SUPPLY CHAIN AND PRODUCT MARGINS: IMPROVING ONE AUGMENTS THE OTHER

The present Indian FMCG marketplace is complicated and saturated. If you want to achieve visibility, you are required to consider two aspects of your product quality — one is product pricing and the other is pricing.

If you think about both these aspects, you can see that the product quality is dependent on the raw material, recipe and packaging. As all of these are relatively permanent and moderating or modifying these aspects is usually hard.

But product pricing is also a significant driving factor in India’s FMCG Market. In this situation, you can try to moderate the pricing without changing the product quality.

Is it possible to solve this dilemma?

Most often businesses try to find the balance between product pricing and quality. Needless to say, this could lead to inferior product and consequent reduction of margins.

A good supply chain management helps you evaluate and control your product pricing.

In order to control the product pricing, you need to handle all the surrounding aspects of the product.

Increasing product margins through Supply chain management

As you may already know, the product margins are essentially the deciding factor of success in supply chain. If you can provide better products at better prices, it’s a sure incentive to attract more customers.

By having a supply chain management platform, you can control various touch points involved in the distribution of products.

In this article, we will be discussing about the factors that directly improves your cost margins.

  1. Increase the product margins
  2. Improve product Offerings
  3. Dramatically Decrease outdated stocks
  4. Distribution efficiency
  5. Infrastructure Returns

You can learn about some added benefits of supply chain management here.

Achieving higher efficiency through Removing Supply chain Fragmentation

One of the most obvious reasons for stocks getting outdated is inefficient processes and fragmentation of the supply chain involved in stock distribution. In this system, each of the distribution centers get their own allocated stock of goods. If each of your distribution centers is operating independently, it can increase your stock demands for every center.

As a result, each of your centers would be required to maintain sufficient stocks for each product. In turn, this may lead to products getting outdated and causing bumps in distribution system.

In-turn, this will also increase the manpower involvement in stock distribution.

And if you have a well-stocked supply network, it allows you to simulate smoother distribution and order management.

Developing and Managing Intricate Supply Chain

For every distribution system, the supply chain intricacy and complexity is a pressing issue.

Let’s take a choice of prioritization in handling the supply chain network.

If you take a congested retailer network like India, you are required to primarily focus on covering maximum number of stores rather than simple geography. This means that you need to handle your transit according to the density of retail stores.

This gives you the ability to visit maximum number of stores within a given time period.

The supply chain network lets you uncover the meetings on each location. This allows you to create a detailed daily plan that allows you to fulfill a maximum number of meetings.

Achieve Higher Profit Margins

In the FMCG market you are largely selling goods that come with pre-set expectations. This means that you cannot depend on innovation to command a higher price.

In this sense, you can achieve a better product margin only through tightly integrating different products. Usually, your final price will be depending on the actual cost of production and overhead costs. (Overstocking and unsold cost).

A supply chain network lets you manage your goods and bring down the accumulated costs.

This helps you achieve higher product margin for the concerned goods.

Creating, Stocking and managing stocking Locations

You need to make sure that the requisite amount of stock is available from the distribution center.

The rising real estate costs mean that stocking and infrastructure costs are also on the rise. In fact, it’s one of the significant reasons for overhead cost. Without a supply chain network, you would be forced to store a threshold stock in every distribution center.

The distribution management allows you to manage your stocks throughout the entire retailing network.

You can also evaluate and simulate the stock flow between different locations. This also reduces the manpower costs for each location.

Conclusion:-

The present day marketplace requires you to compete with a dozen of similar products in every arena. This means that your products get directly compared with regards to pricing and MRP.

In order to achieve overall price reduction, you need to evaluate and optimize each part of your supply network. The supply chain ensures that your stocks are distributed to the right points.

Learn more about improving your supply chain to achieve better income with us @ +91–7899887755 or sales@kapturecrm.com

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