problems facing the logistics of FMCG
Waiting on uploads and downloads

Large consumption, by definition, is associated with large volumes. Shopping centers receive a large number of trucks, trailers and shipments on a daily basis. Dealing with its loading and unloading is not easy, much less balancing the schedules. And that’s where the problems for carriers begin.

The large stores have a great power of pressure on the companies that sell their products there. They are the places where people buy and the chargers need to be present on their shelves and in their shop windows. This gives them a lot of strength when it comes to negotiating the purchase and delivery conditions.

In turn, these manufacturers usually have large volumes, which in the same way means that they can also pressure carriers, which in this case are the last link in the chain. This translates into the problem of delays in uploads and downloads. Carriers are forced to have their vehicles held up waiting to be able to deliver, harming their routes and worsening the productivity of the vehicles. In addition, it is not always easy to invoice the waiting time of the vehicles (how long was it stopped, whose fault was it, the difficulty that the shipper uses to pass on the same cost to his client -which is the large surface- , etc.).

At the 2017 National Transport Forum, 35% of the carriers present stated that loading and unloading times had worsened, compared to 25% who said they had improved.

The FMCG logistics tenders

Another point of friction between logistics and mass consumption (although this is also applicable to other companies) is the increasing implementation of tenders -or tender- for the contracting of services. Over time, the conditions in these processes have inadvertently hindered the quality of the service. For example, while long ago it was more frequent to find tenders for a period of five years, now it is more common to find them for a shorter period, coming to predominate those of one year.

This means that companies have less capacity when considering improvements, investments or acquisitions that can be recovered over several years. Thus, involuntarily, the conditions of the tenders end up negatively affecting the service offered.

The other problematic aspect occurs when these tenders have an excessive focus on costs, and end up closer to being a mere auction instead of giving prominence to the whole, assessing the client’s needs and how they need to be met in a timely manner. .

Cost increase in FMCG logistics

FMCG firms are not only expanding in size, but are also increasing in complexity at the same rate. This in turn leads to an increase in costs due to the difficulty of logistics itself, in addition to other price increases that are external to the large consumer firms themselves.

Among the aspects that are increasing complexity and costs are:

Increase in the price of storage and logistics spaces.
Greater pressure to reduce delivery times.
Shorter life span of products.
Greater number of references and customization of products.
Difficulty in finding profiles specialized in logistics.
Increasing difficulty in deliveries in large urban centers.
Reduction of lead time.
Reduction in the size of orders and in the stock stored.

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