A Complete Guide to FMCG Logistics

Fast-Moving Consumer Goods (FMCG) are everyday products that are sold quickly and purchased frequently, such as food, beverages, toiletries and household items.

FMCG logistics is the process of moving these high-demand products from their site of manufacture or storage to retail outlets and directly into the hands of consumers.

Here, we take a closer look at the logistics processes required in getting goods to where they are needed on time.

What does FMCG mean?

Fast-Moving Consumer Goods (FMCG) refers to products that are in high consumer demand and typically have a short shelf life.

Products classed as FMCG include those sold by supermarkets and convenience shops, including soft drinks, snacks, groceries and personal care items.

These products are typically stocked in large quantities, are often perishable and are in constant demand.

A seamless, fast moving supply chain that gets goods to consumers when they need them is critical.

What is FMCG logistics?

FMCG logistics covers all the movements involved in storing and transporting products to the end user.

Typically, the site of manufacture is different to where products are stored and sold from.

Goods will likely be stored in a warehouse before being dispatched, either wholesale to a retailer or direct-to-consumer (D2C), where they are picked, packed and dispatched directly to the end user.

Key features of FMCG logistics are a high turnover of goods and tight profit margins.

With success increasingly relying on speed to market, real-time visibility of goods throughout their journey is essential.

Having accurate, data-led warehouse inventory ensures successful management of stock and orders, helping balance supply and demand, as well as customer satisfaction.

How does FMCG logistics work?

FMCG logistics manages the full movement of goods from manufacture to sale and covers the following processes:

Inventory Management

Monitors and controls the stock levels of goods to ensure accurate numbers and product availability.

Warehousing

The storing of goods within a purpose designed facility. This can include raw materials or products that are ready to be sold. FMCG storage must meet food grade standards when being used to store goods for human consumption.

Order Processing

Gets goods ready for shipping, either to be sold within retail outlets or shipped to consumers directly.

Pick and Pack

This is where goods are located and selected from the warehouse, then securely packaged with any relevant paperwork ready for onward movement.

Distribution

Refers to the shipping of goods through transport operators. For bulk orders being sent to retailers, this will likely include palletised goods that are moved by HGVs, while direct-to-consumer (DTC) orders are often smaller packages that are shipped by parcel couriers.

Returns Management

For processing goods that are returned by the customer. This includes checking the condition before restocking or disposing of as required.

Why Is FMCG logistics different?

FMCG logistics and warehousing usually involve much larger quantities of goods.

The short product lifecycles involved in FMCG logistics make speed and accuracy vital for success.

As FMCG also covers perishable and short shelf-life products, chilled and frozen goods, supply chains must comply with specific standards and can be much more challenging.

Order volumes can be influenced by seasonal demand, such as heatwaves, cold snaps and Christmas, and peak season promotional campaigns like Black Friday or product launches.

FMCG logistics must reflect these peaks and troughs of demand and purchase behaviour while also managing stock rotation and batch expiry to ensure no product is wasted.

Consumers expect products to be readily available, so FMCG logistics must also meet the delivery expectations of both retailers and consumers.

If a fulfilment provider cannot get goods where they need to be in time, consumers will simply go elsewhere.

Common challenges in FMCG logistics

With goods always on the move, logistics for FMCG presents its own unique challenges.

Demand forecasting

The fast-paced nature of the FMCG sector can make it incredibly difficult to forecast consumer demand. The power of social media and influencers can quickly make previously unknown products and brands highly sought after, while promotional offers can cause sales to skyrocket. If you haven’t forecast these sales peaks, you may struggle to avoid stock sellouts.

This is where data and AI are essential. Stock accuracy, trend predictions and the joined-up management of multiple sales channels make forecasting and preparing your supply chain much easier.

Supply chain disruptions

Supply chain disruptions have become a big risk factor for FMCG logistics, sometimes resulting in empty shelves.

Geopolitical disruptions, conflict and the pandemic have all impacted supply chains in recent years by making ingredients or materials difficult to source. Add in a fuel crisis and rising transport costs and FMCG brands really feel the pressure to keep supply chains moving.

Peak season

To accommodate peak sales, FMCG brands need a robust logistics solution. This is where accurate inventory management and preparing for peak season becomes vital.

Demand for consumer goods can increase dramatically in a very short period, while supply chains are expected to maintain the same speed, accuracy and service levels.

This may result in errors in the fulfilment process, resulting in mispicks or delivery delays. Scaling up warehouse and logistics teams during this time can help to meet demand and reduce staff fatigue, reducing the risk of human error.

The benefits of outsourcing FMCG logistics

Why choose a specialist logistics provider? FMCG fulfilment and distribution needs efficiency and accuracy.

Using an experienced solutions provider like e2b means you benefit from a cost-effective service that can be scaled with the needs of your brand.

• Reduced operational costs – a cost-effective solution that ensures you benefit from the most reliable transport options and the best technology
• Scalability – need more warehousing space and additional fulfilment services? Your FMCG logistics provider will work with you to scale up your supply chain
• Warehouse technology – to make inventory easier to understand and make processes more efficient
• Real-time inventory visibility – so you know product demand in an instant
• Faster fulfilment – to get goods where they need to be as quickly and efficiently as possible
• Improved customer satisfaction – helping you to join up customer communication and provide high-quality service
• Access to logistics expertise – to help you improve efficiency and protect your margins
• More time to focus on growth – so you can focus on the important aspects of your business

What to look for in an FMCG logistics partner

If you’re searching for the right FMCG logistics partner, use our checklist of questions to help identify an experienced and reliable service provider.

Industry experience

• Do they have specific FMCG logistics experience?
• How long have they operated in the sector?
• Who do they currently work with?
• Ask for references from existing clients that operate within this space

Warehouse management systems

• What are the key features of their WMS?
• How well will it connect with your current Enterprise Resource Planning (ERP), ecommerce platform and accounting software?
• Is the system cloud-based for real-time updates across multiple locations?
• Does it offer real-time dashboards for order status and inventory levels?

Ecommerce integrations

• What integrations and Application Programming Interface (APIs) do they have?
• How will these work with your internal systems and software?
• Connecting data is essential for every aspect of your business – order accuracy, customer satisfaction and scalability

Scalability

• What happens if we double or triple order volumes within the next 12 months?
• What’s the largest volume increase you’ve managed for an FMCG logistics client?
• How do you maintain service levels during peak periods?
• How quickly can you onboard new products, customers or sales channels?

Reporting

• What real-time visibility will I have of my inventory, orders and stock movements?
• Do you provide reporting dashboards and can they be customised?
• Can reports be tailored to my KPIs and business requirements?

Service levels

• What is your pick-and-pack accuracy rate?
• What percentage of orders are dispatched on time?
• How do you identify, manage and recover from fulfilment errors?

Sustainability

• How do you help customers reduce the environmental impact of their supply chain?
• Can you give specific examples of sustainability improvements you’ve helped other FMCG brands achieve?

Customer support

• Who will manage our account, and what level of support can we expect day-to-day?
• What customer support do you offer when things go wrong?
• Can you provide examples of how you’ve resolved problems for FMCG logistics clients?

How technology is transforming FMCG logistics

Technology is everything in FMCG supply chains. It has played a huge role in improving the efficiency of FMCG logistics, providing greater visibility and increasing the speed at which goods can be processed and dispatched.

Warehouse management

Contemporary warehouse management systems (WMS) are a game changer for fulfilment providers, ensuring manufacturers and retailers can gain full visibility of their FMCG supply chain, access real-time updates on stock levels and predict demand with greater accuracy.

At e2b, we have developed API integrations that enable our customers to connect their internal systems with our WMS. These integrations are designed to connect various data points, such as warehouse inventory and sales reporting, all in real time.

Barcode scanning and inventory visibility

Barcode scanning of all goods entering or leaving our warehouse keeps track of all SKUs, providing full visibility of goods at all times.

It ensures traceability of stock batches and serial numbers, to make it easier to keep track of sell by dates. This helps to prevent waste by ensuring stock isn’t left to go out of date, or can be easily identified in the event of a product recall.

Full visibility also speeds up the dispatch process by removing the need to manually search for the location of stock.

Frequently asked questions on FMCG logistics

• What is FMCG logistics?
  • The movement of Fast-Moving Consumer Goods (FMCG) from their site of manufacture or storage to shop shelves or directly to customers.
• What products are classed as FMCG?
  • Goods that are purchased often and are in high demand, or have a short shelf life. They typically include products that are sold in large quantities, such as groceries and personal care items.
• Why is FMCG logistics important?
  • To keep shop shelves fully stocked and ensure consumers can access the everyday products they need. FMCG logistics deals with high quantities of products and quick stock rotation.
• What are the biggest challenges in FMCG logistics?
  • Goods are in constant demand, which requires a robust and fast-moving supply chain. FMCG may also be perishable or require chilled or frozen storage, which adds an additional layer of complexity to the supply chain.
• What is the difference between FMCG logistics and standard logistics?
  • FMCG logistics manages larger quantities of goods at faster speeds, while maintaining product quality and fulfilment accuracy.
• Should FMCG companies outsource fulfilment?
  • Outsourcing FMCG logistics enables brands to benefit from experienced, knowledgeable experts and access to the best software and reporting. All of which results in a reliable and cost-efficient service.
• What should I look for in an FMCG logistics provider?
  • Knowledgeable and experienced FMCG experts, a willingness to share case studies and references, and their ability to overcome challenges.

FMCG logistics: key takeaways

Successful FMCG logistics is all about speed, visibility and reliability. As businesses grow, having a specialist and experienced fulfilment partner becomes increasingly valuable in keeping supply chains efficient and profitable.

Choosing the right FMCG logistics partner with the right technology can enable businesses to reduce operational complexity while also improving customer satisfaction.

Learn more about e2b’s FMCG logistics solutions and how we can support your business, or contact our team for a quote.