Leaner, greener and quicker: the changing face of FMCG logistics

The fast-moving consumer goods sector is undergoing a major transformation. As the sector evolves in response to the explosive rise of quick commerce in key markets, growing consciousness about the environment among consumers and the relentless demand for personalisation, the supply chains serving FMCG corporations are also changing. 

For full-service logistics service providers, the challenge is clear: balance the need for breakneck delivery speeds with stringent sustainability goals, all while keeping costs lean. According to Sachin Shikrapurkar, Director of Business Development for APAC at FM Logistic, the core expectations from brands are universal. “All customers expect us to be quick, efficient and cost-effective at all times,” he says. 

However, achieving these efficiencies requires a radical rethink of operational strategies, including traditional warehouse models, fleet management systems and distribution networks.

One such strategic shift underway is necessitated by the rise of quick commerce, especially prominent in Asian markets like India. 

Traditionally, FM Logistic has operated on a big-box model, building and owning large-scale assets. To meet the high-frequency, low-volume, same-day delivery demands of the modern retail consumer, the company is moving towards establishing small “dark stores” and micro-fulfilment centres. This often involves leasing smaller spaces close to urban hubs while maintaining stringent quality and compliance structures, explains Shikrapurkar.

In Europe, where sustainability issues matter to a majority of consumers, the approach slightly differs. The focus remains heavily on “one-roof” operations to manage omni-channel needs, consolidating order fulfilment strategies, such as large-box pallet storage for bulk orders, right alongside dedicated sections for piece-level picking. 

Unified inventory pools managed by sophisticated warehouse management systems, according to Shikrapurkar, can help efficiently reallocate stocks to meet spikes in orders, a not uncommon occurrence in an era increasingly defined by social commerce-fuelled trends.

A crucial differentiator within these one-roof operations is co-packing. As brands seek to meet the growing demand for hyper-personalised experiences, especially in the beauty and luxury sector, late-stage customisation has become vital.

FM Logistic manages such ultra-customisation requirements with services like individualised boxing or gift-packing, especially for major beauty and cosmetics clients. For instance, products ranging from luxury goods to premium chocolates to pet food are packed and re-packed into highly customised boxes that can feature everything from personalised messages to veterinary recommendations for people’s pets.

Beyond personalisation, co-packing also serves as a highly effective waste-reduction tool. Instead of shipping thousands of small, pre-packaged plastic bottles, FM Logistic receives intermediate bulk containers (IBCs) from manufacturers and fills smaller units directly at the warehouse. This significantly cuts down on transportation-related emissions and packaging waste, Shikrapurkar says.

The company also employs a lean design philosophy to create customised, cost-efficient and recyclable in-house retail displays using circular materials like cardboard instead of plastic for retail giants like Colgate-Palmolive. This automated process can replicate successful zero-plastic bundling across multiple brands, eliminating the need to transport goods to third-party vendors for this service, saving on both emissions and costs.

With sustainability now a central operational pillar, it is prompting full-service providers like FM Logistic to adapt, points out Shikrapurkar.

For instance, in FM Logistic’s home market of France, dedicated, sector-specific pools consolidate loads from multiple manufacturers heading to the same retailers. Because the retailer and the brand are often housed in the same facility – as part of FM Logistic’s one-roof strategy – goods simply shift from one side of the warehouse to the other, Shikrapurkar notes. This again leads to significant reductions in emissions as well as savings on financial penalties FMCG clients typically levy on logistics providers in the event of stockouts.

In markets like Spain where pooling is more fragmented, FM Logistic utilises electric vehicles for last-mile deliveries and leverages the city’s metro system to ensure its vehicles do not add to road congestion. Additionally, for factory-bound trucks scheduled to pick up goods, the vehicles are instructed to delay their arrival if congestion at the plant’s loading docks is detected, preventing unnecessary idling and fuel waste, explains Shikrapurkar.

FM Logistic also leans on technology to make its warehouse and fleet operations efficient, “but our approach to automation is highly strategic and frugal,” says Shikrapurkar. “We do automation only where it is necessary. That’s been our core theme.”

This thrifty use of automation includes deploying Automated Guided Vehicles and Autonomous Mobile Robots to scale picking operations dynamically, and using camera-based “inventory viewers” on forklift trucks to capture product data, heavily reducing manual labour. 

FM Logistic also uses digital twins of its warehouses to simulate operations and optimise dynamic slotting based on real-time information around demand, seasonality and order frequency in the quest for operational efficiencies. In India, the company relies on geo-tagged fleets as well as tracking the SIM cards of drivers’ mobile phones for greater supply chain visibility.

Furthermore, as product visibility across the supply chain becomes paramount for manufacturers, retailers and consumers alike, FM Logistic offers tools like My-SCM and Control Tower, which provide end-to-end transparency not just at the purchase order level but also at the product level.

As logistics providers serving a dynamic and fast-changing FMCG sector look to the future, Shikrapurkar identifies three defining trends set to reshape the landscape: sustainability, speed and circular logistics, particularly the efficient management of returns in the surging direct-to-consumer market, which poses a challenge to circular logistics because of the decentralised nature of product returns characteristic of D2C transactions.

However, underpinning all of these considerations is a relentless focus on the bottom line, Shikrapurkar notes, especially because inflation continues to remain a major concern for most companies. Whether it is implementing lean design, utilising public transport systems for deliveries or consolidating inventory pools, the ultimate goal remains the same.

“Sustainability and speed are key requirements and will remain so in the future,” Shikrapurkar says. “However, proactively managing and keeping costs lean is the ultimate consideration. Cost is key.”