Impact COVID-19 on FMCG Supply Chain

The supply chains today are far more complex as compared to what they were a decade ago. The COVID-19 pandemic has not only hampered the production facilities, but has also disrupted the supply chains globally. In order to formulate corporate strategies, organizations are required to comprehend their direct supply chains and also inherit risks which they may get exposed to at their supplier and customer level. This phenomenon is regarded as the nature of every economy. The implications of coronavirus outspread on the supply chains is already quite evident. The pandemic has compelled consumers to radically change their purchase behaviours which has led to hoarding and stock piling of daily essentials and heath & wellness products. This behaviour has subsequently affected the grocery aisles holding non perishable goods, including FMCG products. Retailers in the U.S. have acknowledged the COVID-19 implications on supply chain, apart from sourcing and manufacturing in china. Approximately, 20% of the supply chain retailers in the U.S. are exposed to China. Albeit things coming back online in China, they still have shortage of labour which is affecting the cargo movement and hence cross border trade. Moreover, the U.S. trade war, increasing labour costs, and growth in number of manufactures producing for their own market in China, were some factors previously motivating U.S. retailers to move away from the market. Similar to a trade war scenario, the pandemic could lead to acceleration of more diversified supply chains by the U.S., rather than solely/largely relying on China. Most of the U.S. companies, are facing doubled lead times and the shortage is caused due to lack of air and water freight options in order to move the goods to United States, despite of filled orders. This is an added supply chain disruption faced in the U.S. The lockdown scenario in India has interrupted the operations of FMCG distributors. Since the lockdown, there has been an enormous shortage of labour and manpower. Regardless of the goods being manufactured and stocked in warehouses, the distributors are however unable to further supply them to the final retailers. There are several reasons causing this interruption, including police obstruction and manpower shortage. Consequently, the grocery and supermarket retailers are staring to face shortage of essential FMCG products. Nevertheless, the government has now stepped in with assistance of technology to promote linkage between suppliers and delivery partners. European countries are facing a harsh time with maximum affected and death cases due to the COVID -19 pandemic. Countries such as Italy, Spain, France and Germany facing lockdown for weeks have certainly affected the supply chain of multiple businesses. The grocery store shelves have been wiped-off of their daily essentials, health & wellness and FMCG products. This presents potentially costly challenges for several supply chain leaders. Major swings in the inventory due to panic buying further reflect the upward stream of the supply chain. Manufacturers are left overwhelmed with unanticipated glitches in demand, distributors are in a complex state while determining the distribution during shortage and subsequently retailers lose potential sales.
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