If you are bitten, you are twice prepared for hyper. Consumer goods companies say they have put their teams in the hyperalert to ensure uninterrupted operation of procurement, distribution, and manufacturing – all to reduce unexpected and sudden disruptions as states opt for closure and curfews during the second covid wave. “We have put our teams in the hyperalert; ensuring that inventory stocks are close to the most demanding areas, supply cycles are fast and cost-effective,” said Bisleri International chief executive officer Angelo George. With the Maharashtra government announcing strict weekend closures and new restrictions including late-night curfew in the province by the end of Sunday, companies have said they will need clarification on whether all daily necessities are listed as important, as happened last year. “The industry will need further clarification of what is relevant and important, and the new limitations now,” said George. Essential services are exempted from the night curfew.
Officials at major FMCG companies have said they have increased supply chain agility. They move to a medium-sized and reduced-level approach to reduce disruption to the supply of raw materials and ensure adequate stocks to prevent the closure of any unexpected stock shortage. “We have reduced replenishment cycles from production facilities to retail stores by half – about five days now, from a typical 8-10-day of the industry average,” said Mayank Shah, head of the country’s largest biscuit manufacturer, Parle Products. “We are preparing for asset management and ensuring that we increase productivity in all of our crops, so we are ready for any sudden disruption,” said Sunil Kataria, CEO, India & SAARC, Godrej Consumer Products.
Executives said that without the best preparedness, they are banking on e-commerce sales and hope for a few reductions by authorities in interstate movements. Dabur chief executive Mohit Malhotra said the company had applied last year’s lessons on improving supply and production in areas where barriers were placed. This includes over-supplying and increasing the frequency of goods to distributors in influential markets. The FMCG sector reported a 6% growth rate in the last quarter of December 2020, the fastest in 16 months, according to research firm Kantar Worldpanel. But the outbreak of the epidemic threatens to set back some recovery, say analysts, adding that too little closure and social distancing practices could hurt sales, especially in the more sensible or those that rely heavily on consumption such as soft drinks, hair dyes, detergents, and deodorants.
Commenting on the closure of the Maharashtra restaurants and bars announced later this Sunday, VP Pradeep Shetty, chief executive of the Hotel and Restaurant Association of Western India (HRAWI), said, “We have lost if we are expected to be together, closed down a business and get nothing, in the middle, take care of salaries, non-taxable owners, pay legal fees, and do not generate electricity and water bills until the industry is fully operational.”
ICICI Securities analysts Manoj Menon and Karan Bhuwania wrote in an April 2, 2021, report that “long-term companies supply chains, or those with a market for use away from production facilities can face supply challenges. FMCG companies may also face challenges in demand planning, as they have to ensure the availability of the right stock at the point of purchase, which can be even more difficult in the event of the filling of household pantry”.
The credit rating agency ICRA released a March report that uncertainty related to the near-term perspective has risen sharply, following the rise of new Covid-19 infections, restrictions in local boundaries are required. “If this trend increases, it will improve the recovery outcomes that are expected to occur soon, and it could lead to supply-chain disruption.”
