Tobi Adeniyi, Customer Supply Chain Director at Unilever Nigeria Plc, emphasized the importance of the Fast-Moving Consumer Goods (FMCG) Industry to explore strategies aimed at reducing their reliance on foreign exchange for day-to-day operations.
Adeniyi made these remarks while participating as a panelist at the Nairametrics Industry Economic Outlook event themed ‘FMCG Sector Challenges and Opportunities.’
He underscored the significance of this initiative against the backdrop of escalating foreign exchange rates in the country, which have been impeding the smooth operations of the sector.
Backward integration and localization
Adeniyi advocated for an intensified focus on backward integration and localization within the industry, as he believes these measures will not only bolster the sector but also contribute to the overall expansion of the economy.
Furthermore, Adeniyi urged FMCG operators to strategically position their products in the minds of consumers, particularly during periods of economic volatility marked by soaring costs and the need for price adjustments.
He advised operators to embrace volatility, adopt a proactive approach by planning for adverse scenarios, and remain resilient while awaiting favourable conditions.
Cost-efficient mindset
He stressed the importance of adopting a cost-efficient mindset infused with innovation, emphasizing the necessity of understanding the unit cost of production and devising strategies to mitigate inflationary pressures across the production and supply chain.
Adeniyi recommended a concerted effort to minimize dependence on foreign exchange, advocating for the de-dollarization of operations and a shift towards embracing backward integration and localization strategies.
- “My primary recommendation for operators is to acknowledge and adapt to the volatility inherent in the market. It’s essential to prepare for adverse scenarios while remaining optimistic for better outcomes. Operating with a mindset focused on optimizing costs through innovation is crucial.
- Understanding the per-unit cost of production is key to cost reduction, particularly amidst rising inflation affecting both production and supply chains.
- Efforts should be made to minimize reliance on foreign exchange by transitioning towards local currency transactions and embracing backward integration and localization initiatives,” Adeniyi said.
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