Retailer FMCG Business
Technology in FMCG by Grocery sector
In today world most retailers are looking for innovative ways and idea to redefine the way they their doing business and respond to market trends and try to develop new channels and ways to make the product reach the consumers. As consumers started becoming more demanding in the today's challenging and competitive market place technology was the word that stood out and was seen as an opportunity by firms to make the supply chain more responsive and customer oriented in many number of ways. One of the key aspect by making use of the technology available was to improve the visibility of the product in the supply chain and it allows real time , accurate information to be easily accessed and shared collaboratively with all parties within the chain so that appropriate action can be taken. According to Chopra & Meindl (2006) Information is crucial to the performance of supply chain because it provides the basis on which supply chain managers make decisions. Without information a manager cannot know what customers want, how much inventory in stock, and when more product should be produced or shipped. Without information, a manager can only make decisions blindly.. Technology has provided an edge to greater integration and cohesion among members of the supply chain. These technology include direct linkages with external constituents, such as electronic data interchange with strategic suppliers, middleware connecting independent information system such as separate enterprise resource planning systems installed by buyer and suppliers , rapid development of online , Web-based solutions ,including customized portals and extranets. All these technological advantage have made the companies / firms to become much more proactive with there working environment (Brian Slobodow , Omar Abdullah and William C. Babuschak , 2008 ). In the food industry one of the issues that was faced was the reliability of food industry which was challenged by number of crisis over the past decade ( Ioannis Manikas and Basil Manos , 2006 ) .
Food industry took the initiative to have strict traceability of the food so that when it reaches the retailers it is off right quality. According to ISO Quality standards ,Traceability is defined as the ability to trace the history ,application or location of the entity by means of recorded information( ( Ioannis Manikas and Basil Manos , 2006 ) .Traceability is used a means to have a efficient and transparent flow of information within the supply chain. The efficiency in the system depends mainly on the ability to collect safety and quality related information. IT enabled system have over the years have changed the course of food sector over the years. This below diagram shows how the information is flown through the supply chain to trace the orgin of the product
In the Food industry this provided a great advantage to the retailers so that it help to identify what happens in each stage of the supply chain process that is from the production stage to till it reaches the final consumer. Traceability is done in many ways and it differs from supply chain to supply chain. On the aspect of traceability they make use of Bar codes, RFID Tags, computer labeled products etc as means to trace the product origin. In terms of customer they are being more aware and knowledgeable about the product and the quality that they need to expect from them the retailers. These retailers are liable to trace the product at each stages so that any issues doesn't occur which could in turn lead untimely distribution of the product. Traceability is done according to the information that is put into the system which can range from Lot number ,Buyer id , Product ID or some firms also provide all the information that is available to them from production to distribution in order to have full traceability of the product .Full traceability provides information on total product life cycle. For example in the diary industry where milking and pasteurization take place full traceability requires information about animal breeding procedures , Batch dispersion ,BOM ,and distribution information. In the fresh produce industry full traceability only requires farming and Distribution system ( Ioannis Manikas and Basil Manos , 2006 ).The concept traceability relates to all products and all types of supply chain
The use of technology in the FMCG has allowed ensuring rapid and effective communication of data across suppliers, the manufacturing plant , warehouses ,distributors ,wholesalers ,and retail stores .and getting the supply chain to work at a faster rate with changing environment and customer needs. Grocery industry has benefited in so many ways with the emergence of new technologies available and this helped them to respond to and forth between the supply chain, These information that are passed through the supply chain plays a critical role. For example the data received from the bar scanners are not just used internally by the retailers but the information transferred throughout the entire supply chain. The relationship between a retailer and supplier in differ in the way they apply the information. The development of efficient consumer response has brought in many technology based system to respond to customer demands at a faster rate. These systems have allowed the retailers as well as manufacturers to be more proactive rather reactive. With the help of these technology it allowed for rapid feedback which in turn helps in making proactive decisions within the supply chain. ECR measures are being proposed in three areas product group management , product replenishment and enabling technologies( (Coopers and Lybrand, 1997).Point of sale and electronic date interchange which are enabling technologies as used to exchange information between links in the supply chain so that the other two become possible and easy to make use of.
The early use of paper based system in the grocery system was replaced by Electronic order and communication system such as a Electronic date interchange for the transfer of data and order details between the manufacturers and the retailers. This type of transfer of information allowed the data to travel at a much faster rate. Electronic data interchange is a technique based on agreed standards, which facilitates business transaction in standardised electronic form in a automated manner directly from a computer application in one organisation to an application in a another(Kenneth Lyson and Brian Farrington 2006 ) , One of the example is the Electronic point of same in supermarkets. When a product is purchased from a supermarket there is a barcode on the product that is scanned by the operator at the check out counter which automatically registers the price of the product on to the system. When this signal gets registered in the system it also triggers a computer process that reorders the items from the manufacturer and set off the production cycle, arranges invoicing, payment and transportation of the new order. EDI effectively help in the continuous replenishment of the product with no paper work and little of human effort. One of the major evolutions in the field of grocery industry was the introduction of RFID which is known as Radio frequency Identification which was also used for traceability of the product with much had more technological advantage added to it s side. RFID tag make use of electromagnetic waves to gather information from a small device called RFID tag (Martin Hingsley , Susan Taylor , and Charlotte Ellis , 2006 ) . The tag need to be near antenna of an RFID reader. These tags differ according to its usage and the amount of information that can be stored about the product according to its criticality. Compared to the bar codes the RFID tags are capable of huge storage of information and it also has the ability to identify multiple items at once. RFID provides detailed descriptive information of the product and allows for real time tracking system and it allows the supplier and retailer interaction to solve issues and problems that occurs due to shortage or over shipment of the items. RFID has also bought significant financial benefits to retailers. One example for this was Sainsbury carried our a RFID trial and found that while the initial investment was estimated to be between $ 18 million and $ 24 million ,total benefits achieved were an estimated $ 8.5 million a year ,mainly through efficient stock control and rotation (Martin Hingsley , Susan Taylor , and Charlotte Ellis , 2006 ).RFID implementation in the supply chain has allowed to reduce the human intervention and the reader has prevented the person whose using the reader to individually scan the pallet or case by reading multiple objects at once. According to Gilbert RFID should allow retailers and suppliers to have real time responsiveness (Martin Hingsley, Susan Taylor, and Charlotte Ellis, 2006). With the help of technology the fresh produce growers and suppliers will be able to access the information relating to processing and distribution of their product, and it also allows for tracking of the product which is of great advantage in the fresh produce as it allows for visibility and dramatically increasing the potential stock management. Distributors will be able to increase order fulfilment while reducing the paperwork involved in managing the distribution process. Retailers will be able to reduce stock-outs and shrinkage while gaining greater control of product expiry dates.
Joseph (2005) suggests that E-commerce is slowly affecting the distribution channels through which consumers and businesses have traditionally bought and sold goods and services. The online channel provides sellers with the ability to reach a global audience and operate with minimal infrastructure. reduced overheads, and greater economies of scale, while providing consumers with a broad selection and unparalleled convenience. As a result (Sliwa, 2004), a growing number of consumers do business transactions on the Web, such as buying products, trading securities, paying bills and purchasing airline tickets. Essentially, e-commerce is all about the transactional business process of selling and buying via the Internet. E-Supply Chain refers in particular to the management of supply chain, using the Internet technologies (Agrawal, 2000). E-Iogistics enables organizations to see the big picture by capturing and sifting through data for procurement and fulfilment. Ultimately, management of the entire supply chain is e-enabled, and logistics-generated data can feedback into strategic and tactical decisions made by other parts of the organization. The Internet ultimately provides access to true rather than forecasted supply and demand information. The e-Supply Chain will have customers and suppliers seamlessly linked together, throughout the world, exchanging information almost instantly. The velocity of relevant information flow will be so fast that, as a result, responding to the inevitable changes in expected vs. actual customer demand will mandate demand-driven manufacturing and supporting processes that provide for faster changes in the actual material flow to match demand. (Arthman, 1995). E-Logistics also permits a closer integration of a company's internal business systems with collaborative information from partners and Web-based functions and information. In essence, e-Iogistics represents the foundation for improved business processes, allowing for real-time visibility, seamless channel linkage and collaborative solutions in the supply chain (Ricker, Fred and Kalakota, 2005).
The Role of Information technology has been helpful in reducing the cost of collecting, organizing and communicating data in supply chain. Both the supplier side and retailer side technology has been useful in get the information back and forth across the supply chain. In the terms of point of sale with the manufacturer/supplier is able to receive the information directly according to that they could estimate there production. In such a competitive trading environment, the role that can be played by information technology can mean the difference between success and failure. Technology is still changing at a faster rate and more new innovation are bought into the filed to make both side of supply chain function.
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