“Our complete value chain, from start to finish, depends on our ability to move material to where it needs to be, on time, every time. Increasingly businesses are looking at supply chain to become enablers of business opportunities and one should always keep this in mind when designing or running your supply chain,” shares Raviraj Rodrigues, SCM Head and part of Leadership Team, Wildcraft India. Poised to become India’s largest head-to-toe outfitters, Wildcraft is well on its way to an adventurous ride…
The FMCG business in India, in my opinion, has moved from being an intuition led model to an analytical based approach. Market research plays a key role in determining which brands to launch and which segments to capture. While there are reasons for this approach given the highly competitive nature of the business and narrow margins it makes, this approach will result in incremental changes and I have not seen too many examples of disruptive thinking be in the products or supply chain. Having said that, I always believe that one should have FMCG experience under one’s belt as this is the segment where the market changes daily and one understands the true relevance of the 4 Ps of Marketing.
Wildcraft started as a passionate belief in one man’s mind and it has grown to become India’s fastest growing outdoors brand. What sets us apart is that we haven’t forgotten what we started off trying to do – to make functional, lightweight, performance-driven clothing, footwear and gear for the adventurous kinds. Over the years, our focus has been on maintaining strong business fundamentals. We have invested in our production capacity, supply chain and key functional areas in order to keep our leading edge in the market.
It takes the work of a small army to be honest. From the first brief roll-outs to the final product coming out to stores, there are a myriad people involved and departments need to function almost seamlessly together. Since we own the entire value chain of the business, we need to ensure everything from timely raw material imports to a smooth factory production process. In order to succeed every time, we keep a keen eye-out for potential pitfalls and address them before they become issues. Planning and information sharing within the company are critical.
It is an interesting space to be in and having competition helps us get better and stronger each year. While market competition is a challenge and will continue to be, the real challenge is to understand the unsaid constraints my customer faces and to design and develop solutions that overcome these constraints. For e.g. the breathable rainwear. No one had told us that they wanted breathable rainwear and for years, we have been tolerating rainwear that only protects us from the outside rain, without managing humidity constraints thrown upon us by wearing the rainwear. Wildcraft came up with a solution that not only protects you from the rain but also manages your perspiration. Another example is the UV protection coating applied on some of our summer wear for active outdoors.
To give you an analogy, we are the horse at the helm of the buggy. Our complete value chain, from start to finish, depends on our ability to move material to where it needs to be, on time, every time. Supply chain brings in the raw materials from our various reputed international partners – without these the production process can’t begin. We have certain critical seasons that we need to meet in market, so there is immense pressure on planning our inward inventory stocks well. We also connect the finished goods to counter shelves across our many channels – modern trade, general trade, owned retail stores and online partners. Supply chain provides the competitive advantage to the business by providing solutions that enable our channel partners and sales teams to sell better.
At a conceptual level, we have put in place two strategies that are working best for our current business volume and market:
a) Use demand forecasting only for forecasting and react to the actual market demand through tracking of secondary sales and in-house manufacturing. Both these options give us faster reaction time as well a control on product quality.
b) Centralize our distribution centre to minimize duplication of inventory acrossthe country and thus reduce working capital.
Besides this, we have worked on concepts like delayed differentiation – the key raw material, the fabrics are forecasted at a Greige level and the final colors are firmed up closer to shipping, weekly production planning, semi-automated pick/pack operations in warehouses, IQ based replenishment at stores, etc.
In-store retail identity is something we have focused on critically in the last two years. As I am sure people have seen in the market, there are new stores that have a markedly different look & feel compared to our older stores. The plan is to roll this look across our entire retail presence over the long run. Our thinking was actually quite simple – we wanted our consumers to see the outdoors as we see them. There is a lot of play of natural tones and textures, bamboo fixtures and a clean but well-stacked shelving system. The stores are brightly lit and there’s an almost candy-store like assortment of our product ranges, which is a treat to the eyes.
Wildcraft has always adopted a Channel Agnostic Strategy. This has helped us in both the boom and the bust cycles through which each channel goes through. We are clear which market we want to tap and how. When we do this through our channel partners, our emphasis has been on how the channel partner gets a better ROI on his investment with us and this need not necessarily comes through better margins as the easiest task is to pass on the margins at point of sale, rather than using it to develop the market. While our effort has always been to have franchisees in our retail business, there are times when we had to do it alone as we saw potential in a particular market but our channel partners didn’t. We have, as of today, 120 out of 130 stores that are company owned and managed. Having said that, we would like to include franchisees in our business as long as they share the same passion for outdoors that brought us this far.
At Wildcraft, it has to be the transition from traditional godown style operations to a 3PL managed semi-automated warehouse that went live in Nov 2015. When I joined Wildcraft in April 2014, the Bengaluru warehouse was spread in 5 different sheds of differing sizes. In the system, the inventory was one but in reality, it was split. There were short supplies, orders cancelled and customer complaints galore.
My first task was therefore to bring credibility to warehousing operations and I set about doing it with great gusto. To begin with, I had all the inventory consolidated under one roof at a site that was 20 kms away. I had to deal with transition losses and manage employee concerns on extra commute, but the task was accomplished within 4 months. Now at least the inventory was in one place.
Next step was to identify the challenges faced by the customer and for this I did an extensive market survey using Summer Trainee interns. Having understood their concerns as well as having gone through the next 5-year growth plan, I figured out that we need to automate our warehouse to be able to handle 5,000+ SKUs at a piece-in-piece-out level.
We then needed to decide on whether we should build and operate this ourselves, or run it though a 3PL. For this, we did an extensive tour of the best in class warehouses in the country and understood the pros and cons of own v/s 3PL managed warehouse. We settled on a 3PL managed warehouses for 3 reasons-
– They are in this business longer than us and it will continue to be staple business for them, the onus will always be on them to find newer and better ways to manage productivity, the project management team required for start-up of such large warehouses will have no work once our warehouse is ready (if we manage it) but 3PLs have other projects to move them to.
- They will always attract better talent than us.
- Finally the warehouse management system (WMS) requires time and efforts and multiple iterations to get it right. 3PLs have to get it right else multiple clients will be affected. For us it would be another project altogether.
Then came the change management – the most crucial part. I had to get the board aligned to the fact that for the first time in Wildcraft’s history, we will not be running warehouses and it is good for us. I had to get my warehouse employees aligned that there would be no job losses and given the rate at which Wildcraft is growing, alternate suitable options would be provided. I also had to get my stakeholder aligned that there would be minimal business loss during transition.
It took us 6 months to transition, of which 3 months were devoted to mapping warehouse process to the WMS and the ERP, testing out various scenarios, testing for failure modes before we could signoff on the ERP-WMS integration. The next 3 months went about gradually moving items such that all SKUs were available for sale even during transition. For those 3 months, I personally operated out of the warehouse and I did not visit the Head office even once (or maybe once or twice). It was the best transition ever, as commented by the stakeholders. There were hardly any ripples in the market and we did not let our stakeholders down.
Crucial elements of an exceptional supply chain
• Having a team that believes in itself that supply chain can transform the business and nurturing this team as the company grows
• Aligning this team to the organization’s purpose and strategy
• Developing robust processes and systems that work on lowering reaction time to market changes v/s better forecast management.
There is no question about the fact that as retailers we would like to make it as easy as possible for a consumer to shop for our products from the channel that best suits them. Omni-channel is definitely a great value-add for companies but the impact of that needs to be considered & decided by each business basis their own parameters. For example, if there is a premium to retail space then allowing for Buy-Online-Collect-Instore may not be financially viable. Then the challenge is to be able to rethink consumer journeys to remove pain points.
The traditional belief that supply chain is a cost centre is no longer correct. That approach leads one to search for ways to bring down costs and nothing else. Increasingly businesses are looking at supply chain to become enablers of business opportunities and one should always keep this in mind when designing or running your supply chain. Omni channel is one such good initiative that is a business enabler.
Wildcraft is geared to become one of India’s largest outdoor head-to-toe outfitters. With our expanded offering of gear, clothing and footwear, we are confident that we are on the cusp of defining an industry that has been nascent so far, but is getting a lot of traction and attention recently. We are growing a healthy number each year with a diverse group of channels & geographies contributing to this growth. We are going to continue to push aggressive numbers year on year.
What is the impact GST is slated to bring in?
• Standardized product offerings rather than designing products to fit individual state tax structures as seen today
• Channel margins linked to ROI that the channel partner is expected to make
• The inventory will start getting consolidated at select points keeping in mind the time to market v/s competition and not basis the tax laws of the state. For example, Hosur will be serviced from Bengaluru region and Tirupati from Chennai
• Manufacturing units will try to be as close as possible to the demand centres and not supply centres as seen today.