The FMCG industry has enjoyed consistent success over the past decades that by 2010, it had created 23 of the world’s top 100 brands.
How were the top FMCG brands consistently successful?
The answer lies in the FMCG industry’s 5-part model for value creation.
- Mass-market brand building and product innovation.
- Build relationships with grocers/mass retailers that provide access to consumers.
- Enter developing markets early; actively nourish categories as consumers became wealthier.
- Design operating models for consistent execution and cost reduction.
- Use M&A to consolidate markets and create a basis for organic growth post acquisition.
But recent global industry data suggests that large FMCG / Consumer Durables companies face a serious growth concern. Revenue growth is slipping in most subsegments.
Reviewing the FMCG industry life cycle would help us identify the industry’s key challenges.
Generic Life Cycle of an FMCG Product
Now that we have a good view of the life cycle of an FMCG / Consumer Durable product, let us delve into some of the key challenges faced along with possible solutions.
FMCG Key Challenge # 1: Generating & Evaluating New Product Ideas
In a hyper-competitive world, companies must launch the right products swiftly to maintain market domination and stay ahead of the competition. For this to happen, the speed of product idea generation and evaluation is key – this must be consistent! Unfortunately, most organizations trust Spreadsheets, Documents, and Emails – the result is inconsistent and ad hoc approach to idea generation.
The next logical step is idea evaluation. Here, it is not uncommon to observe product evaluation lacking a comprehensive commercial, technical, manufacturing feasibility – all leading to wrong products being pursued.
FMCG Key Challenge # 2: Inefficient Funds Allocation
When idea generation and evaluation is not consistent and structured, the fallout becomes too obvious – wrong idea pursuits. Organizations allocate investments based on weak product feasibility and decisions that lack conviction.
There are numerous instances when organizations have abruptly stopped new product development or even pulled out the product from the market and the reason – funding a weak product! Inappropriate funding decisions negatively impacts business financials and lose the lose financial strength to take on competition.
FMCG Key Challenge # 3: Scrappy Project Management
New Product Development (NPD) projects are complex and involve team members from multiple cross-functional divisions. Yet, organizations take a bits-and-pieces approach to project planning and execution. The results are not hard to guess –
- Lackadaisical schedule
- Inefficient resource allocation & utilization
- Reactive risks & issues management
- Sub-optimal project cost
- Weak and disconnected tracking of plan vs. actual
FMCG Key Challenge # 4: Documentation Traceability
In general, FMCG product development need to go through stringent tests and regulatory approvals before product launch and hence must be built on a strong foundation of detailed and multi-layered documentation. Unfortunately, in most cases, organizations lack a comprehensive, templatized, well-structured, and version-controlled documentation leading to –
- Duplicated documentation efforts
- Inaccurate documentation
- Documentation rework
- Delayed regulatory approvals
- Delayed product launch
FMCG Key Challenge # 5: Cross-Functional Collaboration
FMCG product development projects involve multiple business functions as well as vendors and government agencies. For most FMCG companies, it is a struggle to foster stakeholder engagement and real-time collaboration. Spreadsheets, Documents, and Emails add to their woes. The result is not rocket science –
- Lack of trust and collaboration
- Cross-functional conflicts
- Horribly delayed decision-making
- Management escalations
What is the way forward?
Organizations must embrace technology to solve FMCG product management struggles. There are software vendors with solutions for many business scenarios. However, business leaders must keep in mind a few critical aspects before signing the cheque.
- An end-to-end NPD project management software solution
Senior executives must look for software solutions that address the entire spectrum of the FMCG industry from new idea generation, idea evaluation, business case approval, automatic conversion to project, project management processes, project planning (requirements, schedule, resources, costs, risks, issues, quality, procurement), project tracking & control, and project closure with product launch. Further, it must address dimensions such as formula/bill of material management, workflow management, etc. – delivering visible customer value at every stage of the business.
- An online project management software specific to the product and organizational standards
The processes of developing a health snack versus a cold beverage are like chalk and cheese. Business leaders must not make the mistake of investing in of-the-shelf solutions that claim to solve all problems – it invariably does it! The chosen project management software solution must be configured to the needs of the specific product, organizational standards, processes, and workflows. A one-size-fits all does not work – is a recipe for disaster!
- An online project management software that integrates with existing enterprise applications
Senior leaders must ensure that the FMCG project management tool integrates seamlessly with any existing applications including ERPs, HRMS, Accounting, and others. Without such an integration, management teams would struggle gaining ‘one version of FMCG truth.’
- A project management software with the usual stuff…
It goes without saying that today’s technology solutions must foster user adoption through best-in-class User Interface, User Experience, social collaboration – both on the desktop and on mobile!
- The FMCG industry operates in a hyper-competitive business environment.
- The FMCG product management relies on high-quality and swift decisions.
- The FMCG companies need software solutions that address the entire cycle of FMCG products.
- The NPD project management software must be configured to the needs of the FMCG industry and organizational standards & processes.