“We are working on ‘SCM 2.0’ strategy, which includes co-innovation and supply chain design. Digitalization is only one part of this growth phase, which has just begun, and we are only starting to see the impact that digital transformation will have on business. We will focus on technical capabilities and infrastructure in our supply chain as we move ahead,” shares Vijay Wadhwani, Asst. Vice President – Supply Chain Management, Relaxo Footwears Limited, during an exclusive interview…
From just a single product in 1976, Relaxo has come a long way today. How has supply chain contributed towards this growth?
There are many parameters a company may use to measure its growth. We at ‘Relaxo Footwears’, besides profitability and financial numbers, focus on physical expansion by having large number of variety footwear in different sizes and colors as well as in increasing market share. One of the most critical factors in driving profitable growth and expansion is customer service and most importantly, customer satisfaction. Customer satisfaction is highly dependent on supply chain and to be successful, your business must manage its supply chain with that in mind. Customer must be the primary focus when considering supply chain strategy, network design, and performance management.
The last 42 years has seen us growing from North India focussed sales to pan India with equal sales contribution and then going global to become Asia’s largest footwear manufacturing company. This growth has only been possible because of an exceptional supply chain, which has constantly been steering the company towards the fastest growth trajectory. To enable such a fantastic growth, we introduced the concept of mother warehouse, FOR basis transportation in which we rationalized our number of transporters, started dealing with organized transporters direct from company and started delivering goods at the customer’s doorstep. Alongside, we also introduced RDCs (Regional Distribution Centres) for efficient and timely deliveries to distant states’ customers. We ensured better production planning and inventory management through effective SAP based computer software, inventory in and out through barcode scanning as well as introduced SAP based despatch and transport management modules.
How complex is the supply chain in this industry? How do you manage the supply chain complexities at Relaxo?
Supply chain complexity is relative to a variety of factors such as rising customers’ expectation for faster lead times, expanding products & services portfolio as well as ensuring a tailored experience. To deliver unique orders for each customer across the supply chain, greater collaboration with suppliers is needed, which calls for deeper visibility and control in the entire supply chain function.
With the expanding businesses and geographies, we are adding a ton of complexity in our supply chain. At Relaxo, we mainly deal with high-volume low-cost products, lightweight products, and our customers are spread in more than 600 towns across India. So, timely delivery in the lowest possible cost to our distant customers is a big challenge because our production set up is in North India. Our plants are located in Bahadurgarh, Haryana, Bhiwadi, Rajasthan and Hardwar, Uttarakhand. At present, we are dealing with large number of SKUs, which are changing frequently as footwear business has become a part of the fashion industry. Besides, sale of SKUs comes in 80:20 ratio i.e., 20% SKUs contribute 80% sales. As part of the continuous evolution process, we have decided to open RDCs to address the requirements of distant places at optimal cost and in the least possible time.
What are the pillars on which the success of Relaxo supply chain rests?
I would like to emphasize here that devoted employees and great teamwork is what successful organizations are made of. To harness these traits, we thrust a lot on values and culture, percolating from top to down. We are working towards capturing share of unorganized & semi-organized sectors, as well as expanding business through e-commerce platform, retails, omnichannel retail, etc. We are working on what we call ‘SCM 2.0’ strategy, which includes co-innovation and supply chain design. The digitalization is one part of this growth phase, which has just begun, and we are only starting to see the impact that digital transformation will have on business. We will focus on technical capabilities and infrastructure in our supply chain as we move ahead.
You have been a part of this fast-growing organization for more than a decade. How has the transformation been over the years?
Transformation is a common term in business. Companies apply it loosely, to any form of change. Strategic transformation implies a change in the business model. The term transformation is also increasingly used for a digital reinvention. The most important starting point of a transformation and the best predictor of success is the CEO who recognizes that only a new approach will dramatically improve the company’s performance. Here I would like to mention that the leadership style of our CEO, Mr Ramesh Kumar Dua, is a classic example of transformational leadership. His is the leadership style in which leaders encourage, inspire and motivate employees to innovate and create change that will help grow and shape the future success of the company. This is accomplished by setting an example at the executive level through a strong sense of corporate culture, employee ownership and independence in the workplace. He inspires and motivates workforce without micromanaging, he trusts trained employees to take authority over decisions in their assigned jobs. Employees on the leadership track are also prepared to become transformational leaders through continuous mentorship and training.
What are the major milestones you have achieved during the journey?
In my journey of 12 years at Relaxo, I have seen tremendous growth in the company in every function be it manufacturing, finance, sales & marketing, procurement, supply chain, etc., besides working on a highly effective IT network. During my stint, the annual sales has grown from 200 crore to 2500 crore and expecting further increase considering our stronghold and the market potential. The number of highly sophisticated manufacturing plants have expanded from three to ten, whereas the production capacity has increased to 7 lakh pairs per day and set to touch a million soon.
How do you maintain a close connect with your partners – dealers & distributors to enhance your market share?
More than 80% of our business happens through wholesale dealers. We provide our dealers with mutually beneficial tools and resources that help them become stronger businesspeople, more knowledgeable brand experts and better sellers. As we continuously keep finding new markets, develop dealers’ network, we provide regular communication related to supplies and other related information. We provide them with all the possible sales support and arrange regular programmes at local and national levels. In line with this, we organize Hall of Fame, a platform for introducing new product developments, company schemes, etc. During this exercise, we also get the opportunity to talk to them on their grievances and suggestions with a view to further expand our reach.
What are the measures you have taken to streamline the supply chain?
In the present economic environment, what strategy you were adopting earlier may not work in the future. Today supply chain managers are under tremendous pressure to contain costs and deliver results amid challenging circumstances. Considering the present circumstances, government policies, tax structure for footwear, we have decided to have mother warehouses within the state where the plant is located, and nearer to the plant to minimize cost. We have also reviewed the performance of RDCs. Post GST, as the state boundaries have practically vanished; we are thinking to merge the RDCs to achieve better operational cost.
What has been one of the most challenging projects for you at Relaxo?
In transportation, we are working with large number of transporters, some of them are organized, while some are semi-organized, including local players. In my experience, there is no single transporter who can work pan-India for both PTL (part truckload) and FTL (full truckload). Today in numbers, we have approximately 120 transporters for outbound logistics, which includes local transports as well as upcountry transport.
For handling our entire transport service, we were using effective ‘Transport Module’, which is linked with SAP. We, however, were facing challenges in negotiating FTL rates, which keep on fluctuating basis seasons, demand and supply. We then introduced E-bidding process, which has been quite effective in reaching out to large number of vendors and getting competitive rates.
How do you plan to take on the growing competition in this space on the back of an unparalleled supply chain?