Australia’s FMCG industry has historically focused on cost efficiency. When your business centres around products with high turnover, every saving matters. However, as faster workflows and new technologies enable companies to rethink their operations, there is a growing need to approach supply chain strategy through a longer-term lens.
While many FMCG businesses continue to focus on immediate cost reductions, the most effective supply chain strategies are those designed around longer horizons. Short-term savings may deliver quick wins, but decisions made without considering future operational requirements can create significant costs further downstream.
Strategic supply chain planning requires businesses to consider what their operations will need in five, 10, or even 15 years. By taking this approach, companies can avoid expensive mistakes, improve efficiency across their operations, and build greater resilience against disruption.
Working with FMCG companies across their end-to-end supply chains, I regularly see the tension between short-term cost pressures and long-term strategic planning. Many businesses understand the importance of supply chain optimisation but struggle to justify investments that may take several years to deliver a return.
However, major supply chain infrastructure decisions should be evaluated beyond immediate payback periods. A solution that delivers a return over three to five years may still create significant value over its full operational lifespan. Buildings, equipment, and technology platforms are often designed to operate for much longer periods, making it essential to consider the future needs of the business rather than only today’s challenges.
The hidden costs of siloed decision-making
One of the biggest challenges facing FMCG businesses is the impact of siloed decision-making across the supply chain.
Manufacturing, supply chain, product design, and other business functions often operate independently, without fully understanding how decisions in one area affect the rest of the operation.
These disconnects can create costly problems once products reach warehouses, distribution centres, or customers. A lightweight, shelf-ready product may improve manufacturing efficiency or reduce material costs, but if it is too fragile to handle effectively in a warehouse environment, it can result in product damage, excess inventory, or stock availability issues.
Packaging decisions can also have a significant impact on automation opportunities. For example, a packaging design that is unsuitable for automated handling may prevent certain technologies from being implemented effectively. A decision made early in the product lifecycle can therefore create limitations much later in the supply chain.
This is why end-to-end planning is critical. By bringing different functions together before decisions are finalised, businesses can identify potential issues earlier, reduce waste, improve automation outcomes, and create more efficient supply chain operations.
The manufacturing blind spot
The shift from local to offshore manufacturing has introduced new challenges in supply chain network design. Many FMCG businesses have adapted their networks reactively rather than strategically, creating inefficiencies that could have been avoided through earlier planning.
Historically, businesses may have located regional distribution dentres (DCs) close to manufacturing sites. However, as manufacturing has increasingly moved offshore, supply chain networks now need to consider different factors, including port proximity, shipping requirements, and container movements.
Without proactive network redesign, companies can face inefficient DC locations, poor container utilisation, higher freight costs, and greater exposure to disruption.
Strategic network planning considers these factors before problems occur. By designing supply chains around future manufacturing and distribution requirements, businesses can improve transport efficiency, reduce unnecessary costs, and create greater resilience against external disruptions.
Companies that attempt to solve container and network challenges after they emerge often spend significantly more than those that planned for these issues from the beginning.
Using automation to plan for the future
FMCG businesses have traditionally prioritised automation investments within manufacturing environments. This is understandable, as manufacturing processes are often highly structured, predictable, and easier to automate.
Warehouse operations, however, have historically received less attention. Many distribution facilities still rely heavily on manual processes, including forklifts and traditional racking systems, despite the growing availability of advanced automation technologies.
This represents a significant opportunity for FMCG companies. Modern warehouse automation can help reduce labour dependency, improve throughput, increase accuracy, and create more flexible distribution networks.
Emerging technologies are also making warehouse automation more accessible. Four-way shuttle systems, for example, provide advantages over traditional automated storage and retrieval systems (AS/RS) by offering higher throughput, greater flexibility, lower costs, and improved redundancy.
Over the next decade, these technologies are likely to have a significant impact on how FMCG businesses design and operate their distribution networks.
Artificial intelligence will also play an increasingly important role in supply chain management. Applications such as demand forecasting, inventory optimisation, and predictive planning are continuing to improve as AI capabilities advance.
As these technologies become more effective, businesses will have greater opportunities to make faster, more informed decisions and better align supply with customer demand.
The holistic approach
The greatest opportunity for supply chain improvement comes from looking at the entire system rather than focusing on individual solutions.
One area that deserves greater attention is reducing dwell time—the time products spend waiting between different processes. Some forward-thinking FMCG businesses are addressing this by strategically co-locating manufacturing and distribution facilities, allowing products to move more directly through the supply chain.
This approach can eliminate unnecessary transport movements, reduce reliance on additional inventory buffers, and support more responsive production models.
A holistic supply chain strategy requires businesses to consider the relationship between automation, technology, processes, infrastructure, and operational flexibility. Improvements in one area should not create limitations elsewhere.
The most effective supply chains balance efficiency with flexibility. While efficiency is essential for controlling costs, businesses also need enough flexibility to respond when disruptions occur. A supply chain designed only for maximum efficiency can become vulnerable when unexpected challenges arise.
Strategic planning requires modelling multiple factors, including costs, service levels, redundancy, operational requirements, and qualitative risks. These decisions should not be reviewed only when problems occur. Supply chain strategy should be an ongoing process of evaluation and improvement.
For FMCG businesses operating in increasingly complex markets, the ability to think beyond immediate cost savings and design supply chains for the future will become a critical competitive advantage.
Read also: The supply chain metric most businesses aren’t measuring—and why it’s costing shareholder value
Adrian Grunbach
Adrian Grunbach is Director – Supply Chain Solutions at ThreeSixty Supply Chain Group, where he works with organisations to optimise end-to-end supply chain performance. His expertise spans strategic network design, warehouse automation, logistics optimisation, and supply chain transformation, with a focus on delivering long-term operational value.
