Supply Chain Operation of HUL before COVID-19

Back-end supply chain explanation

Generally, the role of back-end supply chain is to provide supply facilities, production
facilities, assembling, and physical movement of goods and services. The HUL aims
to make their role more important, as they consider the back-end employers as their
family member and trust them for their important responsibility.

The back-end supply chain is divided into two broad categories, agro based products
and non-agro based products. The agro based products includes food and refreshment
segment, and non-agro based products includes home care, beauty and personal care.

Talking about the agro based products, HUL contacts the selected farmers for getting
pure farm raw material and cultivate certain raw materials on their farmland. Then the
materials are processed and converted into final goods like tea, coffee, catch up, etc.

Front-end supply chain explanation

Front-end supply chain focuses on distribution of goods and services to the end user
with the help of logistics. HUL focuses to streamlining their supply chain to reduce
cost and get competitive advantage in FMCG market.

Once the goods are ready to use the C&F agent ensures smooth conduct of business
and timeliness of delivery without actually getting involved in the clearing and
forwarding activities. When it comes to selecting C&F in HUL they are very
particular about their experience, because with proper experience comes finest
problem solving skills in the FMCG industry.

After the goods are done with all the formalities like customs and clearance, the goods
would be shipped to redistributor stockist, who keeps the stock of the company and
gets fixed margin for keeping it. In certain situation the stockist may perform the role
of distributor, when that’s the scenario it’s known as redistribution stockist. The role
of distributor is to distribute the products in the market to retailer or wholesaler.
Once the goods are held in the hands of wholesalers the wholesalers provide them to
the supermarket or retailers based on their needs and market requirement. After the
chain is completed the goods are available to the customers.

Both front-end and back-end logistics are fulfilled with the help of carriage
transportation that allows the movement of raw materials or goods from point a to
point b with the help of motor vehicles ranging from 4 to 16 wheels (heavy vehicles)

The company prefers carriage transportation because:

● Door to door service – this means that the carriage transportation helps to
transport the material or goods without any hustle and that reduces loading and
unloading expenses.
● Flexible Service – another advantage of carriage transportation is its flexibility,
the routes and timings can be altered based on the requirement and
convenience.
● Best option for shorter distances – carriage transport is much more applicable
when the distance between pickup point and drop point is shorter (up to 600-
900 kilo meters)

The underlining theme that we should understand is that for a company both front-end
and back-end supply chain are important because both are interdependent on each
other.

Effect of Covid-19 on HUL Supply Chain

The supply chains of HUL is pretty vast and intricate ad it belongs to

FMCG industry. The supply chainoperation of HUL is being affected due to
increase of lead time, volatility of price, and inaccuracy of forecasts.

Due to the lockdown, some routes for shipment are at halt now. As a result,
supplies are not being delivered in time. Consequently, this is causing
ripple effect in every subsequent function of the supply chain. Ultimately,
productivity is being lessened severely. In addition, some vendors are out
of supply themselves and now HUL cannot sit idly due to that. Instead, they
are looking for new vendors. And this is forcing them to build new
relationships with those vendors which are making things slower. Also,
they are not having as much leverage in terms of negotiating as they had
before. As a result, expenses are increasing as well.On top of that, supply
for certain materials have become highly uncertain. As a consequence,
prices have also been inconsistent. And this high volatility is making
accurate forecasting a big challenge.Now, to counter these problems, HUL
si trying to ensure as much preparation as possible for any uncertain event.