By – Vrijesh Nagathan, Chief Information & Digital Technology Officer, Marico Limited
Imagine walking down a busy street, your eyes are drawn to the vibrant display at the Kirana store, where the shelves are neatly lined with colourful packets of chips, biscuits, and an array of tempting treats. To passersby like us, it’s a familiar scene – a snapshot of traditional retail. But behind the scenes, a quiet revolution is underway. The products on his cart are part of a sophisticated supply chain, driven by data analytics, AI-powered forecasting, and smart logistics. This blend of tradition and technology is transforming the FMCG industry, making it more efficient, responsive, and customer-centric.
The snacks he’s selling, for instance, might have been produced in a state-of-the-art factory where machines are equipped with sensors that monitor production in real-time, predicting and preventing defects. The packets might have been transported from the factory to the vendor’s cart through a sophisticated logistics network that’s optimised using data analytics and machine learning algorithms. Even the vendor’s transactions might be facilitated by digital payment systems that offer a seamless and secure way for customers to make purchases. With every step in this, one thing becomes clear: the status quo is shifting, and companies that adapt will thrive in this new landscape.
Smart Operations with AI in Supply Chain
With the global generative AI market in FMCG set to grow from $7.9 billion in 2023 to $57.7 billion by 2033, it’s clear that AI isn’t just another tech trend – it’s fundamentally changing how consumer goods companies work, create, and deliver value to customers. This impressive growth rate of 22% shows just how quickly FMCG companies are embracing AI to improve their business.
In the FMCG sector, AI acts as a powerful tool that leverages machine learning, data analysis, and automation to optimise business operations. It processes vast amounts of data on consumer behaviour, market trends, and operational efficiency, enabling companies to make informed decisions. AI goes beyond basic automation, empowering businesses to predict customer preferences, streamline supply chains, and craft targeted marketing campaigns. By ensuring product availability, optimising pricing, and driving data-driven processes, AI transforms traditional FMCG operations into agile, customer-centric models.
At the heart of this transformation is supply chain optimisation, a critical component of the FMCG industry that’s being revolutionised by technologies like GPS, blockchain, and cloud computing. GPS tracking allows companies to monitor the movement of goods in real-time, reducing the risk of loss or theft and enabling them to respond quickly to disruptions. Blockchain technology provides a secure and transparent way to track the origin, quality, and movement of goods, ensuring authenticity and reducing the risk of counterfeiting. Cloud computing enables companies to manage inventory effectively, predicting demand and adjusting production accordingly. This helps reduce waste, minimise stockouts, and ensure that products are available when and where they’re needed. Automation in areas like warehousing and distribution is also significantly reducing costs and improving speed. For instance, automated storage and retrieval systems (AS/RS) can quickly and accurately pick and pack products, reducing labour costs and improving efficiency. By streamlining their supply chains, FMCG companies can respond quickly to changing market conditions, reduce costs, and improve customer satisfaction.
The Digital Dawn of FMCG
Another key area where technology is making a significant impact is in customer engagement. AI and machine learning are allowing companies to analyse vast amounts of consumer data, gaining insights into their preferences, behaviours, and needs. This enables them to create personalised marketing campaigns, products, and services that resonate with their target audience. Digital marketing platforms and social media provide new avenues for brands to connect with consumers, build loyalty, and drive engagement. Companies can use data analytics to identify trends and patterns in consumer behaviours, adjusting their marketing strategies accordingly. Extended reality (XR) and other digital technologies are creating immersive shopping experiences that engage consumers like never before. For instance, augmented reality (AR) can be used to create virtual product demonstrations, allowing customers to interact with products in a more immersive and engaging way. By leveraging these technologies, FMCG companies can build strong relationships with their customers, drive brand loyalty, and ultimately drive growth.
Data-driven decision-making is also becoming increasingly important in the FMCG industry. Business intelligence and analytics tools are helping companies understand their current performance, predict future demand, and identify opportunities for growth. Data analytics can provide valuable insights into consumer preferences, trends, and competitor strategies, enabling companies to make informed decisions and stay ahead of the competition. AI-driven insights can analyse vast amounts of data to identify patterns and make predictions that would be impossible for humans to do. For instance, predictive analytics can be used to forecast demand, enabling companies to adjust production and inventory accordingly. Companies can also use data analytics to identify areas of inefficiency in their operations, optimising processes and reducing costs.
Clicks, Bricks, and FMCG: The New Reality
While AI offers immense potential for FMCG companies, it also raises important concerns and opportunities. Data privacy is a critical concern, as companies collect and analyse vast amounts of consumer data. Ensuring that this data is handled responsibly and ethically is essential, and companies will need to implement robust data protection policies and procedures. The digital divide is another challenge that companies will need to address, ensuring that their digital products and services are accessible to all consumers, regardless of their location or socioeconomic status. Cultural changes will also be necessary, as companies adapt to new technologies and ways of working. Companies like Marico have already adopted a data-driven AI framework to identify emerging consumer trends, enhance inventory management, and optimise supply chain operations. By leveraging tools like Generative AI, predictive analytics, and GitHub Copilot for in-house coding, Marico has improved workflows, streamlined processes, and achieved cost efficiencies.
As the young vendor continues to sell his colourful packets, he remains, perhaps unknowingly, a participant in a much larger story, unaware of the intricate web of technology that’s supporting his business. But one thing is certain – the FMCG industry will never be the same again. The vendor’s simple snack cart is now part of a complex ecosystem that’s driven by technology, data, and innovation. Companies that adapt to this new landscape will thrive, while those that don’t will be left behind. The future of FMCG is digital, and it’s here to stay. The vendor’s story is a microcosm of the industry’s transformation, where tradition meets innovation, and the possibilities are endless.