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Fast Moving Consumer Goods Industry Distribution Model

Fast Moving Consumer Goods (FMCG) is an industry that covers all daily needs, both commodities, and non-commodities whose interests cannot be replaced by other goods. FMCG products usually have a relatively short shelf life or expiration date, due to their perishable nature. In Indonesia, there are at least four categories of FMCG products, namely home care and personal care, food and beverages, cigarettes, and alcohol. Home care and personal care include products for home and personal care, such as cosmetics, toiletries, cleaning tools, clothing, and so on. Meanwhile, food and beverages are food and beverage ingredients that can be consumed directly or must be processed first, including sugar, coffee, tea, milk, instant noodles, and biscuits. The development of the FMCG business has pushed its supporting businesses to move forward, one of which is the distribution model.

How is the development of the FMCG business in the country?

The development of population, shifting behavior patterns and the proliferation of FMCG producers make this industry very dynamic. Consumer demands for the availability of fast and quality goods make these business people more creative and innovative, not only in terms of production but also in terms of marketing. Now, the marketing channel has also widened with the presence of digital platforms that make FMCG the same as other products. No wonder there are many housewives who buy soap, soy sauce, and even cooking spices through online shops.

Statista.com said that as of the third quarter of 2020, the FMCG business in the country rose 8.8% (YoY) with a percentage of 19% of total household expenditure in Indonesia. Meanwhile, the biggest trade/market is still in traditional trade. During the pandemic, the FMCG industry barely had a significant impact compared to other business sectors.

The wider the target for the distribution of a product, the distribution of its supporters must be more spread out. Not surprisingly, the distribution business in the country is one that has survived even though the pandemic has hit.

Then, what is the FMCG distribution model in Indonesia?

With the traditional market as the largest channel, the FMCG distribution model in Indonesia still relies heavily on the sales force. Traditional channels here, do not mean traditional markets, but also grocery shops, stalls, and even street vendors. Salesforce not only acts as an intermediary between producers and consumers but also builds relationships and partnerships between producers and wholesalers/retailers/retailers.

Before reaching wholesalers or retailers, the distribution process has actually started from the warehousing. First, the product enters from the supplier, when the product enters the company, it means that the product flow in this warehouse has entered the receiving activity. When removing products from the truck to the docking area, the admin has a role to match the quantity and type of products that come with the purchase invoice. The next activity is storing which has some activity details such as storing products into a stack. The whole process is often called inbound logistics. The last activity is shipping, which is the entire process related to shipping goods to wholesalers or retailers and is often called outbound logistics.

Wholesalers in Indonesia are known as large wholesalers and small wholesalers. The difference is determined by the size of the coverage area and its turnover. Likewise with retailers or retailers. Modern retailers such as minimarkets usually have their own distribution company to streamline costs and make the prices of their goods more competitive.

As the largest archipelagic country in the world, there are many challenges for FMCG distribution in Indonesia such as creating strategic distribution points, collecting and analyzing large volumes of reports, evaluating and predicting sales, and selecting operational management applications that can accommodate all geographic and management challenges. . These challenges require individual solutions. To answer these challenges, a digital system or application is needed that can run and monitor all distribution functions.

With the development of digital technology, all problems of FMCG distribution in Indonesia can be overcome. Scylla, Pronto, and the service desk from Prathesis answer all distribution problems with systems that are integrated with each other. This system supports all business activities from sales, inventory, customer handling, accounts payable, delivery to financial reports.

All data is processed and integrated, using a cloud-based platform. The use of the cloud itself is actually often done in everyday life, although it has not been widely realized. The cloud-based platform was chosen because companies do not need to provide servers and storage and think about maintenance costs. In addition, cloud platforms are easier and more affordable than those having to manually integrate data.

Appropriate, Fast, and Efficient Distribution Strategy

Fast-moving consumer goods (FMCG) companies need the right, fast, and efficient distribution strategy. Manufacturers need distribution so that products from producers can reach consumers safely. Although it looks simple, in reality, the process of the FMCG product journey from producer to consumer is complicated. Therefore, a good distribution strategy is needed so that the product reaches consumers well too.

The following strategies can be applied to make business activities more satisfying:

Choosing the right distributor

The first strategy, of course, is choosing the right distributor. Because the right distributor will work according to the target even the vision and mission of the manufacturer. Choosing a distributor that fits the producer’s target market will make the producer’s job easier. Manufacturers only need to submit the product to the distributor, to be further managed by the distributor.

Using supporting software

Doing distribution, especially on a large scale, there is a possibility that producer companies will experience problems in managing the process. Software like enterprise resource planning (ERP) or Scylla Enterprise will make monitoring easier. This business software can help manage the distribution process more effectively and efficiently. The way it works is to connect related divisions. This software also integrates a reporting system. Distribution and all the processes can run smoothly, safely, and accurately.

Distribution via website

One of the facilities in the digital era is the existence of a website. Websites can be used for product distribution. The trick is to include all the products in your company on a website that you develop yourself or through a third party. Take advantage of SEO techniques. Use SEO services for several months so that your product is easy to find on search engines. Please note, the level of competition in search engines is tight because it competes with products offered in the marketplace. Therefore, when there is a new product, do intensive SEO optimization.

Define distribution area

As a manufacturer, you must determine the right distribution area according to the company’s products. Understand the behavior of your consumers and map where they are. Do a survey so you know which areas have the most demand for your product. Start in the nearest area and focus on the local area. After the local area has been met, then you can expand the distribution area.

Prepare the means of transportation

One of the main factors for successful distribution is the availability of adequate means of transportation. You have to determine the right means of transportation. Adjust to the location of the distribution range and calculate the cost. Choosing the right means of transportation will make distribution smoother and costs less.

Maintain good relationships with distributors

It could be said, the distributor is the most decisive party in your business. It’s useless to have a quality product that many people need if it can’t be distributed properly. Therefore, maintain good relations with distributors. Especially if you have got the right and appropriate distributor. Keep in touch. Report daily work changes and progress.

Those are some of the right distribution strategies, to optimize the delivery of your products to consumers. Don’t forget to evaluate the sales results and performance of distributors on a regular basis. The goal is to find out how far your business has grown while working with the selected distributor. Also, to determine the next step in selecting a more effective distribution strategy.

Sales Force Automation

4 Reasons FMCG Companies Need SFA (Sales Force Automation)

In any business, customer service is an absolute must. Moreover, the Fast Moving Consumer Goods (FMCG) business goes directly to individual targets. Service determines satisfaction and ultimately satisfaction fosters trust. How to build all that? The answer is an integrated strategy from production to sales, including how to handle and manage salespeople who deal with large, small, and other retailers on a daily basis. In the world of distribution known as Sales Force Automation (SFA) which is a system that automates and integrates all sales activities through a single software. PT Prathesis as one of the experienced distribution application developers supports the performance of the sales team through the development of Sales Force Automation (SFA) for sales targets. SFA will simplify the process of automating business functions such as sales processes, tracking customer interactions, and analyzing sales forecasts and performance to increase revenue and customer service.

In general, SFA contains three components, namely:

  • Contact management: Update contact list, share, make appointments, track tasks, manage time to create to-do lists.
  • Pipeline Management: Store all information about the sales cycle such as managing leads, forecasting sales, estimating potential to identifying prospects.
  • Sales Management: Associated with sales management reporting to an integrated system.

There are several things that make your FMCG company need an SFA, namely:

  1. Sales Team Becomes More Focused

By using SFA, the sales team will focus more on sales targets. In the field, they are not just selling products and providing services to customers. Furthermore, the sales team has already occupied a position above that, namely as a consultant for the product he brought. They are likened to the “face of the company” who understand their products more than retailers and consumers. With SFA, a lot of work is simplified, reports are real-time so it’s easier for the center to monitor the work of the sales team.

  1. SFA Helps Increase Sales

SFA makes all salesman activities more measurable. A more professional sales teamwork system will improve performance and ultimately increase productivity.

  1. More Efficient Sales Process

In systems that are still manual, more than half of the time and personnel of the sales team is spent on non-sales or administrative tasks. If this automation is not built, service to customers will be hampered which can affect sales. The use of SFA software will make the sales team more focused on their core task of increasing sales. The proportion of administrative work is reduced so the team can help think about what other strategies should be developed.

  1. Simplify Workflow

The use of SFA software will cut the sales team workflow process. The workflow becomes easier, so it is more focused. All teams will be able to work more effectively and efficiently. In the end, FMCG companies can go fast.

SFA software is absolutely necessary for FMCG companies. The use of this software is very helpful for the operations of the sales team. So, to improve your company’s performance, it’s time to use SFA software.

Route Optimization, An Essential Strategy In FMCG Product Distribution.

Route optimization is one of the essential strategies in fast-moving consumer goods (FMCG). If the route optimization happened to be performing correctly, it can raise the sales more optimal.

It has become a common thing if each FMCG company is looking for strategies toward decreasing Salesperson operational expenses. Nonetheless, the companies are still required to develop face-to-face intensity with the store owner or whoever is in charge. A sufficient number of communication intensity befitting one affecting indicator for leveraging store morale as a final distributor to selling principal commodities.

Unfortunately, there’s plenty of principal and distributor that hasn’t been yet discovered the efficient route run by the Salesperson. Even though if the distances, time, and other measure variants get optimized, the Salesperson can reach the store target according to the visit order as planned.

Within this digitalization era nowadays, route optimization is one of the apparatuses for business owners and distributors to increase their business growth. By optimizing the route, perks attained for business were :
● Ease to locate the most efficient dan cost-saving route for the Salesperson
● Lessen the time allocated for mapping any Salesperson route.
● Ensure Salesperson visits each store according to the visit order, within the most efficient time, utilizing the least cost spent.

Despite the aforementioned optimization route process looking simple, the fact is numerous methods and strategies are involved in the way. Several distributors tried to optimize the route manually. But it’s not yet maximal, because it depends on efficiency, scalability, accuracy, and Salesperson productivity.

 

Mapping Coverage Illustration

FMCG Companies Must Optimize Sales Coverage, Here’s Why!

Sales coverage or Area Coverage is basically the most important part of Territory Management on FMCG which is applied with a mix of the marketing mix (Product, Place, Price & Promotion). With the existing coverage area, FMCG company salespersons must be able to increase effective calls (outlets visited and make transactions) to ensure product distribution (availability and visibility), education, promotion, and price stability.

Sales coverage is the area coverage grouped based on certain criteria such as location, store name, and store type. With this grouping, all shops will be visited regularly by salesperson FMCG company according to a predetermined schedule.

It is undeniable that sales coverage is one of the keys to smooth business at an FMCG company. Therefore, FMCG companies should design a strategy so that sales coverage impacts on company revenue What are the reasons? Here it is!

All shops are well monitored

With the implementation of sales coverage, salespersons can schedule periodic and measurable store visits. The more regularly the salesperson visits the customer, in this case, the store owner, the more neat and orderly the store will be in managing our products in the store.

Salesperson, It also functions as an intermediary, between the company and the shop owner. Regular visits will make communication between the two better, including discussing the obstacles that may be faced. This means that companies can provide solutions and meet customer needs, better.

If these stores are properly monitored, the company can map out which stores have high incomes and which stores have not maximized their income. So, companies can also help overcome the challenges they face which in turn helps increase sales.

Target and sales increase

One way to optimize sales coverage is to improve salesperson performance. Set determining indicators, for example, the minimum number of visits made in one day, the routine of visits, and the target of visits that must be carried out during a certain period. The salesperson must also be able to estimate the distance and travel time when visiting the customer’s premises, as well as adding new customers within the same area. With sales coverage, salespersons can also learn about the character of consumers in their area. This is very helpful in the decision-making process for which items will be sold more or which items are not too in demand so that sales optimization can be realized.

Budget more planned

If the salesperson’s performance is regular and clear, the company can manage the distribution budget more neatly. Companies can streamline the budget needed for salesperson visits to various customer stores. All budgets will be recorded based on salesperson routines. So, no more cost overruns for unnecessary things.

Improve customer service

Optimizing sales coverage by maximizing the work of the salesperson, also means improving service to these customers. With a salesperson who regularly monitors partner stores with a fixed schedule of visits, it means that the store can predict the amount of product inventory to sell. Customers will also find it easier to calculate product needs, make sales predictions, and do things that can increase sales. In the end, FMCG companies also helped in increasing revenue.

Products are easy to find.

Sales coverage well laid out, it will also make it easier for consumers to get company products. By using demographic data of the population in its “coverage area”, salespersons can manage product availability in each area. The amount may not be the same at every store or at every point, where each can be decided based on the number of items sold in each store. The salesperson can also focus sales to areas with high demand for goods so that turnover also grows. Meanwhile, areas with suboptimal demand can be considered for the next sales strategy.

Those are some of the reasons FMCG companies must optimize sales coverage. In the end, the income of shops and retailers will be followed by an increase in the income of the principal company.