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Just-in-time delivery – driving efficiencies in FMCG supply chain

By Kevin Motaroki | 7 November 2019 | Published by Nairobi Business Monthly

 

MACmobile was established out of a project with Coca-Cola South Africa whereby a supply chain solution was developed for the beverage company, extending across the entire supply chain including manufacturer, wholesaler and merchant. Some three years ago, the company realised the potential of creating a ‘blueprint’ of the solution for other Fast Moving Consumable Goods (FMCG) companies. As such, solutions for businesses in similar industries were developed and commercialised to streamline and simplify sales and invoice generation, stock management, settlements and debtor management, consumer loyalty and rewards, as well as integrated mobile payments. The solutions deliver real-time line of sight into processes and enable efficiencies with ‘Just-In-Time’ (JIT) delivery capabilities. KEVIN MOTAROKI asked Andrew Dawson, the Commercial Director at MACmobile, to elaborate.

 

What do you consider more when choosing your partners: brand equity or brand value?

Brand equity is incredibly important in the perceived recognition of brand by the consumer, relative to promises made by the manufacturer. The influences of pricing, distribution, and correct market segmentation that create brand value can sometimes result in a dilution of brand equity. When it comes to partners, we look at how a company fulfils their brand promise and the extra mile they go to delight their customers. As a business, we try to balance both views in partner selection as we are only as good as our reputation and the relationships built over time.

 

When MACMobile set up shop in Kenya, you were quoted as saying, “Besides facilitating efficiency in business, we offer clean net invoices in trade – removing any bookkeeping problems after the fact.” How exactly does it work?

Traditionally, when an order is loaded for delivery, a copy of the invoice is printed for the driver to hand over. However, in the main market, the final order is often changed due to stock returns, quantity changes due to cash issues or additional stock purchased off the van. In essence, our system allows for the generation and amendment of the invoice at point of delivery; any change that would normally result in the generation of a credit note is now removed. The amended invoice is generated on the mobile device and printed or digitally produced on delivery. Having a system that can handle these complexities in the field allows companies to speed up business and reduce bookkeeping hassles.

 

The FCCG has had a long history of generating reliable growth through mass brands. But, in some ways, the model that fuelled industry success now faces great pressure as consumer behaviours shift and the channel landscape changes. What is different, in terms of these behaviour shifts, about JIT?

The slowing down of the global economy has majorly impacted the retail sector. As a result, one of the biggest drains on cash flow is the holding of dead, or slow-moving stock. This has repercussions all the way down to the value chain, where wholesalers and retailers want to hold stock for as shorter period as possible and also hone down the product offerings to match the consumer buying patterns of the supporting community.

 

JIT optimises the right supply to cater for the right amount of demand in the right place at the right time and price is vital to keep business profitable and afloat. This is forcing manufacturers to become data focused thus having line of site from manufacturer through distribution, and at merchant level using JIT. With such commoditisation within the consumer goods market, incorporating the consumer and rewarding their behaviour fosters loyalty and drives directed sales – encouraging the pull when the value chain needs it.

 

If we take MACMobile as the benchmark, what have you done to actualise JIT? 

Creating a connected value chain that focuses on the push and pull of products is the key. But this needs to be built on a wealth of data that can be used to generate actionable insight. JIT in our world is the data that we have collected through all interactions, which we link with in the value chain of our clients Route To Market (RTM) process. It’s the data analysis that is done and the algorithms written to allow for Machine learning to happen in our data lakes that ensure auto ordering for the exact days of cover based on consumer buying patterns. In other words, we use trend analysis to do forward planning and JIT forecasting.

 

How does your concept reduce operating expenses? 

FMCG is a margins game. The consumer is only willing to pay a certain amount. Each step in the value chain ads is cut and has an impact on the selling price. Having a system that improves productivity reduces operational redundancies and optimising processes helps make more business and keep the costs to a minimum. The impact on reducing manual practices and digitising the data flows to allow for real time decision-making will certainly allow for cost savings. More importantly, it allows for the focus of spending in the right areas to ensure future growth.

 

What partnerships do you envision that would facilitate faster adoption of JIT deliveries?

A stronger, more open relationship between value chain members is required, as the sharing of data from point of sale back towards the manufacturer is becoming more important. Greater engagement within the mobile operator space will allow for integrated digital payments like M-Pesa with the ability to map the actual invoice to the payment to ensure reconciliation is accurate and cash flow is improved. As well, we project improved vehicle fleet management systems to ensure enhanced route optimisation and better use of the wholesale and retail trade of financial systems made available to them to measure their internal profitability and stock analysis.

 

The FMCG model has traditionally relied on mass brands and channels and associated synergies for its success. Is this still the stock option? 

The FMCG market is moving very quickly to the use of data profiling to understand the unique requirements by profile of consumers that visit their retail outlets, customisation and personalisation will be the emerging trend.

 

How integrated is brand relevance in your products?

As a company that has gone through much iteration, the brand has become an important component in our future ventures and initiatives. All marketing, sales and support activities must be grounded in the brand – to ensure we are held accountable to our customers and users. In terms of our offerings, we are focused on sales, logistics, and distribution of consumer goods from manufacturer to merchant and loyalty and rewards programs. As a result, our platforms have remained brand agnostic so brand relevance has little impact on us.

 

How do you ensure organic growth, particularly with dwindling bottom-line fortunes in sub-segments with FMCG?

This talks exclusively to Big Data analytics, using retail sales data as well as stock in hand data to start to understand the realisation per category and sub-category within the retail outlets. Data analytics is the cornerstone of analysing the bottom-line challenges. Once there is a clear picture of what product and pack size is selling (volume) and what is profitable, we can compare the optimal product mix to match the consumer demand per channel, per region. We then use targeted loyalty plans to encourage higher volume sales of more profitable baskets. 

 

Millennials tend to resist brand-owned marketing, preferring instead to learn about products from each other, causing what could be said to be a disruption in this space. Do you find this to be a challenge?

This is a reality that is not going away, so in our minds it creates massive opportunity to disrupt traditional thinking and use big data and digital marketing to influence sales.

 

How do you constantly (re) create value and sustain excellence in a reshaped marketplace?

Through monitoring the tech space progress, identifying trends in the consumer goods supply chain, and listening to our users and delivering the solutions and products that extend their reach and add value within their value chain. Additionally, if you are not tied directly into the profile and mouthpiece that is your consumer then this is not possible. In a word, listen, listen, and then listen some more. 

 

Organisations need to take notes: identify the trends, use science to forecast and then offer product combinations that make commercial sense and are in line with your consumers social and commercial conscience. Only through embracing change can we assist in customer transformation. 

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