“We have set our eyes on opening 1,000 exclusive showrooms in India and abroad, and be closer to our 1000 crore vision,” proudly asserts the third-generation scion of Liberty Shoes, Manan Bansal. Holding the position of director in the company, he believes in learning the tricks of the trade from his mentors and apply new-age business practices to best serve the needs of modern customers. In this interaction, Manan shares with us the company’s ambitious plans to capture global markets, their supply chain transformational journey and their preparedness for the post-GST era.
How do you view the dynamics of the Indian footwear industry?
India is the second-largest producer of footwear globally, accounting for 13% of the global footwear production, next to China, which dominates the global footwear industry accounting for close to 67% of the market. The country produces 2.2 billion pairs of footwear annually in different categories of footwear and exports about 180 million pairs. This industry has shown its potential through its consistency in high export earnings and its ranking amongst most foreign exchange earners for the country continues in the past several years.
Indian footwear sector due to its inherent strengths has found its place as thrust area under 'Make in India' initiative of the Central Government and showcased as the Top Priority Sector amongst the other 25 sectors chosen for ‘Make in India workshop’ chaired by Hon'ble Prime Minister of India. The footwear industry has growth potential to be an $80 billion industry by 2030, which means a CAGR of approximately 20% in the next 15 years with great potential for exports and a huge domestic market.
Liberty has been in the business for close to 60 years. How has been the transformation from then to now?
We have completed 63 years in this business and the transformation has been huge. Till 1982, we were involved in exports only. When we started in 1954, we used to produce only two shoe pairs per day. Today we have the production of around 50,000 pairs per day, thanks to the adoption of the new-age technology in the production process. We take pride in saying that our company has been the pioneer in bringing world-class technology for the footwear industry in India. To name a few, we were the ones who brought PU technology as well as EVA machines for the first time in the country. We were even in an exclusive contract for this technology for the first two years. We have adopted the best in class ERP & SAP tools to bring in efficiency and transparency in the system. Owing to such tech interventions, the entire value chain has been visible to each stakeholder in the company, and that offers us an edge among our counterparts. In short, integration has been the backbone of our robust performance.
Kindly enlighten us on your distribution and reach.
Helping us dress up the feet of the fashion-driven and quality seeking customers in more than 25 countries, which includes major international fashion destinations like France, Italy and Germany, is our worldwide distribution network of 150 distributors, 600 exclusive showrooms and more than 6000 multi-brand outlets. We believe in offering quality with comfort and value for money. The brand with a well-known and exalted positioning in metropolitan cities, is persistently expanding in tier II and tier III towns and cities. Some of the well-known brands offered by Liberty footwear online store are Windsor, Fortune, Tiptop, Force10, Senorita, Gliders and Footfun among others.
Since inception, our reach in tier II & III cities has been our stronghold and this has just been increasing by the day. We have created a product mix for tier II & III cities to further penetrate the market. After being in the market for many years, we exactly know what customers from each stratum desire. When it comes to these cities, people are looking for value for money and long-lasting comfortable shoes. To offer them the same, we are planning to open a factory price store in those cities as those cities are heavy discounts driven.
How crucial is the supply chain for your business and how have you been managing it?
The supply chain has been an integral part of our entire value chain. Let me give you instance…If a customer visits our store and asks for a particular pair of shoes be it sizing or pattern, due to any reason, the size is not available at that store, we consider it as a lost sale. To avoid such a loss in the sale, we have brought down a number of shipping days from 20 to 6 days from the extreme most corner of the country to any store where the demand has been generated. This has been made possible by our vendors in the 3PL space and the robust processes in streamlining SCM operations. We have also made sure that if our products don’t reach on time, we penalize them. This offers us a tight control on meeting our exact requirements from our partners. That’s the precise reason as to why the supply chain holds crucial importance for us.
Having said that, it took us years to manage complexities in our SCM operations. Let me explain this…We have six factories all around the country. In the past, we used to receive orders directly at our factories. This resulted in complexities and haphazard functioning. In the year 2011, we developed a central warehouse, where we receive demand and the entire consignment gets stored there from all the factories. As soon as the demand is generated at the warehouse, it gets dispatched. This proposition has really given us an edge to reach our customers faster. Additionally, we have also been able to reduce the lead time of the package. The production process has also become quite seamless, which has resulted in uniformity in the entire process. The operational gains have been quite satisfactory and the costing has reduced substantially in the long term, which is to the tune of 15 – 20%.
How do you manage complexities arising in the supply chain?
SAP has been a boon for us to eradicate complexities from the system. All our stores and customers are on RetailPRO. To harness maximum benefits, we have integrated the two processes – SAP & RetailPRO. We have created buffers for each customer. Whenever a particular distributor sells an X amount of that particular SKU, that X number of the order will automatically get generated at our plant for production. The factory will only work on that number of pairs for dispatch. In that way, our inventory is also controlled substantially. Earlier we used to dispatch a pre-selected carton to our distributors, irrespective of the demand generated. The particular store used to get invested into a particular category which they probably don’t need. But now, if that particular store requirement is only two pairs, we will send them only two pairs along with different articles in one box rather than just dispatching the same product in different sizes. This way they are getting what the demand is and the inventory is also optimized in a big way.
Now, we don’t forecast. Our entire planning is demand-based. Sometime back, in order to bring in efficiency into our entire process, we adopted ‘theory of constraints’ (TOC) in our system. As soon as the demand for an article is generated, we make sure the same gets into production. As soon as we get the trend about the most selling article, we replenish the same product in a week’s time to cash in on demand. Our system generates demand pattern and accordingly the entire production process works. This way we start increasing the production numbers of a particular article based on the demand. This entire process has shaped and streamlined our supply chain process in a big way.
Kindly share insights into your supply chain transformation journey.
Before we got the theory of constraints (TOC) into play, our six manufacturing units were dispatching goods pan- India. That increased our lead times. We didn’t have organized logistics players as our partners, so there were lots of inefficiencies in the value chain. Our inventory control used to be erratic. Our processes were not integrated well. After following this concept, we introspected on all our systems and processes, discarded what was not needed and brought forth new additions to optimize our operations. Among the many initiatives taken, we first worked on our packaging. We moved to rack packaging than carton packing. Secondly, now a logistics person can generate demand at the production end based on the demand generated by the distributor/dealer to avoid any unwanted production. We are now able to control raw material inventory at our factories. Today we only receive the raw materials based on the production numbers. We only keep 20,000 SKUs in our system. Suppose, if we have new product additions of 1500 number, we reduce 1500 existing units to make space for the new ones.
To further streamline the process, we have advisory committee meetings including directors, merchandisers, etc., who meet on a regular basis to analyze the impact of the process and discuss as to what best can be done to further expanding the reach and reduce time to market to be able to cater to as many customers as possible. Working together with our distributors has really benefited us in reaching closer to customers and catering to their specific needs in the shortest possible time.
How do you manage a strong relationship with your dealers and distributors?
We listen to their issues and concerns. We believe that if you are not a good listener, you have lost half the battle. We appoint teams from our company to cater to assigned dealers and iron out their concerns. This way we are not following a long chain, the problem gets sorted immediately. We have to take their suggestions as they are the ones who are out in the market and they come to us with ideas to enhance our reach. We keep on upgrading our product range based on their suggestions.
What are the prerequisites for selecting a logistics partner?
We first pilot test the project with the 3PL company. If they can deliver the result that we are seeking, they become our preferred partners. We analyze all the trends such as tracking goods, pilferages, delivery times, so on & so forth before finalizing the contract. We have fixed rates with logistics partners pan-India. We keep our logistics partners in competition with each other and keep shuffling our partners to get the best pricing & best services. Each and every concerned stakeholder works on his respective timelines to make sure that the goods reach to the consumers on time.
What are the crucial learnings you are gaining from your mentors who also happen to be your family members? How do you plan to take the growth trajectory ahead?
Our elders have been very patient and supportive in guiding us and believing in us to invest in the latest technologies and management tools to take the company forward. They have taught us to inculcate new ideas into the business keeping intact our company culture and vision. The way I see it, my generation in our company is already on a path to take the company forward with latest trends & tools needed in our industry.
How easy is it for new-age entrepreneurs to set up base and expand in such a dynamic market?
Till the time, you have that confidence in the product you are offering in the market, it is not that difficult. Yes, challenges are there in terms of price points and competition, but I believe if there are no hurdles then there is no gain and change. One has to be honest and hard working on what we are trying to achieve. We have to set our goals clear and not compromise on the quality, value and comfort, which our product should offer to our customers.
How poised are you towards omnichannel retailing? Do you opt for different strategies for both the models?
Online retail has emerged as a popular medium for shopping specifically women's and sports footwear. Looking at the immense growth potential, we have also taken the omnichannel route. We have tied up with Amazon, Flipkart, Jabong, etc., apart from having our own portal. We are generating around 10-15 crore from e-commerce channels. We have a completely different strategy and model to survive in this discounting era on online marketplaces. There are limited products which are sold through e-commerce. We segregate those products and that’s how we even go ahead towards striking a deal with online marketplaces. When it’s about online channels, you have to come to a win-win situation with online retail channels, else no one will be able to survive. The exclusive range of products available online are often available at a discount prices which makes online retail a lucrative channel of sale for footwear. Furthermore, increasing demand for innovation in design and technology of footwear products is likely to create a growth opportunity for the global footwear market.
What according to you are the aspects that would aid in developing a foolproof supply chain network in India?
Having technology tools such as ERP, SAP, RetailPro, always aid in efficiency enhancement and are game-changers in the true sense but at the same time, we have to invest in our employees as well. We have to keep upgrading their skillsets so that they can learn on the job else it will just be a mundane work for them. In order to do so, we have an in-house training centre at our factory. We firmly believe these initiatives can take any company to greater heights going ahead.
What are your growth plans? Where would you like to see Liberty five years down the line?
Our growth plan for the next five years is to become a 1000 crore company with increasing 100 stores every year and being aggressive in our distribution network. We have various plans to increase our reach abroad by opening stores around the globe. We as a company have also been focusing a lot on government and institutional sales and in the next 5 years, we would like to see ourselves supplying good quality and standards products to most reputed organizations.
UP, CLOSE & PERSONAL
Your mentor in life: My father Mr Shammi Bansal has been my mentor in life.
Success, according to you: Success, according to me, is to always keep a positive approach. Always talk and think about solutions to an issue and not problems.
How is it to carry on the legacy? The legacy can be carried forward by always making sure the company’s culture, principles and foundation are intact with a mix and addition of new innovations and technology.
What’s your passion? The passion what drives me every day is my family. My family is the one which motivates me to strive and be a go-getter. Their support is my strength and my biggest asset personally & professionally.
Strategies to harness post-GST benefits We are extremely bullish about the post-GST era as it will offer a level playing field to organized players. Additionally, it will bring in lot of uniformity in the way businesses are being run today. With shoe industry, being 85% unorganized, one can imagine the impact GST will bring in. It will stop tax evasion, and organized players will be able to compete with unorganized players to survive & succeed in the market. As we have been following the same business practices that the GST is going to bring in, we don’t see any change in business proposition for our company. In true sense, we are GST ready. It will aid us in penetrating into deeper pockets of the country and expand our business horizons.
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