supply chain of foodland

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


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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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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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


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


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


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


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

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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supply chain of foodland

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