RESEARCH PROJECT REPORT

ON
“A STUDY ON SUPPLY CHAIN MANAGERMENT”
AT
FMCG GCPL, LUCKNOW.

A project report submitted in partial fulfilment for the award of the

degree
OF
MASTER OF BUSINESS ADMINISTRATION (MBA)

Dr. A.P.J. Abdul Kalam Technical University, Lucknow

(2021-22)

Submitted by

MOHD JAHID
MBA, 4th semester
ROLL NO - (2008990700002)
UNDER THE GUIDENCE OF:

Mrs. LAXMEE VACHHER

PROFESSOR

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 DECLARATION

I am Mohd Jahid the undersigned, student of Shri Sharda Group of Institution,

Lucknow; declare that this project report titled ― “A STUDY ON SUPPLY CHAIN

MANAGERMENT AT FMCG GCPL LUCKNOW” is submitted in partial fulfilment

of the requirement for the summer internship project during the course of Master in

Business Administration. I also declare that this is my original work and has not been

previously submitted as part of any other degree, diploma of another school or

University. The findings and conclusions of the data in this report are based on my

personal study.

MOHD JAHID

MBA, 4th semester

ROLL NO - (2008990700002)

2
 ACKNOWLEDGEMENT

The report has solely been prepared by me with the purpose of fulfilling the requirements

of the course of MBA (Masters of Business Administration,). There are in numerous

helping hands behind it who have guided me on my way.

I would like to give sincere thanks to Mrs. LAXMEE VACHHER (Professor- SSGI

Lucknow), who have supported me all through to make my study and findings more

accurate. Their contribution in stimulating suggestions and encouragement helped me to

coordinate my report writing. I am highly obliged to them.

MOHD JAHID

MBA, 4th semester

ROLL NO - (2008990700002)

3
 TABLE OF CONTENT

SN Title Page No.

1. Introduction 05-54

2. Industry Overview 55-76

3. Company Profile 77-94

4. Research Methodology 95-96

5. Data Analysis & Interpretation 97-103

6. Findings 104-104

7. Conclusion 105-105

8. Bibliography 106-107

9. Questionnaire 108-111

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 CHAPTER 1: INTRODUCTION

Inventory Management

Definition:

Inventory management is an approach for keeping track of the flow of inventory. It starts

right from the procurement of goods and its warehousing and continues to the outflow of the

raw material or stock to reach the manufacturing units or to the market, respectively. The

process can be carried out manually or by using an automated system.

When the goods arrive at the premises, inventory management ensures receiving, counting,

sorting, arrangement, storage and maintenance of these items, i.e. stock, raw material,

components, tools, etc., efficiently.

To see how this whole system functions, we should first understand the flow of inventory in an

organization. The same has been represented in the following diagram: -

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Here, the goods which are stored in the warehouse can be utilized in the following two

ways:

• Direct distribution in the market i.e., to the wholesalers, dealers, retailers or

customer.

• Sent to the production units for manufacturing of finished goods.

There are many inventory management techniques available for organizations to choose

from. Some of the most common ones are EOQ (economic order quantity), ABC

analysis, just-in-time management, EQR model, VED analysis, LIFO (last in last out)

and FIFO (first in first out).

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Inventory Management Objectives

Inventory management is performed to simplify the operational activities. Some of the primary

objectives for which it is carried out are as follows:

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 Preventing Dead Stock or Perishability: With an optimal inventory level, the chances

of wastage in the form of goods spoilage or dead stock.

 Optimizing Storage Cost: It reduces the chances of maintaining excessive stock, even

the requirements are pre-determined, which ultimately cuts done the unnecessary

warehousing costs.

 Maintaining Sufficient Stock: Now, the production department need not worry about

the shortage of raw material or goods because of its constant supply.

 Enhancing Cash Flow: Inventory has a significant impact on the cash flow of the

company. With effective inventory management, the organization can ensure sufficient

liquid cash to enhance its operational efficiency.

 Reducing the Inventories’ Cost Value: When there is a constant purchase of goods or

stock, the organization can ask for discounts and other benefits to decrease the purchase

price.

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Types of Inventory Management

While installing an inventory management system, the organization has to consider the

various aspects like cost, budget, utility and accessibility. However, it can be classified into

the following types:

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Bar-code Inventory Management

The barcode system is its automated and simplified version. The management can find out the

stock remaining with just one click on a computer device. The scanned barcodes enable the

software to maintain a track of all the purchases and the flow of inventory.

Continuous Inventory Management

It links the barcode and radio frequency identification with the accounting inventory system,

inventory received, and point of sales systems along with the production system, to trace the

path of inventory movement. It is mostly beneficial for accounting purpose. This is also

termed as perpetual inventory management.

Periodic Inventory Management

It is a manual process, which is used for determining the closing inventory value, for putting

it up in the ledger at the end of a financial year. Depending on the organizational need, it can

also be analysed quarterly. However, it is a time-consuming way, since the inventory has to

be physically counted.

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Inventory Management Process

Since it is a process of identifying and resolving inventory-related obstacles. Given below is

the step by step method of improving the organization’s inventory management system:

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Step 1: Determining the Loopholes

The foremost step is to evaluate the inventory requirement and the actual stock of the goods.

Also, the reasons for this gap between the demand and inventory should be ascertained.

Step 2: Analysing Consumer Demand and Spending Patterns

The market demand forecasting holds equal importance. This is because it helps the

organization to estimate the production quantity, which ultimately leads to the maintenance of

adequate inventory.

Step 3: Evaluating the Cost Involved

Its implementation involves different types of expenses such as warehousing, maintenance,

transport, bulk discounts and supply chain costs. Each of these should be well analysed.

Step 4: Identifying the Extent of Process Automation

It is not possible for every organization to completely automate the inventory management

process. However, the management can recognize those particular areas where there are

possibilities of automation.

Step 5: Inspecting Supplier’s Practices and Performance

The next step is to find out the suppliers’ inventory management practices since this strategy

cannot be implemented solely. If the supplier is resistant to change and tends to proceed with

the traditional means, the organization needs to look for alternative vendors.
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Step 6: Classifying Inventories into Different Categories

The goods have to be segregated into various categories depending upon the product type,

customer class, maintenance cost or profit margin.

Step 7: Setting Objectives for Each Inventory Category

To efficiently manage and track the performance of the applied technique for each category, it

is essential to set individual goals. It not only provides a base for benchmarking but also

identifies the problems and issues faced in each of these categories.

Step 8: Prioritizing the Areas of Improvement

Now, that we are aware of the problems, the next step is about finding out the density of each

issue and its impact. The concerns which can be resolved immediately needs to be addressed

first. And then, the ones which are complex and requires restoration should be considered.

Step 9: Taking Advice or Opinion from Experts

Designing an appropriate inventory management system is the task of the personnel who

specialize in the field. Thus, at this stage, the organization needs to hire consultants or experts

for advice and opinion on current technology and problem fixation within the desired budget.

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Step 10: Framing Suitable Inventory Management Policy

The last step is to implement a satisfactory inventory management strategy for the desired

change. This improvement should be incorporated as an inventory management policy to deal

with the changes in demand and add value to customer experience.

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Importance of Inventory Management

The evolving technology and changing consumer preference have significantly brought

forward the need for a robust inventory management system. Given below are some of the most

prominent reason for which it is considered beneficial for every business entity:

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Enables Enterprise Resource Planning (ERP)

The ERP software accommodates and links the different business operations. These are

inventory procurement, warehousing, production, human resource, finance, marketing and

sales to one another. In this process, inventory management contributes its part of providing

the necessary data.

Proper Warehouse Management

The barcode system, LIFO and FIFO techniques provide a clear picture of the past and present

inventory available with the company to optimize the warehousing functions.

Efficient Inventory Valuation

It provides for proper evaluation of the different types of inventory, i.e., stock in hand, opening

and closing stocks, raw material, finished goods, etc. This data is also used to prepare the cost

sheet.

Supports Supply Chain Management

Being a segment of supply chain management, it is responsible for streamlining all the

warehousing operations and flow of raw material or stock.

Manages Sales Operations

Sales, as we know, is a continuous process which depends upon the production of goods or

services. If there is inefficient inventory management in the organization, the chances of

unavailability of raw material for manufacturing may arise.

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Challenges Faced in Inventory Management

Inventory management has become an inevitable part of significant business entities. Also,

many small organizations have adopted the concept to keep track of their stock and raw

material.

But while practically implementing it, the companies have to deal with the following

limitations:

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 Lack of Knowledge: The personnel at the receiving and warehousing departments may

lack the required expertise and adequate knowledge of segregating the regular and

seasonal goods out of the whole stock.

 Expanding Product Portfolios: The customers’ demand and requirements for a wide

range of products have tremendously increased the inventory size, making it difficult to

manage, manually.

 Supply Chain Complexity: The organization, at times, fail to track the stock or goods

during the supply chain process. Moreover, it is not necessary that the business partners

also maintain an inventory management system, creating hurdles.

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 INVENTORY MANAGEMENT TECHNIQUES

Definition:

Inventory management techniques can be seen as a useful tool in the hands of the management.

It ensures the availability of the right type of stock, at the right time, at the right place and in

the desired quantity. It also enables the managers to match the inventory shown in the books

of accounts with that available.

Example: A garment manufacturing industry found that in the financial year 2018-19, it has

increased its sales by 33%. However, the Cash Flow statement depicted a very low balance,

indicating that the company lacks sufficient operating capital.

On analysing the books of accounts, it was found that the company has blocked its working

capital in the excess inventory.

The stock was maintained in a vast quantity taking up the warehouse space, demanding high

maintenance cost and some of the stock even became obsolete.

All this is the result of substandard and unplanned inventory management.

There are following selective control techniques: -

 FIFO
 LIFO
 EOQ
 ABC Analysis
 VED Classification
 Drop shipping
 Contingency Planning
 Accurate Forecasting
 Set PAR Levels
 Inventory Kitting
 Just-In-Time
 MRP

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 Perpetual Inventory Management
 FSN Inventory
 Batch Tracking

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First-In, First-Out (FIFO)
First in, first out is the most prominent inventory valuation method for managing the perishable

goods. These include flowers, fruits, vegetables, fish and meat products, dairy items, chemicals

and pharmaceuticals.

FIFO states that the goods which were received first (old stock) needs to be consumed initially.

Thus, reducing the spoilage of those goods which have a short shelf life.

For this purpose, the store in-charge must ensure proper arrangement of stock. It should be

such that the newest batches should be placed in the last shelves, whereas the oldest ones should

be kept in front.

One of the ways of organizing the goods is through their batch numbers or expiry dates.

In reselling businesses, this method also optimizes the inventory for non-perishable items that

have occupied the store space, since a long time.

When the same product is ready to be launched with new features look, packaging or design;

FIFO is used to avoid antiquity of the left out old stock.

Last-In, Last-Out (LIFO)

Last in last out is an inventory valuation technique used for the goods which are non-perishable

and homogeneous. Some of these are bricks, cement, stones, sand, etc.

Since this type of stock is usually arranged in piles, the newest lot is on the top. Therefore, the

most recent goods have to be used first, followed by the oldest stock, which is at the bottom.

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Though, this technique shows a superior income statement; the balance sheet is poorly valued

with old stock.

Also, the International Financing Reporting Standards (IFRS) and the Accounting Standards

for Private Enterprises (ASPE) forbids the use of LIFO in accounting. In the US, Generally

Accepted Accounting Principles (GAAP) has not imposed any such restrictions.

Economic Order Quantity (EOQ)

This model is applied when objective is to minimize the total annual cost of inventory in the

organization. Economic order quantity is that size of the order which helps in attaining the

above set objective. EOQ model is applicable under the following conditions.

 Demand per year is deterministic in nature

 Planning period is one year

 Lead time is zero or constant and deterministic in nature

 Replenishment of items is instantaneous

 Demand/consumption rate is uniform and known in advance

 No stock out condition exist in the organization

The total annual cost of the inventory (TC) is given by the following equation in EOQ model.

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The graphical representation of the EOQ model is shown in Figure 2.

Figure 2: Economic Order Quantity Model (EOQ Model)

A numeric illustration of the EOQ model is given in example 1.

ABC manufacturers produces 1,25,000 oil seals each year to satisfy the requirement of their

client. They order the metal for the bushing in lot of 30,000 units. It cost them $40 to place

the order. The unit cost of bushing is $0.12 and the estimated carrying cost is 25%-unit cost.

Find out the economic order quantity? What percentage of increases or decrease in order

quantity is required so that the ordered quantity is Economic order quantity?

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ABC Analysis

Another inventory control method is ABC analysis that lists out the goods under three classes

as follows:

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1- A, i.e., Highly Important: These are the goods which cost high and therefore, maintained

in small quantity.

2- B, i.e., Moderately Important: It constitutes the inventory which has an average value

maintained in fair quantity.

3- C, i.e., Less Important: These goods are available in huge quantity due to their low value

or cost.

Thus, category A being quite expensive, requires constant monitoring through EOQ, periodic

check on available quantity, inventory budgeting and ratio analysis.

The goods under category B should be ordered as per the market or production requirements.

Moreover, the ones that belong to category C does not require much control. Instead, only the

cost monitoring approach is enough for such goods.

Vital, Essential and Desirable (VED) Classification

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The VED classification is mostly used in industries where machines are used for production.

It distinguishes the stock according to the significance of its usage into the following three

categories:

1- Vital: Items signifying the lifeline of the production process are termed as vital items.

In the absence of these, the whole process would halt.

2- Essential: The stock out cost of the essential items is quite high. Thus, their absence

leads to a significant loss.

3- Desirable: The desirable items does not immediately hamper the production and also

have a minimal stock out the cost.

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 In the above classification, we can see that the essential items hold the highest significance

since its non-availability would pause the production process. These items usually comprise

of machinery which requires excessive control.

Drop shipping

Drop shipping is that form of business which ensures inventory control for resellers. The

organization does not maintain any inventory.

On receiving the order from a customer, the company forwards it to manufacturer, supplier or

wholesaler. Then, the vendor directly ships the product to the customer.

Thus, cross-docking has the following advantages:

 Minimal inventory cost;

 Meagre start-up investment;

 Scalability with low risk;

 Minimal order fulfilment expense.

Contingency Planning

Contingency strategy can be seen as a backup plan. Thus, this type of inventory management

technique helps to deal with any of the following adverse business circumstances:

 Shortage of space in warehouses;

 False inventory valuation or calculation;

 Vendor runs out of stock and cannot meet the order deadlines;

 A sudden increase in demand leads to stock over-valuation;

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  The manufacturer or vendor stops dealing in particular goods without any prior

information;

 The company runs out of sufficient working capital to acquire essential products.

In this method, the organization should foresee the inventory-related risk and its impact.

Accordingly, it should plan what actions are to be taken, if any of the above problems arise.

Along with this, a constant effort should be made to build strong public relations for long-term

existence.

Therefore, contingency planning is essential for effective inventory management.

Accurate Forecasting

In inventory management, market demand analysis and estimation of sales, play a significant

role. If the organization lacks proper information about a precise number of future sales units,

there are high chances of stock wastage or shortage.

While accurate demand forecasting the organization must look into the following factors:

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 Economic conditions;

 Market trends;

 Planned advertisements and promotion;

 Marketing cost;

 Consumers’ growth rate;

 Seasonal impact on demand;

 Previous year’s sales record.

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 Set PAR Levels

Minimum safety stock or Periodic Automatic Replenishment (PAR) level refers to

establishing minimum stock criteria for each type of goods. If the inventory goes down the

set limit, it is an indication that the new minimum order needs to be placed.

For such decision making, the store manager needs to analyse the frequency of sales or

production and procurement period. With the changing market demand, production capacity,

warehousing capacity, maintenance cost and various other factors; the PAR levels can be

altered.

Therefore, the organization must review the PAR levels considering these factors, from time

to time. In the absence of the manager, safety stock levels also aid the employees to take

prompt inventory procurement decisions.

Inventory Kitting

Product bundling as we call it is a method of creating a bundle by grouping different products,

packaging and merchandising them together as a single unit.

In the inventory management, on selling a bundle, the system automatically associates the

pack’s sale to the sale of items included in it, separately.

Some of the benefits of this method are as follows:

 Spontaneous selling of different products helps to minimize inventory absolution; along

with clearance of the old stock.

 It reduces the overall warehousing, maintenance and shipping costs.

 It initiates inventory tracking and its minimum level maintenance.

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  It improves the average order values and enhances sales revenue.

Just-In-Time (JIT) Inventory Management

Just-in-time is one of the Japanese inventory management techniques, that emphasizes

keeping a ‘zero inventory ‘.

As the name suggests, it refers to maintaining only that much stock which is required at

present, for carrying out the production or merchandising process.

Some organizations first receive the order from the clients, and then they proceed with the

inventory procurement and manufacturing activities.

Following are the various advantages of JIT:

 JIT benefits through ordering the new stock only when the old one is about to finish.

Thus, it reduces obsoletion or expiry of the existing stock.

 It ensures a positive cash flow, with less working capital engaged in inventory.

 It also provides for optimizing the inventory cost by reducing the warehousing and

insurance expenses.

However, one of the most significant drawbacks of this technique is it may result in stock-out.

Since there is a possibility that the procurement team fails to order the goods on time or the

delivery of stock is delayed.

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 Material Requirement Planning (MRP)

Commonly known as MRP method, it is an analytical approach. The manager places the order

with the vendors, for new stock only after finding out the market demand and sales forecast,

acquired from the different business areas.

For the manufacturers, merchandisers, wholesalers and stockists; it is a beneficial technique

since it provides for price risk optimization and also reduces the overstock uncertainties.

Perpetual Inventory Management

It is a continuous inventory system that helps in regular tracking of the real-time stock

movements.

In this method, the inventory is promptly updated in the books of accounts, as soon as the

purchase or sale of goods is made.

Thus, this is a superior technique to the periodic inventory system which initiates only an

occasional or random check of inventory through physical counting of goods.

Given below are the various plus points of perpetual inventory system:

 Efficient inventory forecasting;

 Immediate recording of the stock information;

 Competent in terms of time and cost;

 Error-free due to validated data.

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Fast, Slow and Non-Moving (FSN) Inventory

The critical function of the FSN inventory technique is understanding the frequency with which

a specific product is consumed for production or merchandising. Let us now go through its

following three elements:

1. Fast-Moving Inventory: The goods which are readily saleable or consumed in bulk, are

termed as fast-moving inventory. The inventory turnover ratios of such stock are quite

high.

2. Slow-Moving Inventory: The stock which is not consumed that frequently resulting in

low turnover ratio, is categorized under slow-moving inventory.

3. Non-Moving Inventory: Some goods in the warehouse, goes out of demand and

therefore, becomes obsolete. Many times, such non-moving inventory leads to dead

stock.

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The manager should take steps to use or eradicate the non-moving inventory for creating space

in the warehouse. Also, the slow-moving goods should be stored in a limited quantity to avoid

the chances of absolution.

On the other hand, the fast-moving stock should be maintained in a sufficient quantity for

uninterrupted production or supply of goods.

Batch Tracking

Throughout the supply chain management, goods are recorded and traced as per their batch

numbers, to facilitate lot tracking.

It is widely used to figure out where the inventory is, right from its receiving and warehousing

to production or sales. It even keeps track of the products’ expiration date (if available).

Given below are the benefits of batch tracking to the organizations:

 Batch tracking is a more efficient method of inventory management when compared to

the manual process.

 It improves vendor relationship through the identification and selection of prominent

suppliers.

 It helps to make out defective products in a batch, and thus, reduces the chances of loss.

 A robust quality control system can be established through a lot tracking system. Since

the expiry date of each product or batch is known, the chances of quality degradation

reduce.

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 Supply Chain Management

Definition

Supply chain management refers to controlling the flow of raw material, product, inventory,

cash and information right from the place of origin to the final consumption of the product. A

supply chain involves all the activities which an organization performs for consumer

satisfaction. It includes product development, finance, marketing channel, transportation,

customer service and other business operations.

A business comprises of various activities, people, department, associates and most

importantly, it involves a risk factor.

If an organization is merely planning to produce some goods without knowing how it would

procure the raw material, machinery and other resources, it may not be able to start even.

Process of Supply Chain Management

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Supply chain management is a step by step process which remains as a standard for all the

business operations. Let us now learn about these steps in detail below:

 Plan: The initial stage in the process of supply chain management is to develop a plan

constituting the various strategies related to the procurement of raw material,

manufacturing of goods, distribution of products, inventory management and

warehousing, arranging for finance and customer handling.

 Source: This step deals with the decisions regarding the suppliers of the raw material.

The supply chain manager is responsible for maintaining a cordial relationship with the

suppliers to ensure continuous availability of raw material at a reasonable price.

 Make: In this stage, the whole concentration is on the manufacturing of the product. It

involves product design, the method of production, product testing and sampling,

packaging, etc.

 Deliver: In this step, the organization plans for the delivery of the manufactured goods

to fulfil the orders. It includes distribution channel management, invoicing, receiving

payments, warehousing and inventory management.

 Return: Customer service is the essential step where the companies need to arrange for

the replacement or refunds in exchange for the products returned being either damage,

dissatisfaction or defective. It includes pick up service, customer helpline, handling of

queries and complaints, etc.

Supply Chain Management Activities

You must be wondering what all activities are performed under supply chain management?

Why are they so essential for the organization? To understand the impact of supply chain

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management on the various departments of an organization, we must go through the following

activities:

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Customer Relationship Management: The companies are engaged in building customer

loyalty toward the brand through customer relationship management. It involves identifying

the customer’s need, designing the products accordingly and maintaining a customer database.

Customer Service Management: Supply chain management continuously focus on customer

service and satisfaction through proper flow of information, addressing customer issues and

working on feedbacks.

Supplier Relationship Management: Communicating with the suppliers and

enhancing public relations is essential for the regular supply of raw material and uninterrupted

trade practices.

Manufacturing Flow Management: It includes all the operations which facilitate a transfer

of raw material into the factory and transfer of finished goods out of the factory. It ensures a

flexible and systematic manufacturing process to produce products or services at the lowest

possible cost.

Demand Management: Demand forecasting and analysis are necessary to meet the needs of

the customers in the best possible way. It is also provided for the preparation of the sales

budget and supply estimation.

Order Fulfilment: Supply chain management includes activities related to order processing

and fulfilment like handling queries, taking up orders, order delivery, coordinating with the

customers and the suppliers, etc.

Product Development and Commercialization: The company needs to be updated with the

ongoing trend, and the customer wants. This is essential to survive in the long run by making

the required changes in the product or develop a new product through innovation.

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Returns Management: Reverse logistics is the flow of goods from the customers back to the

company due to specific issues like damage or defect. It is a must needed activity for the

company to gain customer loyalty and satisfaction by working on the loopholes.

Need for Supply Chain Management

The regulation and movement of information, goods and money in business are necessary for

the proper functioning of all the departments and achievement of organizational goals. It is

also essential for the economy and growth of a nation.

Let us see why supply chain management has gained so much importance, for any business

as well as for the country:

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Enhances Customer Service

A business revolves around its customers, and consumer satisfaction is the critical factor of

all business activities. To ensure proper customer service, supply chain management is needed.

The customer seeks for the right product, in the correct proposition and the right quantity, on-

time delivery of the products, availability of the product at the accessible location and prompt

after-sales service.

Cost Reduction

Supply chain management streamlines the business process by reducing the overall cost

incurred on the procurement of raw material, manufacturing of goods and expenditure incurred

on supply chain management.

Supply chain management ensures acquiring the raw material from the suppliers at the lowest

possible price as well as looking for better deals.

It provides for the regular supply of materials and tools to the manufacturing and assembling

units to avoid loss from the temporary shutdown of production units.

Supply chain cost, i.e. the cost of maintaining a large inventory and obsolete products can be

reduced by enhancing sales and better customer service.

Better Financial Position

Financial viability and management is an essential factor in organizational growth. A proper

supply chain management controls the expenses of the company to improve its financial health.

When the sales are in bulk, a slight cost-cutting in the supply chain can lead to a remarkable

difference in the profitability.

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Supply chain management is all about building up of networks taking the help of the tertiary

sector to reduce the cost of fixed assets. The faster the product reaches its customer; the sooner

is the payment made. This reduces the debtors and improves the cash flow of the company.

Human Survival and Existence

Supply chain management is necessary to move the goods or services from its point of origin

to its end-user. In the direction of humanity and to protect human life, supply chain

management is required at the time of crisis to move the resources from one place to another.

It also acts as a saviour at the time of medical emergencies and rescues like the hospital’s

supply chain management.

Enhances Quality of Life

Usually developed countries have a better standard of living due to a well-structured supply

chain. It also improves the transportation system, communication system, infrastructure, etc.

It enhances profitability from the trading and business activities to ensure economic growth

and development of a country.

Better supply chain means more business and more business means more employment

opportunities.

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Supply Chain Operations

The third and last decision phase consists of the various functional decisions that are to be made

instantly within minutes, hours or days. The objective behind this decisional phase is

minimizing uncertainty and performance optimization. Starting from handling the customer

order to supplying the customer with that product, everything is included in this phase.

For example, imagine a customer demanding an item manufactured by your company. Initially,

the marketing department is responsible for taking the order and forwarding it to production

department and inventory department. The production department then responds to the

customer demand by sending the demanded item to the warehouse through a proper medium

and the distributor sends it to the customer within a time frame. All the departments engaged

in this process need to work with an aim of improving the performance and minimizing

uncertainty.

Supply chain performance measure can be defined as an approach to judge the performance of

supply chain system. Supply chain performance measures can broadly be classified into two

categories:

 Qualitative measures: For example, customer satisfaction and product quality.

 Quantitative measures: For example, order-to-delivery lead time, supply chain

response time, flexibility, resource utilization, delivery performance.

Here, we will be considering the quantitative performance measures only. The performance

of a supply chain can be improvised by using a multi-dimensional strategy, which addresses

how the company needs to provide services to diverse customer demands.

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Quantitative Measures

Mostly the measures taken for measuring the performance may be somewhat similar to each

other, but the objective behind each segment is very different from the other.

Quantitative measures are the assessments used to measure the performance, and compare

or track the performance or products. We can further divide the quantitative measures of

supply chain performance into two types. They are:

 Non-financial measures

 Financial measures

Non-Financial Measures

The metrics of non-financial measures comprise cycle time, customer service level,

inventory levels, resource utilization ability to perform, flexibility, and quality. In this

section, we will discuss the first four dimensions of the metrics:

Cycle Time

Cycle time is often called the lead time. It can be simply defined as the end-to-end delay in

a business process. For supply chains, cycle time can be defined as the business processes

of interest, supply chain process and the order-to-delivery process. In the cycle time, we

should learn about two types of lead times. They are as follows:

 Supply chain lead time

 Order-to-delivery lead time

The order-to-delivery lead time can be defined as the time of delay in the middle of the

placement of order by a customer and the delivery of products to the customer. In case the

item is in stock, it would be similar to the distribution lead time and order management time.

43
If the ordered item needs to be produced, it would be the summation of supplier lead time,

manufacturing lead time, distribution lead time and order management time.

The supply chain process lead time can be defined as the time taken by the supply chain to

transform the raw materials into final products along with the time required to reach the

products to the customer ‘s destination address.

Hence it comprises supplier lead time, manufacturing lead time, distribution lead time and

the logistics lead time for transport of raw materials from suppliers to plants and for

shipment of semi-finished/finished products in and out of intermediate storage points.

Lead time in supply chains is governed by the halts in the interface because of the interfaces

between suppliers and manufacturing plants, between plants and warehouses, between

distributors and retailers and many more.

Lead time compression is a crucial topic to discuss due to the time based competition and

the collaboration of lead time with inventory levels, costs, and customer service levels.

Customer Service Level

The customer service level in a supply chain is marked as an operation of multiple unique

performance indices. Here we have three measures to gauge performance. They are as

follows:

 Order fill rate: The order fill rate is the portion of customer demands that can be

easily satisfied from the stock available. For this portion of customer demands, there

is no need to consider the supplier lead time and the manufacturing lead time. The

order fill rate could be with respect to a central warehouse or a field warehouse or

stock at any level in the system.

44
  Stock out rate: It is the reverse of order fill rate and marks the portion of orders lost

because of a stock out.

 Backorder level: This is yet another measure, which is the gauge of total number of

orders waiting to be filled.

 Probability of on-time delivery: It is the portion of customer orders that are

completed on-time, i.e., within the agreed-upon due date.

In order to maximize the customer service level, it is important to maximize order fill rate,

minimize stock out rate, and minimize backorder levels.

Inventory Levels

As the inventory-carrying costs increase the total costs significantly, it is essential to carry

sufficient inventory to meet the customer demands. In a supply chain system, inventories

can be further divided into four categories.

 Raw materials

 Work-in-process, i.e., unfinished and semi-finished sections

 Finished goods inventory

 Spare parts

Every inventory is held for a different reason. It‘s a must to maintain optimal levels of each

type of inventory. Hence gauging the actual inventory levels will supply a better scenario of

system efficiency.

45
Resource Utilization

In a supply chain network, huge variety of resources is used. These different types of

resources available for different applications are mentioned below.

 Manufacturing resources: Include the machines, material handlers, tools, etc.

 Storage resources: Comprise warehouses, automated storage and retrieval systems.

 Logistics resources: Engage trucks, rail transport, air-cargo carriers, etc.

 Human resources: Consist of labour, scientific and technical personnel

 Financial resources: Include working capital, stocks, etc.

In the resource utilization paradigm, the main motto is to utilize all the assets or resources

efficiently in order to maximize customer service levels, reduce lead times and optimize

inventory levels.

Financial Measures

The measures taken for gauging different fixed and operational costs related to a supply

chain are considered the financial measures. Finally, the key objective to be achieved is to

maximize the revenue by maintaining low supply chain costs.

There is a hike in prices because of the inventories, transportation, facilities, operations,

technology, materials, and labor. Generally, the financial performance of a supply chain is

assessed by considering the following items:

 Cost of raw materials.

 Revenue from goods sold.

46
  Activity-based costs like the material handling, manufacturing, assembling rates etc.

 Inventory holding costs

 Transportation costs

 Cost of expired perishable goods

 Penalties for incorrectly filled or late orders delivered to customers

 Credits for incorrectly filled or late deliveries from suppliers

 Cost of goods returned by customers

 Credits for goods returned to suppliers

In short, we can say that the financial performance indices can be merged as one by using

key modules such as activity based costing, inventory costing, transportation costing, and

intercompany financial transactions.

As seen under the major objectives of supply chain, one of the basic objectives of SCM is to

make sure that all the activities and functions within as well as across the company are

managed efficiently.

There are instances where efficiency in supply chain can be ensured by efficiencies in

inventory, to be more precise, by maintaining efficiency in inventory reductions

47
48
Though inventory is considered a liability to efficient supply chain management, supply chain

managers acknowledge the need of inventory. However, the unwritten rule is to keep

inventory at a bare minimum. Many strategies are developed with the objective of

49
 streamlining inventories beyond the supply chain and holding the inventory investment as low

as possible. The supply chain managers tend to maintain the inventories as low as possible

because of inventory investment. The cost or investment related with owning inventories can

be high. These costs comprise the cash outlay that is necessary for purchasing the inventory,

the costs of acquiring the inventories (the cost of having invested in inventories rather than

investing in something else) and the costs related with managing the inventory.

Role of Inventory

Before understanding the role of inventory in supply chain, we need to understand the cordial

relationship between the manufacturer and the client. Handling clients, coping up with their

demands and creating relationships with manufacturer is a critical section of managing supply

chains.

There are many instances where we see the concept of collaborative relationship being marked

as the essence of supply chain management. However, a deeper analysis of supply chain

relationships, especially those including product flows, exposes that at the heart of these

relationships is inventory movement and storage.

More than half of it relies on the purchase, transfer or management of inventory. As we know,

inventory plays a very important role in supply chains, being a salient feature.

The most fundamental functions that inventory has in supply chains are as follows:

To supply and support the balance of demand and supply.

To effectively cope with the forward and reverse flows in the supply chain.

Companies need to manage the upstream supplier exchanges and downstream customer

50
demands. In this situation, the company enters a state where it has to maintain a balance

between fulfilling the demands of customers, which is mostly very difficult to predict with

precision or accuracy, and maintaining adequate supply of materials and goods. This balance

can be obtained through inventory.

Optimization Models

Optimization models of supply chain are those models that codify the practical or real life

issues into mathematical model. The main objective to construct this mathematical model is to

maximize or minimize an objective function. In addition to this, some constraints are added to

these issues for defining the feasible region. We try to generate an efficient algorithm that will

examine all possible solutions and return the best solution in the end. Various supply chain

optimization models are as follows:

Mixed Integer Linear Programming

The Mixed integer linear programming (MILP) is a mathematical modeling approach used to

get the best outcome of a system with some restrictions. This model is broadly used in many

optimization areas such as production planning, transportation, network design, etc.

MILP comprises a linear objective function along with some limitation constraints constructed

by continuous and integer variables. The main objective of this model is to get an optimal

solution of the objective function. This may be the maximum or minimum value but it should

be achieved without violating any of the constraints imposed.

We can say that MILP is a special case of linear programming that uses binary variables. When

compared with normal linear programming models, they are slightly tough to solve. Basically

the MILP models are solved by commercial and noncommercial solvers, for example: Fico

Xpress or SCIP.

51
Stochastic Modelling

Stochastic modelling is a mathematical approach of representing data or predicting outcomes

in situations where there is randomness or unpredictability to some extent.

For example, in a production unit, the manufacturing process generally has some unknown

parameters like quality of the input materials, reliability of the machines and competence

within the employees. These parameters have an impact on the outcome of the manufacturing

process but it is impossible to measure them with absolute values.

In these types of cases, where we need to find absolute value for unknown parameters, which

cannot be measured exactly, we use Stochastic modeling approach. This modeling strategy

helps in predicting the result of this process with some defined error rate by considering the

unpredictability of these factors.

Uncertainty Modelling

While using a realistic modelling approach, the system has to take uncertainties into account.

The uncertainty is evaluated to a level where the uncertain characteristics of the system are

modelled with probabilistic nature.

We use uncertainty modelling for characterizing the uncertain parameters with probability

distributions. It takes dependencies into account easily as input just like Markov chain or may

use the queuing theory for modelling the systems where waiting has an essential role. These

are common ways of modelling uncertainty.

Bi-level Optimization

A bi-level issue arises in real life situations whenever a decentralized or hierarchical decision

needs to be made. In these types of situations, multiple parties make decisions one after the

other, which influences their respective profit.

52
Till now, the only solution to solve bi-level problems is through heuristic methods for realistic

sizes. However, attempts are being made for improving these optimal methods to compute an

optimal solution for real problems as well.

RM for Multiple Customer Segments

In the concept of revenue management, we need to take care of two fundamental issues. The

first one is how to distinguish between two segments and design their pricing to make one

segment pay more than the other. Secondly, how to control the demand so that the lower price

segment does not use the complete asset that is available.

To gain completely from revenue management, the manufacturer needs to minimize the volume

of capacity devoted to lower price segment even if enough demand is available from the lower

price segment to utilize the complete volume. Here, the general trade-off is in between placing

an order from a lower price or waiting for a high price to arrive later on.

These types of situations invite risks like spoilage and spill. Spoilage appears when volumes

of goods are wasted due to demand from high rate that does not materialize. Similarly, spill

appears if higher rate segments need to be rejected due to the commitment of volume goods

given to the lower price segment.

To reduce the cost of spoilage and spill, the manufacturer can apply the formula given below

to segments. Let us assume that the anticipated demand for the higher price segment is

generally distributed with mean of DH and standard deviation of σH:

53
An important point to note here is the application of differential pricing that increments the

level of asset availability for the high price segment. A different approach that is applicable for

differential pricing is to build multiple versions of product that focus on different segments.

We can understand this concept with the help of a real life application of managing revenue for

multiple customer segments, that is, the airlines.

54
 CHAPTER 2: INDUSTRY OVERVIEW

The Indian FMCG sector is the fourth largest sector in the economy with an estimated size

of Rs. 1,300 billion. The sector has shown an average annual growth of about 11% per

annum over the last decade. Unlike the developed markets, which are prominently

dominated by few large players, India ‘s FMCG market is highly fragmented and a

considerable part of the market comprises of unorganized players selling unbranded and

unpackaged products. There are approximately 12-13 million retail stores in India, out of

which 9 million are FMCG kirana

stores.

India FMCG sectors ‘significant characteristics can be listed as strong MNC presence, well

established distribution network, intense competition between the organised and

unorganised players and low operational cost. Easy availability of important raw materials,

cheaper labor costs and presence across the entire value chain gives India a competitive

advantage.

Products which have a swift turnover and relatively low cost are known as Fast Moving

Consumer Goods (FMCG). FMCG items are those which generally get replaced within a

year. Examples of FMCG commonly include a wide range of repeatedly purchased

consumer products such as toiletries, soap, cosmetics, oral care products, shaving products

and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper

products, and plastic goods. Penetration level and per capita consumption in many product

categories is very low compared to world average standards representing the unexploited

market potential. Mushrooming Indian population, particularly the middle class and the rural

segments, presents the huge untapped opportunity to FMCG players. A distinct feature of

55
the FMCG industry is the presence of international players through their subsidiaries (HLL,

P&G, Nestle), which ensures innovative product launches in the market from their parent's

portfolio.

Our country has a varied agro-climatic condition that enables to offer extended raw material

base suitable for many FMCG sub sections like food processing industries etc. India is the

one of the major producer of livestock, milk, sugarcane, coconut, spices and cashew and is

the second largest producer of rice, wheat and fruits & vegetables. Similarly, India has an

abundant supply of caustic soda and soda ash, the chief raw materials required in the

production of soaps and detergents, which enables the household section of the industry to

excel and grow. The accessibility of these raw materials gives India the location advantage.

INDUSTRY CATEGORY AND PRODUCTS

Household Care (Personal Wash)

The market size of personal wash is estimated to be around Rs. 8,300Cr. The personal wash

can be segregated into three segments: Premium, Economy and Popular. The penetration

level of soaps is ~92 per cent. It is available in 5 million retail stores, out of which, 75 per

cent are in the rural areas. HUL is the leader with market share of ~53 per cent; Godrej

occupies second position with market share of ~10 per cent. With increase in disposable

incomes, growth in rural demand is expected to increase because consumers are moving up

towards premium products. However, in the recent past there has not been much change in

the volume of premium soaps in proportion to economy soaps, because increase in prices

has led some consumers to look for cheaper substitutes.

56
Detergents

The size of the detergent market is estimated to be Rs. 12,000 Cr. Household care

segment is characterized by high degree of competition and high level of penetration. With

rapid urbanization, emergence of small pack size and sachets, the demand for the household

care products is flourishing. The demand for detergents has been growing but the regional

and small unorganized players account for a major share of the total volume of the detergent

market. In washing powder HUL is the leader with ~38 per cent of market share. Other major

players are Nirma, Henkel and Proctor & Gamble.

Personal Care (Skin Care)

The total skin care market is estimated to be around Rs. 3,400 Cr. The skin care

market is at a primary stage in India. The penetration level of this segment in India is around

20 per cent. With changing life styles, increase in disposable incomes, greater product choice

and availability, people are becoming aware about personal grooming. The major players in

this segment are Hindustan Unilever with a market share of ~54 per cent, followed by

CavinKare with a market share of ~12 per cent and Godrej with a market share of ~3 per

cent.

The Skin Care segment is expected to register a growth rate of mare that 16 %.

Hair Care

The hair care market in India is estimated at around Rs. 3,800 Cr. The hair care

market can be segmented into hair oils, shampoos, hair colorants & conditioners, and hair

gels. Marico is the leader in Hair Oil segment with market share of ~ 33 per cent; Dabur

occupies second position at ~17 per cent.

57
Shampoos

The Indian shampoo market is estimated to be around Rs. 2,700 Cr. It has the

penetration level of only 13 per cent in India. Sachet makes up to 40 per cent of the total

shampoo sale. It has low penetration level even in metros. Again the market is dominated

by HUL with around ~47 per cent market share; P&G occupies second position with market

share of around ~23 per cent. Godrej do not have the presence in this segment. Antidandruff

segment constitutes around 15 per cent of the total shampoo market. The market is further

expected to increase due to increased marketing by players and availability of shampoos in

affordable sachets.

Oral Care

The oral care market can be segmented into toothpaste - 60 per cent; toothpowder -

23 per cent; toothbrushes - 17 per cent. The total toothpaste market is estimated to be around

Rs. 3,500 Cr. The penetration level of toothpowder/toothpaste in urban areas is three times

that of rural areas. This segment is dominated by Colgate-Palmolive with market share of

~49 per cent, while HUL occupies second position with market share of ~30 per cent. In

toothpowders market, Colgate and Dabur are the major players. The oral care market,

especially toothpastes, remains under penetrated in India with penetration level ~50 per cent.

Food & Beverages (Food Segment)

The foods category in FMCG is gaining popularity with a swing of launches by HUL,

ITC, Godrej, and others. This category has 18 major brands aggregating Rs. 4,600 Cr. Nestle

and Amul slug it out in the powders segment. The food category has also seen innovations

like softies in ice creams, ready to eat rice by HUL and pizzas by both GCMMF and Godrej

Pillsbury.

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Tea

The major share of tea market is dominated by unorganized players. More than 50

per cent of the market share is capture by unorganized players. Leading branded tea players

are HUL and Tata Tea.

Coffee

The Indian beverage industry faces over supply in segments like coffee and tea.

However, more than 50 per cent of the market share is in unpacked or loose form. The major

players in this segment are Nestlé, HUL and Tata Tea.

MARKET POTENTIALITY OF FMCG INDUSTRY

Some of the merits of FMCG industry, which made this industry as a potential one are

• Low operational cost

• Strong distribution networks

• Presence of renowned FMCG companies

• Population growth which is responsible behind the success of this industry.

Steps to Successful Fast-Moving Consumer Goods (FMCG) Business

1. Supermarket and retail selling

2. Design, advertising and printing

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3. Media and direct mail research

4. Market research

5. Public relations

6. Internet strategies

SWOT ANALYSIS OF FMCG SECTOR

Strengths,

• Low operational costs

• Presence of established distribution networks in both urban and rural areas •

Presence of well-known brands in FMCG sector

Weaknesses,

• Lower scope of investing in technology and achieving economies of scale,

especially in small sectors

• Low exports levels

• "Me-too products, which illegally mimic the labels of the established brands. These

products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities,

• Untapped rural market

• Rising income levels, i.e. increase in purchasing power of consumers

60
• Large domestic market- a population of over one billion.

• Export potential

• High consumer goods spending

Threats,

• Removal of import restrictions resulting in replacing of domestic brands

• Slowdown in rural demand

• Tax and regulatory structure

PEST ANALYSIS ON FMCG SECTOR

Political (incl. Economic Social Technological

Legal)
Environmental Economic growth Income distribution Government research
regulations and spending

protection
Tax policies Interest rates & Demographics, Industry focus on
monetary policies Population growth rates, technological effort
Age distribution

International trade Government Labour / social mobility New inventions and

regulations spending development

and restrictions
Contract Unemployment Lifestyle changes Rate of technology
enforcement law transfer
policy
Consumer
protection
Employment laws Taxation Work/career and leisure Life cycle and speed of
technological
attitudes obsolescence

Entrepreneurial spirit

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 Government Exchange rates Education Energy use and costs
organization /

attitude
Competition Inflation rates Fashion, hypes (Changes in)
regulation Information

Technology
Political Stability Stage of the business Health consciousness & (Changes in) Internet
cycle welfare, feelings on
safety

Safety regulations Consumer Living conditions (Changes in) Mobile

confidence
Technology

Table 4.4.1

FMCG SECTOR IN INDIA

India ‘s FMCG sector is the fourth largest sector in the economy and creates employment

for more than three million people in downstream activities. Its principal constituents are

Household

Care, Personal Care and Food & Beverages. The total FMCG market is in excess of Rs.

85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain

a high growth rate. FMCG Industry is characterized by a well-established distribution

network, low penetration levels, low operating cost, lower per capita consumption and

intense competition between the organized and unorganized segments.

The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth in the

third quarter of 2008-09 despite the economic downturn. The industry is expected to register

62
a 15% growth in Q3 2008-09 as compared to the corresponding period last year. Unlike

other sectors, the FMCG industry did not slow down since Q2 2008. The industry is doing

pretty well, bucking the trend. As it is meeting the every-day demands of consumers, it will

continue to grow. In the last two months, input costs have come down and this will reflect

in Q3 and Q4 results. Market share movements indicate that companies, with domination in

their key categories, have improved their market shares and outperformed peers in the

FMCG sector. This has been also aided by the lack of competition in the respective

categories. Single product leaders have also witnessed strength in their respective categories,

aided by innovations and strong distribution.

Strong players in the economy segment like Godrej Consumer Products Ltd in soaps and

Dabur in toothpastes have also posted market share improvement, with revived growth in

semi-urban and rural markets.

Items in this category include all consumables (other than groceries/pulses) people buy at

regular intervals. The most common in the list are toilet soaps, detergents, toothpaste,

shaving products, shoe polish, packaged foodstuff, and household accessories and extends

to certain electronic goods. These items are meant for daily of frequent consumption and

have a high return. A major portion of the monthly budget of each household is reserved for

FMCG products. The volume of money circulated in the economy against FMCG products

is very high, as the number of products the consumer use is very high. Competition in the

FMCG sector is very high resulting in high pressure on margins.

Characteristics of FMCG in India

• Branding: Creating strong brands is important for FMCG companies and they

devote considerable money and effort in developing bands. With differentiation on

63
 functional attributes being difficult to achieve in this competitive market, branding

results in consumer loyalty and sales growth.

• Distribution Network: Given the fragmented nature of the Indian retailing industry

and the problems of infrastructure, FMCG companies need to develop extensive

distribution networks to achieve a high level of penetration in both the urban and

rural markets. Once they are able to create a strong distribution network, it gives

them significant advantages over their competitors.

• Contract Manufacturing: As FMCG companies concentrate on brand building,

product development and creating distribution networks, they are at the same time

outsourcing their production requirements to third party manufacturers. Moreover,

with several items reserved for the small scale industry and with these SSI units

enjoying tax incentives, the contract manufacturing route has grown in importance

and popularity.

• Large Unorganized Sector: The unorganised sector has a presence in most product

categories of the FMCG sector. Small companies from this sector have used their

location advantages and regional presence to reach out to remote areas where large

consumer products have only limited presence. Their low cost structure also gives

them an advantage.

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 SCOPE OF FMCG SECTOR IN INDIA

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector

in the economy. FMCG Sector is expected to grow by over 60% by 2010. That will translate

into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector

will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores in 2010. A well-

established distribution network, intense competition between the organized and

unorganized segments characterizes the sector. Hair care, household care, male grooming,

female hygiene, and the chocolates and confectionery categories are estimated to be the

fastest growing segments, says an HSBC report. Though the sector witnessed a slower

growth in 2002-2004, it has been able to make a fine recovery since then.

65
 GROWTH PROSPECTS

Spending Pattern

An increase is spending pattern has been witnessed in Indian FMCG market. There is an

upward trend in urban as well as rural market and also an increase in spending in organized

retail sector. An increase in disposable income, of household mainly because of in-crease in

nuclear family where both the husband and wife are earning, has leads to growth rate in

FMCG goods.

Large Market

India has a population of more than 1.150 Billion which is just behind China. According to

the estimates, by 2030 India population will be around 1.450 Billion and will surpass China

to become the World largest in terms of population. FMCG Industry which is directly related

to the population is expected to maintain a robust growth rate. In hair colour category there

was a marginal increase of 10.5%. The company launched Cinthol Lime Fresh Talc and

Cinthol.

Regular soap was launched in small SKUs (stock keeping units). In the hair care category,

GCPL introduced a free shampoo offer for Godrej Expert. The company’s rural market share

in the hair care category has also increased from 41.1% in Mar 2009 to 42.0% in Mar 2010.

66
 Source: UN Population Division: Medium variant

Graph 4.5.1

Changing Profile and Mind Set of Consumer

People are becoming conscious about health and hygienic. There is a change in the mind set

of the Consumer and now looking at ―Money for Value‖ rather than ―Value for Money‖.

We have seen willingness in consumers to move to evolved products/ brands, because of

changing lifestyles, rising disposable income etc. Consumers are switching from economy

to premium product even we have witnessed a sharp increase in the sales of packaged water

and water purifier. Findings according to a recent survey by A. C. Nielsen shows about 71

per cent of Indian take notice of packaged goods labels containing nutritional information

compared to two years ago which was only 59 per cent.

67
 POLICY

India has enacted policies aimed at attaining international competitiveness through lifting of

the quantitative restrictions, reduced excise duties, automatic foreign investment and food

laws resulting in an environment that fosters growth. 100 per cent export oriented units can

be set up by government approval and use of foreign brand names is now freely permitted.

Governmental Policy

Indian Government has enacted policies aimed at attaining international competitiveness

through lifting of the quantitative restrictions, reducing excise duties, and automatic foreign

in-vestment and food laws resulting in an environment that fosters growth. 100 per cent ex-

port oriented units can be set up by government approval and use of foreign brand names is

now freely permitted. India is second largest Country in terms of Population growth and

increase in population has a direct relation to FMCG Products. Survey by A. C. Nielsen

shows about 71 per cent of Indian take notice of packaged goods' labels containing

nutritional information compared to two years ago which was only 59 per cent.

Removal of Quantitative Restrictions and Reservation Policy

The Indian government has abolished licensing for almost all food and agro-processing

industries except for some items like alcohol, cane sugar, hydrogenated animal fats and oils

etc., and items reserved for the exclusive manufacture in the small scale industry (SSI)

sector. Further identified 85 items that would be taken out of the reserved list. This has

68
resulted in a boom in the FMCG market through market expansion and greater product

opportunities.

Foreign Direct Investment (FDI)

Automatic investment approval (including foreign technology agreements within specified

norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate

Bodies (OCBs) investment, is allowed for most of the food processing sector except malted

food, alcoholic beverages and those reserved for small scale industries (SSI). There is a

continuous growth in net FDI Inflow. There is an increase of about150 per cent in Net Inflow

for Vegetable Oils & Vanaspati for the year 2008.

Graph 4.5.2

MARKET OPPORTUNITIES

Vast Rural Market

Rural India accounts for more than 700 Million consumers, or ~70 per cent of the Indian

population and accounts for ~50 per cent of the total FMCG market. The working rural

population is approximately 400 Million. And an average citizen in rural India has less than

69
half of the purchasing power as compare to his urban counterpart. Still there is an untapped

market and most of the FMCG Companies are taking different steps to capture rural market

share. The market for FMCG products in rural India is esti-mated ~ 52 per cent and is

projected to touch ~ 60 per cent within a year. Hindustan Unilever Ltd is the largest player

in the industry and has the widest market coverage.

Food laws

Consumer protection against adulterated food has been brought to the fore by "The

Prevention of Food Adulteration Act (PFA), 1954", which applies to domestic and imported

food commodities, encompassing food colour and preservatives, pesticide residues,

packaging, labelling and regulation of sales.

Export - “Leveraging the Cost Advantage”

Cheap labour and quality product & services have helped India to represent as a cost

advantage over other Countries. Even the Government has offered zero import duty on

capital goods and raw material for 100% export oriented units. Multi National Companies

out-source its product requirements from its Indian company to have a cost advantage. India

is the largest producer of livestock, milk, sugarcane, coconut, spices and cashew apart from

being the second largest producer of rice, wheat, fruits & vegetables. It adds a cost advantage

as well as easily available raw materials.

Sectoral Opportunities

Major Key Sectoral opportunities for Indian FMCG Sector are mentioned below:

o Dairy Based Products

70
India is the largest milk producer in the world, yet only around 15 per cent of the milk is

processed. The organized liquid milk business is in its infancy and also has large long-term

growth potential. Even investment opportunities exist in value-added products like desserts,

puddings etc.

o Packaged Food

Only about 10-12 per cent of output is processed and consumed in packaged form, thus

highlighting the huge potential for expansion of this industry.

o Oral Care

The oral care industry, especially toothpastes, remains under penetrated in India with

penetration rates around 50 per cent. With rise in per capita incomes and awareness of oral

hygiene, the growth potential is huge. Lower price and smaller packs are also likely to drive

potential up trading.

o Beverages

Indian tea market is dominated by unorganized players. More than 50% of the market share

is capture by unorganized players highlighting high potential for organized players.

INDIA COMPETITIVENESS AND COMPARISON WITH THE WORLD

MARKETS

Materials availability

India has a diverse agro-climatic condition due to which there exists a wide-ranging and

large raw material base suitable for food processing industries. India is the largest producer

of livestock, milk, sugarcane, coconut, spices and cashew and is the second largest producer

71
of rice, wheat and fruits & vegetables. India also has an ample supply of caustic soda and

soda ash, the raw materials in the production of soaps and detergents – India produced 1.6

million tonnes of caustic soda in 2003-04. Tata Chemicals, one of the largest producers of

synthetic soda ash in the world is located in India. The availability of these raw materials

gives India the locational advantage.

Cost competitiveness

Apart from the advantage in terms of ample raw material availability, existence of low-cost

labour force also works in favour of India. Labour cost in India is amongst the lowest in

Asian countries. Easy raw material availability and low labour costs have resulted in a lower

cost of production. Many multi-nationals have set up large low cost production bases in

India to outsource for domestic as well as export markets.

Presence across value chain

Indian firms also have a presence across the entire value chain of the FMCG industry from

supply of raw material to final processed and packaged goods, both in the personal care

products and in the food processing sector. For instance, Indian firm Amul's product

portfolio includes supply of milk as well as the supply of processed dairy products like

cheese and butter. This makes the firms located in India more cost competitive.

72
 COMPANY‟s PROSPECTS

Hindustan Unilever Limited Figure 4.6.1

• Unilever is lowering its expenditure on packaging across its portfolio of food brands

as part of a wider cost-cutting drive. HUL has pared down the colour palette used for

printing across many products. The system has been used to reduce printed

packaging costs for Unilever s products. It is also eco-friendly because it reduces

waste in the printing process. HUL is taking different steps to reduce the cost and

increase the margin.

• Hindustan Unilever‘s product - Pureit (a water purifier) has received the UNESCO

Water Digest Water Award 2008-2009 in the category of best domestic non-electric

water purifier. Pureit received the award for outstanding contribution in the field of

water in India. The product is available across 21 Indian states and has reached more

than 1 million homes in India giving them access to microbiologically safe drinking

water.

Pureit‘s performance has been tested by leading international & national medical,

scientific & public health institutions and meets the germ-kill criteria of the

Environmental Protection Agency, the drinking water regulatory agency in the USA.

73
Godrej Consumer Products Limited (Godrej)
Figure 4.6.2

• The Board of Directors of Godrej Consumer Products Limited (GCPL) has approved

the acquisition of 50 per cent stake of its joint venture partner SCA Hygiene Products‘ stake

in

Godrej SCA Hygiene Limited. After the transaction, the Joint Venture which owns the

‗Snuggy‘ brand of baby diapers will become a 100 per cent subsidiary of GCPL.

• Godrej Consumer Products Limited has acquired 100 per cent stake in the Kinky

Group Limited, South Africa. Kinky is among one of the largest brand into hair segment

with product portfolio.

Procter & Gamble Hygiene & Health Care Limited (P&G)

Figure 4.6.3

• The Company has 21 product categories out of which only 8 product have presence

in India. The company is planning to launch the rest 13 product in India. The company

expects to see a growth in other categories.

• The company has an aggressive plan to set up 20 new factories across the World out

of which 19 is expected to come in emerging markets and most of them would be seen in

Brazil, Russia, India, and China (BRIC) nations.

74
• Whisper which is one of the company‘s power brands has recorded 50 per cent

market share in urban India.

Colgate-Palmolive (India) Limited Figure 4.6.4

• Colgate Palmolive (India) Ltd, which is currently holding 75 per cent of the share capital

of SS Oral Hygiene Products Private Ltd, Hyderabad, has acquired the remaining 25 per

cent share capital from the local shareholders at an aggregate price of Rs 77.70 lakh.

Consequently, SS Oral Hygiene Products has become a wholly owned subsidiary of the

company.

Dabur India Limited (Dabur) Figure 4.6.5

• Dabur has entered into the malted food drink market with the launch of a new health drink

―Dabur Chyawan Junior‖. According to the company, they expect to capture a market share

of 10 per cent of the Rs. 1,900 Crores malted food drink market over the next two years.

75
• Dabur has acquired 72.15 per cent of Fem Care Pharma Ltd (FCPL), a leading player in

the women‘s skin care products market, for Rs 203.7 Crores in an all-cash deal. The

Company is expected to create synergy by this deal.

• Dabur got approval from Government of Himachal Pradesh to set up another medicine

manufacturing unit. The project has an expected investment of Rs. 130 Crores.

Nestle India Limited Figure 4.6.6

• Nestle is planning to invest Rs 6 billion in India in 2009 for expansion of its business

in the country. The company which has allotted an investment of Rs 3 billion in the Indian

market in 2008, would be doubling the investment in 2009 as part of its business strategy.

Nestle International is reinvesting and expanding in India and Nestle India will have all the

financial resources to expand and grow from the parent company.

• Nestle India reported a good increase in its standalone net profit for the second

quarter. During the quarter, the profit of the company rose 26.54% to Rs 1,210.90 million

from Rs 956.90 million in the same quarter, last year. The company posted earnings of Rs

12.56 a share during the quarter, registering 26.61% growth over prior year period. Net sales

for the quarter rose 23.45% to Rs 10,356.30 million, while total income for the quarter rose

23.78% to Rs 10,423.40 million, when compared with the prior year period.

76
 CHAPTER 3: COMPANY PROFILE

Godrej Group is one of the largest conglomerates based in Mumbai, India, involved in

various industries that include appliances, precision equipment, machine tools, furniture,

healthcare, interior solutions, office equipment, food-processing, security, materials

handling and industrial storage solutions, construction and information technology. Its

products include Locks, access control systems, security systems and safes, typewriters and

word processors, rocket launchers, refrigerators and furniture, outsourcing services,

machine tools and process equipment, cosmetics and detergents, engineering workstations,

medical diagnostics and aerospace equipment, edible oils and chemical, mosquito repellents,

car perfumes, chicken and agriproducts, material handling equipment like Forklift trucks,

stackers, tyre handlers, sweeping

machines, access equipments etc. The Group

is headed by Adi Godrej and Jamshyd Godrej.

Ardeshir Godrej (Ardeshir), a lawyer,

founded the Godrej group in 1897. He gave up

law and started a locks manufacturing

venture.

Soon, he expanded his business by

manufacturing safes and security equipments

and also ventured into toilet soaps business.

After Ardeshir, his brother Pirojsha Godrej

led the venture towards becoming a vibrant,

multi-business company. The company was incorporated with limited liability in 1932,

77
under the Indian Companies Act, 1913. By 2003, the Godrej group had emerged as one of

the largest privately held diversified industrial corporations in India.

As godrej continued its operations it expanded its areas to consumer goods by setting up

Godrej Soaps Ltd, which later got changed to Godrej consumer products ltd.

This Project deals with Godrej Consumer Products Ltd. as a part of FMCG sector.

Godrej Consumer Products Ltd is one of the leading Fast Moving Consumer Goods (FMCG)

companies in India. The company is the market leader in personal, hair, household and fabric

care products. The company operates in two segments namely soaps and personal care. The

soap segment includes the Godrej brand and other brand toilet soaps and personal care

segment includes hair color, shaving cream and gel, talcum powder, deodorant, fairness

cream, liquid detergent and other toiletries. They also undertake contract manufacturing of

toilet soap for third parties.

GCPL has five manufacturing facilities in India at Malanpur (Madhya Pradesh), Guwahati

(Assam), Baddi- Thana (Himachal Pradesh), Baddi- Katha (Himachal Pradesh) and Sikkim.

GCPL operates in the domestic and international markets and currently is looking at creating

a MNC image world over.

78
HISTORY

Godrej Consumer Products Ltd was incorporated on November 29, 2000 as a public

company and was promoted by Godrej & Boyce Manufacturing Company. The Consumer

Products business was part of the erstwhile Godrej Soaps Limited (GSL). The liabilities and

assets pertaining to the consumer products business of Godrej Soaps Ltd together with the

factories situated at Malanpur and Silvassa along with the marketing, selling, distribution

and related facilities have been transferred to the company with effect from April 1, 2001.

Also, the company set up a new factory at Guwahati in Assam for manufacture of hair colour

and toiletries during its first year of operations.

The origin of GPCL can be linked down to 1897 when Godrej group (holding company) was

set up by its founders Ardeshir and Pirojsha Godrej.

PRODUCT DETAILS

Products offered by Godrej are divided into three main categories

• Home care

• Personal wash

• Hair care

79
HOME CARE

• Goodnight- A mosquito repellent -Good Knight is the only fully entrenched brand in HI

with significant presence in all the formats. Good Knight grew from strength to strength

launching Mats followed by Liquid Vaporisers, coils, lotions and aerosols.

• Jet-JET Brand is the regional jewel for Godrej Household Products, with more than 80%

Market Share in coil in india

• Godrej Dish wash- It‘s a special dish washing formula that works wonders with grease

removal.

• Ezee- It is a fabric softner that works well with woolleens(lauchned in 1983 and a market

leader in that category.)

• Genteel- Liquid detergent brand that specializes in wolleen fabric care washing.

• Hit- With increasing knowledge of pests, hit is becoming ppopular amongst consumers

in urban households.

80
PERSONAL WASH

SOAPS

• CINTHOL- soap with longlasting effect of freshness

• GODREJ Fairglow- soap with fairness formula

• Godrej no1- Indias largest selling grade 1 soap

• Godrej vigil- grade 1 health soap

GODREJ SHAVING CREAM

HAIR SOAP –SHIKAKAI, CROWNING GLORY

GODREJ PROTEKT-SANITISER

The company is among the largest marketer of toilet soaps in the country with leading brands

such as Cinthol, Fairglow. Godrej No 1. Fairglow, India's first fairness soap created

marketing history as one of the most successful innovations.

81
During the year 2002-03, the company launched Godrej No. 1 Ayurvedic soap and Godrej

FairGlow Saffron in the southern markets of Karnataka and Andhra Pradesh.

They re-launched their flagship brand Cinthol in a new range of soaps, talc and deo sprays.

Cinthol Regular and Fresh soaps were also launched in an attractive new packaging.

During the year 2007-08, the company launched Godrej No 1 soap in Papaya and Lotus

variant

HAIR CARE

HAIR COLOUR

– Godrej expert

– Colour Soft

– Renew
82
NATURAL HAIR COLOUR

– Keshkala

– Kali mehendi

– Nupur mehendi

ANOOP HAIR OIL

The company is the leader in the hair colour category in India. They have a vast product

range from Godrej Renew Colours soft Liquid Hair Colours, Godrej Liquid & Powder Hair

Dyes to Godrej Kesh Kala Oil, Nupur based Hair Dyes.

During the year 2007-08, the company launched Godrej Renew Powder Hair Colour. Also,

they entered the unbranded mehendi powder market by launching 100 per cent natural

mehendi branded 'Godrej Nupur'.

OTHERS

In May 2003, the company acquired the trademark and copyright relating to the brand

Snuggy for a total consideration of Rs. 5.9 crore and re-launched as Godrej Snuggy baby

diapers in the market.

83
RECENTLY LAUNCHED

Godrej has come out with home and car fragranced spray refreshers called Godrej Aer which

comes in several forms of fancy packaging.

A whole Range of Godrej Consumer Products sold in the National and International

Market

84
 MISSION, OBJECTIVE AND VISION

“Brighter Living”-the tagline of the company itself suggests its motive of business

That is to provide those mass of the consumers, those products and services where a

difference in quality at the same price could enhance the living of all.

GPCL‟s Vision -―To deliver superior value for our stakeholders by providing leading

quality, affordable home and personal care products that enhance the quality of life of

consumers in high growth emerging markets. We will achieve this through enduring trust,

relentless innovation, passion for our consumers and a strong entrepreneurial spirit.‖

Godrej strongly believes that their brand is not what they say it is but its what the customer

believes it to be.

Therefore, the prime objective is by gaining market reputation through customer

satisfaction.

GPCL has promoted a 4 Step Objective process towards a ―Brighter Living‖

• Progression: To progress hand in hand with the customer. Customer is believed to

be a

star.

• Expression: To give the customers products and services and allow them to express

themselves.

85
 • Empathy: To dig deep into the heart of India to know the customer very well.

• Experience: To provide and experience of excellence to the consumers.

On a long-term perspective, GPCL aims at a 10 x 10 objective which means that they wish

to be 10 times bigger than the current position within a period of 10 years.

The Man Behind what Godrej Consumer Products Ltd. Is Today!

Adi Godrej- Chairman

86
 SWOT ANALYSIS

Godrej has been holding a strong position in the market where it comes to fast moving

consumer goods, however as a company one must understand the wholesome aspect of the

company’s strengths, weaknesses, opportunities and threats.

STRENGTHS

Leader among India’s FMCG companies

Godrej has a firm foothold in the fast moving consumer goods segment being in this

area since the very beginning.

Some brands in 100 most trusted brands

Godrej is known for its quality being the best at that affordable price. Most of the

Indian Masses would go for products from godrej because of the customer

satisfaction and trust built by this company over decades (reference to Godrej Group)

Presence in more than 60 countries spread amongst 4 continents

Godrej has not only captured the Indian market but also since a while is looking into

international business. Capturing the 3 continents of Asia, Africa & latin America.

GCPL‘s key international businesses include Rapidol, Kinky, Darling Group, Tura

in the African continent, Godrej Global Mideast FZE in UAE, Megasari Makmur

Group in Indonesia, Issue Group and Argencos in Argentina and Keyline Brands in

the United

Kingdom.

Over 1,300 full-time employees

87
 Such a huge employee base adds to the strength of the organisation.

Widespread distribution network across India

GCPL has a widespread distribution network across India. It has a presence in both

the urban and rural markets, enabling it to benefit from the opportunities in both

segments. It has a sales team which comprise of over 250 staff spread across the

country. It has a network of 33 C&F agents and as on February 29, 2008. It had 1,273

distributors, 142 super stockists and 3,175 sub stockists to support the sales team in

India. Its distributors and sub stockists cover around 650,000 retailers in India.

GCPL has linked its major distributors in India through a system called ‗Sampark‘,

a collaborative planning, forecasting and replenishment system with its ERP system

leading to reduced inventory levels.

Recognized Godrej Research & Development Centre

The research and development activities broadly comprise of various processes for

developing new products, standardising new analytical methods and identifying

substitutes for key raw materials. Through this research and development centre,

GCPL continuously interact with consumers to obtain feedback on its products and

information obtained is leveraged to complement new product development

activities. The Godrej Research & Development Centre is recognised by the

Department of Science and

Technology, New Delhi.

88
WEAKNESSES

Market share is limited due to presence of other strong FMCG brands.

Godrej has a strong foothold in the market but the % of market share is lesser in

comparison to the level of operations and this is basically due to the monopolistic

competition.

Godrej products has stiff competition from big domestic players and

international brands

As godrej moves forward to capture international business, so are other companies in

India which make the position of godrej weaker in the market facing more competition in

terms of sales. Since the mentality of the consumer is moving from LOCAL-

IMPORTED. Absence of Superior or premium products for Personal wash and

Household care

Godrej caters to the masses but unlike its competitors doesn’t not have any premium

products that gives an edge over the middleclass standard.

OPPORTUNITIES

Tap rural markets and increase penetration in urban area

Godrej has an opportunities to explore the rural markets by establishing a stronger

distribution network enabling the rural people to get their products at a fair price.

Mergers and acquisitions to strengthen the brand

Inorder to capture the personal and home care segment at an international level,

mergers will be most helpful in not only spreading godrej‘s products but also gaining

those companies products and bringing them into India.

89
 Acquisitions on the other hand help in gaining international presence and spreading

a touch of godrej‘s better living strategy worldwide.

Increasing purchasing power of people thereby increasing demand

THREATS

• Intense and increasing competition amongst other FMCG companies

• FDI in retail thereby allowing international brands

FDI in retail sector is posing to be a threat to the local companies.

• Competition from unbranded and local products

• Price fluctuation of Inputs

Vegetable oil is a key ingredient for soaps and other related washing products which is

currently being exposed to price fluctuations that can cause losses to the company

• Foreign Exchange losses

Due to the number of acquisitions made by the company the difference in the

agreement amount and the payment date amount due to currency conversion can pose

a threat to incur high foreign exchange losses.

90
 COMPETITION

– In the soaps category, GCPL brands compete with ‗Lux ‘and ‗Lifebuoy ‘- Hindustan

Unilever Limited, ‗Nirma‘– Nirma.

– In the hair colours category, its products compete for market share with ‗Black Rose‘

‗Super Vasmol‘ and ‗L‘Oreal‘.

– Competitors in shaving cream category are ‗Gillette‘, ‗Palmolive‘ and ‗Old Spice‘.

– In the liquid detergent category GCPL brands ‗Ezee‘ and ‗Genteel‘, compete with

‗Safewash- Wipro‘ and ‗Surf Excel- Hindustan Unilever Limited‘.

AQUISITONS, MERGERS & JOINT VENTURES

International Business has contributed to the growth of Godrej Consumer Products Ltd. All

this could not have been achieved without the mergers and acquisitions that the company

has undergone over the past 8-9 years.

• In October 2005, the company acquired 100% ownership in Keyline Brands Ltd, a

UK based FMCG. This acquisition gives the company, ownership of several

international strong brands and trademarks including Cuticura, Erasmic and Apart in

many countries.

• In September 2006, the company acquired the South African business of Rapidol,

UK with their subsidiary Rapidol International.

91
• In March 2007, they formed a 50:50 joint venture company known as Godrej SCA

Hygiene Ltd along with SCA Hygiene Products AB, Sweden which will manufacture

and market paper based absorbent hygiene products, specifically sanitary napkins

and baby diapers, in India, Nepal and Bhutan. Their joint venture company, Godrej

SCA Hygiene Ltd launched Libero baby diapers, Tena and Libresse and also they

re-launched Snuggy brand as 'Snuggy Dry' in the states of Kerala and Tamil Nadu.

• In October 2007, the company acquired Global Mid East FZE which was 100%

subsidiary of Godrej International Ltd.

• In April 2008, the company acquired 100% stake in Kinky Group Properties Ltd,

South Africa that is one of the leaders in South African Hair Category. This

acquisition gives the company an opportunity to enter into a new line of business and

diversify their hair product portfolio.

• In 2009 GPCL bought 49% stake in Godrej Sara lee and the rest 51% before the

fiscal year end.

• With effect from 1st April 2010, Godrej group merged Godrej Consumer Products

Ltd and Godrej Household Products Ltd. Into Godrej Consumer Products Ltd. No

new share were issued since it all belonged to the same Holding Company.

• In 2010, GCPL had bought out Latin America‘s Issue Group, a market leader in

haircolour in Argentina, Peru, Uruguay and Paraguay. In less than two weeks time,

the firm acquired another Argentinian hair care company Argencos.

92
• In march 2010 the company spent Rs100 crore-Rs125 crore to acquire Tura, a

Nigerian beauty products company. This is the company’s third acquisition in Africa.

• In April 2010, GCPL acquired Megasari—a leading consumer products company in

Indonesia, which has notched up revenues of $120 million in the past fiscal with

estimated profit-after-tax margins of 11%-12%. It is also the second-largest player

in the insecticides market, enjoying 35% market share of Indonesia ‘s household

insecticides market (with a total size of $150 million, growing at 20%). It also has

45% market share (of a total $68 million market, growing at 45%) in the air-care

93
segment and 80% market share of the $21-million wipes market (growing at 45%).

Megasari has 15% share of the breakfast cereals market.

94
 CHAPTER 4:

RESEARCH METHODOLOGY

The research conducted in inventory control techniques in Godrej Consumer Products Ltd.

followed a well-defined methodology. The procedure followed is explained thoroughly in

next titles.

6.1 TYPES OF RESEARCH DESIGN

Types of research design used in this research of inventory control techniques are descriptive

as well as analytical. It follows a descriptive research design it is used to identify and

classify the elements or characteristics of the subject. Quantitative techniques are used to

collect, analyse and summarize the data. In Godrej, data and information are collected to

analyse the inventory control techniques.

Here analytical research is also used as descriptive approach is extended to suggest and

explain the causes of changes in inventory and factors effecting inventory and inventory

control techniques.

Applied research is also followed i.e. problem solving research is applied in this project.

The already known theories and knowledge of inventory control techniques are studied and

applied to practical situation like of GCPL ‘s inventory and understand the variation in

inventory level and finding out alternative methods and models for better inventory control.

6.2 DATA COLLECTION TECHNIQUES

Various data and information are collected to fulfil the research objectives of the research.

The data collected are both primary and secondary data.

95
Data collection techniques used for collection of primary data is interviews conducted with

executives and staff of finance and stores department.

Data collection techniques used for collection of secondary data are from stores record,

annual reports news report, news articles, journals, various web sites and professional books

as well as interview conducted with executives and staff of finance and stores department.

96
 CHAPTER 5:

DATA ANALYSIS & INTERPRETATION OF DATA

1. Orders are placed on a timely basis how would you rate the overall quality of this
process?
Result Respondents

Very Good 15

Good 20

Average 5

Poor 8

Very Poor 2

Respondents

Very Good
Good
Average
Poor
Very Poor

2. All purchase order transactions are completely prepared and recorded on a timely
basis
Result Respondent

Yes 35

97
 No 15

Respondent

Yes
No

3. Who receives the invoices for purchased inventory

Result Respondents

Operational manger 20

Production manager 10

Marketing manager 20

Respondents

Operational manger
Production manager
Marketing manager

98
4. Rate the working strategies of supply chain management department on the basis of
the current programs?
Result Respondents

Outstanding 28

Excellent 12

Good 5

Average 5

Respondents

Outstanding
Excellent
Good
Average

5. Is the supply chain management department is having sufficient transportation?

Result Respondent

Yes 37

Not sufficient 13

99
 Respondent

Yes
Not sufficient

6. According to the current growth process of the organization, which of the following
needs much attention

Operational activities 26

Tactical activities 14

Current programming 10

strategies

Operational activities

Tactical activities

Current programming
strategies

100
7. Choose the right option, where the supply chain department is facing problem in
taking care of the raw material?
Result Interpretation

During storage 20

Packaging 5

Testing of packaging 12

Evaluation of defective raw material 13

Interpretation

During storage

Packaging

Testing of packaging

Evaluation of defective
raw material

8. How do you rate the delivery activity of the department?

Result Respondent

Excellent 14

Very effective 16

Good 10

Average 10

101
 Respondent

Excellent
Very effective
Good
Average

9. Is there any case recorded by the supply chain department in which the production
department complained late

Yes 18

No 32

Yes
No

10. The process should include how purchases are started (inventory levels), who is
involved, and how it is made
Result Respondent

102
Strongly Agree 10

Agree 30

Neutral 0

Disagree 5

Strongly Disagree 5

Respondent

Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree

103
 CHAPTER 6: FINDINGS

• Generally, youth and women ‘s are the main customers at Godrej Consumer

Products.

• Electronic media has a great impact on customers they are getting aware about new

products and related offers.

• Due to availability of all products under one roof and nearby their house helps

customers to shop weekly and shop fresh every time.

• Groceries are the main items purchased by the customers and they are aware about

Godrej Consumer Products brands and mostly are satisfied with them.

• All the customers want that their time should not waste after shopping, number of

cashiers should be increased, waiting process management should be made good.

104
 CHAPTER 7: CONCLUSIONS

1) Stock in market

Company have already available data/ information, that, how much brand pack wise crate

available to its distributors, but they don‘t have information or data available to its outlets

i.e. in actual market. Through this project work company get idea about how much brand

pack wise crate to its outlets i.e. in actual market.

Whenever company wants data about brand pack wise crate to its outlets

i.e. in actual market, company get easily available data by this ―Glass Bottle Management‖

project

2) Investment and Profit

Through this project work company easily available data or information of how much brand

pack wise crate to its outlets i.e. in actual market, this helps company to invest more in

market. Investment means more crate in market, its naturally means that more profits

generation to company.

105
 CHAPTER 8: BIBLIOGRAPHY

BOOKS:

JAIN, S.P. & NARANG, K.L(2004), Cost & Management Accounting, Material Control,

chapter-3, p - 50-75.

PANDEY, I.M., Financial Management, Inventory Management, chapter-29.

WEBSITES:

http://download.microsoft.com/download/6/D/1/6D1D1250 D92B 4B8F 9AA3

596422D3F614/Inventory_FactSheet.pdf

http://www.azinventorymanagement.com/economic order quantity.htm

http://www.azinventorymanagement.com/inflation eoq.htm

Vhttp://www.azinventorymanagement.com/safety stock.htm

Vhttp://www.azinventorymanagement.com/reorder point formula.htm

http://www.azinventorymanagement.com/stock level system.htm

http://www.azinventorymanagement.com/costs associated.htm

http://www.azinventorymanagement.com/cost to carry.htm

http://www.azinventorymanagement.com/cost run out.htm

vhttp://elearning.nic.in/student trainee report/preso doc.doc

http://download.microsoft.com/download/1/8/6/18645A04 E36D 40F4 9C7A

0ABECF73576B/Global_Energy_Forum_.pdf

106
http://business.mapsofindia.com/aluminium/

http://www.equitymaster.com/detail.asp?date=3/26/2009&story=2

http://www.indiabiznews.com/biznews/categoryNewsDesc.jsp?catId=160

29 http://www.metalworld.co.in/grabglo.asp

http://www.hinduonnet.com/businessline/iw/2001/04/29/stories/0529e051.

htm http://www.metalworld.co.in/report0108.pdf

http://www.hindalco.com/about_us/

http://www.hindalco.com/about_us/business_index.htm#aluminium

http://economictimes.indiatimes.com/dirreport.cms?companyID=13416&year=0http://ww

w.ener gymanagertraining.com/aluminium/Aluminium.htm

http://www.economypoint.org/a/abcxyz analysis.html

http://www.managementparadise.com/projects/material/selectivecontrol.html

107
 CHAPTER 9: QUESTIONNAIRE

1. Orders are placed on a timely basis how would you rate the overall quality of this

process?

Result Respondents

Very Good

Good

Average

Poor

Very Poor

2. All purchase order transactions are completely prepared and recorded on a timely

basis

Result Respondent

Yes

No

3. Who receives the invoices for purchased inventory

Result Respondents

Operational manger

Production manager

Marketing manager

108
4. Rate the working strategies of supply chain management department on the basis of

the current programs?

Result Respondents

Outstanding

Excellent

Good

Average

5. Is the supply chain management department is having sufficient transportation?

Result Respondent

Yes

Not sufficient

6. According to the current growth process of the organization, which of the following

needs much attention

Operational activities

Tactical activities

Current programming

strategies

109
7. Choose the right option, where the supply chain department is facing problem in

taking care of the raw material?

Result Interpretation

During storage

Packaging

Testing of packaging

Evaluation of defective raw material

8. How do you rate the delivery activity of the department?

Result Respondent

Excellent

Very effective

Good

Average

9. Is there any case recorded by the supply chain department in which the production

department complained late

Yes

No

110
10. The process should include how purchases are started (inventory levels), who is

involved, and how it is made

Result Respondent

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

111