Hindustan Lever Limited

Submitted by :
PGDM Class of 2007
Ankit Asthana C-07
Tarangita Gupta C-38
Logistics Vaibhav Sagar C-42
Arjun Kotwal C-50
Chetan Sharma C-53
Amity Business School, Noida 1
 HINDUSTAN LEVER LIMITED
"add vitality to life"
• HLL is India's largest Fast Moving Consumer Goods
Company, touching the lives of two out of three
Indians.
• Presence in over 20 Home & Personal care products.
• Hindustan Lever Ltd. (HLL) is part of a global
Fortune 500 company, with market leadership in
home and personal care products, food, beverages
and specialty chemicals.
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 The Hindustan Lever Limited Advantage
• India’s No. 1 FMCG with huge turnover of over 10000
crores
• HLL's unparalleled distribution infrastructure
• Extensive product portfolio
• Free Cash Flow ensures strong competitive advantage in
the market
• Over 40000 employees spreading across the world
• Product are manufactured in 100 factories and involve
2000 suppliers and associates
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 The Unilever Heritage
• Is one of the world's largest consumer goods major, operating in
over 90 countries in the world.
•Every day, an estimated 150 million people around the world
reach for Unilever products.
•These include global favorites such as Surf, Dove, Sunsilk and
Lipton, together with regional product variants like Knorr,
Annapurna, Fair and Lovely, and Sunlight, and more.
•Unilever invested $2 Billion in R&D in over 70 Innovation
Centers worldwide.

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 The Hindustan Lever Limited:
Competitive Advantage
• One, HLL's unparalleled distribution infrastructure
places it in an ideal position to quickly attain critical
mass in a new business.
• Two, its extensive product portfolio gives the
company considerable bargaining power with trade. If a
food is to be a volume-driven business, this will
certainly be a critical success factor.
• Three, with its substantial free cash flows (the
company generated operational cash flows of over Rs
2,200 crore in 2005); HLL continues to be in a strong
position to make substantial investments in the
acquisition of new brands and products.
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 The Present Network
•Nearly 1000 products distributed nationally through a
network of four warehouses
• More than 40 agents, 7,500 wholesalers and a number
of large institutional customers.
•About 100 factories
•Involve more than 2000 suppliers and associates.
•HLL products are distributed through a network of over
7500 redistribution stockists to an astronomical number
of towns and villages in India.
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What do you think is
the effort behind a
great sales?

LOGISTICS!!!
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 Logistics: The Enabler
• Logistics is a process of planning, implementing and
controlling efficient and cost-effective flow of materials and
information from point of origin to point of consumption.
• “Hindustan Logistics Limited” - Typically 10-15% of a
Hindustan Lever Limited turnover is spent on logistics.
• HLL has over 36,000 employees, and has created 2 lakh
indirect jobs.
• Its operations are spread across 70 locations in India
involving 2000 suppliers and associates and 7000 stockists
and agents. HLL has emerged as a major Exporter.
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 How does HLL’s Logistics
make it a globally competitive
player ?

Let’s illustrate the effectiveness of HLL’s

Logistics & Supply Chain.
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 The AXE Effect – a case study!!
•Most popular of Hindustan Lever Limited/ Unilever brands has been
the AXE Deodorants
•Manufactured at the Chicago’s Unilever Plant.
•Packaged in India by HLL’s domestic based unit. There the operating
costs accumulated to as high as Rs. 87 per bottle, which was being
sold at a cost range from Rs.100 to Rs. 125.
•In 1995, Unilever, in order to decrease its operating cost, decided to
start its own manufacturing plant in Saachen, Philippines.
•costs of manufacturing to the company to Rs. 46, and costed at
around Rs 76 (after including freight and carriage charges) which
were sold at the same costs
Amityof Rs.100
Business Noida .
to Rs.125
School, 10
The Effect Then

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•But the cost of distribution was very costly as the
distribution network of Unilever (Philippines) was not
very strong and reliable.
•The cost of transportation was also a major concern and
the very same AXE bottle costed Unilever around Rs 76
(after including freight and carriage charges).
•it was observed that’s it was not feasible for the
company as the operating profits in other regions (like
U.K. & U.S.) were mostly ranging between 100%-150%.
•India of course, had always been a strategically
important market. India emerging as the major area of
operations Hindustan Lever Limited has developed here
one of the most steadfast and a well-situated Logistics
network Amity Business School, Noida 12
 The Indian Advantage
•The manufacturing is being shifted to Walur, Maharashtra in India,
reducing the costs by tones.
•Now the same AXE Effect costs the company just a mere amount of Rs.
26 hence reducing its market price to Rs. 99.
•The distribution cost to other regions (like Europe, U.S. and Middle East)
was also not so high because of the already setup distribution network of
HLL.

•Hindustan Lever has a distinct advantage of having

probably the best Supply Chain Management, Logistics and
Networking. So this coupled with a low manufacturing cost
the operating margins remained same for Unilever in other
countries ( like North American, European etc markets.)
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The INDIAN Advantage

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 From West to the East - A Paradigm Shift

HLL
The AXE Effect The Network

Chicago based mfg.

Mfg. in Philippines India - the Hub

to cater Southeast Asia mfg. and distribution
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 Hindustan Lever Limited
• It has been hugely acknowledged, even by Unilever
global Competitor Procter & Gamble, that
Hindustan Lever Limited has the best Supply Chain
Network & Logistics Management.
• With an efficient logistics team, HLL has managed to
transport its product from the production centre to the
ultimate consumer with great efficiency.
• At the very present moment HLL is responsible for
almost 20% overseas supply chain, distribution and
logistics of Unilever.

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 HLL Global Competitiveness
Indian Labour Cost
Labour Cost/unit(Comparisons)

9.87
P AN
JA 9.87
Country

IN ES
IL LI P 13.05 Cost/unit
PH A
US
12.24
UK
6.57
IN DIA
0.00 5.00 10.00 15.00
labourCost/Unit

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 HLL Global Competitiveness
Indian Labour Cost
• India possess a global competitiveness
when it comes to a cheap labour.
• Production in India has become a
considerable importance
• INDIA is now becoming a manufacturing
and production Hub

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 Indian Geographic Advantage
• India is centrally located when it comes
to geographic proximity in South Asia.
• Due to it’s location advantage, HLL has
established a wide distribution network
throughout the South Asian market
catering to needs of different consumers.

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 Exports
•India’s largest branded FMCG exporter
•It has been recognized by the Government of India as a
Golden Super Star Trading House.
• HLL enjoys international recognition within Unilever
and outside for its quality, reliability and speed of
customer service.
• HLL's Exports geography comprises, at present,
countries in Asia, Australia, Africa, North America and
Europe.
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 Exports by HLL in 2005

Others
17%
Castor
9% Health &
Personal
Care 49%
Rice 10%
Marine
Products Tea 11%
4%

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 Existing Situation of HLL’s Exports

Hindustan Lever Limited's (HLL) Exports turnover touched

Rs.1249 crores in 2005
•Toothpaste exports to Europe
•New markets in tea
•Marine products expand in Europe
•Castor adds to customer base
•Rice meal kits for the US
•Leather clocks record turnover

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HLL Export to Various Regions

Rest of World
24%
South Asia
38%

U.S.A.
14%
Middle East
Europe
7%
17%

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 HLL's Exports Portfolio

HLL's Exports geography comprises, at present,

countries in Asia, Australia, Africa, North America
and Europe.
• Health and Personal Care
• Tea
• Marine Products
• Rice
• Castor
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Brands Unlimited

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 The Hindustan Lever Limited:
Comparative Advantage
• The objective of any Logistics workgroup is to draw up standards in
the field of logistics and to drive possible cost savings through
collaboration across industry.
• Parameters involved in the study comprise of Packagins, Use of
EURO size pallets, Bar coding, Economies of scale.

The Comparison follows

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 Parameters Hindustan Lever Ltd
Packaging Packaging professionals are divided by
category structure (organizational silos). The
challenge is to deliver functional and
operational excellence in this divisional
organizational structure, without being
constrained by the organizational silos of the
formal structure.
Use of EURO size HLL uses pallets to move or store products of
pallet(used for optimized all sizes and weight. This allows for easy
material handling) maneuverability with the proper equipment.
Also uses Battery operated Pallet Trucks.
Bar coding HLL selected Psion workabout mx Hand-
held devices from Psion Teklogix, here an
Intercode Solution team designed and
implemented a Barcode based system that
addressed all req. including redundancy,
throughput, security and reliability.
Economies of scale The fundamental principle determining the
organization structure is to infuse speed and
flexibility in decision-making and
implementation, with empowered managers
across the company's nationwide operations.
For this, HLL is organized into two self-
sufficient divisions - Home & Personal Care
& Foods - supported by certain central
functions and resources to leverage
economies of scale wherever relevant
Amity Business School, Noida
P& G
Reduce, or prevent, the environmental impact of our
products packaging in their design. The Procter &
Gamble (P&G) Co.,markets consumer packaged goods
that include skin and hair care brands, teeth whitening
products and cosmetics. P&G's packaging function
continues to deliver innovative designs.
P&G uses pallets as platforms, used to move goods
throughout their lifecycles; pallets accompany the
cargo they carry in factories, trucks, warehouses and
stores
P&G uses RFID(Radio Frequency Identification) a
technology set to transform the future of the retail
sector. This helps P&G in checking the status of its
products in Wal-Mart stores and other distribution
centers.
Procter & Gamble Leverages Scale by Going Beyond
Its Own Walls. Economies of scale that come from
sachet price-reduction. The two laws of brand used by
P&G which helps them take advantage of economies of
scale are "The bigger the brand, the more is total spent
on marketing" & " the bigger the brand is the less in
Unit Cost terms is spent on marketing."
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An overview of Mfg. At Walur
HLL Logistics &
Network Chain

HLL Logistics
Clearing & Fwd. Agents
& Network

S.Asian
Market Europe &
Americas
Middle East
Market
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 Distribution Centres

Rotterdam
Windsor
Tampere
Seattle Liverpool
New Jersey Bordeaux

Chicago Middle East Tokyo

Phoenix
Shanghai

Philippines
Mumbai,
Kolkatta

• Over 18,000 professionals

• 2,000 professionals onsite
EUROPE

ASIA PACIFIC
Chicago
NORTH AMERICA

Japan - Tokyo(HQ)
Saudi Arabia
New Jersey United Kingdom India - Mumbai (HQ)
France Taiwan
Shanghai
Phoenix Germany
Philippines
Seattle The Netherlands
Hong Kong
Sweden
Windsor Switzerland

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THANK YOU

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