Computer & Tehnology // Research Paper: Fast Moving Consumer Goods (FMCG)

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Research Paper: Fast Moving Consumer Goods (FMCG)

With the creation and development of service brands, this paper outlines the major challenges associated with fast moving consumer goods (FMCG) as this needs branding adjustment before being applied to the service sector. Dupre and Gruen (2004) argued that fast moving consumer goods defined its core competencies as the ability to identify, design, and develop the merchandise it sold, instead of the ability to buy.  With the huge development of new trends and changing demand of people, FMCG core competencies have remained profitably growing, which in turn influenced the service industry to inward focus and paid scant regard for the external environment, particularly the competition and efficient consumer response (ECR).

 FMCG strategic capabilities include: empower the direct link with suppliers with design responsibility, brand management, excellent customer service, and excellent working conditions. Competition has eminently occupying industry’s environment leading the service to carefully match market requirements and to enable a greater responsiveness to changes in wider business context extending into the theory of agility in supply chain philosophy. Christopher and Towill (2007) noted that this philosophy is summarized in six dimensions: marketing, production, design, organization, management, and people.

Accordingly, agile supply chain with quality, cost, and lead time serves as market qualifiers; but with service level the operations make the market winners. In this view, FMCG has strategically used its strategic capabilities with dimensions of supply chain to design the framework of long-term implementations of sustainable development of retailing in customer relationship management, marketing, promotions, and inventory management. Even as competition and customer demands inevitably influenced the flow of operational procedures, FMCG integrates strategic capabilities with enterprises in a mutual network through rapid information transfer and cost-effective exchange of activity (Christopher & Towill 2002).

Brand Management. Several studies discussed that branding effect a high risk influence to product. Majority of the authors insisted that brands relationship to market projects a strong application of integrated marketing communication (Dauvergne & Lister 2012; Grayson 2011). Over the last decades, FMCG has shifted from reactive approach to a more proactive integration of business strategy. Today, corporate branding of FMCG is defined with specific targets – reinforcing the credibility efforts and building stronger relationships with customers. This strategy, for example, includes employing sustainability experts to emphasize the importance of corporate leadership to measure consumer demands and product brands. Dauvergne and Lister argued that “the bigger the brand, the harder it is to control the reputation and, hence the greater the vulnerability” (2012, p. 3). Further, Luck (2004) argued that if a brand is strong, customers take on the strong quality that brand possesses, which is important in allocation of market positioning. Simply put, as consumer exposure to brand increases, the quality or strength of a parent brand is expected to have a positive influence on retailer acceptance of a new extension product.

Customer service. Analyzing the economic and environmental relations of business with the lives of consumers, FMCG comes with the idea of ensuring a high-quality standard products and services. Due to the complexity of supply chains, because of outsourcing and globalization, FMCG structured and managed competitive advantage of products and services in greater differentiation between profit and loss. The service industry and business companies that bring products and services to the market should make end-users not only comfortable but make them as well as healthy. In practice FMCG is continually optimizing its reputation of eco-label which distinguished products and services with quality and efficiency significantly because these maintain no harmful elements (Dauvergne & Lister 2012). As per the lists of restricted substances that include, AZO-dyestuff, allergenic dyestuff, chromium VI, pentachlorophenol, organic compounds, formaldehyde and heavy, FMCG note the chemical selection with their partner industries as part of compliance and considerations to safeguarding consumers.

Working conditions. Workers’ rights including child labor and women protection are watched over. The consistency of FMCG in promoting quality products and services to the customers are followed by evaluation as to how the workers’ conditions are placed and treated, extending to appraisal of working environment and compensations. Grayson (2011) mentioned that various retail markets providing FMCG continue journey to embed corporate responsibility and sustainability, which includes the trust-based relationships with employees in establishing a corporate culture and environment where stakeholders mutually stimulate innovation and create long-term work-in-progress.

The increasing development of FMCG in establishing potential strengths and opportunities, threats and weaknesses has triggered service industry in the determination to achieve the commitment to sustainability. In terms of political aspects, Jones et al., mentioned that “retailing is a large, diverse, and dynamic sector of the UK economy offering an ever-increasing range of goods and services to consumers” (2007, p. 246). United Kingdom, among other states, has a stable political and economic setting. The political position of FMCG enables enterprise to promote considerable concerns about working conditions, rates of remuneration, child labor, and health and safety issues. Leading in three sets of merchandise, the food, clothing, and financial services, of which FMCG recognizes the issue of ethical trading, sustainable sourcing, sourcing local and regional foodstuffs and animal welfare (Jones et al 2007, p. 250). 

FMCG remarkable growth rates and market shares in scores of business segments. This was then affected with the fight off of top leadership conflict. Handed with direct responsibilities for the implementation of plans directors led on piloting green factories and commit to have direct link with manufacturers / suppliers instead of doing business with wholesalers. Current fiscal situation in the UK makes favorable with low-to-moderate interest rates which indication of a healthy economy. In this view, FMCG needs to focus more in the new trending in younger age group that pays out most of disposable incomes, such as clothing.

In terms of social aspect, the “sustainable development is about ensuring a better quality of life for everyone, now and for generations to come. It means a more inclusive society in which the benefits of increased economic prosperity are widely share, with less pollution and less wasteful use of natural resources” [DETR, 1999, cited in Elliott, 1999, p. 238]. With the forces of changes get off to global community, FMCG entrepreneurs recognized the key elements to sustainable development, and that is partnerships to customers and supplier to hinder threats post by increasing labor wages in different sectors and intense competition in the market. With several market forces competing to directly comply with consumers’ demand, high production process and high profits, enterprises implementing FMCG highlights social responsibility and mainly considered the integral element of business and corporate-level differentiation strategies.

Technology Factors. As the growth comes on the heels of interactive motivation of technological innovations, FMCG recognizes the continuing pattern of development through technology. By initiating strategic internet sales system, internet networking based applications has become vital vehicle in evolving the rapid pace of people’s demand in distributing services of business particularly in retailing industries. Among the growth noted in FMCG are the emergence of competition in the global market and the consistent aid of technology for the expansion of e-business. By developing powerful network through the website and information systems approach, FMCG expanded sales in the world-wide market and optimized organization’s professional network with active interaction between prospect and existing clients, investors and suppliers.

Furthermore, FMCG adopts RFID or the radio frequency identification to handle the clothing items. FMCG has undertaken partnering with market channel entities as a critical strategy throughout supply chain. One of the challenges faced by FMCG is the economical suitability of radio frequency identification (RFID) adoption in the FMCF supply chain as a whole (Bottani & Rizzi 2006). According to Moon and Ngai, “the implementation of RFID meant that the in-store inventory could be tracked and recorded more effectively and responsively, ensuring that a fuller range of sizes or styles of garments was available to customers” (2008, p. 598). The RFID is also expected to be significant in the various areas of the company like warehouse inventory, raw materials management, and logistics and return processing. The value of the technology is more realized as when considers the line-of-sight necessities of tags in the clothes, such as men’ suits, shirts, and ties at one of its stores. 

There is a growing identification of the role that transportation and logistics excellence plays in attaining a world-class supply chain. Transportation provides the most loaded, lowest hanging outgrowth of any prospective area of supply chain development to promptly drive out expenditures and attain better operational performance. The employment of the radio frequency identification (RFID) technology in the process of supply chain management is an example of how business process and technologies reshape the way of doing FMCG that generates solutions for the improvement of a process (Angeles 2005). This efficiency generated by radio frequency identification in the area of distribution management resulted to the timely presence of goods in the market that were primarily needed by consumers which made the technology also popular in the transport sector. Retailers and manufacturers have also gained the economic benefits of RFID as the technology help prevent the lapses by the improvement of the visibility of supply chain at its multiple stages. Specifically, RFID has empowered the gathering of information about the location of the goods that are tagged as they undergo a series of processes in the supply chain from the manufacturer up to their final destination which is the store.

            The deployment of RFID technology in the value chain is expected to allow the FMCG enterprise to automate the supply chain and the efficiency in the processes of distribution and reduction of operation and costs of labor (Dwivedi , Kosta, & Jyoti, 2010). In addition, precise and accurate information regarding inventories help in the prevention of out-of-stock situations and promotion of increased inventory turnover that could dramatically lead to further discounts on volume for the company. Remember that the firm is also reliant on other suppliers in the production of the RFID empowered subway card.

Streamlined operations with the capability of automation of RFID and the capacity of the technology to accurate capture of data compared to manual processes contribute to the competitiveness of the FMCG. Better management of inventories, enhanced market data for industries and businesses, reduction of uncertainties, increased level of product information offered by the technology and identification of bottlenecks are some of the benefits of RFID technology leading to the increased in competitiveness of fast moving consumer goods enterprise.

Comparable to any typical business enterprise, it is critical for the FMCG entrepreneurs to have knowledge about their market and make efficient consumer response. Hence, FMCG needs to define what composes a new experience for the customer aside from the principles of the marketing mix. Fast moving consumer goods enterprise management must be able to integrate effective and efficient enterprise resource planning (ERP) systems (Lui & Chan 2008). ERP systems will be deployed to aid in the collection, organization, production of reports and distribution of data or information within the business processes of the retail organization. This type of systems is also engaged in the alteration of data to be used by the managers of the retail giant in the crafting of business decisions. Intranet and extranet were deployed by the FMCG with the goal of improving the capability of the business organization in communicating with other stores in various parts of the world and aids in the sharing of information that make business processes easier, quicker and in huge amount or volume.

Several intranet systems of the FMCG is expected to permit the firm to communicate about the operations of the several stores around the world. Significantly, these enterprises reinforced its intranet with another enterprise resource planning system through the introduction of various initiatives related to the strengthening of the core business, quality of products and the increased in the productive capacity of the entire workforce. At present, the firm is using the enterprise resource planning services of Oracle through the PeopleSoft HRMS (Reilly & Williams 2003). This software is entailed in running and managing the financials of the company in various stores. To be specific, the PeopleSoft enterprise solution of Oracle was deployed by the company for functional and technological necessities. It has the capacity of modeling the framework as well as the processes of business of the firm in a graphical manner by using tools related to development and the compliance of the software to international standards.

The system of innovation works to process the achievement targeted by fast moving consumer goods enterprises. Failure to innovate and change consequentially reflects the organizational failure itself to achieve the adopting changes and realize the potential benefits. As innovation requires not only the shifting of traditional view to modern view, as of the incorporation of technological advances, FMCG enterprise also indicates and identifies the successful transformation of multi-determined and multi-level phenomenon in other resources such as workforces and finances.

References

Angeles, R. 2005. RFID Technologies: Supply-Chain Applications and Implementation Issues. Information Systems Management, 22 (1), pp. 51 – 65.

Bottani, E. and Rizzi, A., 2008. Economical assessment of the impact of RFID technology and EPC system on the fast-moving consumer goods supply chain. International Journal of Production Economics, 112(2), pp.548-569.

Christopher, M & Towill, DR 2002, Developing Market Specific Supply Chain Strategies, International Journal of Logistics Management, 13 (1), p. 1-14.

Dauvergne, P & Lister, J 2012, Big brand sustainability: Governance prospects and environmental limits. Global Environmental Change, 22 (1), p. 36–45.

Dupre, K. and Gruen, T.W., 2004. The use of category management practices to obtain a sustainable competitive advantage in the fast-moving-consumer-goods industry. Journal of Business & Industrial Marketing, 19(7), pp.444-459.

Dwivedi , V.V., Kosta, Y.P. & Jyoti, R. 2010. Metamaterials: The Future of Miniaturized and Compact Antenna Technology for Radio Frequency Wireless Communication Systems. The IUP Journal of Electrical & Electronics Engineering, 3 (1), pp. 7-15.

Elliot, JA 1999, An introduction to sustainable development, London: Routledge.

Grayson, D 2011, Embedding corporate responsibility and sustainability: Marks & Spencer. Journal of Management Development, 30 (10), p.1017 – 1026.

Jones, P Wynn, M Comfort, D & Hillier, D 2007, Corporate Social Responsibility and UK Retailers. Issues In Social and Environmental Accounting (ISEA), 1 (2), p. 243-257.

Lui, K.M. and Chan, K.C., 2008. Rescuing troubled software projects by team transformation: A case study with an ERP project. IEEE Transactions on Engineering Management, 55(1), pp.171-184.

Moon, KL & Ngai, EWT 2008, The adoption of RFID in fashion retailing: a business value-added framework. Industrial Management & Data Systems, 108 (5), p. 596 – 612.

Reilly, PA & Williams, T 2003, How to Get Best Value from HR: The Shared Services Option, Burlington: Gower Publishing, Ltd.

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