FMCG companies gearing up to keep daily supplies running amid 3rd wave; increasing stock, production buffers

As Covid’s third wave drives up fears of another lockdown or mobility checks, FMCG companies such as ITC, Dabur, Parle and others are up to doubling supply capacities; stocking health and daily essential items in the supply chain; and creating production backups.

FMCG companies, lockdown, inventory, household supplies, manufacturing capacity, contingency plan, vendor, supply chain, online channel, ITC, Dabur, Parle
FMCG firms are increasing supply capacities, stocking health and daily essential items, and creating production backups. Image: Bloomberg

As Covid’s third wave drives up fears of another lockdown or mobility checks, FMCG companies such as ITC, Dabur, Parle and others are up to doubling supply capacities; stocking health and daily essential items in the supply chain; and creating production backups. Food companies have ramped up product supplies to stockists, increased pipeline inventory and have even geared up manufacturing facilities to make up for any shortage in the market.

“We are applying learnings from last year on streamlining the supply chain to ensure minimal disruption in supplies and have already begun building requisite inventory to avoid any supply and commodity disruptions due to the ongoing wave,” Mohit Malhotra, Chief Executive Officer, Dabur India Ltd, told Financial Express Online.

India recorded 90,928 new cases on Thursday, according to the Union home ministry data. “ITC has been continuously taking stock of operations and monitoring market developments. During the first wave when much was not known about the novel coronavirus, there was lots of uncertainty, both from a consumer behaviour as well as from an operations point of view. This has changed greatly in the second wave and now, if at all there will be a third wave,” said a spokesperson from ITC.

Stock it up

Companies, dealers and distributors across the supply chain are continuously working towards stocking up more of daily essentials such as cooking oil, rice, wheat, pulses, tea, snacks, toiletries, health and immunity boosting products, ayurveda based products, etc, to avoid any supply disruptions if authorities impose restrictions amid rising Covid-19 cases. Many are keeping an inventory of almost twice their normal times capacity.

Parle Products has set up an additional inventory and has ensured that there is a 10-15 per cent buffer in case of restrictions being imposed. “We are prepared and have a fair idea of how things will progress and accordingly, our vendors and distributors are also communicated about all the strategies in case of an emergency,” Krishnarao Buddha, Senior Category Head, Parle Products Pvt Ltd, told Financial Express Online.

Even as FMCG firms do not expect any nationwide lockdown or even for the surge to get severe, they are still being cautious and are prepping for any untoward situation. “The ITC supply chain… having adequate inventory across various nodes in multiple geographies, is now in a much better position to address any challenges arising because of any restrictions,” the company spokesperson said.

“There will be restrictions and curfews but as we anticipate, there will be no lockdown as such. And in that case, people working from home or taking online classes, will want to munch on snacks, etc. more than before. Also, when staying back home, people tend to not be in their routine, they sleep late binging on series or movies and this also leads them to munching on salty snacks or noodles, etc. While there might be a chance of panic buying, the demand will increase more due to reasons like these,” Krishnarao Buddha of Parle said.

A prepared manufacturing facility

Not only inventory, supply chain and vendor base, FMCG companies are also prepping up their back-end units in order to avoid the chaos-like situation they had to face during the first lockdown in 2020. Bhupat Bhuva, Founder & MD, Sheetal Cool Products Limited, which sells milk, milk-based products and packaged ready-to-eat savouries, said, “Our team is working day and night to prepare ourselves for the coming season. We have worked a lot on our supply chain process, backward integration and production making sure we are able to meet the market demand.”

Krishnarao Buddha said, “We operate with more than 120 manufacturing facilities across the length and breadth of the country. We have asked all of them to be prepared in case of a spurt in demand, to ensure that additional manpower is available in case of need. So, we can increase our capacity to a level of 40 per cent, if required. The company is on guard and well prepared.”

Besides, companies are also taking extra safety measures at their manufacturing facilities. “All precautions and stringent hygiene protocols remain in place both at office premises and at factories including masking at all times, sanitization, safe distancing and quarantining in case of travel or contact,” said ITC spokesperson. Dabur has even equipped its units with Oxygen Concentrators to meet any emergency in the event of a third wave.

Go online for better reach

The FMCG firms are also putting greater focus on omnichannel and online mediums, ever since the first Covid wave. ITC spokesperson said, “Omnichannel presence by companies/brands has now become more important than ever, especially in urban areas. Emerging channels like e-commerce are gaining traction with increased penetration and adoption, given the reluctance of people to physically visit stores during the peak of Covid.”

Mohit Malhotra said, “At Dabur, we are launching a special digital initiative on our corporate website, offering consumers a chance to get free Dabur Immunity Kits that include some of Dabur’s time-tested Ayurvedic formulations.”

-First published on Dec 6, 2022.

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