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Supply Chain Management Assignment

FMCG Industry
Group 5

Rohit Chopra (164)
Sanchit Govil ( 167)
Shubham Tayal (186)
Sumedha Deogharia (202)

• Such a huge industry is recognized by its customers. strategically located distribution centres and highly profitable or high-volume customer markets . and its supply chains are seen as role model for other industry. low-cost manufacturing facilities.Supply Chain Performance Attribute for FMCG Industry Introduction • FMCG industry is a quick. supply chain managers try to find cheaper suppliers. • In order to achieve the organizational goal of making money . • FMCG supply chain is faced with unique issues like Bullwhip effect and high return & transit losses. agile industry with a wide range of products.

Introduction • Pillars for value enhancing FMCG & retailing • Supply Chain management • Customer Service Management Agenda • Situations of competitive advantage • Cases • Supply Chain Challenges and Issues • Supply Chain Performance Attribute for FMCG Industry .

product availability went up Delayed differentiation and Technology development Logistics Distribution strategy • • • • • Created a Large Network of Dealers Established a Network of Company Depots Created a Marketing Organization that matched its Distribution Intensity Successfully Resolves the Cost-Service Conflict in Distribution Strong Commitment to Distribution Cost Control • • • • • The warehousing facilities are well maintained The company is adapting eco-friendly production methods Maintains low inventories in off seasons. while at the same time. Technology adaption • Asian Paints has deployed SAP R3. product lifestyle platform. with positive results .Situations of competitive advantage Asian Paints Paint tinting machines • • By acquiring a technology that enabled mixing of colors and base paints to get the appropriate shade in a few minutes. giving company bargaining power resulting in higher profit margins than competitors The company has succeeded in establishing themselves in rural parts of India by large distribution network. and high inventory in festival seasons The company has huge base of raw material suppliers. retail outlets etc. Asian Paints obtained a competitive advantage by delaying the differentiation Retail inventory costs have come down. SAP HANA CRM etc. ERM employee platform formula management. i2 supply chain planning suite.

while driving growth for the company and the store At the same time. information sharing and monitoring RS Net is part of Project Leap. called RSNet. which also includes a back-end system connecting suppliers. exclusively for retailing outlets in metros The business system delivers excellent customer service. despatches.Situations of competitive advantage HUL Ltd • HUL has generally sought competitive advantage through a continuous reengineering of the supply chain Horizontal differentiation and vertical integration. innovative marketing initiatives are taken to provide consumers with experience of our brands at the store itself. HUL's end-to-end supply chain. all company sites and stretching right upto stockists . for online interaction on orders.Inclusive business strategy • • • • • Targeting low income consumers in rural Indian villages Commission based model with free training in hygiene Created a Marketing Organization that matched its Distribution Intensity Successfully Resolves the Cost-Service Conflict in Distribution Strong Commitment to Distribution Cost Control • • • Supermarkets HUL has set up a full-scale sales organisation. through product tests and in-store sampling Technology adaption • • • An IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis Stockists have been connected with the company through an Internet-based network. non – departmentalized management cadre Shakti Amma .

5% .8 million households through 1.6 million retail outlets Approach • • • • • • • Just-In-Time Global Sourcing Shorten its planning cycle to 15 days from 30 days Revised its demand planning process Leveraged IT System ERP system: MI net Vendor Managed Inventory Results • • • • Decreased stock-outs associated with distributor sales to retailers by 33% Reduced lost sales due to stock outs by 28% thereby improving revenue by 1. 56 million consumer packs are sold to about 1.Situations of competitive advantage Marico • Enhance long term value of company brands by achieving excellence in distribution performance • Reduce total delivered cost • • 882 direct distributors.5% Lowered excess distributor inventory by 33% Reduced late deliveries to distributors by 37. 153 super distributors. catering to 2393 small stockists and 4523 van markets Every month.

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now called samyojaks Results • Helping ITC in creating strong connect with villagers • Enhancing its supply distribution network • Entry-level soap brand. weak infrastructure and the involvement of intermediaries • • • • • Installs computers with Internet access in rural areas of India to offer farmers up-to-date marketing and agricultural information Farmers can directly negotiate the sale of their produce with ITC Limited Each ITC Limited kiosk having Internet access is run by a sanchalak — a trained farmer Each installation serves an average of 600 farmers in the surrounding ten villages within about a 5 km radius The warehouse hub is managed by the same traditional middle-men. Superia.Situations of competitive advantage ITC • E-Choupals • Link directly with rural farmers via the Internet for procurement • E-Choupal tackles fragment ed farms. widely available in the village because e-Choupal Sanchalaks were helping in local marketing • Greater pricing power to the company • Good quality output • Farmers get real-time information .

speeds benchmarking efforts. .Supply Chain Challenges and Solutions Supplier/partner relationship management • Different organizations. even different departments within the same organization. and enhances the evaluation of best practices. • For example. • Managers must let go of internal biases and make a conscious choice to follow mutually agreed upon standards to better understand current performance and opportunities for improvement. can have different methods for measuring and communicating performance expectations and results. SCOR provides a common language for supply chain classification and analysis. • Using a common language and framework makes it easier for teams to communicate.

• Develop Multi Functional. non departmentalised Management Cadre • Recruitment of well qualified management trainees. talent acquisition. specific job qualifications. methods for developing future talent and leaders. • Supply chain leaders need a thorough understanding of the key competencies required for supply chain management roles. and development is becoming increasingly important. • Inculcating a professional “learning” culture . training.Supply Chain Challenges and Solutions Talent Management • As experienced supply chain managers retire. and organizations scale up to meet growing demand in developing markets. and the ability to efficiently source specific skill sets.

Supply Chain Challenges and Solutions Downward Flow of Information .

Supply Chain Challenges and Solutions Sales and Operations • All companies were operating S&OP at some level but reported not to the levels of discipline and standards required to utilise the process as the company´s one operational planning process utilising ‘one set of numbers’. • Improved use of IT and more standard reports available from ERP • Reduced and more focussed S&OP meetings • More discussion and focus on exceptions rather than regular issues • Improved accuracy of demand planning • Integrating Distributors within the S&OP process .

Supply Chain Challenges and Issues Sustainability • Sustainability has become a key priority in design and operation of supply chains. • Making world more sustainable. Greenhouse gas emissions. adding skylights for natural light. banning plastic bags etc. • While much needs to be done. Waste generation. Water consumption. • Switching to a more efficient light bulbs at stores. • Most concrete actions have been in reducing risk and improving financial performance. • Customers becoming more environment conscious and thus increasing importance to develop sustainable supply chains. . • Reducing packaging. • Firms should measure and report on four main categories – Energy consumption. many companies have reported success in improving sustainability. • Reducing risk and improving financial performance.

5 664.3 64.2 95.6 34.3 Gross Margin ROE .1 Average shareholder equity Inventory Financial Metrics Inventory turnover Number of Days In Working Capital 37.1 2747.9 5.1 134.9 216.0 3682.2 1665.2 111.2 15.5 Cost of Goods Sold 14468.6 26.3 13.8 10657.8 13.) Asian Paints HUL Marico 31775.6 31.3 10418.6 15.8 ROA 29.2 6.2 15.6 6640.8 28019.6 13.0 6600.3 30.0 4.0 3682.0 2189.9 40.Key Financial Metrics ITC Net Income ( Crore Rs.0 Sales Revenue 29901.0 790.9 9.2 32.0 16377.3 Operating Margin 35.8 29035.6 352.8 14.3 57.

• With reference to drivers above most of the drivers of operational efficiency are better for HUL. ROA being high for Asian Paints depicts efficient utilization of assets by this company.e. and highest for HUL i.Inferences from financial metrics • Inventory Turn Over Ratio for ITC is minimum i. .e. 9. • ROE is a measure of company’s profitability w. 4.2 times its average inventory and there is a scope of substantial improvement as per other FMCG companies. • No.r.9 which means that ITC sells only 4. thus depicting that operations of this company is most efficient. • ROA is a measure of how efficient a company is at utilizing its assets.2 . the investment made by shareholders. of days in working capital is a measure of how many days a company will take to convert its working capital into revenue. This is a measure of company’s efficiency and shows efficiency of HUL in FMCG sector.t. Asian Paints and HUL are most profitable for shareholders.