Fast Moving Consumer Goods (FMCG) companies are using technology to beat longstanding challenges and build on emerging opportunities in the face of current challenges brought upon by Covid-19. Key players in the sector are learning fast, innovating and transforming their ways of operating to meet changing customer demands.
This disruption is set to change business models for the better, ushering in a new era of efficient, flexible and sustainable consumer goods companies. Robotics and Artificial Intelligence is set to bring about large changes by enabling greater efficiency across the FMCG sector in the immediate future.
Rapidly Growing Industry
The Fast Moving Consumer Goods (FMCG) sector is the fourth largest sector in India, growing at a compound annual growth rate (CAGR) of almost 28 percent, according to a November 2019 report by the India Brand Equity Foundation (IBEF). Demand in the FMCG industry is spurred by growing affluence and appetite of the Indian consumer, growing youth population and increasing brand consciousness. On the other hand, easier import of materials and technology, reduced barriers to entry of foreign players, and new product development with improvement in supply chain efficiency are major supply drivers for the sector.
Current Challenges in the FMCG Industry
Manual labour issues in material handling are a major challenge in the industry. According to the material handling industry forum, 25 percent of the material handling cost is attributable to intralogistics cost. Manufacturing processes are highly human labour dependent – from raw material feed to material processing to finished goods movement. The labour-intensive activities such as packaging and palletising not only cause physical but also mental stress to the employees leading to loss of productivity. Additionally, industry leaders have been showing caution in using traditional heavy machinery like forklifts for material transfer as there are major safety concerns of using a forklift, battery-operated pallet trucks, etc.; relating to not only goods safety but the safety of the human workforce. Further, the lack of real-time data – especially for material in transit – is a big hindrance in achieving efficiency in operations.
The Growing Need for Automation
To tide over these issues, there is a growing need for automation to kickstart growth and increase productivity. Increasing dynamism in consumer demands – more SKUs, more product variations, market fluctuation- resulting in increasing complexity in manufacturing processes- amplify the need for adaptability. Operational efficiency, productivity and real-time traceability are crucial for FMCG companies to gain or maintain competitiveness.
According to McKinsey & Company, up to 90 percent of all ‘predictable physical’ processes in manufacturing can be replaced by automation to the benefit of producers and consumers. Though hit hard by the Covid-19 pandemic and the nationwide lockdown, the companies had to step out of their comfort zones and explore new ways of doing business. The Covid-19 pandemic stressed the need for human-touch free processes as physical distancing is now becoming a norm.
AI & Robotic Fuelling Growth
Automation, digitisation and advanced analytics are changing the business landscape. Across the FMCG industry, collaborative Autonomous Mobile Robots (AMRs) enhance safety and efficiency by automating the intralogistics operations of companies & enabling industry 4.0. AMRs are freely navigating material handling equipment which is equivalent to a driverless Google car transferring material without requiring an operator. AMRs have a suite of the sensors that enable them to perceive the external environment, helping them to navigate around fixed obstructions (building, racks, work stations, etc.) and various obstacles to perform designated tasks collaboratively with human workers. Apart from helping in navigation, AMRs’ sensors also generate data about processes which can be combined with MES/ ERP/ WMS data to obtain deep insights and resolve critical issues in the material flow process & overall supply chain.
These robots enable man and machine to work collaboratively and focus on what each one does best, safely. Not only does this reduce production bottlenecks and delays caused by human error, but it also helps the individuals to focus on higher value-adding and higher priority tasks instead of repetitive physically laborious tasks. In this way, automation is not eliminating humans; rather it is helping humans work better and focus on more productive tasks. By combining human skill with robotic reliability and autonomy, FMCG businesses can achieve the optimal model for manufacturing success. According to the Accenture report, Artificial intelligence in FMCG will increase productivity by 40 percent and profitability by 38 percent by 2035.
The trend towards digitization & automation is here to stay. The Covid-19 pandemic has only accelerated the evolution of the way work is designed and delivered. During the pandemic, many FMCG products could not reach the end consumers due to high dependency on labour for manufacturing and logistics. The pandemic was an eye-opener for the entire industry on how to capitalize and take advantage of the technology to continue thriving during the crisis.
Many companies are now experimenting with innovation, using emerging technologies to re-imagine their businesses and operating models. They are making themselves more agile, flexible and responsive due to the implemented social distancing rules. For instance, one of India’s large FMCG conglomerate faced challenges like unavailability of trained operators, a higher number of accidents and the huge cost of damaged goods. The deployment of Autonomous Material Handling Equipment has removed dependence on human operators, helped increase productivity while ensuring high operational safety (zero accident, 100 percent safety) leading to zero pilferage and no lost inventory. In another instance, India’s leading consumer goods company was facing challenges during material transfer and huge space constraint at their warehouse. Implementation of autonomous mobile robots in pallet transfer helped increase their productivity and efficiency
The adoption of robotics backed by superior new-age technologies like artificial intelligence, machine learning and computer vision is set to create impact in the fast-moving consumer goods (FMCG) sector by enabling highly productive, efficient and more resilient supply chain.