Fast Moving Consumer Goods Industry Distribution ModelJuly 19, 2021
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.