Covid prompts FMCG firms to look at efficient processes3 min read . Updated: 05 Aug 2020, 09:57 PM IST
- While not all associations and learnings will stick, especially as markets gradually open up and stocks start moving, firms will look at imbibing some of these changes in the way they function
NEW DELHI: India's top packaged consumer goods makers are imbibing lessons learnt from covid to make their businesses more efficient. Executives at top fast moving consumer goods (FMCG) companies told Mint that the disruption caused by the pandemic has prompted companies to look at redundancies in operations and eliminate time taken to roll out new products and reach markets.
FMCG companies in India rely on extensive market research and scores of distributors and small shops to ensure their products reach shoppers, but the lockdown upended their links to the markets. However, following the surge in demand for packaged foods and personal hygiene products, companies banded together teams, created links with hyperlocal delivery partners, and helped get their products to stores to help fulfill consumer demand.
While not all associations and learnings will stick, especially as markets gradually open up and stocks start moving, several firms will look at imbibing some of these changes in the way they function.
Chennai-based CavinKare, which launched new products such as sanitisers and a vegetable cleaner in record time, said it could look at cutting timelines for new product launches and even narrow lengthy test marketing processes going forward. The maker of Chik shampoo typically takes 18 months to launch a new product.
“Even before COVID, one of the endeavors of the company was to cut this timeframe. We had actually initiated internal action to be able to look at whether we are able to cut the period to a substantially lower time. To the extent that some of the categories we've been able to do in a month—that’s also probably to do with the formulation of the products. But now we are looking at the time frame where we can quickly crunch the erstwhile 18 to 24 month period down to much shorter periods," said Venkatesh Vijayaraghavan, Director & CEO, Personal Care & Alliance, CavinKare
He added that the company allowed cross functional teams to work together, thereby reducing duplication of work.
“One of the things that this particular experience of covid has done is bring the entire cross functional teams i.e. marketing, production, packaging, supply chains and R&D together, so we're able to actually crunch the timelines, eliminate some of the duplications that happened," he said.
The pandemic also prompted several companies to ramp up supplies online and forge partnerships with hyperlocal delivery partners and even assist retailers by opening up helplines as the lockdown crippled movement of goods.
More such direct to consumer, online to offline and vice versa, and multiple hybrid models are likely to come into play, Russell Reynolds Associates, an advisory firm, said in a research note this week.
Moreover there has also been a quick adoption of e-commerce channels to buy groceries. Typically, 88% of FMCG sales in India come from traditional or kirana stores. But covid is likely to change that.
Beverage maker Coca-Cola India said adoption of digital tools—both remote working as well as scaling up presence on e-commerce, at a time when out-of-home consumption of beverages remains disrupted, has been accelerated.
"We have quickly scaled our ability to really operate on the click-to-desire continuum, where we are really trying to scale up our presence on e-commerce. We are possibly one of the companies which is benchmarked for execution in the brick and mortar world and we are trying to see how we can replicate it in the digital world—that is one area where we are building capabilities and we continue to build them," T. Krishnakumar, President, Coca-Cola India and South West Asia said.
A "black swan" even such as covid has been a huge eye opener for Mondelez India, the maker of Oreo cookies and Dairy Milk chocolates. The company launched a new product in June, moving processes such as product qualifications, packaging and in-plant trails to virtual modes.
“What we thought would never be done without a face-to-face interaction now is getting done remotely," Deepak Iyer, managing director, Mondelez India told Mint. Mondelez that also has a centre of excellence on agility globally—where it works using the Scrum method, that is basically a framework devised to complete complex projects said it used learnings from the centre to tide through the covid crisis.
“India is one of the first pilot markets where we used this the centre of excellence. So it's been a huge part of our success and this is not something that we did during Covid. That was something that we started last year. But it's come in very handy during covid. And hence it gives us more reasons to accelerate that kind of culture in the organization," said Iyer.