DIGITALIZATION OF NETWORK DESIGN IN FMCG:

A PATHWAY TO SMARTER, FASTER AND MORE

RESILIENT SUPPLY CHAINS

SUBMITTED BY:

NAME PRN
SHREYAS CHIKHALIKAR 24020741017
KASHYAP RANINGA 24020741031
MANALI PIMPLE 24020741036
DHRUMIL MODI 24020741037
SHALMALI PRADHAN 24020741058
 PART A
TITLE: DIGITALIZATION OF NETWORK DESIGN IN FMCG: A PATHWAY TO
SMARTER, FASTER AND MORE RESILIENT SUPPLY CHAINS

1. INTRODUCTION

In today's rapidly evolving landscape, digital transformation is revolutionizing industries,

including the fast-moving consumer goods (FMCG) sector. With consumers demanding
quicker deliveries, personalized products, and seamless online shopping experiences,
FMCG companies are being pushed to rethink how they design and manage their supply
chains. This is where the digitalization of network design comes in—using advanced
technologies to create smarter, more efficient, and more responsive supply chains that can
meet the demands of both customers and businesses.

The increasing complexity of supply chains and the unforeseen disruptions in recent years,
like the global pandemic, have underscored the importance of companies becoming more
agile and resilient. Digital technologies such as artificial intelligence (AI), machine
learning (ML), big data analytics, and the Internet of Things (IoT) are empowering FMCG
companies to make quicker, more informed decisions by offering real-time data and
insights. Whether it's optimizing delivery routes, predicting inventory needs, or minimizing
waste, these technologies are helping companies stay ahead in a highly competitive market.

The FMCG industry, which includes everyday products like food, beverages, and personal
care items, operates at a fast pace, handling massive volumes of products while maintaining
razor-thin margins. Ensuring products are delivered on time and in perfect condition is
crucial to keeping customers satisfied. With the ongoing rise of e-commerce, particularly
following the pandemic, companies require adaptable and resilient supply chain networks
that can respond to changes in consumer behavior, whether through deliveries to retail
stores or directly to customers’ homes. Digitalization enables companies to achieve this by
allowing them to swiftly adapt to changes and avoid expensive delays or stock shortages.
RESEARCH OBJECTIVES AND QUESTIONS:

Objective: To explore how digitalization can transform FMCG supply chains, making them
more efficient, agile, and sustainable while overcoming traditional challenges.

Research Questions:

1. How can digital tools help FMCG companies make smarter decisions in their supply
chain networks?

2. What obstacles do FMCG companies face when trying to go digital in their supply
chain design?

3. How does digitalization help companies build supply chains that can withstand
disruptions?

4. What are the broader environmental and financial impacts of using digital technologies
in FMCG supply chains?

This research aims to shine a light on how FMCG companies can successfully adopt digital
technologies to design better supply chains and navigate the challenges that come with this
transition. It will offer insights into real-world applications and strategies that can help
businesses thrive in a digital future.

2. LITERATURE REVIEW

DEFINITION OF MAIN VARIABLES

In order to grasp the digitalization of network design within the fast-moving consumer
goods (FMCG) industry, it is important to first clarify the key concepts involved.

1. Digitalization: refers to the integration of digital technologies throughout business

operations. In supply chains, it encompasses the use of tools like artificial intelligence (AI),
machine learning (ML), big data analytics, and the Internet of Things (IoT) to enhance
decision-making, streamline processes, and improve communication.

2. Network Design: This involves the strategic planning of a company’s supply chain,
including choosing optimal locations for suppliers, distribution centers, and warehouses,
as well as identifying the most efficient routes for product distribution. Network design
influences cost, speed, and flexibility in delivering products to customers.
3. FMCG Supply Chain: FMCG refers to products that are sold rapidly and at a relatively
low price point, including items like packaged foods, beverages, and household goods.
An FMCG supply chain involves the fast and efficient movement of these products from
manufacturers to retailers or directly to consumers.

4. Resilience: In supply chain terminology, resilience denotes the capacity to swiftly

bounce back from disruptions, including natural disasters, pandemics, or shortages in
supply. Digital technologies help companies anticipate disruptions and respond with
agility.

5. Efficiency: This measures how well a supply chain optimizes resources, minimizes
waste, and reduces costs while maintaining service levels. Efficiency is crucial for FMCG
companies, which operate on thin margins and need to maintain high volumes of product
movement.

LITERATURE RELATED TO RESEARCH OBJECTIVES AND VARIABLES

There is growing recognition in the literature that digitalization is reshaping supply chain
network design, particularly in industries like FMCG where speed and flexibility are
critical. Several studies have explored how digital technologies improve efficiency,
resilience, and responsiveness.

A key study by Saberi et al. (2019) investigates the incorporation of blockchain and IoT
technologies within supply chains. The authors contend that these technologies provide
exceptional transparency and traceability, which are crucial for enhancing FMCG
networks. By enabling real-time tracking of goods, companies can improve inventory
management and reduce delays, thus boosting both efficiency and customer satisfaction.

In their examination of digital transformation in supply chain management, Ivanov et al.

(2021) emphasize the significance of AI and machine learning in forecasting demand and
optimizing logistics. According to their findings, these technologies allow FMCG
companies to forecast sales more accurately, plan production schedules, and adjust
distribution routes dynamically. This leads to significant cost savings and better service
levels, as companies can better align their supply chains with actual demand.

Christopher and Peck (2017) contributed to the literature on supply chain resilience,
focusing on how digitalization strengthens supply chains in times of disruption. Their study
emphasizes the importance of visibility, which is enhanced through technologies like IoT
sensors and cloud-based platforms. These tools allow companies to monitor their entire
supply chain in real-time, quickly identifying risks and taking corrective actions to avoid
disruptions. For FMCG companies, this means being able to maintain smooth operations
even when faced with challenges like transportation delays or unexpected spikes in
demand.
Another significant contribution is from Pereira and Silva (2020), who investigated how
big data analytics enhances supply chain network design. Their research indicates that by
analyzing large volumes of data, companies can identify patterns and trends that might
otherwise remain hidden. For example, FMCG companies can use data analytics to predict
which products will be in high demand based on seasonality, customer preferences, or
market trends. This allows for better planning and reduces the risk of overproduction or
stockouts.

EXISTING LITERATURE ON DIGITALIZATION IN FMCG NETWORK

DESIGN

Research specifically focused on the digitalization of FMCG network design is still

developing, but several key studies have laid the groundwork. Mishra et al. (2022)
examined how omni-channel distribution is changing the FMCG landscape, particularly
with the rise of e-commerce. Their study found that digital tools are helping FMCG
companies manage both online and offline sales channels more effectively, ensuring that
products reach customers through the most efficient routes. Digitalization supports more
flexible supply chains that can meet the needs of both physical stores and direct-to-
consumer (D2C) deliveries.

A study by Zhou et al. (2019) explored how digitalization impacts inventory management
in FMCG supply chains. Their results indicate that AI and IoT technologies can
significantly minimize excess inventory while guaranteeing that products are accessible
when and where they are required. Achieving this balance is crucial in the FMCG sector,
where products typically have short shelf lives and experience high turnover rates.

In terms of sustainability, Kamble et al. (2020) examined how digitalization can create
more environmentally friendly supply chains. The authors discovered that by leveraging
technologies such as big data analytics and AI, FMCG companies can minimize waste,
enhance transportation routes, and decrease their carbon footprints. For example, AI can
recommend the most efficient shipping routes, thereby lowering fuel consumption and
emissions. This aligns with the growing consumer demand for sustainability, which is
becoming a competitive advantage in the FMCG industry
RELEVANT THEORY
Several theories underpin the digitalization of network design in FMCG supply chains,
with systems theory being one of the most relevant. Systems theory views the supply chain
as an interconnected network of processes, resources, and stakeholders. Digital tools
strengthen this interconnectedness by offering real-time data and facilitating better
communication throughout the supply chain. This empowers companies to make more
informed decisions and respond more rapidly to shifts in demand or disruptions.

Supply Chain Management Theory also plays a critical role, especially when considering
concepts like lean supply chains and agile supply chains. Lean supply chains prioritize the
elimination of waste and enhancement of efficiency, whereas agile supply chains highlight
the importance of flexibility and responsiveness. Digitalization facilitates both strategies
by automating processes, increasing accuracy, and fostering more dynamic decision-
making.

Additionally, resource-based view (RBV) theory offers a framework for understanding

how FMCG companies can leverage their digital capabilities as a competitive advantage.
According to RBV, companies that effectively use their internal resources—such as data
analytics, AI, and IoT infrastructure—can outperform competitors by creating more
efficient, responsive, and resilient supply chains.

In summary, the literature confirms that digitalization is transforming the way FMCG
companies design and manage their supply chains. While there is already significant
evidence supporting the benefits of digital technologies, such as improved efficiency, better
demand forecasting, and enhanced resilience, there is still a need for more research focused
specifically on FMCG network design. This research will help bridge that gap, exploring
how digital tools can be applied more effectively in this fast-paced, consumer-driven
industry.
3. RESEARCH METHODOLOGY

To investigate the impact of digitalization on network design in the FMCG industry, this
study will adopt a mixed-method approach. By using a combination of both qualitative and
quantitative techniques, we aim to gather comprehensive insights that address the research
objectives and provide a balanced understanding of how digital tools are transforming
supply chains in the FMCG sector.

1. DATA COLLECTION TECHNIQUES:

a. Literature Review: The initial step will involve a comprehensive examination of current
academic literature, industry reports, and relevant case studies. This will help establish a
strong foundation of knowledge on the topic, identifying key concepts, technologies, and
challenges that have already been explored, and pointing out gaps that this research can
fill.

b. Interviews: We will carry out semi-structured interviews with supply chain experts,
logistics professionals, and technology providers in the FMCG industry. The purpose is to
understand the real-world challenges and successes of integrating digital tools into supply
chain network design. These conversations will offer valuable practical insights that go
beyond theoretical knowledge.

c. Surveys: A survey will be distributed to a range of FMCG companies that have adopted
digital technologies in their supply chain operations. The survey will collect quantitative
data regarding the effects of digitalization on metrics such as cost efficiency, supply chain
resilience, and overall performance.

d. Case Studies: To complement the survey and interviews, real-life case studies from
FMCG companies that have successfully implemented digital supply chain strategies will
be examined. These examples will provide a concrete illustration of how digitalization can
drive improvements in network design.

2. DATA ANALYSIS TECHNIQUES:

a. Thematic Analysis: The interview responses will undergo analysis through thematic
analysis. This approach will assist in uncovering recurring patterns, prevalent challenges,
and significant themes that arise from the data, adding qualitative richness to the study.

b. Statistical Analysis: Survey data will be processed using statistical methods like
regression analysis to identify trends, relationships, and the degree of impact digital tools
have on supply chain performance.
3. TOOLS AND SOFTWARE:
a. SPSS or R: These tools will be used to analyze the quantitative survey data, helping us
draw correlations between digital adoption and improvements in key performance
indicators (KPIs) like cost reduction, speed, and flexibility.

b. NVivo: This software will assist in organizing and analyzing the qualitative data
gathered from interviews, making it easier to identify themes and draw conclusions.

FLOWCHART FOR RESEARCH COMPLETION:

This methodology allows us to not only explore the theoretical aspects of digitalization in
FMCG supply chains but also gain real-world insights from industry professionals. By
blending qualitative and quantitative methods, this research will provide a well-rounded
understanding of how digital technologies are reshaping supply chain network design in
the FMCG industry.

4. POSSIBLE OUTCOMES OR IMPLEMENTATION

The research on the digitalization of network design in the FMCG industry will likely yield
valuable insights that are beneficial both in practice for industry professionals and in theory
for academics. The outcomes can be divided into practical implications for managers and
broader theoretical contributions for researchers.

PRACTICAL IMPLICATIONS FOR MANAGERS OR INDUSTRY

A significant practical result of this research will be a more refined comprehension of how
digital technologies, including AI, machine learning, IoT, and big data analytics, can be
effectively utilized to enhance the design of supply chain networks in the fast-moving
consumer goods (FMCG) sector.
For managers, this means identifying the specific technologies that are most effective in
optimizing inventory, reducing costs, improving forecasting accuracy, and enhancing the
speed of product delivery to meet customer demands.

For instance, the research might highlight how predictive analytics can be leveraged to
better forecast demand and adjust production levels accordingly, reducing overstock or
stockouts, which is a common challenge in the FMCG sector. Managers will acquire
knowledge on how digitalization enhances real-time decision-making by offering visibility
throughout the entire supply chain. Utilizing digital tools enables them to foresee potential
disruptions, swiftly adapt to market fluctuations, and modify distribution strategies to
streamline delivery routes.

Additionally, this research can guide companies on how to balance the use of digital tools
with existing supply chain structures, making the transition smoother and more efficient.
For industries where digital adoption is still slow, the findings could offer a blueprint for
implementing these tools in a phased and manageable way, thus reducing resistance from
employees or systems that are not yet digitized.

Moreover, sustainability is an increasing concern for both businesses and consumers. By

integrating digital technologies, FMCG companies can optimize logistics and reduce their
carbon footprint through better planning of delivery routes and inventory management,
which could be a major competitive advantage in an environmentally-conscious market.

Overall, the practical implications for managers will revolve around building more
resilient, efficient, and adaptable supply chains that can meet the growing demands of
digital transformation and the rapid pace of change in consumer markets.

THEORETICAL IMPLICATIONS FOR ACADEMICIANS OR RESEARCHERS

This research will enhance the existing knowledge on digital supply chain management
within the academic community, focusing specifically on the FMCG industry. Although
there is a considerable amount of literature regarding supply chain management, the
integration of digital tools in network design for the FMCG sector is still an emerging area,
particularly in light of the swift technological advancements.

One of the theoretical implications is the potential to expand on existing frameworks such
as the Lean and Agile supply chain models by incorporating digital tools. This research
may illustrate how digitalization boosts the adaptability of agile supply chains while also
enhancing the efficiency of lean supply chains, effectively connecting two frequently
distinct paradigms.

This study could also challenge or reinforce existing theories related to supply chain
resilience. Traditional theories often focus on physical assets and human resources as the
primary sources of resilience. However, this research might show that digital capabilities—
such as real-time data tracking and predictive analytics—can be just as critical, if not more
so, in building supply chains that can withstand disruptions.

Furthermore, the research will explore how digital technologies are not just tools for
optimization but also integral to decision-making and strategic planning within supply
chains. This could lead to new theories on the role of technology in strategic supply chain
management, where digital tools become central to every phase of the supply chain, from
procurement to customer delivery.

Academics could also use this research to study how digitalization in the FMCG industry
impacts global supply chain models. Since FMCG products are often distributed across
borders, understanding how digital tools can integrate into global networks could open up
new research avenues, particularly in the areas of trade logistics, global compliance, and
international market dynamics.

By building on and possibly expanding these existing theories, this research will provide
valuable contributions to the academic discourse on supply chain digitalization and
encourage further exploration into how emerging technologies are reshaping industries that
operate on rapid consumer cycles.

In conclusion, the expected outcomes from this research are twofold. Managers in the
FMCG industry will benefit from actionable insights that help improve supply chain
efficiency, resilience, and sustainability through digitalization. Meanwhile, academics will
gain theoretical insights that can deepen the understanding of how digital technologies
influence supply chain management, opening up new directions for research and theory
development. The combination of practical and theoretical contributions will help bridge
the gap between industry practices and academic knowledge, driving both fields forward
in meaningful ways.

KEYWORDS

Digitalization, FMCG, Supply Chain Network Design, Artificial Intelligence (AI),

Machine Learning (ML), Internet of Things (IoT), Big Data Analytics, Supply Chain
Resilience, Predictive Analytics, Omni-Channel Distribution, Inventory Management,
Sustainability, Supply Chain Optimization, E-Commerce, Supply Chain Agility, Digital
Transformation, Blockchain, Real-Time Data, Demand Forecasting, Cloud Computing,
Logistics Management, Automation, Smart Supply Chains, Lean Supply Chain, Agile
Supply Chain, Disruption Management, Digital Supply Chain Strategy, Resource-Based
View (RBV), Network Optimization, Supply Chain Efficiency
REFERENCES

Saberi, S., Kouhizadeh, M., Sarkis, J., & Shen, L. (2019). "Blockchain technology and its
relationships to sustainable supply chain management." International Journal of Production
Research, vol. 57, no. 7, pp. 2117-2135.

Ivanov, D., Dolgui, A., Sokolov, B., & Ivanova, M. (2021). "Digital supply chain twins:
Managing the ripple effect, resilience, and disruption risks by data-driven optimization,
simulation, and visibility." Transportation Research Part E: Logistics and Transportation
Review, vol. 136, pp. 101922.

Christopher, M., & Peck, H. (2017). "Building the Resilient Supply Chain." The
International Journal of Logistics Management, vol. 15, no. 2, pp. 1-14.

Pereira, C. R., & Silva, A. L. (2020). "Big Data Analytics and Its Application in the Supply
Chain: A Study on Benefits and Challenges." Journal of Supply Chain Management, vol.
56, no. 2, pp. 45-59.

Mishra, R., Modgil, S., & Shukla, A. (2022). "Omni-Channel Strategies for the FMCG
Sector: Integration of Digital and Traditional Supply Chains." Journal of Business
Research, vol. 139, pp. 1004-1013.

Zhou, H., Benton, W. C., & Browning, H. (2019). "The Impact of Digitalization on
Inventory Management in FMCG Supply Chains." Supply Chain Management: An
International Journal, vol. 24, no. 3, pp. 421-435.

Kamble, S., Gunasekaran, A., & Dhone, N. C. (2020). "Sustainable Supply Chains in the
Era of Industry 4.0: Integrating Digital Technologies to Enhance Environmental
Performance." Production Planning & Control, vol. 31, no. 2-3, pp. 71-86.

Singh, R. K., & Gupta, A. (2021). "Digital Transformation in the FMCG Sector: Strategic
Implementation of AI and IoT in Supply Chain Management." Journal of Manufacturing
Technology Management, vol. 32, no. 5, pp. 1203-1220.

Holweg, M., & Helo, P. (2021). "Digital Lean Supply Chains: A Future Roadmap."
International Journal of Operations & Production Management, vol. 41, no. 7, pp. 1105-
1124.

Bowersox, D. J., & Closs, D. J. (2021). "Logistical Excellence: It's Not Business as Usual."
Supply Chain Management Review, vol. 25, no. 1, pp. 48-58.
 NAME: KASHYAP RANINGA || PRN: 24020741031

PART B
Digitalization is reshaping the FMCG supply chain by integrating advanced technologies
like artificial intelligence (AI), machine learning (ML), big data, and the Internet of Things
(IoT). These innovations allow companies to make smarter decisions, streamline
operations, and improve communication across the supply chain. In an industry where
speed, flexibility, and efficiency are critical, these digital tools offer significant advantages.

For instance, blockchain and IoT have been shown to enhance transparency and tracking,
enabling real-time monitoring of goods as they move through the supply chain. This
minimizes delays, improves inventory management, and enhances customer satisfaction
by ensuring products are delivered on time and in optimal condition. AI and ML, on the
other hand, are increasingly being used to predict consumer demand and optimize logistics.
This allows FMCG companies to more accurately forecast sales, adjust production
schedules, and choose the most efficient distribution routes, leading to cost savings and
better service.

A key area where digitalization is making a major impact is in building resilient supply
chains. Given the unpredictable disruptions caused by events like natural disasters or
pandemics, digital tools enable companies to monitor supply chains in real time, quickly
identifying risks and taking action to avoid disruptions. This enhanced visibility helps
businesses maintain smooth operations even when faced with unexpected challenges. As
digital tools continue to evolve, their role in transforming the FMCG supply chain is
becoming more vital, making it more adaptable, efficient, and resilient in today’s dynamic
market.
031_RM_Assignment_Part_A&B.
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by Kashyap Raninga

Submission date: 19-Oct-2024 11:47PM (UTC+0530)

Submission ID: 2490313024
File name: 031_RM_Assignment_Part_A_B.docx (151.2K)
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