Streamlining The Supply Chain

While every CIO, irrespective of the geography or vertical, would ideally want to reach his customers at the desired time and price, it is hardly practical in the real world. Any supply chain depends heavily on the country’s available infrastructure. While this aspect is not in a CIO’s hands, what is in his hands is the power of IT.

CIOs can leverage technology to bring about maximum streamlining of their supply chains. Some of the leading CIOs in the country are already up to the task. They are trying to make their supply chains as efficient and futuristic as they can.

Leading the Way

For a company in the FMCG industry, it is very important to keep track of the secondary movement of goods.

As Arup Choudhury, CIO, Eveready Industries says, “We need to monitor on a continuous basis, which distributor is stocking what. The field force also needs to be equipped with off-take data of the beat to be covered, competitor information, new product launches and promotional activities.”

The company had been gathering this information manually, which led to heavy reliance on an individual sales person's judgment and often resulted in human errors. That was when Eveready thought of using a mobile phone to link salespeople with the headquarters’ servers and their distributors.

A small, Java-based application was thus set up for the mobile phone to capture sales, inventory and forecast data. There was a central portal which could be used by head office to enter promotions and product launches.

The master data was synced with the ERP system to get the latest information. By doing this, the company captured the primary, secondary, and forecast information into a data warehouse and used a reporting tool to generate meaningful information from it. The entire project took about 6 months for implementation.

The implementation has resulted in yielding valuable data for the company, which when mined properly helps in generating important information like affinity analysis to decide product placement strategies. Better product placement and historical information of retail outlets in turn leads to an increase in sales revenue

“In a nutshell, this project has used a simple mobile technology to catapult the organisation into a different level, way ahead of competition. Better quality of life for the sales force, no more filling up excel sheets, decision making process has been reduced to minutes from months, better product visibility, increase in sales turnover,” says Choudhury.

When the management at Dabur decided to make its supply chain more efficient, it was easier said than done. Given Dabur’s vast product portfolio, its supply chain was far more complex than other FMCG companies in the country.

“We have a diverse product portfolio with more than 800 SKUs spanning multiple ‘shelf life’ -- foods, personal care, home care and healthcare products, fragmented and multi-tiered distribution network with more than 10 plants, over 40 warehouses and about 1500 distributors. We also have a large fragmented front end and seasonal products with significant sales skew,” says Anil Garg, Head– IT, DaburIndia.

Besides, the company was straddled with legacy systems. Sales forecasting, the key to any FMCG company in meeting demand, and preventing over/ under production was being done manually.

Dabur decided to improve forecasting. The company that was already running SAP ERP for many years now, decided to implement SAP’s Advanced Planner and Optimizer (APO).

To ensure the accuracy of SAP APO, historical data was deconstructed to derive the baseline sales and impact of ATL/ BTL inputs. The entire project was divided into different phases—diagnosis, design, build and implement, and finally run (go live).

Dabur greatly benefited from SAP APO with perceptible business outcomes. For instance, post this deployment, lost sales opportunities which were accounted at about 6% were reduced to 3.75%; error forecast was reduced from 85% to 40%. The forecast accuracy increased from just 25% to over 60%.

"With SAP APO implemented, our entire forecasting is now automated. The entire sales volume plan is generated by the system once you input the growth target. All other calculations including required capacity expansion, markets where we can get more business etc is all generated by the system in real times,” explains Garg.

 The Need for Speed

While it is important for any company to have an efficient supply chain, it is absolutely imperative for a company planning to foray into a new geography.

 As Mike Narula, Chairman  & CEO, AirTyme Communications, says, “For a company wanting to enter into a new market, optimising its market reach is an important aspect. Moving into new markets has a profound impact on the supply chain (i.e., new import regulations, local country legislation, new customs processes, and customers).”

The US-based international distribution company, Airtyme, specialises in integrated supply chain solutions for the wireless industry throughout theUnited StatesandChina. 

“The company should be able to respond quickly to consumers’ needs, and be able to extend its market reach by exploring new technologies, new channels and new geographical markets,” says Narula

“It should also have the flexibility to re-evaluate its business model due to sustainability pressures and understanding the impact of the changes to the supply chain. Through a high-performing supply chain, businesses will be able to increase the response to the market as it would help in accelerate decision-making and execution,” he adds.

Conclusion

 A corporate considers its supply chain as an overhead. Given the current economic landscape, the need of the hour, therefore, is to streamline it for getting a healthier bottom line. Those enterprise technology leaders who have done so have realised enhanced revenues. It is time others followed them.

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