Almost all firms face Challenges in maintaining a supply chain. This happens because they only focused on their production and sales aspects f business. As a result, logistics was a neglected area of those firms. Recently, few firms try to improve the performance of their respective supply chain. There are many reasons that are responsible for neglecting supply chains within the organization. The major two reasons are discussed here.
- Taxation structure drives location decisions
The taxation structure influences in taking most supply chain decisions. They are not focused on customer service issues. However, some special economic zones offer tax benefits rather than others. So, some firms consider these decisions and many of them altered their plant location decisions. Moreover, taxation issues can’t ignore. There have been lots of discussions in industrial and political issues regarding taxation issues.
- The poor state of logistic infrastructure
The transportation and warehousing industries are in the unorganized sector. Having unorganized trucking industry results in unreliable lead times and high in transit damages. The old trucks on the road are breaking down goods quite frequent. Further, this is adding to unreliability. However, the modernizing warehousing systems is a great idea that is yet to see the light of the day.
Traditional organizations neglect logistics did not attract the best talent in the industry. At present, the owners have realized the importance of managing the supply chain. The new blood and greater reorganizations are seeing the light of the day.
Challenges in maintaining a supply chain for the FMCG sector
The fast-moving consumer goods sector is the fourth largest sector of the economy. This sector generally includes a wide range of frequently purchased consumer’s goods such as soaps, dairy products, confectionary, soft drinks, fruits and vegetables, and batteries. Besides, it has a lower unit cost and higher volumes. In this sector, the performance of the supply chain is a key factor. Moreover, it has a complex distribution network and intense competition forcing firs to constantly work on supply chain performance.
It has some major challenges to do it. Let’s see some major Challenges in maintaining a supply chain for the FMCG sector.
- Managing availability in the complex distribution set up
Now, every firm is working with complex distribution systems. Besides, they are comprising multiple layers of numerous small retailers between company and customers.
- Working with smaller pack sizes
In developed countries, they followed larger pack sizes. But in our country, we prefer mini pack sizes. As a result, to increase market penetration, producers need to pack smaller sizes.
- Entry of national players in the traditional fresh products sector
The national players are entering into the traditional market. The farmers handle these markets..
- Dealing with complex taxation structures
the taxation structures are varied in the different state.
- Dealing with counterfeit goods
The company who copied other companies goods.
- Opportunistic games played by the distribution channel
Having so many distributors, maximum profits go to these channel members.
The poor roads and unreliable transportation have an adverse impact on costs and uncertain situations.
- The emergence of third-party logistics providers
Some firms have been managing their logistics activities internally. But lately, they are realized that they need to focus on managing core business functions. Thus, they are searching for third-party logistics service providers for handling their logistics functions. In developed countries, almost every firm has used outsourced logistics. The third-party logistics service providers manage them effectively.
In developed markets, global firms would like leading third-party providers. They would go beyond the traditional role and also play the role of a fourth party logistics company. The fourth party logistics company can integrate the capabilities, resources, and technology to provide effective supply chain solutions to its customers.
- Reservation for the small scale sector
Traditionally, there have been reserved for the small scale. As a result, the FMCG companies outsource their raw materials from small players. Besides, they need to rework their sourcing strategies.
- The emergence of organized retail
the traditional retail store is breaking down. there is an emergence of a modern or organized retail store. however, consumers are demanding these types of store. Where they can get everything that they want to buy.
So, learners, we learn about Challenges in maintaining a supply chain. if you overcome these challenges, you can enjoy more than others.