Agile Supply Chain Management Impact on FMCG Organizational Success

This report investigates the impact of utilizing agile supply chain management strategies on organizational capabilities within the Fast-Moving Consumer Goods (FMCG) industry, particularly in Australia. It addresses key issues within the FMCG supply chain, assesses the current status of agile strategies, and identifies relevant tools and measures for improvement. The research delves into the supply chain activities of FMCG organizations, emphasizing the agility concept, value-chain concept, and lean principles. It explores the dimensions of an agile supply chain, including customer sensitivity, virtual integration, process integration, network integration, and measurement based on capabilities. The report also discusses measures of evaluation, such as the use of modelling processes and End-to-end resource planning (EERP) to improve information flow. Ultimately, the study aims to provide insights for FMCG organizations to enhance their supply chain agility and overall performance.

The impact of using agile supply chain management on the organizational capabilities in
the FMCG industry
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Table of Contents
1.Introduction..........................................................................................................................................2
2.Background of the study....................................................................................................................2
3.Problem and management decision.................................................................................................3
3.1 The management problem......................................................................................................3
3.2 Research question..................................................................................................................3
3.3 Objectives...............................................................................................................................4
4.Literature review.................................................................................................................................4
4.1 Supply chain management.....................................................................................................4
4.2 The value-chain concept........................................................................................................5
4.3 The lean concept....................................................................................................................5
4.4 Key supply chain activities of the FMCG organizations.......................................................5
4.5 The agility concept in the FMCG industry............................................................................5
4.6 Measures of evaluation..........................................................................................................7
5.Research design and method.............................................................................................................8
5.1 Research design and justification...........................................................................................8
5.2 Subjects for study and selection process................................................................................8
5.3 Conceptualization and measurement.....................................................................................9
5.4 Data collection method........................................................................................................10
5.5 Data analysis........................................................................................................................10
6.Ethical consideration in social research.......................................................................................10
7.Research limitations.........................................................................................................................11
References..............................................................................................................................................12

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1. Introduction
The fast-moving consumer goods (FMCG) are also called the "consumer packaged goods". They
include groceries and other items consumers buy at regular periods; like household accessories,
shampoos, toilet soaps and certain electronic goods. These goods have a high rate of return (Ray
et al. 2016).
The supply chain landscape is not static, it continues to evolve and vary in size, configuration,
shape and management strategy. The supply chain lifecycle is similar to the product lifecycle, it
starts with the stages of emergence, growth, maturity and decline. This lifecycle is applicable in
different industries, including the FMCG industry (MacCarthy et al. 2016).
There are many sorts of risk associated with the FMCG supply chain management. The internal
and external forces affect the effectiveness of the supply chain. In order to enhance its efficiency
and effectiveness, FMCG organizations use the agile to reduce the cost of production and timely
respond to the customer needs (Agigi, Niemann & Kotzé 2016).
This research critically analyzes the importance of using the agile supply chain in the FMCG
industry, its framework and dimensions. Also, it discusses its impact on the FMCG
organizational capabilities and the best measurements that fit the agile strategy.
2. Background of the study
The supply chain strategy in each organization is derived from its unique characteristics,
customer focus, channels of distribution and investment mix. Focusing on the most strategic
priorities and capabilities and aligning them with the organizational goals is the key to create a
competitive advantage. The FMCG business strategy involves one or a mixture of four key
supply chain strategies, represented in the competitive, partnered, responsive (agile) or
sustainable strategy. The responsive or agile strategy refers to being able to adaptively and

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quickly respond to the consumers, retailers and suppliers' changing needs and requirements while
ensuring risk management through the supply chain (A.T. Kearney 2017).
A survey was conducted by A.T. Kearney in 2017 about the Australian Food and Grocery
Council (AFGC) members, revealed that the dominant strategy among them is the responsive
(agile) strategy. About 3 out of five members used this strategy in 2015 and still using it. An
increasing attention of the FMCG organization is devoted to using technology to help in
producing innovative products. Miragliotta et al. (2009), as cited in Balocco et al. (2011),
discussed the main advantages of using the radio-frequency identification (RFID) on the supply
chain performance. RFID is used to automatically identify tags of products and easily tracks
them.
3. Problem and management decision
3.1 The management problem
FMCG organizations are required to carry out effective and adequate supply chain management
to make sure that business performance always improves upon. The assessment of current
situation shall be done to find out new initiatives that may be implemented for managing supply
chains. The management needs to assess the current scenario and determines the new measures
that should be implemented to maintain supply chain agility and faster launch of the new
products (Bourlakis & Matopoulos 2010). The research problem could be stated as follows:
"Measuring the impact of using the agile supply chain management on the organizational
capabilities in the FMCG industry in Australia".
3.2 Research question
The following research questions will be answered upon the completion of the research:

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 What are the difficulties that need to be resolved within the supply chain of the FMCG
organizations in Australia?
 What is the current status of using an agile strategy in the supply chain management at the
FMCG organizations in Australia?
 What are the new measures and tools relevant to the agile strategy that can utilize the
management of the FMCG supply chains?
The information required to answer the research questions will include the perception of the
supply chain manaagers and the changes that should be made to the organization for managing
and improving the supply chains in Australia.
3.3 Objectives
 To assess the factors that contribute to the supply chain management in the FMCG
organizations.
 To determine the issues associated with supply chain agility in the FMCG organizations.
 To determine the benefits of using the agile supply chain in FMCG organizations.
 To develop a list of tools and measures that can be used to improve supply chain management.
4. Literature review
4.1 Supply chain management
Supply chain management refers to the active management of the supply chain in order to
maximize the value to the customer and create an organizational competitive advantage. The
supply chain activities include the sourcing, product development, the production process and
logistics management. Organizations should operate the supply chain effectively and efficiently.

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Managing the linkages between the supply chain activities is likely to increase the value creation
and the customer satisfaction. It is important to lower the cost of production along the chain
activities by eliminating the unnecessary expenses to achieve system effectiveness. Efficiency
could be achieved by solving problems and removing bottlenecks (MacCarthy et al. 2016).
4.2 The value-chain concept
The value chain concept depends on the organizational strategic planning and extends beyond
the organizational boundaries to include the distribution networks. Different factors are involved
in the delivery of the products and services to the customer (Donovan et al. 2015).
4.3 The lean concept
A lean concept is a team-based approach to continuous improvements that focus on waste
elimination to create a value-added. This concept has been lately applied in the supply chain and
logistics management issues (A.T. Kearney 2017).
4.4 Key supply chain activities of the FMCG organizations
The FMCG supply chain activities include primary activities and supporting activities. The
primary activities are the inbound logistics, operations, outbound logistics, sales and marketing
and services. The support activities include the procurement activities, technology development,
human resource management and firm infrastructure (Ray et al. 2016).
4.5 The agility concept in the FMCG industry
Agility refers to the organization's ability to respond to the changes in demand rapidly in terms
of quantity and variety. Agility is about the organization-wide capability, including the
information systems, organizational structure and logistics processes. The agile organization is
flexible because it mainly depends on the flexible manufacturing systems (FMS). It is often used
by the lean manufacturing to achieve the zero inventory and the just-in-time production. The lean

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strategy focuses on the elimination of all the waste and non-value adding activities, but the agile
strategy requires rapid reconfiguration in response to the customer needs and waste elimination
as much as possible (Gligor, Esmark & Holcomb 2015).
Christopher (2000), argues that organizations would have to choose between the pure agile or a
lean strategy to adopt within its supply chain. Sometimes they will have to combine between the
two strategies in a hybrid strategy. The supply chain may require to be lean for some activities
and agile for the rest.
The agile supply chain dimensions are customer enriching, enhancing competitiveness through
cooperation, mastering change and uncertainty through the organization. According to van Hoek,
Harrison & Christopher (2001), the agile supply chain framework involves the following:
 Customer sensitivity or the customer-centered rather than product centered logistics.
 The virtual integration that represents the immediate conversion of consumer demand
into new products and services by using knowledge-based methods rather than the multi-
function methods.
 Process integration that represents the self-management to maximize the autonomy rather
than the standardization of work.
 Network integration that depends on the fluid clusters of networks rather than the long-
term relationships.
 Measurement is based on capabilities rather than the lean measurements of quality and
productivity.
According to KPMG 2014, as cited in Agigi, Niemann & Kotzé (2016), the FMCG industry is
the largest industry worldwide. It is rapid and agile and produces diverse products. The grocery

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production faces diverse risks represented in the loss of key suppliers, the limited amount of
safety stock and variation in the fuel costs.
Some FMCG organizations operate their own distribution channels and sell their products in
their wholesale or retail stores. These organizations have the chance to timely detect the
consumer needs. Their ability to respond to them rapidly is higher compared to other
manufacturers. They can fully realize that the customer experience focuses on the intangible
business aspects that require shifting the sales of goods into services (Sachdeva & Goel 2015).
4.6 Measures of evaluation
Globalization has resulted in networked collaboration between the partners from different world
countries. The organizations that could not integrate, were unable to achieve the required
performance level and failed. According to Ritala & Ellonen (2010), as cited in Ray et al. (2016),
creating a source of competitive advantage depends on the performance of the network of
organizations rather than the old concept of depending on the organizational inherent intangible
resources.
According to Anu (2014), as cited in Ray et al. (2016), the modelling processes could be used to
solve supply chain problems through information sharing with the different involved
stakeholders. The End-to-end resource planning (EERP) improved the information flow through
the supply chain. The complexity of the supply chain management requires special measures that
can detect and evaluate the different factors that interact within the system. According to Ekinci
& Baykasoglu (2016), entropy represents an indicator of variability, hidden activities and
connections within the system. It could be used to measure the rate of information dissemination
within the supply chain.

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5. Research design and method
5.1 Research design and justification
The research design is important in assessing the appropriate approach to be used in solving the
research problem and answering the research questions (Rajasekar, Philominathan &
Chinnathambi 2013).
This research follows the ontology philosophical paradigm that assumes an external reality
exists. It is a way of understanding the world phenomenon. It depends on objective approaches to
discover the social concepts related to the phenomenon of the investigation. The used approach
is the positivist that uses objective data collection and hypotheses testing. It requires the
researcher to be objective and not to follow his personal feelings in order to achieve unbiased
theory development (Xian & Meng-Lewis 2018).
In order to pursue the truth in this research, the researcher will depend on the descriptive
research design to describe the phenomenon of applying the agile supply chain management in
the FMCG in Australia on the organizational capabilities.
5.2 Subjects for study and selection process
The positivist research involves an evaluation of the facts and truth that requires a distance
between the researcher and the phenomenon of investigation (Xian & Meng-Lewis 2018).
Positivism involves using the quantitative research that begins with the sample selection. The
type of data will be the primary data collection from the respondents. The sampling method that
will be used in this research is a convenience sampling or the availability sampling. It is a type of
non-probability sampling method that depends on data collection from the population members
who are conveniently available and meet certain practical criteria. Also, the members of the

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targeted population should be homogeneous to assure that no differences will occur in the
research results (Etikan, Musa & Alkassim 2016).
The targeted sample of this research is the FMCG companies that use the agile supply chain
management. The research will consider the member organizations of the Australian Food and
Grocery Council (AFGC). The members represent the leading national companies in Australia
operating in food, drink and grocery manufacturing industry. They are 180 companies, where
about 3 out of five companies depend on the agile strategy, which means that the sample size
will be 108 companies (A.T. Kearney 2017). The questionnaires will be distributed to the
managers and staff members.
5.3 Conceptualization and measurement
This research depends on the quantitative data analysis that comes after the primary data
collection. It requires a precise definition of the used measurements for the research variables
(Flick 2013).
This research considers the independent variable represented in the organizational capabilities
and the dependent variable represented in the agile supply chain management. The
organizational capability measures consider the capability of the organization to create a
competitive advantage, cost reduction, customer satisfaction and measuring the entropy. The
measurements of the agile supply chain management include customer sensitivity, virtual
integration, process integration and network integration.
The researcher will depend on the construct validity that deals with the questions or the
operationalized variables. Also, it will consider the content validity that covers the concepts
within the dimensions. Moreover, it will consider the empirical validity that assures the internal

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validity of the variables and that they are empirically correlated. Statistical methods will be used
to ensure data reliability, including the Cronbach's Alpha test and t-test (Centellas 2016).
5.4 Data collection method
The data collection methods should match the research design. This implies that the method to be
used in this research is quantitative questionnaires. The researcher will create the questionnaire
that will use closed questions. This method requires accurate selection of the questions,
managing the sequence of the questions, offering limited options for an answer, the sequence of
the questionnaire should follow the logical thinking, no spelling mistakes exist and it assures that
the questions are easy to understand (Hirzalla & van Zoonen 2017). The questionnaire will be
manually distributed and gathered from the respondents within a 3-month timeframe.
5.5 Data analysis
After finishing the data collection phase, the quantitative data analysis will take place. The
quantitative data analysis measures the quantities or amounts that result in a set of numbers. The
results will be presented in graphic and tabular formats. It will represent frequency distribution
and statistics summary, relationships among the research variables, sub-group analysis, statistical
models and results generalization from sample to population (World Health Organization 2014).
The independent variable is represented in organizational capabilities and the dependent variable
is represented in agile supply chain management.
6. Ethical consideration in social research
Social research should consider the ethical issues and the national and international laws of each
subject area. The researcher should follow the academic citation. The ethical principles of
dealing with human participants should be followed. The human rights should be respected,
including data privacy and confidentiality of the personal information. The arrangements of the

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post-study, including the respondents' interventions should be clearly documented. It is important
that an ethical committee reviews the research before the final approval. The research study and
the statistical analysis should be accurately approached and clearly justified. The research should
be done according to the appropriate risk management and conducted by qualified researchers.
High care should be devoted when implementing the research, including the appropriate setting.
The country laws and regulation in relevance to ethical research might regulate the data
collection process, storage of the personal data and protection of people who refuse to participate
in the research. In compliance with the governance concerns, the adverse issues that occur during
the research should be reported to the review ethical committee that approves the final research
(Harriss & Atkinson 2011).
7. Research limitations
This research is limited to testing the impact of the independent variable represented in
organizational capabilities on the dependent variable represented in agile supply chain
management. It is not meant to investigate any other variables.
The research results will be analyzed by using the quantitative method and the judgments will
ensure objectivity to be able to generalize the results to the population.
This research is limited in space, it will take place in Australia. It is limited in the number of
investigated companies represented in the member organizations of the Australian Food and
Grocery Council (AFGC). The sample size is 108 and it will consider the opinions of the supply
chain managers.