What are FMCG?
By Rackbeat February 7, 2022
FMCG is a large market rife with possibility for profit – but it is also a market tied to certain risks regarding production and purchasing of products.
But exactly what is FMCG and what elements of the production- and purchasing process should you be especially aware of if your company works with FMCG? Give this post a read and get your questions answered.
What does FMCG stand for?
FMCG stands for “Fast-Moving Consumer Goods” – products that have a fast turnaround. FMCG are all forms of commercial products that are cheap to produce, are sold relatively cheaply and have a tendency to sell quickly.
One of the defining characteristics of FMCG is that the products are expendable. A good rule of thumb here is, that if a product is not designed to last for more than 3 years, it can be classified as expendable – and therefore the product is a form of FMCG.
That means that many of the wares in your local supermarket for example, falls under the category of FMCG. This includes for example:
- Bread and other baked goods
- Fruits and vegetables
- Meat and dairy products
- Toiletries and other personal hygiene products (I.E. toilet paper, soap, toothpaste, and mouthwash)
- Alcohol and tobacco
- Some forms of pharmaceutical goods (I.E. moisturizers, over-the-counter medicine and perscription medicine)
Some forms of consumer electronics can also be classified as FMCG. This pertains to products such as mobile phones, laptops, and digital cameras. Should you buy a mobile phone for example, you are typically using it for 2-3 years, before you replace it with a newer model.
Challenges for FMCG-businesses
As a business there are a lot of money to be made on fast-moving consumer goods. There are some special challenges tied to being a FMCG-business however.
First of all, there are not particularly high profit margins on FMCG. Additionally, the products often have a short shelf-life. That means that a FMCG-business’ goal are to sell as many products as they can – as fast as they can.
Therefore it is also important for FMCG-businesses to continually deliver quality products, that continuously get their customers to return to buy their products again and again. This also means that factors such as innovation and product development is crucial for a FMCG-business’ success. Plainly, this also means that FMCG-businesses have a 100% overview of which products they have in stock, including all the products expiration dates and so on.
If your business works with fast-moving consumer goods the challenges surrounding the products’ perishability increases the importance of your production running smoothly every day. There are multiple reasons for this – including:
- You inventory needs to be optimized to handle and organize many types of products with differing needs.
- Because FMCG are expendable, it is crucial to keep track of how large an amount of each product the business produces. Here it is especially important that you are not producing or buying more than you can sell before the products perishability is exceeded.
- When you work with expiration dates it is also important to keep an overview of your shipments, both inbound and outbound. Without an overview of shipments you are opening up to mistakes that can stop or delay the products from getting to your customers in time, resulting in product waste.
Because of these factors, FMCG-businesses are required to have a full overview of inventory – and smart warehouse management can help you automate this.
Get the full overview of FMCG-production with Rackbeat
Rackbeats Warehouse Management System makes it possible for businesses that work with fast-moving consumer goods, to congregate their entire production flow in one system. That way, you can optimize the throughput and keep an overview of production.
You can quickly identify delays, deviations and other challenges, you avoid producing more than is needed, and you can continuously plan ahead in regards to production.
Read more about inventory management for manufacturing here, and discover how Rackbeat can help you create an overview of the FMCG-production in your business.