“Strong foundation of meticulous planning, well-entrenched distribution network and a strong logistics network is one of the core areas in this competitive world, which is where Patanjali has scored on to build a strong supply chain,” highlights Samir Chaturvedi, AVP & Head of Supply Chain – Patanjali Ayurved Ltd., during an exclusive interview…
Patanjali is a true FMCG ‘Made in India’ brand to reckon with. What have been the USPs of the brand?
Patanjali brand is having its halo illuminated by the grace of Swami Ramdev ji and Acharya Balkrishna ji. Patanjali FMCG brand is having a wide range of products across food & non-food category. It is the only Indian organization having such a wide variety of Swadeshi & herbal products under one umbrella. USP of the brand lies with the innovation/product creation process while finalizing the products. E.g., there is a wide variety of products consisting of unique blends in specific categories which were not existing in the organized Indian Markets but were prevalent at an unorganized level, like physically refined oils, Atta-based Biscuits, Cow Ghee, Aloevera Juice, Giloy Juice, Dant Kanti, Amrit Rasayan, etc.
How did you take on your competitors in a space where there is no dearth of MNCs?
The latent Indian Market was deprived of Swadeshi Products, which Patanjali as a Brand tapped at the right time and ful. lled it in due course by providing herbal, cost effective/value for money products which was instrumental in building trust amongst the Indian consumers. This is where Patanjali as a Brand scored over MNCs, which were existing over the decades. This gave Patanjali a competitive advantage over MNCs as it created its own market acceptance. However, to support reach of these products to consumers and, that too, in a cost-effective manner, a careful planning and distribution strategy was envisaged. This approach was also modified time to time to build past learnings.
What makes supply chain a rock solid foundation for Patanjali?
Strong foundation of meticulous planning, well-entrenched distribution network and a strong logistics network is one of the core areas in this competitive world, which is where Patanjali has scored on to build a strong supply chain. This is all the more important due to vagaries of the products, seasonality and multi-channel supply base while catering to a vast geographical customer base pan India.
Your business model is the major source of rural FMCG marketing research. What are the elements that have helped you in establishing such a strong supply chain network?
We have various formats for reaching out to end customers. It includes our exclusive stores in two different formats, namely Ayurvedic Kendra and Ayurvedic Chikitsalaya. These initial formats helped us reach the various parts of the Urban and Rural markets. However, to fill the gap, general trade retailers played a vital role. To support a bigger customer base in specific areas, mega stores were also initiated. Then there are exclusive tie-ups with other government/non-government agencies, which are predominantly very strong in rural sectors. There was a different kind of supply chain setup created for these tie-ups.
How do you plan to take on omni-channel retailing?
While Patanjali has established itself in General Trade through big distributors and exclusive retail outlets in the online space, it has entered into contracts with major e-commerce stalwarts like Amazon, Big Basket, Grofers, Flipkart, etc., to establish itself in the online platform. To further strengthen the brand in the online space, Patanjali has also launched its own home-grown website www.patanjaliayurved.net, thus marking its omni-channel presence so that no customer is left out. In order to grab wider range of consumer network, a 24-hour customer service desk is already in place for addressing consumer query regarding their order tracking and traceability. In this model, consumers can place direct orders through websites for home delivery for which an integrated software is underway to synchronize all channels for establishing single-window information flow.
How have you been able to build and grow such an impeccable network of dealers and partners across the country?
As they say, “Rome was not built in a day”, likewise Patanjali network was not built overnight. A lot of brainstorming sessions were organized to establish an evaluation process in assessing and selecting dealers, distributors and franchisee partners. The clinching factor in assessment/selection of the partners has been their strong belief in Swadeshi and their willingness to spread the same within the network. This journey is still continuing in the quest for change and building an impeccable network with improvisations.
What are the basis on which you select a 3PL?
3PL is the backbone for any business to run smoothly through hub & spoke model for scalability in operations. 3PL’s infrastructure strength, their experience in handling FMCG clients, service span encompassing all the areas related to warehousing and distribution, processes quality adherence, inclination/ adaptability for technology, quality of manpower, adherence to service levels and last but not the least is cost control, optimization and effectiveness.
As we indulge ourselves in different channels of sale, it is a prerequisite that prospective service provider has versatility in operations. Post GST, a lot of consolidation is ongoing to match the pace of business as we are moving towards mother warehouses/hubs, which are equipped with technology and automation with the flexibility to expand. Hence, service partners should also be matching the pace with us.
What are the USPs of Patanjali’s supply chain?
Patanjali’s responsiveness to customers’ demand fulfillment has ensured end-to-end solution. Our major forte is network designing, consistency in leadership, effective planning and technology implementation since we started expansion exponentially and have never looked back. We focus on achieving efficient fulfillment of demand, drive outstanding customer value, enhance organizational responsiveness, build network resiliency, and facilitate financial success. It is the ease and efficacy with which it fulfills demand for all formats, like dedicated exclusive stores, Modern Trade, e-commerce, Arogya Kendra, Chikatsalaya & Mega Stores, general trade and retailers.
Are there any technology tools being implemented by you?
SAP is the ERP tool that is being used to enable physical ² ow as well as information ² ow for supply chain effectively. A SAP integrated WMS is also under implementation. Transport management system tool is up and running. Apart from these soft tools, an integrated distributor management system is already under implementation and has been successfully put in place in the Iast leg. This is going to be extended up to distributors’ levels and all the information would be flowing back in real-time. This will ensure that all primary and secondary data is completely synchronized. For e-commerce delivery tracking, there is a separate software, which is already operational. This is being used for route planning, its optimization and tracking the consignments. Business Intelligence (BI) is available but would be implemented in later phases.
Managing a large number of SKUs is a daunting task. How challenging has the journey been and how have you overcome those challenges?
We at Patanjali manage a plethora of SKUs based on certain principles. While 80:20 rule, based on the Pareto principle, is applied to focus on the fast-moving SKUs, which means ABC analysis of the inventory being in place keeping in mind the previous sales history and seasonal trends. Basis the dissection of stocks into ABC, production planning and inventory control with safety stocks in place helps in addressing variation / spikes in demand resulting in minimal stock outs has been the major forte of SCM. While managing the SKUs has been challenging, dissecting of the inventory into di. erent categories like Food, Non-Food, Biscuits & Confectionery, oil and Ghee, Pooja Samagri range and deploying the inventory principles like ABC analysis as well as managing the forecast better coupled with PPIC, has helped to overcome the challenge.
How does the demand planning happen? What are the inventory management strategies being implemented by you?
Accurate Sales Forecast plays a vital role in managing demand planning keeping in view stocks at all the mother hubs and finished goods warehouses. Supply chain uses its own assessment before manufacturing the stocks. Major factors to be considered are: demand variability, manufacturing variability and lead time basis the market demography. Cycle count is the most important tool for any Inventory management. Other strategies involve keeping track of company's stocked goods through batch management, FMFO marking for outbound movement making sure that the right products are in the right place at the right time. Patanjali keeps striving to ensure that the best inventory management practices are being benchmarked for replication to improve stock availability across the channel for uninterrupted sales.
You are the role model for Indian companies who want to set up their base and flourish on the back of such a strong supply chain network. What message would you like to share with them?
Strong belief and uniqueness of the products has been the hallmark of Patanjali. Be adaptable and open to challenges and changes to be aligned to business at any given point in time. Patanjali, as known to all, has been growing at a scorching pace in various channels where supply chain has been an integral part of the changes, thus never losing sight of business. So, the message is that Supply Chain is the backbone of any product-driven business to respond faster to business cycles. Last but not the least, keep reviewing supply chain at regular intervals in context of the business, address failure/gaps, improve and move on.
What do you think are the enabling policies that are good for the growth of supply chain in India and vice-versa?
In last two-three decades, lot of benefits were initiated for the manufacturing sector in specific areas. The purpose of this exercise was the growth of backward areas. However, it has changed the balance of logistics in an unnatural way and, in many cases, the raw material was made to move to far o. places and again finished goods were moved back. In that scenario, major producing states were neither supplier of ingredients / raw material nor there was significant demand of the final products. Moving back to natural business growth across India is helping supply chain to grow in a significant manner. Load balance of logistics is normalizing a bit. Apart from that manufacturing is now being planned not keeping in mind the tax benefits but basis availability of raw material, demand of the product, ease of operations and infrastructure of the state. This would also motivate states to create good infrastructure and to implement industry friendly policies.
Government policy of improving infrastructure, particularly highways has really helped in the overall development of transportation. The transit time has also reduced significantly. This has increased the efficiency of the logistics sector. The thrust given to various sectors for introducing technology is helping in various areas to build a stronger supply chain. It is more visible in hi-technology products, e.g., RFID usage, tracking using GPS, etc.
GST has been a major gamechanger as far as supply chain is concerned. It has given a bigger thrust for creating bigger warehouses and consolidation of services. This is surely going to make supply chain setups more versatile and robust. One of current issues is that warehouse infrastructure is not very good mainly in tier II and tier III towns. The consolidation exercise is giving a big boost for construction of bigger warehouses or warehouse complexes having all required amenities at one place. Major 3PLs have already initiated setting up bigger warehouses to suit future demand.
How has been the impact of GST on your business? How do you plan to work on the weak links and emerge victorious yet again?
GST has affected many organizations partially or significantly. As initially, the overall sentiments of traders/manufacturers took a beating, but this was a short phase, which is over now. Keeping benefits of GST in mind, consolidation process of warehouses is continuing. Initiation of this process was started even before GST came into existence; however, this was not done overnight and the entire process change took time. Basis consolidation working, logistics setup has improved. This will give its return in due course of time. It has already made our system more agile and cost effective.
Please enlighten us on your supply chain transformation story…
Since the inception of Patanjali Ayurved Ltd, the supply chain was largely product driven, which means there was a push of the products, which were produced or manufactured. The supply chain is now aligned to the current market requirements and hence it is consumer driven and not product driven. There is a thrust working for value added services so that customers can get a real value of the products.
What are the disrupting change agents in the supply chain?
To err is to change where change is continuous as explained in Kaizen theory. Following are the change agents, like market demand, SKU rationalization, change in pack size, technology, digital, sensor and automatic identification, predictive analytics as an input for demand forecasting and planning, automation in production, inventory and network optimization tools, driverless vehicles, deliveries using drones, etc.
What are your ambitious plans for growth?
Apart from continuing with a faster growth, we are also planning to diversify in range of products. Hence, to suit those speci. c requirements, new additions / improvements are being made to planning, distribution setup & logistics as well as warehousing. Recently we have concluded a network optimization working. The results of the same are under implementation. These are being carried out in phases.
Where do you see Indian supply chain taking shape from here onwards?
Indian supply chain would be seeing a lot of inclusion of technology in various areas. This would include software to help supply chain optimization, automation of processes in manufacturing and web portals helping improvement in logistics. Apart from this use of RFID, bar coding etc., will automate a lot of operations across warehouses. Current warehouse operations are labour intensive and keep on getting affected due to local factors as well as during festivals. The technology will surely change this process significantly. Turn over vs manpower ratio will be significantly up in future.