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SUPPLY CHAIN ASSIGNMENT

ITC FOODS

HARDEEP SINGH BHATIA

09BS0000832

IBS MUMBAI

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Food products are normally a high volume ball game.Products have to be essentially be

available in the market at all given points of time and at all given points of purchase.The supply

of products takes place virtually on a daily basis on fixed quotas or otherwise,to retailers as per

their requisitions and the anticipation of demand and the performance of products in the recent

past.

The skeleton of distribution system is same for all the companies.Companies try very hardto make a difference at some point to get the competitive advantage.ITC has a very

strong distribution network for their cigarette brands and they are using this network to

push their new biscuit brands.Credit system also depends upon the position of the product

in the market.

Observations companies with top product are hard to bargain on credits.Companies alsouse their premium products to push their non premium products.

ITCs distribution philosophy is that of channel-tailored support.ITC and its distributors use

different sales forces to cater to the separate channels of convenience outlets , grocers , and

supermarkets,says Naware.ITC services trade channels and not specifically one kind of outlet

alone.Thus for impulse purchases like confectionery , the bulk of our sales come from convenience

outlets.However , categories like aata,readytoeat foods,and snack foods are directly

distributed to grocers and key accounts, in addition to some convenience outlets.

ITC directly services more than a million outlets all over India.It has depots on key states and the

depots are geographically dispersed to optimize logistics costs,according to Naware.He pointsout that for high-bulk;lowweight items(such as the most recent launch of snack brand I

Bischips),specific retail stocking and display solutions use floor and air space for ease of

placement and high visibility.

The other advantage is ITCC backward integration with the parent companys $155 million

international business division(IBD),which markets agricultural products abroad.IBDS E-Choupal

system,which sources directly from the farmers through 1286 kiosks across 9000 villages also

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helps to develop markets and brands for ITCs consumer goods.As a distribution channel , the

two-way functioning E-Choupal is cost effective,with the added scope of increasing in range as

more kiosks and more farmers are tagged on to the sourcing network.The E-Choupal and the

storage hubsthe company has a strategically located hub in each statefunction as centres

where ITC and the firms it partners can market FMCG goods that range from agricultural

products to household items,

ITC frequency of retail servicing is one of the highest in the consumer-goods business.Consequently

it does not need to resort to dumping of stocks at an outlet as an insurance against stockout

situations but can sell only as much as the retailer can dispose of and top up stocks whenever and

wherever necessary.This also makes the group manage its working capital better.

Timing and data-gathering regarding stocks is crucial.We have a fully online ERP-based logistics

system linking our distributors,godowns and marketing branches to head offices and factories ,

continuously feeding in data of sales and stock positions across the entire supply chain,says

Naware.This enables us to track pipelines and sales in real time and keep control over all

elements of the supply chain,be it raw material,packaging material,workin-process inventory, or

finished goods.

To leverage its network and distribution reach and to centralize the data flow between various

divisions,ITC has installed Project Infobahn , a companywide hybrid network using a Virtual

Private Network(VPN) through an Internet service provider.This comprises 69 leased lines,103

ISDN lines,10 radio frequency devices,and four new VSAT links.The lets staff,wholesaler dealers

,and partner companies access data and transact business over the Internet.It also leverages the

existing network to cross-sell and up-cell the companys own business offering and enables it to

market offers from other business houses through a secured distribution network.The network spans

110 locations and all ITC divisions.

The company distributed more than 4 lakh large racks,to display the brands at all point of

sale.The racks created so much impact that even competitors like market leader Frito-Lays

introduced its own version of water racks.After all in India Jo dikhta hai wahi bikta hai.