Competitive analysis of the supply chain management of top FMCG companies.

Introduction to the industry:

Fast moving consumer goods (FMCGs) are basically consumer goods that are conveniently packed and are
available at a relatively low cost. Some of the most common examples are daily house hold goods such as
packaged foods, beverages, toiletries, candies, cosmetics, etc. These are goods meant for immediate
consumption. As a result, the turnover for the industry is also very high leading to very high production and
equally high purchases. Packaging also plays a key role in this industry as differentiation is the key to success
in this neck-to-neck competitive industry. Supply chain is a vital component in this volume driven industry and
the company that is able to reach the grassroot level consumer is the one that is going to win in the long run.
This takes the supply chain and distribution structure of the players in this industry to another pedestal. There
are many recent trends and innovations by top players in the industry. In this report I would like to mention
the strategies of three top FMCG players in the country and do a comparative analysis. The players covered in
this report include Hindustan Unilever Limited (HUL), Amul and Dabur.

Purpose:

The main purpose of this report is to do a comparative analysis of the supply chain structure of 3 top FMCG
companies in India. Supply chain and distribution is essential for any company for the goods to reach the end
consumer and effective supply chain helps the company cut down lead time and save on various overhead
costs. So, I decided to take 3 of the top players in the country as it would be most appropriate and easier to
comprehend. Also, I took players from 3 different industries, Amul from dairy products, Dabur from ayurvedic
based consumables and HUL from the daily use consumables.

Flow:

After providing a brief introduction to the paper and the companies focussed in the research, we will then
move on to the main part of the paper. The comparative study will be done in the order of company. We will
at first have a look at the supply chains of the individual companies before drawing certain conclusions across
the players.

Hindustan Unilever Ltd.

HUL is a consumer goods company headquartered in Mumbai and is a subsidiary of the British giant Unilever.
The company offers a wide array of products ranging from food, beverages, cleaning products, personal care
products, etc. The company boasts of a customer base of more than 700 million. The process at HUL is a very
comprehensive one and the company puts in all the required efforts to make the business a successful one.
Supply chain planning is done at the SKU level. The base demand is calculated using various algorithms based
in the past data. This helps the company predict the required quantity for production. HUL has more than 25
manufacturing plants spread across the expanse of the country. These plants combined manufacture more
than 100 varieties of products and HUL has 2000 different suppliers for the raw materials and intermediate
materials. The company has 4 warehouses across the country with 50+ agents and 8000+ wholesalers. This
vast distribution network covers the entire urban population. A unique feature of HUL is that it maintains a
central data base for maintenance of stock levels across the country. This gives the company a one pointed
and detailed view of the stock of various SKUs across the country. In the rural part of the country, the
company covers about 50000 villages, reaching 300 million customers.

AMUL:

Amul is a cooperative company of the Indian government under the ownership of Gujarat Cooperative Milk
marketing federation based at Anand in Gujarat. Amul was responsible for the white revolution which made
India the world’s largest milk and milk products manufacturer. The company follows a three-step supply chain
process. The initial step is buy it, the second step being make it and the final step being move and market it.
The upstream supply chain of Amul links the farmers and village cooperative societies. The milk is procured at
the local cooperative milk collection centre and transported to the cold storage network. All the farmers are
given a digital card for identification. The whole milk collection process in terms of the litres provided, the fat
content of the milk, etc is digitally recorded based on the farmer’s identification. The payments to the farmers
are also done based on the collection data. The process at Amul from supplier identification to payment is
digitally integrated with Automatic Milk Collection Unit Systems (AMCUS). Amul has implemented Geographic
Information Systems (GIS) for tracking of milk at the village collection centres. The Dairy Information and
Service Kiosk (DISK) is set to establish a good supplier relationship. The next step is make it and move it. At
Amul, the milk is pasteurized at the District Milk Unions referred to as the Cool storage network. The internal
supply chain of “Make it “starts with the milk being received at District Milk unions with chilling plants.
Amul’s chillers (District Milk Unions) are strategically located in proximity to the villages and delivery to local
chillers is by insulated rail tankers and chilled trucks.
Amul facilitates prompt transportation to district facilities and further dispatch it to consumer or processing
units. Transport of processed products is through chilled trucks to distribution centers.
Electronic systems to track inventory provides information for replenishment schedules. Amul has
interconnected its zonal offices, regional offices, and member diaries through VSAT, and Gujarat Co-operative
Federation has a strategic tie-up with IBM to implement SAP ERP on IBM technologies.
This will digitally connect end to end business processes and ensure effective supply chain performance. The
next important component is the distribution process after manufacturing. It is called the make it and move it
step. The downstream supply chain of Amul indicates that processed milk and dairy products move from dairy
unions to GCMMF owned warehouses. Orders are received by GCMMF (Devas Naka) and products are
distributed through its 56 Sales offices, and a network of 10,000 dealers and 100,000 retailers. Amul adopts
a three-tier downstream flow as Manufacturing units – Company depots- Wholesale depots – Retailers and
Direct retailing through Amul utterly delicious parlours/franchisees.
Logistics decisions for distribution are controlled by Amul and the transportation cost is borne by Amul.
GCMMF monitors suppliers of milk and distributors of finished goods.
Effective reverse logistics minimizes cost. Amul has established a B2B and B2C portal that links its supply
partners, distributors, and customers, and it e -sells all its products through cyber stores.
Another added advantage of the Amul supply chain is that it has integrated the supply chain both vertically
and horizontally. The supply chain of Amul also has backward integration with dairy farmers who are
members of the village cooperative societies who then function as collection centres. Amul also uses forward
integration to connect to the wide customer base through various customer interaction programmes.
Dabur:
Dabur ltd. is an Indian multinational based out of Ghaziabad, Uttar Pradesh. It is a manufacturer of ayurvedic
medicines and natural consumer goods. The company has 600 SKUs and has more than 2500 retailers around
the country. Dabur has improved distribution system through its unique Retails Excellence program, “DARE”
(Driving Achievement of Retail Excellence). the Program covers a major objective as a channel focus, activating
key customer, improving rural focus, rewarding distribution efficiency, maximizing brand impact and building
information capabilities. Dabur has used Direct Shipment Strategy which was implemented in order to bypass
warehouses and distribution centers. Thus Dabur delivers products directly to the retailers/consumer through
the Institutions & Modern Trade System. Advantages of implementing strategy are –The retailer avoids the
expense of operating a distribution centre and Reducing lead time. Thus, Dabur has achieved cost reduction in
the transportation process which overall adds to the reduction in price of the product. By this strategy Dabur
has reduced the lead time, bringing Dabur and other elements in the Supply Chain closer which improves
overall efficiency of the supply chain as shown in following figure. Reduction in lead time has added in
reduction in Bullwhip Effect of the Supply Chain. Dabur has managed to minimize the Inventory-
Transportation cost Trade-off. By elimination of the warehouse in supply chain, the company has reduced the
inventory carrying cost and Implementing ‘Milk run’ system by the small truck loads Dabur has managed the
increased transportation cost in the chain. Overall efficient tactics in the supply chain has made Dabur to
succeed and sustain in the supply chain network and has increased the entry barriers in the FMCG industry.
Thus, Dabur having strong distribution network will have to cope up when organized distribution network
plays a major role.
The three companies are unique in their own way and have built their success with a quality supply and
distribution chain. HUL with their centralized database, Amul with its three step process and Dabur with its
DARE programme. I will not pinpoint and say that one companies supply chain is better than the other,
however we can take home the point that the companies can learn from each other and tweak their
respective supply chains to better their operations.

Future Scope:

A considerable chunk of the reviews ae rejected due to various unforeseen slip-ups in the syntax of the
reviews, primarily spelling mistakes. We are of the view that any information is information regardless of petty
blunders. The study is going to take into consideration all the erroneous reviews also so as to provide a more
details and insights from the reviews garnered. We would also like to widen the scope of our study to include
many more players in the highly competitive smartphone manufacturing industry rather than the streamlined
version we offer now. This would lead to a wider reach of our study and it would be beneficial to the customer
base expansion and incremental revenue generation which was envisioned at the beginning of the study

Objective:

We have a three-fold objective for our project;

- To encourage home gardeners, grow and maintain terrace or balcony gardens by providing them access to
view the health status of the leaves and provide remedial measures
- To provide a platform for nature enthusiasts to explore their interests and help them get a description of
the type of plant just by the click of an image.
- To provide assistance to the agricultural farmers of the country to help them keep their plants under a
constant health scanner and provide corrective measures where and when necessary