“As a responsible business, delivering the highest quality products and exceptional service, pladis’ products have the potential to reach more than 4 billion people across the world. pladis people are passionate about collaboration and creation, using consumer insights and trends to fulfill its promise; ‘to bring happiness to the world with every bite. This, combined with rapid speed to market, enables the company to bring its products from idea to on-shelf quickly, so they are available for consumers all over the world,” shares Mr. Anil K Mishra, National Logistics Head – South Asia, pladis Global, during an exclusive interaction…
Kindly share with us pladis Global’s journey in the Indian market.
UB is a leading international baked snack business, part of pladis, which combines three centuries of baking and confectionery expertise by bringing together its iconic Godiva, McVitie’s, and Ulker brands. Our company was established in India in March 2009 as United Biscuits. In June 2016, United Biscuits became a part of pladis Global having three iconic brands under one umbrella – McVitie’s, Godiva, and Ulker. pladis is the proud steward of over 300 years of family baking and confectionery experience. The expertise of its 16,000-strong global workforce spans 25 factories in 11 countries and is founded on collaboration, agility, and resilience. We believe all foods can be enjoyed in moderation as part of a healthy diet, including our snacks. We’re committed to providing our consumers with the right information to help them understand how our products can be part of a healthy and balanced lifestyle.
How do you plan to take on your contemporaries with your product offerings?
Our unique selling proposition is our constant focus on producing healthy products through continuous innovation, with a customer-first approach. Besides, we place immense thrust on our maintaining an agile distribution system, a strong pan-India network, constant customer feedback, and priority action, regular market visits by all departments apart from the sales team to know your customer, know your business & take positive action. Our aim is to adhere to a zero-defect policy and relentlessly raise the standard of our offerings. We lay immense thrust on bonding and aligning within internal and external stakeholders, omnichannel ordering pattern, and e-commerce. Our incredible social network helps us keep a constant connection with our consumers.
How do you differentiate the Indian market vis-à-vis global markets? What are the challenges in operating in India?
The Indian market is quite dynamic and diverse. The key to the Indian market is the adaptability to changes and quick response time, which scores an edge against other global markets. India is a highly competitive market and can compete with any country in the world. We are growing much faster than any other economy in the world, but it does not really reflect our real potential, which is helping us grow amidst several adversities. There are global challenges and one of the lessons for India to learn, therefore, is to build such firewalls around its own economy so that the impact of these global developments can be minimized. Most global industry leaders are expressing interest in India, and they also acknowledge our true potential. The slowdown in China does not directly impact India adversely, but it does impact the rest of the world. As the world has become more globalized and connected, companies have sought to capitalize on the opportunities presented by countries beyond their own. These opportunities are both supply-related like more abundant raw material or cheaper manpower, and demand-driven like growing incomes of larger consumer populations.
With many of these emerging market economies opening in the last few decades, home-grown companies saw an opportunity to scale themselves up – indeed, in many cases, it was a do-or-die situation. Many of them succeeded exceedingly well in doing so – becoming, what we’re terming ‘Local Giants’. Despite the slowdown in the last two odd years since Covid & several other global uncertainties, India’s long-term potential as an attractive marketplace remains as strong as ever, buoyed by healthy demographics, such as a young population. Today, global MNCs and local giants compete in almost every sector of the economy. Indian market is a very competitive market, a low price-driven market with vast geography having different cultures, different tastes, different languages, etc.
Despite India opening its borders to international trade, there are still several hurdles to overcome when importing and exporting goods like Custom, FSSAI, etc. Several layers of bureaucracy make it very challenging to move goods efficiently, and companies must file a long list of documents before moving goods across borders because every state has its own set of rules & regulations when it comes to setting up a business. The LPI (Logistics Performance Index) by the World Bank is an interactive benchmarking tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance.
How were the last two years in terms of managing the supply chain of your products amid the pandemic?
The COVID-19 pandemic is not just a short-term crisis. It has long-lasting implications for how people work and how supply chains function. The last two years were very challenging in terms of managing the supply chain during a pandemic. Supply chain and logistics were costlier. We had vehicles but there were not enough resources to run the show due to Covid-19 induced guidelines and scare among people. Sea freight and domestic freight rates were sky-high, due to reasons such as shortage of vehicles, manpower, congestion at different ports, government rules, etc. Challenges were faced in lifting the RM /PM till the factory due to government restrictions in the first and the second wave.
What came to the rescue was aligning IT and digitalizing systems and support to evolving work requirements. We placed more focus on omnichannel to collect orders from customers. Due to dynamic demand, we did a mini S&OP to align production and sourcing of RM/PM. Online shopping and local shops played a crucial role in reaching end consumers. Our human resources team also played a crucial role during the pandemic. They were in constant touch with us and helped us immensely in taking care of the family when it came to any medical emergencies.
What are the crucial learnings gained during this time?
We created contingency plans and laid emphasis on a business continuity plan (BCP) – starting with scenario planning strategies for different demand environments, and preparing succession plans for key executive positions. We realized that plan B should be in place in case plan A gets failed. In order to mitigate supply hock, we worked closely with existing suppliers while diversifying the supply base and government officials. We managed demand volatility by managing panic buying situations while taking on a responsible retailer and sales role. We ensured a safe working environment by investing in protective gear for supply chain workers and communicating with the teams via Apps to manage time, availability, and safety. Our company became more focused on cash flow and understanding & developing alternate sources of supply. We leveraged advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), robotics, SaaS, blockchain, machine learning, etc. Now our digital supply networks are designed to anticipate and meet future challenges as well. We also ascertained that in the case of exports, we should have multiple registrations at different sea and dry ports.
We work on a triple bottom line phenomenon – Economical, Environmental, and Social. We focus on alternative ethical sourcing principles. We map our supply chain based on requirements and geography. We always have a backup plan in place and are being more vigilant. We focus on improving visibility, increasing feasibility, close coordination, communicating effectively. We quickly embraced the New Normal and changed our minds. We started adopting the CPFR approach (Collaborative Planning, Forecasting, and Replenishment), which aims to enhance supply chain integration by supporting and assisting joint practices.
How do you foresee the performance of FMCG in the next few years and how is the supply chain going to be a key enabler in this journey?
With a growth rate of 14.7%, the FMCG sector has been projected to grow to a market size of almost US$220 billion by 2025. With household goods and personal care products amounting to up to 50% of FMCG sales in the country, the FMCG sector has proven to be India's fourth-largest income-generating sector. We believe focusing on sustainability, customer experiences, Digitalization, e-commerce, Big Data & analytics, artificial intelligence, direct distribution, hyper-local market, IoT, SaaS, blockchain, and 3D printing will be the major trends going forward.
Retail has gone digital. Smaller brands are evolving to reach a wider audience, selling through communities, and direct and doorstep delivery. They are focusing on environmentally and socially friendly brands. There is a great emergence of online shopping in B and C tier cities. We believe simplifying supply chains create business efficiencies and can help to reduce uncertainties and risks. A more streamlined supply chain increases the importance of each supplier relationship, creating incentives for companies and suppliers to collaborate on development opportunities and innovation projects. The four key enablers of supply chain management implementation are managerial understanding of the implications of increased customer power; establishing appropriate relationship structures; leveraging technology for enhanced visibility and communication; and the use of supply chain facilitators.
The use of artificial intelligence (AI) and automation is on the rise in many supply chains. Automation allows you to streamline repetitive tasks, while AI — which attempts to mimic human intelligence and “learn” — can assist with more complex, challenging tasks. Earlier Supply chain was considered as a sub-optimal function in the entire value chain but now after the pandemic, it has become the nerve center of the business as it carries 55-65% cost during buying RM/PM /service, so if they do economical buying in comparison to the competition, then the company gets more profit. A sound supply chain should have future buying and visibility capability and most importantly, the SCM department should act as the GUARD to any company.
How can the industry revolutionize the food supply chain and what role does pladis Global can play in these evolutionary dynamics?
A food supply chain encompasses all the processes –how food grown on a farm arrives at the dinner table. This includes the farm, manufacturing/processing, distributing/supply, retailer, and consumer. The goal of the grocery stores/ FMCG industries is to achieve quality food at a low price from the supplier, so they can still make a profit and offer competitive prices to the consumer. Wastage in the food industry is a big issue, which is directly impacting to company’s P&L. More focus should be placed on how to reduce it. The food industry has been adopting the IoT technology for a variety of tasks, which include enhancing companies’ capacity of keeping track of food production, ensuring the safety and quality of the food, keeping an eye on the maintenance systems to avoid errors, and handle facilities remotely. IoT is also adopted to reduce food waste and boost yields.
Solutions powered by Artificial Intelligence have played a crucial role in automating various sections of the food industry’s operations, particularly the monotonous, repetitive duties. The more creative and strategic efforts can be concentrated on with more focus by the human personnel. The technology is particularly effective in sections in which enormous amounts of data are required to be processed for solving optimization issues and driving operational efficiency. Our focus is also on certainly a sustainable supply chain in the coming year.
Any remarkable government policy initiative that you would like to highlight, and you would like to give any feedback on the upcoming policy that can shape the future of the Food & FMCG supply chain…
The fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector with household and personal care accounting for 50% of FMCG sales in India. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The urban segment (which accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$220 billion by 2025, from US$110 billion in 2020. The Indian packaged food market is expected to double to US$ 70 billion by 2025. The sector witnessed a healthy FDI inflow of US$ 18.59 billion from April 2000 to June 2021. Rising digital connectivity in cities and rural areas is driving the demand for FMCG (through e-commerce portals).
Investment approval of up to 100% foreign equity in single-brand retail and 51 % in multi-brand retail and the Union Government’s production linked incentive (PLI) scheme gives companies a major opportunity to boost exports. Atmanirbhar Bharat Abhiyaan, Digital India, Fasal Bima Yojana, Mudra Yojana, Mission Shakti, Skill India, Matsya Sampada Yojana, Gati Shakti, etc., are supporting the faster growth. Going ahead, we believe initiatives such as the National Logistics policy (NLP) will create a single-window e-logistics market and focus on the generation of employment, and skills and make MSMEs competitive. India's logistics sector is highly defragmented, and the aim is to reduce the logistics cost from the present 14% of GDP to less than 10% by 2022. The National Logistics Policy (NLP) is aimed at streamlining and strengthening India's logistics sector, promoting the seamless movement of goods across the country, and increasing the ease of doing business for players in the sector.