“Our supreme goal is to remain highly cost efficient and asset-light, through network optimization & striking partnerships for technology-driven efficiency. With the kind of technology buzz in the market at present, this is the golden era to be a part of a challenging supply chain journey,” asserts Vivek Gaurav,Head – Planning, Customer Service & Logistics, General Mills India Business, during an exclusive interview. Excerpts…
For the past 150 years, General Mills, as a global organization, has been living its purpose of serving the world by making food people love. India is no different where, in order to drive growth, we are focused on our consumer first strategy where we work to gain a deep understanding of customer needs and respond quickly to offer what they want, whether it’s our retail FMCG portfolio or our Bakeries and Food Service business. With food preferences changing faster than ever, we remain focused on understanding and responding in ways that will grow our business. We are focusing on newer & bigger categories across business verticals and the biggest challenge would be to synergize our growth with the right channel strategy, while ensuring rapid distribution expansion.
I got an opportunity to work with some of the most reputed companies viz., Asian Paints, Colgate Palmolive, Marico Kaya & now General Mills.And when you are a part of such great organizations, you become an integral part of the paradigm shifts which the organizations bring. All of them being consumer-driven growth oriented companies, have always kept challenging their boundaries of existing product segments and opened newer yet logical avenues. e.g., Asian Paints transformed itself into a complete home solutions company by venturing into modular kitchens, bath fittings, wall coverings, etc.
Similarly, I was a part of the core team when Kaya stepped on the gas to go closer to its customer through new channels like Kaya Skin Bar (the retail format) and e-commerce (both by building our own website & by partnering with key e-commerce players). Indian-grown FMCG companies have shown immense appetite to grow globally through strategic acquisitions as well as through organic growth. Last few years also saw the world moving from generic to specialized as well as customized offerings. We witnessed Asian Paints moving deep into Kids paint segment and Kaya lining up formulations specifically focused on men’s grooming. These are just some of the instances of revolution that actually set the growth of FMCG sector on a truly impressive landscape.
Complexity of supply chain is a direct function of how diverse is your product portfolio, how diverse are your business channels, depth & width of your logistics operations, and finally it boils down to the ultimate goals that a supply chain organization sets for itself.
Diverse product portfolio: Talking specifically about India, General Mills has an extremely varied product portfolio. This includes ready-to-eat range, cake mixes, wheat flour & top channel brands such as Häagen-Dazs and Nature Valley. To give you a sneak peek: Atta is a branded commodity. While brand equity always is a key driver, the topline & bottomline are significantly influenced by competitive scenario & minute fluctuations in wheat pricing. Hence the need for responsiveness & leanness of manufacturing & planning, and extremely tight control on logistics cost adds to the complexity.
When it comes to Nature Valley & Häagen-Dazs, which are imported from Europe, the international supply chain challenges w.r.t. high lead times along with very tight shelf lives add to the complexity and reduce flexibility. Apart from this, there is a high seasonality factor across our verticals, which forces us to stretch our transactional and infrastructural capacities.
Business channels & verticals: Apart from diverse product portfolio, we have a heady mix of channels & verticals viz. traditional trade, modern trade, e-commerce, B2B, food services, exports, imports, etc. Different streams have very different realities w.r.t. visibility of demand, seasonality, inventory planning & visibility, customer service and above all, the freshness expectations.
Goals: At a strategic level, our task is cut out to build our supply chain capability w.r.t. talent, processes, footprint & tools in line with our growth vision. In terms of supply chain excellence, we actually aim to enhance customer service by developing a very responsive, integrated and agile supply chain network, which is highly efficient and lean. Additionally, one goal we are chasing single-mindedly is that the entire supply chain should be extremely visible for all stakeholders to take timely decisions and hence drive business predictability. Among all this, our supreme goal is to remain highly cost efficient and asset-light, through network optimization & striking partnerships for technology-driven efficiency.
We believe that efforts aimed at improving technology-driven-efficiency, safety, sustainability, integration and traceability are key drivers for improving the overall effectiveness of our global supply chain. Driving progress in these areas is critical to operating excellence and ensuring the promise of our brands to our consumers. For us, highly energetic team where trust & transparency is in the DNA, has been our biggest strength. Through people power and their undeterred attention towards detailing and rigor to drive home value is what is setting General Mills apart from the rest. Additionally, a sustainable and ever-improving customer service in a highly complex and growing product and channel portfolio is what is driving our growth in the country.
E-commerce has been opening bigger avenues of growth for each and every sector and Food & FMCG is no different. Three key success factors in e-commerce are price competitiveness, reach & speed. This is where supply chain and distribution become the USP of your business. Lean, flexible and responsive logistics along with the distribution strategy, like direct from warehouse or through distributor model, are very crucial factors.
When it comes to food, complexities further aggravate due to freshness expectations and perishability. In that sense, we have to be highly flexible as well as responsive to customers’ requirements. This also boils down to reducing lead times because the one who can deliver goods to customers in the shortest time will win the ultimate race. This is one part of the e-commerce business. Reverse logistics poses a big challenge. Moreover, when it comes to e-commerce, your supply chain gets directly exposed to the end consumer because there’s no intermediary in between and that’s when responsiveness comes into play. No company would like to get trapped under the inefficiencies of logistical glitches and lose brand image. If you factor in all these, no doubt, e-commerce offers lot many opportunities, but it also has its share of challenges, which first need to be addressed before taking the big leap.
Today the biggest dilemma for an organization is whether to invest in its own technology infrastructure or to partner with relevant service providers because both have merits and demerits. Scale and Investment are the two key deciding factors. If you do not have scale, you thrive on partnerships and collaborations for building technology muscle. We are currently exploring partnerships with tech service providers to test the wicket and find synergies between our vision and their core strengths. Big data and Internet of Things (IoT) for last mile tracking, supply chain integration & omnichannel philosophy is in my radar. This paradigm shift also calls for educating and partnering with our logistics partners to improve their capability for real-time last mile tracking because going solo wouldn’t do any good. We are also planning initiatives around secondary freight optimization to further enhance network optimization.
Globally, leading companies are also offering Freight Rate Benchmarking services to help customers in optimizing supply chain costs and we are seeing signs of such offerings in India too, though at a very nascent stage. Besides this, we are planning to exploit technology towards seamless integration of demand planning, production planning & dispatch requirement planning, etc. In essence, with the kind of technology buzz in the market at present, this is the golden era to be a part of a challenging supply chain journey.
Being the 6th largest food company in the world, GM is a highly respected company globally and our product portfolio globally is very wide and deep as compared to India. Local Demographics, growth trajectory and brand awareness vary among geographies in each product category. Hence, the supply chain complexities are bound to be very different in every region. Each geography is at a different stage of supply chain maturity and systems. But at the same time, there is a consistent effort to drive standardization and synergies among various geographies through various global initiatives.
I have a firm belief that if you want your supply chain to keep winning, you can’t afford to leave your partners whining. If supply chain organization is the mind, the Vendors and 3PL partners are your limbs. So they need to be very healthy, seamlessly connected & trustworthy in order to effectively respond & go all out to drive your business goals. You are just as strong or weak as your partners which means you need to step out to strengthen them. I am currently aiming to partner with key vendors to help them stay abreast with paradigm shifts in technology and business models so that they can help us transform our responsiveness and customer service. We are also in the process of putting into place a vendor performance framework, which will help us provide constructive critique to our partners on their performance. It adds immensely to the mutual trust if you help your partners increase their business. Hence, I am trying to go out of the way to connect our partners with my peer industry leaders for business opportunities. This is how leaders can drive the change in the entire industry. The more collaborated we are, the better are the results.
There are various stages of driving sustainability. Companies are giving back to society by partnering with community. e.g., community sourcing. Another view is that if you are not able to give back to society, at least do not take away from society. Rising activism is giving rise to regulatory tightening, hence it’s always better to be proactive & stay ahead of the peers in sustainability initiatives. In the process, it becomes a big competitive advantage for the organizations.
Looking at our ambitious growth plans, the entire organization is looking at new ways of working. Hence my top priority has been to coach my team to consistently align them with the strategic intent and the new ways of working. I have been leading the initiative on carving out Demand Planning as a separate function, driving immense focus on cross-functional processes, reviews & reliability. We are grooming a high-energy team to take the planning & logistics to its next level. Having various businesses like retail, bakeries & food services, we are working tirelessly to integrate the customer service for all these businesses under one core team in order to enhance synergies, stock availability, operational reliability, visibility and effective capacity utilization. As mentioned earlier, technology will be the greatest driver for us to achieve most of this.
First and foremost, a 3PL must know its strong and weak areas and be candid about it to its customers. Secondly, a successful 3PL will always be open to change and transformation with respect to the shifting business dynamics. Third and probably the most important aspect is that a 3PL should have infinite proactiveness to bring new ideas to table for their customers’ growth.
In simplified terms, it is one market one tax. I believe that going ahead, customer service & total delivered cost would be only key driving factors because taxation factor is out of the window now. In near future, we would see optimization & consolidation of warehousing space. One interesting fact which I have studied is that the consolidation will make sense only if your warehousing cost is at least 25% to 30% of your overall logistics cost.
Logistics efficiency would be enhanced in most of the key routes due to improved mobility and reduced waiting times. There would be positive impact on margins. The commercial viability of a route depends a lot on transporter’s capability to ensure maximum truck utilization in both onward and return transportation. With certain routes experiencing disruption due to reduction in unorganized or kuccha trade post GST, transporters are feeling the heat and hence trying to pass this to their clients. However, this phenomenon seems to be temporary till they find alternate options. In the long run, GST will give a big boost to government’s vision of creating multi-modal logistics hubs across the country.
Today’s supply chain professionals are quite open to change and are quick learners. This is one of the biggest pluses that I have been observing. They are always passionate about doing something new and bring value to the table in their individual capacities and as teams. For them to enter into supply chain as a profession, this is one of the best times as the domain is set to witness a paradigm shift with the government’s continued thrust on holistic infrastructure development, the accelerated pace of development as far as dedicated freight corridors are concerned, the emergence of B2B supply chain marketplaces, global best practices and above all, mushrooming of well-funded technology startups. Having said that, they need to understand the finer nuances of the entire value chain to deliver action oriented results and not just focus on their core competencies because supply chain is that crucial link, which binds the entire value chain together. Finally, it’s all about holding your head high while keeping your feet firm to the ground. If you know the operational processes well, you can make better business decisions.