supply chain management fmcg industry

8/10/2019 Supply Chain Management FMCG Industry

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Supply Chain Management AssignmentFMCG Industry

Group

Rohit

Chopra (164

Sanchit Govil ( 167

Shubham Tayal (186

Sumedha

Deogharia (202


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Supply Chain Performance Attribute for FMCG Industry

Introduction

FMCG industry is a quick, agile industry with a wide range of products.

Such a huge industry is recognized by its customers, and its supply chains are seen

role model for other industry.

FMCG supply chain is faced with unique issues like Bullwhip effect and high retur

transit losses.

In order to achieve the organizational goal of making money , supply chain managtry to find cheaper suppliers, low-cost manufacturing facilities, strategically locate

distribution centres and highly profitable or high-volume customer markets


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Introduction

Pillars for value enhancing FMCG & retailing

Supply Chain management

Customer Service Management

Agenda

Situations of comp

advantage

Cases

Supply Chain Chal

and Issues Supply Chain

Performance Attri

FMCG Industry


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Situations of competitive advantage

Asian Paints

Paint tinting machines By acquiring a technology that enabled mixing of colors and base paints to get the appropr

shade in a few minutes, Asian Paints obtained a competitive advantage by delaying the

differentiation

Retail inventory costs have come down, while at the same time, product availability went

Delayed differentiation and Technology development

Distribution strategy

Created a Large Network of Dealers

Established a Network of Company

Depots

Created a Marketing Organization that

matched its Distribution Intensity

Successfully Resolves the Cost-Service

Conflict in Distribution

Strong Commitment to Distribution

Cost Control

Logistics

The warehousing facilities are well maintained

The company is adapting eco-friendly production

methods

Maintains low inventories in off seasons, and high

inventory in festival seasons

The company has huge base of raw material suppl

giving company bargaining power resulting in high

profit margins than competitors

The company has succeeded in establishing thems

rural parts of India by large distribution network, r

outlets etc.

Technology adaption

Asian Paints has deployed SAP R3, i2 supply chain planning suite, ERM employee platform formu

management, product lifestyle platform, SAP HANA CRM etc. with positive results


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Marico

Enhance long term value of company brands by achieving excellence in distributi

performance

Reduce total delivered cost

882 direct distributors, 153 super

distributors, catering to 2393 small

stockists and 4523 van markets

Every month, 56 million consumer

packs are sold to about 1.8 million

households through 1.6 million retail

outlets

Approach

Just-In-Time

Global Sourcing

Shorten its planning cycle to 15 days from 30 days

Revised its demand planning process

Leveraged IT System

ERP system: MI net

Vendor Managed Inventory

Results

Decreased stock-outs associated with distributor sales to retailers by 33%

Reduced lost sales due to stock outs by 28% thereby improving revenue by 1.5%

Lowered excess distributor inventory by 33%

Reduced late deliveries to distributors by 37.5%


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Si i f i i d


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ITC

E-Choupals

Link directly with rural farmers via the Internet for procurement

E-Choupal tackles fragment ed farms, weak infrastructure and the involvement

intermediaries

Installs computers with Internet access in rural areas of India to offer farmers up-to-date ma

and agricultural information

Farmers can directly negotiate the sale of their produce with ITC Limited

Each ITC Limited kiosk having Internet access is run by a sanchalak a trained farmer

Each installation serves an average of 600 farmers in the surrounding ten villages within abo

5 km radius

The warehouse hub is managed by the same traditional middle-men, now called samyojaks

Results

Helping ITC in creating strong connect with villagers

Enhancing its supply distribution network

Entry-level soap brand, Superia, widely available in the village because e-Choup

Sanchalaks were helping in local marketing

Greater pricing power to the company

Good quality output

Farmers get real-time information

S l Ch i Ch ll d S l ti


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Supply Chain Challenges and Solutions

Supplier/partner relationship management

Different organizations, even different departments within the same organization, can have

different methods for measuring and communicating performance expectations and results.

Managers must let go of internal biases and make a conscious choice to follow mutually agre

upon standards to better understand current performance and opportunities for improveme

Using a common language and framework makes it easier for teams to communicate, speeds

benchmarking efforts, and enhances the evaluation of best practices.

For example, SCOR provides a common language for supply chain classification and analysis.



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Talent Management

As experienced supply chain managers retire, and organizations scale up to meet growing de

in developing markets, talent acquisition, training, and development is becoming increasingl

important.

Supply chain leaders need a thorough understanding of the key competencies required for s

chain management roles, specific job qualifications, methods for developing future talent an

leaders, and the ability to efficiently source specific skill sets.

Develop Multi Functional, non departmentalised Management Cadre

Recruitment of well qualified management trainees.

Inculcating a professional learning culture



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Downward Flow of Information



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Sales and Operations

All companies were operating S&OP at some level but reported not to the levels of discipline

standards required to utilise the process as the companys one operational planning process

utilising one set of numbers.

Improved use of IT and more standard reports available from ERP

Reduced and more focussed S&OP meetings

More discussion and focus on exceptions rather than regular issues

Improved accuracy of demand planning

Integrating Distributors within the S&OP process


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Key Financial Metrics


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Key Financial Metrics

ITC Asian Paints HUL Maric

Net Income ( Crore Rs.) 31775.8 10657.8 29035.0

Average shareholder equity 790.2 95.9 216.3

Cost of Goods Sold 14468.6 6640.0 16377.0

Sales Revenue 29901.3 10418.8 28019.0

Inventory 6600.2 1665.1 2747.5

Financial Metrics

Inventory turnover 4.2 6.9 9.9

Number of Days In Working Capital 37.831.6 26.6

ROA 29.3352.8 13.3

Operating Margin 35.315.2 15.2

Gross Margin32.6 13.8 14.3

ROE 40.2 111.1 134.3


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supply chain management fmcg industry

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