The document discusses challenges facing Indonesia's fragmented FMCG industry and opportunities for digitalization. Key challenges include 80% of retail being small, independent stores with poor transportation connectivity leading to high costs. However, COVID-19 is accelerating the shift to e-commerce and online purchasing. This presents an opportunity to digitalize the industry through a B2B e-commerce marketplace that connects wholesalers, retailers, manufacturers and distributors on a single platform. Case studies like GudangAda show best practices for digitalization include designing scalable and user-friendly systems, investing in data and APIs, and providing an omni-channel infrastructure and services to empower all stakeholders in the supply chain.

1. Fragmented FMCG Industry:
Digitalising traditional
stores to enhance
supply chain agility
GudangAda Keynote Speaker:
Huan Yang,ChiefTechnology Officer

2. Introduction: Indonesia’s Fast Moving
Consumer Goods (FMCG) Industry
MarketClimate, Challenges, andOpportunities
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3. Main Challenges in Indonesia’s FMCG Sector
Introduction
Indonesia’s FMCG Market
- 15th largest in the worldof landarea
- Archipelago of17,000islands- 6,000 currentlyinhabited
- Fast growing industry: conveniencestores, supermarket/hypermarket chains,drugstores
- Fragmented Trade:
- 80%of local retail is madeup ofmanyindependent store ownerse.g(Warungs,
momand popstores)
Transportation/Logistics:
- Poortransportation connectivity
- WorldBank Report2018 Indonesia’sLogistic Performance Index=3.2/6
- Resulting inhigh cost environment
Industry:
- Highly competitive, highpricing
- Reliance on traditional trade
- Lack of digital literacy amongstindependent wholesalers; unwillingness toshift to digital
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4. Introduction
Market Outlook
- COVID-19pandemic accelerating shiftto digital (e.g e-commerce, online purchasing
behaviours);increase from75 to 85 million online consumers
- High Market GrowthPotential:
- FMCGIndustry projected to grow 8x by 2022; FMCGsales projected to hit 30
billionat EoY 2020
- Higher purchasing powerandriseof middle class economy
- Higher DisposableIncome amongstIndonesians ->translates to higherFMCG
sales
Transportation
- Urbanization is making the distributionofgoods morecost-effective
- Increased connectivity between islands is helping to ease logisticdelivery timeframes
Main Opportunities in Indonesia’s FMCG Sector
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5. Insights and trends to FMCG sector
Digitalisationfor Overcoming a FragmentedTrade
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6. Insights and Trends in Indonesia’s FMCG Sector
1. FMCG industry is shifting to online quickly.
- Data from GudangAda: 300,000+ wholesalers and retailers within 2 years.
2. B2B e-Commerce marketplace is proven to add value to all FMCG stakeholders.
- Wholesalers, retailers, manufacturers, and distributors ononesingle platform
- Neutral 3rd party model empowers FMCG stakeholders instead of displaces them.
3. An omni-channel infrastructure is needed by digitised FMCG industry. Just one component is not enough.
- Third party logistics (3PL) integration
- Payment service.
4. Data is equally important to small FMCG stakeholders.
- Warungs.
- Mom and pop stores.
5. Deep insights to customer needs is especially important while digitising FMCG industry.
- Inventory management
- Logistics
Key TechnologicalTrends
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7. • Faster
• Cheaper
• Smarter
• Bigger
FMCG Stakeholder Benefits with Technology
Insights and Trends in Indonesia’s FMCG Sector
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8. Best Practices in Technology Solutions to
Digitalise FMCG Industry
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Case Study: GudangAda’s technology strategy

9. Best Practices in Technology Solutions
to Digitalise FMCG Industry
GudangAda’s TechnologicalAdoption Strategy
Goal: to increase end user adoption that is accessible for all
stakeholders in FMCG supply chain ecosystem
- Designing a scalable system architecture which enables fast
business iterations.
- service architecture
- readily deployable
- Designinga completeset of end-userfocusedsolutions fitting for
various customer needs.
- asmajority of users are traditional wholesalers, appneeds to beconsumer friendly
- prioritise user satisfactionanduser interface
- Modeling and implementing business logic efficiently.
- B2B e-marketplace
- Payment services
- internal or 3PL logistics services
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10. Best Practices in Technology Solutions
to Digitalise FMCG Industry
GudangAda’s TechnologicalAdoption Strategy
Goal: to increase end user adoption that is accessible for all
stakeholders in FMCG supply chain ecosystem
• Investing in data early.
- Build a data warehouse early.
- AI could come in when there is enough data.
• Well-defined APIs.
- Great abstraction of business requirements.
- Interfaces between different modules.
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11. GudangAda’s System Architecture
Simple layer structure1
to introduce new
services and build
ecosystem quickly
a
b Standardized
components to
maximize flexibility
c Early investment in
data warehouse
solution2 to
strengthen futureML
& AIcapability
Key highlights
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.Application layer, Business layer, Database layer, Data warehouse & business intelligence; 2. Data warehouse to collect,store, and analyze data
b
a
a
a
c
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12. Fragmented FMCG Industry:
Digitalising traditional
stores to enhance
supply chain agility
GudangAda Keynote Speaker:
Huan Yang,ChiefTechnology Officer