Value Chain Analysis of FMCG Industry

FMCG (fast-moving consumer goods) comprises low-cost, quickly and easily sold products and goods; they also go by the name of consumer-packaged goods (CPG). Today, we’ll discuss the value chain analysis of the FMCG Industry supply chain analysis; primary and supporting activities in the process of value chain analysis Example Company. They are inbound and outbound logistics, operations, marketing, and customer service; infrastructure, HRM, technology, and procurement as an application of the value chain analysis process.

Products and goods fall under the category of FMCG Industry

• Dry products
• Over-the-counter products
• Cosmetics
• Candies
• Toiletries
• Beverages
• Packaged food items
• Non-durable household products and goods

Key Elements of FMCG Industry

• The inventory turnover rate is higher
• Large distribution network
• Lower profit margin
• Higher sales volume

Companies and Brands in the FMCG Industry

• Coca-Cola Company
• PepsiCo
• Unilever
• Nestle
• Procter & Gamble

The Value chain analysis of FMCG Industry supply chain analysis would analyze the primary and supporting activities in the process of value chain analysis. They’re inbound and outbound logistics, operations, marketing, and services; infrastructure, HRM, technology, and procurement. Here’s the supply chain analysis of FMCG Industry value chain analysis company example as follows;

Value Chain Analysis of FMCG Industry

Let’s discuss the primary and supporting activities involved in the process of value chain analysis of FMCG Industry supply chain analysis. It is an application of value chain analysis based on Porter’s model; some of the key elements and components of value chain analysis are as follows;

Primary Activities of FMCG Industry

The primary activities are directly involved in the production of products and goods and adding value to the FMCG Company. Some of the five main primary activities in the value chain analysis of FMCG Industry supply chain analysis are as follows;

Inbound Logistics of FMCG Industry

I-Large Suppliers Network

FMCG Companies have established a very large supplier network for sourcing and procuring raw materials and supplies from various regions across the world. The large and worldwide sourcing suppliers and manufacturing suppliers’ network would help them to ensure the smooth availability of raw supplies, materials, products, and goods without any disruption.

II-Suppliers Code of Conduct

Many FMCG Companies have set up a strict code of conduct for suppliers, vendors, and manufacturers to regulate their practices and ensure their compliance with human rights standards. Their supplier’s code of conduct comprises of following elements;

• Fair treatment of workers
• Compliance with human rights standards
• Fair wages and compensation plan
• Standard working hours
• No child and forced labor

III-Suppliers Support

Often, FMCG Companies offer support and guidance to their suppliers and vendors to ensure the quality of supplies, materials, and goods. It could be in the form of conducting training programs, providing tech expertise, and sharing knowledge of advanced methods and techniques. As a result, it helps them to improve the quality of products, goods, and supplies.

Outbound Logistics of the FMCG Industry

FMCG Companies employ multiple transportation and 3rdparty logistics service providers for the distribution of supplies, materials, products, and goods. Some companies have their in-house distribution and transportation network along outer logistics channels. They move raw materials, supplies, products, and goods from the suppliers to the production and manufacturing facilities, warehouses and distribution centers, retail stores, and the end consumers.

Operations of FMCG Industry

I-Production & Manufacturing Facilities

Some FMCG Companies have their in-house production and manufacturing facilities; others outsource their production and manufacturing work to other countries. The production and manufacturing facilities receive raw supplies and materials from verified suppliers; perform various operations and employ multiple tools and resources to produce the finished goods for the end consumers.

II-Warehouses & Distribution Centers

Many FMCG Companies have a very large network of warehouses and distribution centers in various regions and countries across the world. They receive finished goods from the production and manufacturing facilities; and temporarily store, package, and label the products before shipping them to the end consumers.

Marketing & Sales of FMCG Industry

I-Marketing & Advertisement

FMCG Companies run various types of marketing and advertisement campaigns for the promotion of their brand, products, and goods. They employ multiple media channels; marketing and promotional strategies to approach the targeted segment of the customer market.

II-Retail Stores

Usually, FMCG Companies have a very large distribution network and they ensure to deliver their products to all the retail stores of their targeted market. The objective is to make their products and goods available to the targeted customer market.

Services of FMCG Industry

FMCG Companies offer a wide range of products, goods, and services to the mass consumer market. The objective of FMCG and its services is to make life easier for customers improve their satisfaction level and promote brand loyalty.

Supporting Activities of the FMCG Industry

Supporting activities are indirectly involved in the production of products and goods and adding value to the FMCG Company. Some of the main supporting activities in the value chain analysis of FMCG Industry supply chain analysis are as follows;

The Infrastructure of FMCG Industry

FMCG Companies have established a very large infrastructure of production and manufacturing factories, suppliers and distribution networks, retail store networks, and warehouses and distribution centers. The large and well-developed infrastructure would help them to smoothly perform various consumer goods production operations without any disruptions and delays.

HRM of FMCG Industry

FMCG Companies have employed millions of people performing different roles in various regions and countries across the world. The human resource management department of FMCG Companies plays a key role in conducting training programs for suppliers, recruiting a large database of employees, and rightly allocating the workforce to different roles.

Technological Development of FMCG Industry

FMCG Companies invest a significant amount of capital resources in research and technological development. It allows them to implement the latest technological tools and equipment for the production and manufacturing facilities, automation technology for the warehouses and the distribution centers, and advanced software and applications to manage the system.

Procurement of FMCG Industry

FMCG Companies are highly careful and cautious about ethical sourcing and procurement of raw materials and finished goods for the end consumers. They have developed a strict code of conduct for suppliers to ensure their compliance with human rights standards and industry standards and regulations.

Conclusion: FMCG Industry Value Chain Analysis Example Company | Application of Value Chain Analysis Process |Process of Value Chain Analysis

After an in-depth study of the value chain analysis of FMCG Industry; we have realized FMCG is the world’s top-growing business category. If you are learning about the FMCG Industry value chain analysis example company; then you should keep in mind the abovementioned primary and supporting activities. They’re inbound and outbound logistics; operations, marketing and sales, and services; infrastructure, procurement, HRM, and technological development as an application of the value chain analysis process.