How ERP Systems Are an Integral Part of the FMCG Industry

The Fast Moving Consumer Goods (FMCG) industry is a dynamic one that always produces goods that can never go out of demand. It is responsible for the production of packaged food and beverages, personal care products, cleaning items, and other necessities. Consumers are so used to the convenience these goods offer which makes it impossible for them to go out of demand. This was seen during the pandemic. When production of almost all goods was halted, consumers went into a frenzy and heavily stocked up on these items. This caused some people to hoard while others were left without necessities. Despite what the pandemic put companies through, the FMCG industry still managed to thrive since consumers needed the products even more desperately than before and the demand for them kept rising.

The FMCG industry is a huge one and is monopolized by huge players in the market. These companies have a lot of operations running simultaneously which is why their managers have a lot of responsibilities.  For multinational companies, it is difficult to keep up with all the internal processes and for these processes to run smoothly, there needs to be a moderator which ensures that there is adequate communication between the internal stakeholders in the organizations. Enterprise Resource Planning (ERP) systems bring together multiple functions of a company such as finance, human resources, marketing, and supply chain management. It also integrates customer relationship management into all of these processes.

This helps provide employees with a centralized database that can be accessed from any department at any time. With this, employees can access information in real-time, which helps them to make decisions quickly but also helps them in making the right ones. A lot of tasks are automated by ERP systems which is why there is barely any need for data entry. Furthermore, all processes are standardized by ERP systems. While ERP systems are quite crucial for organizations to run, enterprise software asset management can take these FMCG companies one step further and help manage their inventory for them.  Inventory management is a tough function and with how much technology has been integrated into our lives, this function cannot be performed without the help of reliable software.

There are many ways in which ERP systems are an integral part of the FMCG industry.

1)  Supply Chain Management

This industry produces goods that need to be stocked up regularly in retail stores consistently because of the demand consumers have for them. For this reason, if companies want to be consistent with their deliveries, they have to ensure that their production is never delayed. Supply chain management is the crux of the production of goods since this is what deals with the raw materials as well as the smooth delivery of goods from the factory to the retail store. ERP systems optimize supply chains by accurately forecasting the demand by using historical data and current market trends. It adds seasonality into the mix for the most accurate forecast. It also separately deals with perishable goods which have a short shelf life to ensure that there is no deadstock but at the same time, there are no stock-outs either.

2)  Production Planning

Fast-moving consumer goods also include foods and beverages, which are required to always meet safety standards. For this reason, all the items must be labeled according to the batch they were made with so that in case a product turns out bad, the entire batch can be recalled. This makes the process of quality assurance much easier. Companies are supposed to comply with government regulations since the health of consumers is at risk every time they consume food or a drink. ERP systems also help with scheduling production accurately by forecasting accurately so that resources are also allocated efficiently. This then helps to minimize downtime.

3)  Sales and Distribution

ERP systems integrate so many different functions into one place which makes it so easy for organizations to keep track of them. Customer relationship management is also a part of ERPs. This can help FMCG companies track their sales and understand customer preferences according to the area their goods are being sold. This also helps with deciding the quantity of products that will be allocated to different zones they operate in. This can also help them come up with better delivery routes to avoid any problems and they can also lower transportation costs by coming up with the perfect route. This makes deliveries much more efficient.

4)  Financial Management and Budgeting

Companies can budget their projects with the help of ERP systems. They can predict the amount of money firms should come up with in the next quarter so that they can allocate their resources accordingly and invest their money in the right place. The management of financial resources makes or breaks the cash flow of a company. Enterprise resource planning helps them manage their money the right way which then translates into good financial health for the firm. Accounting is also one of the crucial functions of bigger companies. They are liable to pay taxes which is why there is a strict check on their expenses and profits. ERP systems can accurately read through financial data which decreases errors and helps with streamlining financial processes. This provides companies with accurate financial reporting.

The FMCG industry is a huge one and has a huge market share over the rest of the industries. They have thousands of operations that are carried out daily and every single one of them needs to be managed separately. It is humanly impossible for managers to keep up with each operation which is why ERP systems streamline these processes for them in the form of data and let them know if something needs to be changed or if what they are doing is working. ERP combines all functions and forecasts data correctly and helps employees make decisions regarding inventory and stock so that there are no stockouts. At the same time, quality is maintained since the software tracks every product.