Managing the Crests & Troughs

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Managing the Crests & Troughs

“For any business, supply chain is associated as the backbone of the company especially in the FMCG industry where the crest and trough could be so pitched that the single decision regarding the same could change the view & version of the scenario. People still need to understand that SCM does not restrict itself in pushing sales for any company. The term itself caters to various departments, which could lead any genre of business to its apex,” highlights Praveen Jain, General Manager – Supply Chain, Adani Wilmar Ltd.

How is the FMCG industry performing, particularly the segment you are operating in?

Praveen Jain

Growing population, economic growth and rising disposable income will drive India’s edible oils consumption growth, which is expected to grow by 8% annually to exceed 34 million tons by 2030. Keeping this in mind, the demand for edible oils is increasing every single day in the global market. India’s fastest growing edible oil sector has been growing at the CAGR of 9%. Adani Wilmar Limited (AWL) is striving to catch up with this pace. Almost 19 years ago, Adani Wilmar responded to the call of the lucrative and unexplored business of the edible oil sector. It has now recorded a total turnover of `29,000 crore divided between two main business areas – edible oils and foods.

The company is now a leading super power of quality edible oil and food products to the markets of India and the Middle East. We have the largest range of edible oils spanning across the categories of Soya, Sun, Mustard, Rice bran, Groundnut, Cottonseed and have extended its basket of offering with the introduction of the revolutionary oil – Vivo, India’s first oil for Diabetes care.

The other business arm deals with Basmati Rice, Pulses, Soya Chunks, Besan and Fortune Chakki Fresh Atta. The product portfolio of Adani Wilmar spans under various brands such as – Fortune, King’s, Bullet, Raag, Avsar, Pilaf, Jubilee, Fryola, Alpha and Aadhaar. Adani Wilmar Limited also caters to institutional demand through its industry essential range, which includes bulk packs of consumer essentials as well as Lauric & Bakery fats, Castor Oil derivatives, Oleo chemicals and Soya value-added products.

What are the peculiarities that you need to maintain while handling edible oils and corresponding products?

Well the specificities are wide and many. Some of them include:

  • Price variation of crude oil commodity
  • Depot Inventory – right product & quantity
  • Mapping of trucks through manufacturing locations (Depot vs Direct Party)
  • Transit Time & Loss
  • Multimodal transportation from manufacturing locations in order to optimize freight
  • Vendor management

Kindly explain the entire value chain.

The movement of raw material (crude) of different oils happens through vessels to different manufacturing and processing locations in India. The movement is catered at port based plant of AWL, which refines and dispatches the product to demand points. Demand forecasting takes place at our head office, thereby allocating the SKU wise city wise demand through supply planer for execution from various plants and job works. A logistician places the vehicle by negotiating freight at dispatch point, thereby optimizing the primary freight. The logistician also tries to cater to the multimodal option at the dispatch point to optimize the vehicles dispatch, arrival of which are destined at depots, which are spread across the country. From there, the secondary demand is served to more penetrated demand points. Direct parties are also served from the Plant, making a better impact on logistics. The product is then sold in the General Market or MFS as per the demand generated, satisfying the customers.

How crucial a role does the supply chain play in the entire business?

For any business, supply chain is associated as the backbone of the company, especially in the FMCG industry where the crest and trough could be so pitched that the single decision regarding the same could change the view & version of the scenario. At AWL, SCM professionals always strive to keep up the sales as well as optimize the cost-related parameters with their experience and new methodologies, moreover we ensure that our top line & bottom line will be maximized by managing an efficient supply chain. People still need to understand that SCM does not restrict itself in pushing sales for any company. The term itself caters to various departments, which could lead any genre of business to its apex.

The departments like procurement, warehousing, production & dispatch planning and especially logistics can add so much value to the system. Exploring the depth of such certainties could easily develop business acumen, which is required to be ahead of others in this brutal game of competition.

How complex is the supply chain of the segment you are operating in?

The supply chain we are dealing in regulates purely on the demand and supply of the market. That demand may be SKU based, vehicle based or inventory space based. SCM at AWL is mostly affected by the external factors like availability of vehicles, raw material, production limitation of packing locations price fluctuation of crude in international market.
Similarly, in our food business, especially atta (Wheat Flour), which falls under perishable products, where the production to consumption cycle is only 90 days, throws upon us a major challenge of continuous replenishment of the same. All these factors contribute, to a large extent, in making the supply chain a much more complex structure. But, as you know supply chain is known for its tackling behavior, so particular strategies of SCM are applied on day-to-day basis in order to overcome the hindrances and complexities to contribute towards the growth of the company.

What are the packaging innovations brought forth by Adani?

Packaging innovations in Adani involves:

  • Increasing the film line of the pouch thereby making it more durable
  • Inclusion of honeycomb sheet in the trucks and rake movement so that the loss could be minimized
  • Improving the resistance of the redressing material from 3PL to 5PL, thereby making the packaging more robust
  • Increment in the strength of Jar & Tin in order to minimize the losses.

What has been one of the most challenging tasks while at Adani?

Although in my opinion, the SCM department undergoes numerous challenges on a day-to-day basis to fulfil the demand of the counterparts, we know that tasks are always aligned in such a manner where some target-oriented structure could be stipulated and for this, supply sourcing in any FMCG company is the foremost important weapon.
At times, there is a situation where there is a lack of supply of vehicles from the manufacturing location, which could be due to various reasons. The lack of information regarding the vehicle sourcing or we can say, distorted web of information causes our logisticians to restrain themselves in setting up a targeted freight in the market. Cost saving mechanism is one of the important parts of SCM and due to the aforementioned variations, cost sometimes shoots up. The factors are mostly external but lack of information of all those factors restricts us from gaining a deeper insight for a solution.

Export is a big part of your business. What are the EXIM complications and how do you deal with the same?

Export is a growing part of our business and it’s the most suitable way to mark your presence in the global market. We supply in countries like Australia, New Zealand, Malaysia, Singapore, UAE & the African Continent. The major EXIM complications, which deal in export are:
1) Countries like Saudi Arabia require Halal certificate on their logo as it has been declared mandatory in their country. Such things should always be kept in mind.
2) Quality should be up-to-the-mark as per the international standards. It is an important point to mark your presence in the market.
3) Legal complication is the major factor, which plays through the transshipment of products.

How do you do supply mapping?

Well, there are three important aspects to it:

  • Demand Planning: Catering to the demands form the customers, which are drilled down to zones, states & cities and allocating them location and product wise. Demand is taken on historical level, which gives a fair idea of the seasonality and trend.
  • Vehicle Management: Vehicles are booked through vendors for the locations. It also caters to the multimodal aspect of the system.
  • Inventory Storage: Inventory is stored at depots, which are liquidated by the sales team in a different type of market (GT or MFS).

What are the supply chain strategies implemented by you?

Network Optimization Strategy: The entire secondary network of depots, which are catered to through various manufacturing locations according to the demand are optimized and hub & spokes are formed, to give us better serviceability and cost.
Freight Mapping Strategy: In order to recognize the freight from each location, a system has been installed to give us information about the previous freight, thereby expanding the insight of the logistician.
End-to-end Integration of Vehicles: The end-to-end integration of the vehicle solves various purposes of booking, tracking and database management of the vehicle, which could be utilized in the future for placement reference.
WMS Implementation: For better inventory handling and insight of the depot stock, WMS implementation across all depots has shown its impact in aligning secondary sale.

What are the innovative sourcing & distribution techniques implemented by you?

The various innovative sourcing & distribution techniques implemented by AWL are:

Distribution Techniques:

1) Hub & spokes formation of the depots in order to cater to the demand in an efficient manner
2) Part & Full wagon rake dispatch from the plant for satisfying the customer needs
3) Stock transfer and cross-docking of products for maintaining the optimum inventory level in the depots for the customers.

Sourcing Techniques:

  • Better vendor management in order to explore the skilled and experienced vendors for service provision
  • Survey and exploration through market intelligence enhances our chances regarding the collaboration with skilled service providers adding value to the sourcing technique of Adani Wilmar
  • Not only is the exploration of new vendors applied in AWL, but also the improvement of the existing ones has made its contribution in the development of the sourcing methodology.
  • Existing vendors are identified as per their performance and testified to the knowledge-based aptitude developed by the company and if the performance is above AWL’s parameters, they develop as a separate identity.

How do you see the supply chain dynamics shaping from here?

Supply chain dynamics is a terminology, which is constantly building up with time. Through challenges and experiences, the dynamics become more robust and structured. From the current situation, we envision that the supply chain dynamics will be able to trespass the technology as well as information barriers in the company, saving more time and cost for the organization.
We are at the initial stage of mapping end-to-end supply chain in the organization; it also includes exploration of various multimodal techniques and inclusion of blockchain, vendor management system, etc. As time goes on, the system will be more resilient and unsegmented, which will definitely give us an edge.

How strongly aligned is supply chain with Adani Wilmar’s growth strategy?

Adani Wilmar growth is not restricted to growth in a particular segment, it marks its milestone as an overall upliftment in performance for every department & SCM is not a new concept to it. SCM at AWL ladders up by defining the best automation as well as cost beneficiary methods in order to push up the sale. As we are growing in different genres of business, taking a step further from oil to food business, we require more and more skill sets to attain the right time, quality, quantity & information. Under these subsets, the game totally changes for different kinds of products and we, at Adani Wilmar, always strive to produce the best out of it. We believe that the supply chain cost optimization strategy should always be frontline in SCM, thereby giving the self-push of growth under the roof of AWL.