Changing paradigms in the
Indian consumer goods sector –imperatives for CPG companies

Consumer goods sector
in numbers - India

Creating and managing ‘power brands’
has become a strategic area of focus
for companies.

India’s Consumer Goods industry is at an inflection
point. While the heterogeneity and diversity in the
Indian CPG market have always posed challenges,
structural changes are creating tectonic shifts inmarket dynamics. This document explores thisaspect and allows organizations to prepare for thefuture (which is already upon us.)

There is a massive rise in healthawareness and lifestyle management inIndia. More than ever before, consumers
are conscious of what they eat and how
they look and are focusing on healthierdiets. So, companies are focusing on‘accelerated’ new product launches in thehealth, wellness, safety, and hygienebaskets to beat the competition.

The FMCG sector is the fourth largest sector in theIndian economy. With respect to the segment-wise
distribution, household and personal care products
account for 50% of the pie, while healthcare andfood and beverage are 31% and 19% respectively.
Urban households account for 55% of the total
FMCG market in India, with the market size expected
to grow at a CAGR of 14% between 2020 and 2025.
Consumer spending in India is likely to reach
US $3.6 trillion by FY’22. Private consumption
expenditure (at constant prices) was estimated at
US $1.18 trillion in FY20 against $1.12 trillion inFY19.1

Structural shifts in theconsumer goods
sector - Trends &outlook
Based on our research, the following trends aretaking center stage with respect to the strategies
adopted by consumer goods sector leaders to garner
not just market share but also their customers’
mind-share (the battle lines are drawn here veryclearly).
Millennials and Gen Zs have become themost important cluster of ‘target
customers’ for most brands. Retail andFMCG companies are exploring ways toevolve ‘business models’ by creating
consumer-centric experiences driven bydigital transformations. Social commerce,communities, and hangouts are few
examples of newer areas in which
companies are mining data for decision
making.

2

There is a radical reshaping of distribution
channels with e-commerce anddirect-to-consumer, enabling sales growth
acceleration. Companies are piloting‘last-mile’ connectivity and ‘omnichannel’models for better penetration and reach.
Nasscom, in one of its recent studies,called this the retail 4.0 or O+O model –Offline+Online.
Another important and visible trend is thesignificant increase in the demand forbranded products in rural India. The rural
FMCG market is expected to grow at a
CAGR of 10 percent over the next fiveyears. Multiple factors are contributing tothis trend such as increasing rural
consumer awareness, access to
information and services, and outreachactivities by FMCG companies.
Supply chains are being redrawn, driven byoutcomes delivered through value-chain
optimizations. Whether it’s getting
connected with global supply chains orintegrating 3PLs/4PLs, digital demandplanning platforms and intelligent
solutions (AI/ML-based) are acceleratingthese transformations.
ESG – Environment, Social, andGovernance is becoming a critical theme
to Corporate Social Responsibility (CSR).
Customers are paying closer attention toactivities that companies undertake
globally (and in India too), which is having adirect impact on corporate brand buildingand messaging.

Transformation ThemesWhile organizations have traditionally focused on process efficiencies and automation, optimizing value chainsand enabling them to sustain the true value of transformation through reducing risks is gaining a lot of traction. At
Wipro, we have worked with global CPG and retail customers to design high-impact process transformations witha clear focus on generating business value acceleration and outcomes.

Value Chain Optimization
Processes

Key functions

Procure to Pay• Supplier Relationship Management• Procurement Planning

Concept toLaunch• Product Commercialization &Lifecycle Management (RNPI)• Pricing Analytics Management

Plan to Deliver• Integrated Business Planning• Supply Chain Planning & Execution• Warehouse & Transportation
Management

Order to Cash• Distribution Network Optimization• Distributed Order Management &Reverse Logistics assessment

Wipro has gained extensive experience in working
with global marquee clients to provide end-to-end
solutions across the value chain. Examples of thisinclude New Product Designs, reimagining retailexperiences, new processes orchestrations anddigitization, defining newer Routes to Markets,
designing Intelligent Demand and Supply planning(AI/ML based solutions), and creating Smart
Manufacturing solutions with Industry 4.0 rollouts.
With the continuously changing consumer behaviors,
market dynamics, and technology landscapes, theneed for innovation is higher than ever.
Let's take a look at a few themes which arepropelling the transformations:

Business value• Improve right first time for
new products and minimize
time to steady state• Higher availability rates
across channels• Cut distribution costs byas 5-10%• Reduce system wide
inventories• Benefits by improving O2C
cycle time by upto 5-10%
and cost benefits by 20%• Improve demand forecast
accuracy• Minimize quality &compliance incidents

Direct-to-Consumer: From cosmetics and fashion toconsumer durables (e.g. electronic items) including
luxury goods companies, CPG and retail companies
are embracing faster route to consumer. D2C
involves selling directly to your end customers via
your own e-commerce platforms or throughmarketplaces. The benefits are many - streamlined
sales, reduced overheads, and an engaging
experience to build your brand online and receive
valuable customer insights. Companies are building
immersive D2C platforms, enabling integrated
fulfillment and assortments planning while
managing partners ( 3PL, trading partners, etc.)
Wipro helped an iconic denim jeans brands
streamline their D2C order management capabilities,3leading to near real-time inventory flow and daily
inventory sync and improved inventory accuracy. One
inventory view of the enterprise increased orderpromising, reduced cancellations to less than 5%, as
well as reduced lead time in business issue
resolution. The project involved the implementationof Manhattan Associates Enterprise OrderManagement software for its D2C business.
Omni-channel fulfilment: For brands, creating
seamless CX (customer experience) across online
and offline channels has become extremely
important since this is what's expected by thenextgen. This requires unified and collaborative
efforts across channels. End-to-end visibility oftransactions from purchase to delivery - including
inventory management, order management, andshipping management is also paramount.
Wipro is working closely with a leading American
multinational corporation which is involved indesigning, manufacturing, and marketing footwear,apparel, equipment, accessories and services toenable a global omnichannel strategy for the client.
The company upgraded its technology to build aflexible supply chain, improved order allocation, andfulfillment by system integration and drive betterbusiness visibility via dashboards. This led to an 18%
increase in e-commerce revenue, 13% increase inorder value, significant improvement in new
customers, a reduction in cancellations from 15% to<2%, and a reduction in undersell as well as better
inventory visibility across systems.
E-commerce fulfillment automation: During FY’21,
e-commerce business contributed 5% - 10% of
FMCG sector leaders’ sales, accelerated by thepandemic. Many companies are targeting to growthis figure to 15% - 25% over the next three years.
Challenges abound in trying to meet these goals.
Selling products through e-commerce platforms,
multiple brand websites, and marketplaces aremaking order fulfillment processes a complex issue.
This is also impacting fill rates. Automation of theend-to-end process can streamline the process
while reducing lead times and increasing fill rates.
This can be enabled through integrating the trading
partners via EDI, APIs as well as automating order
receipts, inventory feeds and allocation, shipment
notices, invoices, and more.2
Wipro has worked extensively with one of themarquee Indian consumer goods majors to automate
the company’s e-commerce fulfillment process. This
covered everything from purchase orders to invoicing
automation - POs received from marketplaces suchas Amazon and Flipkart to inventory allocations, SO
processing, and dispatching. All of this was enabled4through Wipro’s IP platform, integrated with boththird-party marketplace systems as well as backend
ERP. The realized benefits included improved fillrates, leading to higher e-commerce sales and asignificant reduction in TAT (lead time to fulfill).
General Trade route-to-market acceleration: For
most consumer goods companies in India, general
trade contributes upwards of 80 percent ofrevenues. Traditionally, this channel has remained alaggard in technology adoption and digitaltransformations. Over the last three to five years,
sector leaders had made significant investments intransformations. Be it ‘last-mile connectivity’, ‘apps
for retailers’, ‘direct retailer orders’, ‘salespersons
route optimization’, data analytics and advanced
technologies to run algorithms, geo-fencing usingsensors and imagery - they are all pressed toservice. These are bound to improve retail
penetration, effectively track store performance,increase salesforce territory coverage andeffectiveness. Wipro uses advanced analytics
platforms, IoT, and image analytics solutions todesign and deploy the use cases for its clients.
For one of the large dairy clients in India, Wipro
piloted an ice cream cart tracking solution using IOT
and mobility solutions. Wipro applied its IP solution
to help the customer effectively track and optimize
the route taken by the carts. As a result, the end
customer was able to track the nearest cart and thecart owner was directed to the nearest sales points.
This led to reductions in the theft of carts andincreased sales through the reduced movementof carts.
Wipro is working with many large and mid-sized
FMCG companies in India to manage and support
DMS applications. Wipro set up pan-India helpdesk
support for one such client, India’s largest oral careand personal care products major, for the SAP DMS
application implemented at the distributor site toensure the smooth running of the business. Wipro
team manages DMS support for sales, returns,schemes, master maintenance, invoice, payments,claims, and more.

Wipro has rich experience working on transformation and consulting
engagements across SCM value chain
Business velocity

VisionStrategy

Sales & Marketing

Transformation Vision,
benefits/ Business caseDefineCust. Engagement(CPQ/QTC/CLM)

DesignSupply Chain

ERP/ Application/
SaaS First Strategyand Evolution

TransformationOperations

IT Costoptimization

Procurement

Human Capital

Roadmap & Reference
Architecture

Persona based
Journey design

Process Modeling& SaaS/ ERPDesign, BPR

Audits & health check& Assurance Services

Applications
Modernization /Platform
Rationalization

Continuous Business
Process Optimization/Improvements

FinanceKPI Improvements/
Value Realization etc.

Target Operating
Model & Industry
Standard Models

SaaS / Application
Transformation
best models

ERP Performance Audit& Health Checks

RealizevalueImplement

Product & Process Capability
assessment & Roadmap

M&A and Divestures

Hybrid Eco-system Architecture(SaaS/ On-prem/ public cloud etc.)

Business excellenceBusiness process capabilities/
efficiency/assessments,
Benchmarking

Transformation Governance &Change Management

Business experience

Process Mining Service Process Operations
Command Center

Supply chain transformations: Case in point Predictive inventory replenishment Supply chains
are the life lines of all consumer goods and retailcompanies. Whether it’s ‘Farm to Fork’ (food sector),‘Grain to Glass’ (beverage sector), or ‘Bush to Brand’(Beauty and Personal care sector), consumer
behaviors are changing rapidly. SKU growth becomes
unmanageable and the increasing number of sales
channels cause supply chains to become highly
complex. Challenges such as low life cycles ofperishables, the stringent environmental conditionsof healthcare products, the fast-moving nature ofgoods and apparel (i.e. becoming outdated quicklyand managing returns) add to this complexity. So do
managing orders and inventories across thechannels. Companies are trying to solve thesechallenges by building digital supply chains that are
not only ‘resilient’ but also ‘intelligent.’ Going beyond‘track and trace’, Wipro offers solutions that use data

analytics and AI/ML to create the right models fordemand planning, supply planning, S&OP, capacity
planning, inventory planning, and warehouse
operations management. Digital supply chain towers
are enabling end-to-end visibility of entities andtransactions across the value chain.
Wipro helped a global apparel company achievesignificant cost savings, eliminate chargebacks, andreduce direct labor cost through business process
restructuring, technology development on pricing
and distribution platforms, and building additional
logic to track and block incorrect pricing.
For one leading US retailer, Wipro’s forecast method
yielded a better result than baseline forecasts,
improved the accuracy of weekly sales volume
forecasts by 5-10%, and improved revenue by 2-3%.
5The above picture depicts the services that Wipro
can offer - from vision to value realization. To
address low fill rate challenges, maintaining
optimum inventory based on analytics - sufficient tofulfill the demand but at minimum cost to thecompany - becomes critical. Automating thereplenishment processes across locations canreduce manual interventions. With effective
forecasting, risks to inventory availability can beaddressed.
Convergence of urban and rural markets: India’s
rural economy has come into the reckoning during
and post-pandemic - and so has the rural consumer.
Some interesting information underscores this point.
During the last year, ‘rural data consumption’ swelledby 400 percent, aided by nearly 100,000 panchayats
becoming digitally connected. Today, the number ofregistered households that subscribe to high-speed
internet stands at two million. Data consumption
grew from 400 TB in July’19 to 13,000 TB in Jun’21.
Ease of access to content creation through mobiles
has created new market segments. Companies havetaken cognizance of these trends - and are
aggressively preparing to engage with this marketsegment.

The way forward
Organizations realize that there is an interplay ofconsumer behavior changes, technology evolution,and market dynamics that have a bearing on thedesign of growth strategies. Challenges aroundlegacy issues and skills gaps weigh in for companies
to deal with large-scale transformations. They areadapting the ‘learning-on-the-go’ model, an agile
approach driven by POCs and pilots towards
transformation. Technology is no more an enabler
but has become central to business strategy as it
has a direct impact on KPIs and outcomes. It’s
imperative for organizations to look to strategic
partnerships with technology companies toco-create the future. This calls for the identificationof priority areas and purpose, defining themes anduse cases relevant to business, and creating
roadmaps for transformation with clear outcomes
and ROIs. With vast experience working with global
consumer and retail majors, Wipro has provided
consultative as well as implementation support inthis transformation journey.

References
1[Source: IBEF, Livemint, ET]

2[Source: Indian FMCG cos Annual Reports, Investor
presentations and Gartner Report on CPG Industry - 2021]

About the authors
Ashish Sharma
General Manager – India Business,
Consumer Goods & Manufacturing
Sectors, Wipro Technologies

Kalpesh Baviskar
Senior Consultant, Consumer
Goods - Domain & Consulting,
Wipro Technologies

6Sujit Jagirdar
Practice Partner, Consumer Goods- Domain & Consulting, WiproTechnologies

Wipro Limited
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IND/BRD/NOV2021-OCT2022

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