Institute of Supply and Materials Management

(Incorporated by Act of Parliament No. 3 0f 1981)

Advanced Diploma in Logistics and Warehouse Management - (English)

ADLWM 1/ 2023

Module 05: Demand And Distribution Management

Assignment Topic: Identify the major challenges for demand management in the FMCG Industry and provide
recommendations to overcome them.

Student Name: W.V Kaushan Nimesh

Student Registration Number: ADLWM/E/C/Sun/1-2023-55

Date of Submission: 31st October 2023

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Table of Contents. Page No

1. . Identify the major challenges for demand management in FMCG. 3-6

➢ Fluctuating Consumer Behavior.
➢ Short Product Life Cycles.
➢ Seasonal Variations and Trends.
➢ Supply Chain Disruptions.
➢ Increased Competitions.

2. Recommendations to overcome these challenges. 7 - 13

➢ Data-Driven Demand Forecasting.
➢ Collaboration and Information Sharing,
➢ Agile Supply Chain Management.
➢ Customization And Personalization.
➢ Investment in Technology.
➢ Continuous Market analysis.
➢ Risk management Strategies.

3. Conclusion Summary. 14 - 14

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1. Identify the Major challenges for demand management in the FMCG.

➢ Fluctuating Consumer Behavior – Today’s consumers are more likely to study

extensively before deciding what to buy. Approximately 45% of Millennials Shop around
for the greatest discounts by comparing pricing at several stores. Accept the Convenience

and increased selection that come with Internet Purchasing.

➢ Short Product Life Cycle – A short Product life cycle is a term that explains
how long a product exists on the market from its original release to its final
decline and elimination. In essence, it is the time between the product’s debut,
sales rise, peak demand, and eventually decrease when newer goods or
developments replace it.
Because of quickly changing consumer preferences,
Developing trends, and intense rivalry, the fast-moving consumer goods market
frequently has shorter life cycles. Products In this area, such as food, toiletries,
and home products, are updated or changed regularly to meet consumer
expectations and preferences.

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➢ Seasonal Variations and Trends – The Technique of analyzing and
predicting short-term swings in consumer demand at various times of the year
is known as seasonal demand forecasting. Many variables might influence a
company's seasonal demand cycle including regional holidays, weather
patterns, and popular trends.

➢ Supply Chain Disruptions – A supply chain disruption is defined as any

occurrence that disrupts the production, sale, and distribution of goods.
Natural disasters, regional conflicts, and pandemics are examples of supply
chain interruptions.

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➢ Internal Risks
✓ Planning And forecasting risks.
✓ Internal Business Changes.
✓ Lack of contingency plans.
✓ Manufacturing Errors.
✓ Errors in Shipping orders.

➢ External Risks
✓ External business changes.
✓ Information security threats.
✓ Pricing fluctuations.
✓ Transportation Delays.
✓ Economic, political, and environmental factors.

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➢ Increased Competitions – Because there are many buyers and sellers in a
Completely competitive market, market demand determines the price of an
item. If a vendor prices their items above the market price, their demand will
fall to zero since buyers may readily obtain the goods for a lower price from
another business.

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2. Recommendations to overcome these challenges.
➢ Data-Driven Demand Forecasting - Data-driven demand forecasting
leverages advanced analytics and machine learning to provide more complex
projections that account for extra factors that may impact demand. These
systems may detect real-time fluctuations in purchasing behavior, developing
social trends, weather data, inflation data, supply chain information, and more.
Manufacturers may now evaluate all in-house data as well as third-
party and public data to obtain a complete and more accurate picture of how
demand is anticipated to vary over time. Furthermore, modern analytics and
machine learning enable manufacturers to swiftly mine large volumes of data,
ensuring they have the insights they want when they require them.

➢ Collaboration and Information Sharing - Collaborative demand planning

promotes communication among many stakeholders, which can result in
improved decision-making and more efficient resource allocation.
This type
of forecasting might help businesses overcome some of the issues associated
with demand forecasting, such as enhanced data quality and availability,
decreased demand fluctuation and uncertainty, and optimized forecasting
horizon and granularity.

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Information Sharing - Integrations between BI, analytics, track-and-trace tools, and
quality management result in knowledge-sharing networks. Combining on-premises
legacy systems with third-party and cloud apps results in a platform that enables
supplier connectivity as well as increased speed and scalability.

Collaboration - The amount of data at our fingertips underlines the importance of

collaboration in all elements of the supply chain. Data dependability and accuracy
are critical, but businesses rely on data that delivers a single version of the truth that
can be freely shared to save costs and waste while boosting results.

To be most
efficient, collaboration should encompass every department inside a firm, as well as
retailers and suppliers.

➢ Agile Supply Chain Management

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An Agile supply chain. puts constant emphasis on efficient processes and empowered
employees. Agile supply chains are nimble enough to respond smoothly to sudden
changes in supply chain demand.

Adopting an agile model benefits the greater

organization by allowing it to act quickly and decisively. It enables to empowerment
of positive business outcomes even in the face of adversity.

How to create an agile supply chain model?

➢ Establish goals and key performance indicators that the Organization should
fulfill Around production or customer requirements.
➢ Define the roadblocks and challenges your organization needs to overcome to
reach its goals.
➢ Establish project teams dedicated to driving network enhancements. This job
should change over time, tracking performance and changing the base to identify
new methods to improve supply chain management.
➢ Keep clients aware of what's going on by emphasizing communication with
them. Recognize their problems and work together to accomplish common goals
and success measures.
➢ Take as many measures as possible to streamline corporate operations. Identify
both quick, low-hanging fruit and long-term, continual improvements.
Encourage your change agents to pay attention to detail and quality without
becoming overly obsessed with perfection.

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➢ Customization And Personalization.
Customization and personalization are strategies businesses use to tailor their
products, services, or experiences to individual customer preferences. While these
terms are related, they have distinct meanings.

1. Customization - Customization involves providing customers with the ability

to choose or modify certain aspects of a product or service to meet their specific
needs or preferences.
Example - Customizing a Mobile phone by allowing customers to choose the
specifications, color, and additional features according to their preferences.

2. Personalization - Personalization is about tailoring the overall customer

experience based on individual characteristics, behaviors, and preferences. It
extends beyond product features to include marketing messages,
recommendations, and user interfaces.
Example - Personalizing an online shopping experience by recommending
products based on a customer's browsing history and purchase patterns.

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 How to Implement Customization and Personalization?

➢ Data collection Analysis - Utilize customer data to understand preferences,

behaviors, and purchase history.
Use analytics to identify patterns and trends that can inform customization and
personalization strategies.
➢ Technology integration - Implement advanced CRM (Customer Relationship
Management) systems.
Use AI and machine learning algorithms for dynamic personalization and
recommendation engines.
➢ Flexible Manufacturing and supply chain - Adopt agile manufacturing
processes to accommodate customized product variations.
Ensure a responsive and flexible supply chain to meet personalized demand.
➢ Interactive User Interface - Create online platforms that allow users to easily
customize products.
Develop personalized user interfaces that adapt based on user preferences and
behaviors.
➢ Customer Feedback and Collaboration - Solicit feedback from customers to
understand their needs and preferences.
Collaborate with customers in the product development process, especially for
customizable products.

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 ➢ Investment In Technology
Investing in technology is a strategic approach that businesses take to leverage
advancements in information technology, automation, and digital solutions to
enhance their operations, improve efficiency, and stay competitive in the modern
market. This can encompass a wide range of technologies depending on the industry
and business needs. Here are key aspects to consider regarding investment in
technology.

• Digital Information - Digital transformation involves integrating digital

technologies into various aspects of business operations to fundamentally
change how businesses operate and deliver value to customers.

Example - Adopting cloud computing, implementing enterprise resource

planning (ERP) systems, or leveraging data analytics for decision-making.
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 • Automation AI - Automation involves using technology to perform tasks
with minimal human intervention. Artificial Intelligence (AI) refers to
machines or software that can mimic cognitive functions.
Example - Implementing robotic process automation (RPA) for routine tasks,
using AI algorithms for predictive analytics or chatbots for customer support.
• E-commerce And Digital Marketing - Leveraging digital platforms for
online sales, marketing, and customer engagement.
Examples - Leveraging digital platforms for online sales, marketing, and
customer engagement. implementing an e-commerce platform, utilizing social
media advertising, and employing digital marketing strategies.

➢ Risk Management Strategies

Here are several guidance, techniques, and approaches that can be applied to
manage demand. Those are the following.

• Using behavioral intelligence and "nudge" tactics. (A 'nudge' approach is a

non-forced means of gently changing the behavior of a group of individuals.)
• Increasing accessibility and self-service alternatives.
• Service redesign and co-design with consumers.
• Individual and community resilience development, as well as co-production of
results.
• Changing people's behaviors over time.
• Using potential risks to direct preventative resources.

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 Conclusion Summary.
In conclusion, managing demand in the FMCG industry presents unique challenges
due to dynamic marketplaces, evolving consumer behaviors, and economic
disruptions. The short product life cycle, fluctuating consumer preferences, and
increased competition demand innovative solutions. To overcome these challenges,
businesses should embrace data-driven forecasting, enhance collaboration across the
supply chain, implement agile strategies, and invest in technology. Customization
and personalization strategies, coupled with a focus on continuous market analysis,
provide a pathway to meet consumer demands effectively. By addressing these
challenges and leveraging technological advancements, FMCG businesses can
navigate the complexities of demand management, ensuring agility, competitiveness,
and sustained success in today's dynamic market environment.

References - www.toolsgroup.com

www.arenasolutions.com

https://www.snowflake.com

www.fourkites.com

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