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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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Situations of competitive advantage
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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Situations of competitive advantage
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.
Supply Chain Challenges and Solutions
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Supply Chain Challenges and Solutions
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
Supply Chain Challenges and Solutions
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Supply Chain Challenges and Solutions
Downward Flow of Information
Supply Chain Challenges and Solutions
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Supply Chain Challenges and Solutions
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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