Challenges of ERP in Supply Chain Sector in FMCG Industry in India - Dissertation Example

The FMCG companies are aligning their supply chain to meet the market demand and serve according to the needs of the customers in the country. The performance of the supply chain provides an edge to the company over its competitors. It can be well understood that when a country has such a massive establishment of the FMCG industry, then the supply chain would be surely playing an important role in this sector. Keeping in mind the significance of the supply chain in the FMCG sector in India and the increasing use of technology in the retail and FMCG sector, this study aims to thoroughly analyze the significance and challenges of implementing Enterprise Resource Planning (ERP) in the supply chain of the FMCG sector of Lucknow, India.

The issues which the supply chain companies face due to incorrect ERP implementation or inadequate training would also be discussed. Further, instances of the breakdown of the supply chain services in the FMCG sector due to ERP problems would also be discussed. Secondary research was conducted and the literature available on the subject was studied to discuss the significance of ERP in the supply chain. The role of the IT integrated supply chain in companies like ITC, HUL, Dabur, and Nestle has been identified.

It was found that ERP integration has streamlined the information flow and has assisted in the smooth flow of goods and services. The respondents considered conducting the study confirmed the fact that all the four FMCG companies have excellent IT integrated framework and they are quite satisfied with its performance.India can boast of being the fourth largest Fast Moving Consumer Goods (FMCG) Sector globally (India Brand Equity Foundation, n. d., p. 2). The estimated size of the FMCG sector of India is Rs.

1,300 billion (Gnimoline, n. d.). It has shown further growth of about 11 percent in recent times. However, the FMCG sector of India is not like that of the developed markets, which are only dominated by few major players. It is defragmented and comprised of a large number of sellers who conduct business in both organized and unorganized markets. Among 12-13 million retail stores, about 9 million stores belong to the FMCG segment. The population of the country is over one billion, so it has a strong customer consisting of about 300 million middle-class buyers.

It is considered to be among the largest economies because of the large purchasing power of the people (Sharma, and Bakshi, 2012, p. 472-474).India is considered to be the fastest developing country in the world now, so the disposable incomes of the people are increasing and even the standard of living of the rural people has gone through a drastic change. The Indian FMCG market is flooded with goods and services and the consumers have access to innumerable products based on their needs and requirements.

The major players in the FMCG sector of India are Britannia Industries, Dabur India, ITC, Nestle India, Palmolive, Marico Industries, Tata, Amul, and many more (Sharma, and Bakshi, 2012, p. 472-474). It was derived from research that an average Indian spends around 40 percent of their income on products like groceries and about 8 percent on personal care items, as can be seen in Figure 1.To understand the usage of ERP and its pros and cons in the supply chain of the FMCG sector, it is very important to first segregate the segments of the FMCG industry because the different companies selling diverse products utilize ERP based on their convince, business strategies, and goals of the company.