ensuring product integrity through cost and reliable food supply...
TRANSCRIPT
www.rkfoodland.com30‐Oct‐12
Ensuring Product Integrity through Cost Effective, Efficient and Reliable Food Supply
Chain
Vishal Sharma VP – Operations
RK Foodland Pvt Ltd
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Preview
• About Radhakrishna Foodland Pvt Ltd
• Drivers of Supply Chain
• Supply Chain Management Benefits
• Supply Chain Challenges
• Case Studies—QSR & Retail
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Radhakrishna Foodland Pvt Ltd (RFPL)
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About RFPL
30+ years experience in supply chain business
National Wholesale Broadline Distribution (NWBD)
Retail Chain of Convenience Store – Foodland Fresh
Fresh Category – FFV, Non Veg, Bakery
Staples
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About RFPL
Cold Chain Expertise
Pioneered efforts in transitioning institutional food services industry from unorganized to organized sector
Managed over 30000 people at multiple sites Pan‐India
Industry and Sector Experience – Learning by doing
Long term strategic collaborative relationships
PAN India presence
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Total Fleet Size – 275 (owned/ leased)Temperature Controlled – 137Reaching out to 66major citiesNearly 1000 distribution pointsApprox. 800 vehicles operated
• Owned/ leased• Vendor managed
Pan India presence
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Foodland – The Brand Behind Super Brands
Supply Chain Solutions
WarehousingTransportation
& Logistic Services
Value Added Services
Project Management
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Some of Our Clients
FMCG
Retail
QSR
Food Service
Pharma
Factory
Sub ContractUnit
Mother WH Depots
Retailers
Distributors
ConsumersRaw Material
FMCG SUPPLY CHAIN EXPERIENCE
RETAIL & QSR SUPPLY CHAIN EXPERIENCE
SUPPLIER I SUPPLIER II SUPPLIER III
DISTRIBUTIONCENTRE
STORES STORES STORES
RFPLWAREHOUSE MANAGEMENT
Kalamboli DC Noida DC
RFPLWAREHOUSE MANAGEMENT
Kalamboli DC
Noida DC
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Foodland’s Warehouse Management
Provide Shared/Dedicated facilities
Manage Multi‐Temperature products
Optimize efficiency ‐ inventory control
Safety & Security of Stock and Assets
Forecasting & Scheduling
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Foodland’s Transport Management
Fleet Development & Management
Routing & Optimization
Shipment Tracking
Freight Payment Accounting
Inspection & Reporting on receipt
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Foodland’s Value Added Services
Inventory Management
Reverse Logistics
Co Packing/ Packing Design
Retail Solutions
IT Implementation and Integration
Promotional Support
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Foodland’s Project Management
Solution Design
Technology Implementation and Support
Property Management
Material/Machinery Procurement
Industrial Relations
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Foodland’s Unit Management System
C U S T O M E R
D E L I G H T
P E O P L E
O P E R A T I O N ST E
C H
N O
L O
G Y
C O
M M
E R C
I A L S
Q H H
S
S
EMC
I T C
Brand Protection
Business Continuity
MOBILISATION
T R A I N I N G
TOO
LS
KRA / KPIs R E P O R T S
REV
IEW
S
AUDITS
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Food Supply Chain Drivers
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Drivers of Supply Chain Performance
Inventory
Transportation
Facilities
Information
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Competitive Strategy
Supply Chain Strategy
Drivers
Inventory Transportation Facilities Information
Supply Chain Structure
Efficiency Responsiveness
Drivers of Supply Chain Performance
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Drivers of Supply Chain Performance –Inventory
Role of inventory in the Food Supply Chain:o Anticipation of future demando Production and distribution costs reduction
• Economies of scale
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Drivers of Supply Chain Performance –Transportation
Role of transportation in the Food Supply Chain:o Transportation moves the product between different
stages in a Supply Chain• Transportation choices impact the responsiveness and the efficiency of the Supply Chain
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Transportation Efficiency
• Improve Routing• Ensure Full truck loads• Drive shorter, safer & smarter routes• Reduce out of route excess mileage
• Reduce Empty Mileage • Increase vendor backhauls• Optimize network design
• Deploy Innovative Technology• Enhance dispatching tools• Visibility through dashboards
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Transportation Efficiency
Trucks Fill Process:• Adjust pallet & truck capacities• Club delivery days together• Adjust Delivery Frequency• Adjust Truck configurations• Improve Systems• Educate local routers
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Transportation Efficiency
Perfect Trucks:• Truck Tracker Architecture with output
• Km Report• Truck loadability Report from facilities• Exception Report – Route deviation frequency• Cold Chain Compliance• Transporter wise volume & Value
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Transportation Efficiency Measurement
No. of PERFECT TRUCKs in a Month
Truck reported back within TAT
OK Not OK
Truck followed the Route
Truck’s AC Worked on the Route
Truck delivered without Damage/Shortage
A Truck with all parameters Green is a Perfect Truck
A PERFECT TRUCK
>90% Truck Utilization
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Drivers of Supply Chain Performance –Facilities
Role of Facilities in the Supply Chain:o Where inventory is transformed into another state ‐Manufacturing Facility
o Where inventory is stored before being shipped ‐Warehousing Facility• Choices such as number of facilities or capacity impact the Supply Chain
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Facility Efficiency
Energy Efficiencyo More natural lightingo Reduce electricity consumption
Diesel Consumptiono Auto‐ Cuto Reduce Over Capacityo Reduce Rentalso Preventive Maintenance: Filter cleaning, Changing, Engine Decarbonizing etc
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Facility Efficiency
Labor Productivityo Improve Facility Layout
o A,B, C classification & arrangemento Seasonal stock arrangement
Automationo Palletization and HOPTs and BOPTso Lift/Conveyer Belts
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Food Safety & Quality Management
Quality Aspect Benefits
Cold Chain Management Product integrity & quality assured and thus brand protection
Batch Level Traceability Absolute stock control thus ensuring FEFO, reducing the picking time, controls WET
Certification Programme Ensures that people are aware & have the relevant knowledge to deliver
Continual Improvement Programme
Systematic approach towards measurable KPIs/SLAs. Thus , Ensuring continuous improvement of the overall system
Compliances Ensures complete brand protection & business continuity
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Food Safety & Quality Management
Quality Aspect Benefits
Contingency Planning Ensures consistent supplies even in case of natural disasters or other crisis situations
Security & Access Control Prevents sabotage and tampering of products and controls WET as well
Foreign Matter Control & Hygiene
Customer Safety and thus protects brand image
Preventive MaintenanceEnsures that the equipments are working in the best condition and the operations are not hampered by breakdown
Internal AuditsVerify the level of execution of processes , accuracy of data and level of achievement of targets and promotes improvement
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AUDITS
External 3rd Party AuditsISO Audits Half YearlyDQMP Audits YearlyCSR Audit Yearly
Client Audits As per schedule
Internal Quality Audit Quarterly
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Drivers of Supply Chain Performance –Information Role of Information in the Supply Chain:
o Serves as the connection between the Supply Chain’s various stages (allows coordination of actions)
o Allows daily operations of each stage of the Supply Chain (ex. : a production scheduling system needs information)
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IT as an Enabler
Time Temperature Indicators
e‐SCM based on internet, GPS & GIS
Decision Support Systems (DSS)
e‐Mist (Electronic MIS for Transportation)
KPI Dasboards
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Information Technology
Platforms
Adopted to Client ERP Softwareo PepsiCo (SAP)o Bharti Wal‐Mart (MGDS)
RAMCO Marshall Since 1998
SAP R3/IS Retail, BIW Since 2006
EPOS (Retail Store) Since 2006
DRIVE (Transportation) Since 2007
IBM Lotus‐Mail Solution Since 2008
GPS solutionCDMA / GSM linked to Satellite
Since 2007
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RFPL provides Client with Seamless and Real Time Supply Chain Visibility
Seamless and Real Time Supply Chain Visibility
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Facility Scorecard ‐ KPIs
Bucket KPIs KPI Benchmark Bucket Score Benchmark RFPL guarantee
People Management
Attrition %Cost of recruitmentCost of trainingManpower cost Voice of employee survey
Warehouse Management
Inventory accuracyManpower productivityPut away/picking efficiency/accuracyWarehousing costWarehouse Shrinkage
Transportation Management
Freight costTransportation ShrinkageTransportation cost Vehicle type and utilization
Customer Management
Customer complaints Issue resolution TATOrder processing TATOTIF (MT/TT)Voice of customer survey CRS compliance
MIS ManagementDelay/Error in MISCompleteness of MIS
Product availability and integrity
Range availability at RDStocks freshness
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Considerations for Supply Chain Drivers
Driver Efficiency Responsiveness
Inventory Cost of holding Availability
Transportation Consolidation Speed
Facilities Consolidation/Dedicated Proximity/Flexibility
Information What information is best suited for each objective
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Supply Chain Management Benefits
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Supply Chain Management Benefits
Reduction of SC costso Non‐transport costso Transport costs
Lower inventories Improved delivery time Improvement in service quality
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Supply Chain Champions: Service vs. Costs
Source: McKinney & Institute for supply chain management 41
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Supply Chain Champions: Cost vs. Performance
Source: McKinney & Institute for supply chain management 42
A picture is better than 1000 words!How many words would be better than 3 pictures?
‐ A supply chain consists of
‐ aims to Match Supply and Demand, profitably for products and services
SUPPLY SIDE DEMAND SIDE
The rightProduct
HigherProfits
The rightTime
The rightCustomer
The rightQuantity
The rightStore
The rightPrice =++ ++ +
‐ achieves
Supplier Manufacturer Distributor Retailer Customer
UpstreamDownstream
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Supply Chain Challenges
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Challenges
Operational Challenges
• Quality Infrastructure• Seasonal Imbalance• Manual loading / unloading• Low efficiency refer units for vehicles• Practices like shutting off refer units
Structural Challenges
• Real cost of doing business
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Total Cost of Ownership
Key areas that we impact as service provider and outcomeif we fail to deliver ON TIME
Loss of sale for material not reaching on timeAdditional overtime of crew waiting to unloading the material
IN FULLStock out at storesLoss of sale and drop in foot fallLoss of opportunity to delight customer and impact on brand image
Quality of productDrop in yield of the product; more wastages at storesChances of stock getting HOLD at stores leading to loss of saleDrop in gross margin at store and loss of incentive for teams
PromotionsCould delay time bound promotions planned at storesOpportunity loss to generate high sales during festivalsLoss of sale and impact due to inventory carrying costs
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Case studies
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CASE STUDY – RETAIL DC OPERATIONS
DC serves 104 Retail stores
DC handles 8000 SKUs
Average Productivity of receiving dock: 4 cases per min
Picking efficiency – 45 lines per hrFill rate – 99.5%
World’s LargestRetailer’s DC : 85000 sq ft
40 (3 refer + 37 dry)
Dedicated vehicles
50 (3 refer + 47 dry)
Dedicated vehicles
Dedicated Team of 477
People
Average Dispatches per day: 1200 cases
KPI improvements – last 3 ~ 5 years
60
80
100
120
2010 2011 2012
No of stores covered
250300350400450500
2010 2011 2012
DC sales (cr)
0.1
0.2
0.3
0.4
2010 2011 2012
shrinkage(%)
96.5
97
97.5
98
98.5
2010 2011 2012
picking accuracy (%)
Audit score
86 (2010)
96 (2012)
Fill rate
93.8 (2011)
98.7 (2012)
KPI
Cost
0
2
4
6
8
2008 2009 2010 2011 2012
DC controllable cost as % of sales
5
7
9
11
13
2010 2011 2012
Productivity (cpmh)
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Value addition by RK Foodland (2011 vs. 2012)
• DC sales increased by 31% • Cost to sales reduced by 26% • Productivity increased by 40% (10.8 vs. 7.7)• Average stock in store increased to 94%• Average DC fill rates increased to 98.7% from 93.8%• DC damages reduced by 50%• AP audit score ‐ 94%; External food safety audit – 96%• Foodland audit score – 89% (QHHSSEMCC)• 51% more throughput than any other similar DC on a per sqft basis
Consolidation center operations
• Started in 2012 • 13 vendors (27 more in pipeline)
• 6 stores• 97% fill rate
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Birth of Consolidation Centre (CC)How will I supply such a small Load to Retail
Store?
Vendors not supplying on time!! My Shelves are empty and I am loosing on Sales. How will I
resolve this problem ???
Vendors
Retailer
What is Consolidation Centre?
• A Consolidation Centre (CC) is a warehousededicated to receiving, staging, anddispatching (or transporting) material to aspecific geographic location, development, ordistrict. Its primary mission is to enablecombination of discrete shipments into fewer,more efficient deliveries.
How the Consolidation Centre works?
CASE STUDY ‐ QSR Supply chain operations
• DC Operations• Receiving• Storage• Stock transfer/ inter company
sale
• Value Added Services• Purchase Operations• Inventory Planning• Order Management• Handling Fresh Produce• Updating price master• Vendor Payments• Preparing annual budget• Audits• Trainings• Handling promotional items• Handling OPS & MNR items• New launch support• Monthly MIS• New Store/ route surveys
• Infrastructure Creation• Distribution Center• Refer & Dry Vehicles• Long term association
• Transportation• Inbound & Outbound• Normal & Dynamic routing• Store Scheduling
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CASE STUDY ‐ QSR Supply chain operations
256 stores121 – NE135 ‐ SW
36major suppliers
490 SKU250 Food/ non food
240 Ops
89 Dedicated vehicles
13000+ outbound trips a year
OTIF – 87%Fill rate – 96%
End to End Supply Chain Operations ‐Demand Forecasting, Ordering, warehousing & transport (primary & secondary)‐ Promotion/ Event handling‐ Supplier & Store Order Processing including Payments‐ Inventory Management
World’s LargestQSR
Associated since 1996
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Lower costs
Develop & retain talent
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Scope of Activities
Our objective100%
Customer Delight atstore
Customer Service•Order Collection & Processing• Store scheduling & route planning• Reconciliation with store• Product re‐call
Inventory Planning• Monitor sales trend • Stock replenishment• Timely place Purchase orders• QIP / GRN / SOC Preparation
At Stores• No Stock‐outs• Adequate space• Trained Manpower• Zero machine downtime
Delivery • Adequate fleet• Temperature compliance• Back up for breakdown• Turn around time• Reverse Logistics
Distribution Centre• Maintain inventory level• Racking & storage• Handling equipment• Trained manpower• ISO, DQMP & Statutory compliance• IT support• Value added services
Imperatives for Business (Management Commitment)
• Business Forecast • Expansion‐New stores / cities• New SKU launch• Integrate new vendors & locations• Agreed service level• Infrastructure (facility set up, trucks & equipments)
• Resource deployment• Financial capability / working capital• Licenses and registration
Vendor Support• Stick to production schedule to honour delivery schedules. • Maintain adequate raw material inventory• Temperature compliance• Scheduled downtime for machines
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QSR Supply Chain Effectiveness Measures
Warehousing Management• Warehouse productivity• Inventory Days on hand – Value / Quantity• Rentals per case
Transportation Management• On Time Delivery %• Truck Space Utilization %• Transport Productivity• Fuel Efficiency ( Kms / Litre)
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Live Tracking
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Location wise in‐out‐report 1
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Logistics Standards
• DQMP (Distributor Quality Management Process)
• Operations and Customer Relations (Operations Manual)
• Quality Control (HACCP / QIP)
• Cold Chain standards
• Hygiene regulations
• Product handling standards
• Emergency and contingency plans
• Risk & Crisis management
• Continuous unannounced internal and 3rd party audits for DCs result in superior quality scores regularly.
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Inventory Management is a key enabler
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Enablers– One stop shopping concept ‐ Central file management– Inventory management ‐ Restaurant simplification
Synchronizing the perishable Supply Chain– Demand forecasting
Promotional + Continuous Supply Restaurant and DC level
– Supply Planning Restaurant and DC level
– Visibility and Collaboration across the chain
Synchronization delivers significant business benefits to both the customer and the supply chain
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Strategy for efficiencies
Cust DC :
integrated
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RFPL VALUE MODEL
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IT/MIS Management
OverheadsProfits
Network Management
OverheadsProfits
People/labor Management
OverheadsProfits
Transportation
OverheadsProfits
Warehousing
OverheadsProfits
IT/MIS Management
Network Management
People/labour Management
Transportation
Warehousing
Overheads
Profits
COST SAVINGS
One Management Team
Multi‐skilling
Drives innovation
Eliminates Inefficiencies
TRADITIONAL SERVICES MODEL
DUPLICATION
COST
Power of one benefits
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Thank You
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