Dabur- “The Oldest Supply Chain in India”

Dabur the leading  personal and healthcare company among the four FMCG giants in India is managing the Oldest Supply Chain in India. Dabur is over 125 years old and deals with the diversified product range in ‘Natural and Herbal’ which leads to the EBITDA –quarter growth of 27.8% and consolidated Q1 net Profit up 19.6% at `127.74 Cr with  Revenue surges 31.6% to `1216.24 Cr, for the Q1 2011-12. Building on a legacy of Quality and Experience, Dabur is at present India’s trusted name and world’s largest Ayurvedic and Natural Helath Care Company having distinct brand  identities such as Dabur master brand for the natural health care product, Vatika for premium personal care, Hajmola for digestives, Real for fruit juices and beverages & Fem for fairness bleaches and skin care products.

Dabur procures raw materials worth around `500 Cr from a wide base of vendors. The Company has wide and integrated distribution network for its around 600 SKU delivering to around 2100 stockiest, further connecting to the thousands of retail outlets covering every small and remote part to organized stores of India. Dabur has improved distribution system through its unique Retails Excellence program, “DARE” (Driving Achievement of Retail Excellence). the Program covers a major objective as a channel focus, activating key customer, improving rural focus, rewarding distribution efficiency, maximizing brand impact and building information capabilities.

Dabur has used Direct Shipment Strategy which was implemented in order to bypass warehouses and distribution centers. Thus Dabur delivers products directly to the retailers/consumer through the Institutions & Modern Trade System. Advantages of implementing strategy are –

·         The retailer avoids the expense of operating a distribution center

·         Reducing lead time

Thus, Dabur has achieved cost reduction in the transportation process which overall adds to the reduction in price of the product. By this strategy Dabur has reduced the lead time, bringing Dabur and other elements in the Supply Chain closer which improves overall efficiency of the supply chain as shown in following figure. Reduction in lead time has added in reduction in Bullwhip Effect of the Supply Chain. Dabur has managed to minimize the Inventory-Transportation cost Trade-off. By elimination of the warehouse in supply chain, the company has reduced the inventory carrying cost and Implementing ‘Milk run’ system by the small truck loads Dabur has managed the increased transportation cost in the chain.

Overall efficient tactics in the supply chain has made Dabur to succeed and sustain in the supply chain network and has increased the entry barriers in the FMCG industry. Thus, Dabur having strong distribution network will have to cope up when organized distribution network plays a major role.

Figure : Supply Chain of  Dabur

The writer of this article, Amol Deogade is a PGP student of Indian Institute of Management, Raipur and has done his B.E. from Government College of Engineering, Amravati. Prior to joining IIM Raipur, Amol was working at Cognizant Technology Solutions. Amol can be reached at titanamol@gmail.com

SAFEXPRESS

 Safexpress has created benchmark in terms of the “Knowledge Leader” in the Supply Chain & Logistics Industry. With the mission of adopting and internalizing a work culture demonstrating a “We can We will” attitude to reflect in daily responsibilities with exceeding objective towards market dominance., Safexpress has vision of conscious learning organization maintaining flexibility for change for providing the most customized solutions. The company has expanded its reach to 560 destinations across India through more than 3,600 GPS enabled vehicles, across 35 states and union territories delivering 80 million packages a year, with ware house space of over 6 million square feet. With the operations of 24 X 7 in real time Safexpress provides Express Distribution, Third party Logistics services & supply chain Consulting. By Implementing Innovative and benchmarking services, the company has given a new face to Supply Chain & Logistics Industry.

As a service provider of third party logistics, the company allows the clients to focus on their own core competencies. Which means clients can focus more on the expertise of field leaving the logistics expertise to Safexpress. The ever increasing need for technological flexibility is another important advantage of the use of Safexpress as the third party logistics provider. The Company has been able to cope up with the advanced technology coming in the Logistics Industries. Thus outsourcing logistics to the Safexpress reduces the lead time and improves the service level. Safexpress provides Technological Flexibility to the client. The company gives flexibility to the client for the service in the different geographical location.

Investments in coss-docking strategy has given Safexpress The Competitive Advantage. In such strategy warehouses function as inventory coordination points rather than as inventory storage points, so goods arrive at warehouses from manufactures and are transferred to the retailer’s vehicle, so that delivery time can be reduced as much as possible. Thus Safexpress indirectly cuts down  the inventory cost of manufacturer/distributor & decreases the storage time which finally leads  to reduction in lead time. But all in all cross-docking needs an initial investment and startup setups. Still Safexpress has managed to implement it by-
        o   Linking Distribution centers, retailers and supplier by advance information systems

        o   Fast and responsive transport system

o   Accuracy in forecast by multistage information sharing



All these have not only added value to the manufacturer/distributor but also to the whole Supply Chain Process. 

A unique value-added Supply Chain & Logistics Service, Reverse Logistics has reduced the time and cost involved in carrying defective parts. This kind of logistics is generally used for shipping the defective parts from retailer to distributor and finally to the manufacturer. Safexpress directly takes these defective goods under its possession and moves them to its warehouses where they are repaired and re-shipped.  Services such as reverse movement of goods, repacking, re-labeling, refurbishing provided by Safexpress was a step to reduce the time and cost involved in the backward supply chain & prevented customer dissatisfaction, cash lockdown for the retailer and a rise in the distributor‘s inventory. For providing reverse logistics to clients, Safexpress has deployed reverse logistics centers, where they stock thousands of Stock Keeping Units (SKU) of the client and employ well trained professionals to handle the product. Indeed, Safexpress has revolutionized the Logistics Industry in India.

 The writer of this article, Amol Deogade is a PGP student of Indian Institute of Management, Raipur and has done his B.E. from Government College of Engineering, Amravati. Prior to joining IIM Raipur, Amol was working at Cognizant Technology Solutions. Amol can be reached at titanamol@gmail.com

The Power of Trust in Manufacturer-Retailer Relationships

Manufacturers and retailers have almost always been adversaries for each other, each trying to gain leverage over the other for better profit margins. Another fact is that manufacturers have had the upper hand in this conflict for most part of the history, as they are usually huge conglomerates or powerful entities as compared to retailers. Only in the recent times have the retailers gained significant strength owing to the emergence of mega-retailers or supermarkets or buying alliances.

The aforementioned conflict seems like a necessary evil, and obviously has its disadvantages for the manufacturers and the retailers:

1.      The victim tends to have payback whenever there is a change in the position of power.

2.      The victim always tries to find a way to escape the oppression, often harming the other party in some way or another.

3.      This conflict represents a loss of opportunity, wherein the two parties could have worked together for mutual benefits as well as provided greater value to the end consumer.

If the manufacturer-retailer relationship is based on trust, it leads to the following benefits:

1.      The retailer shows more commitment towards the manufacturer, which can be observed from the relatively better performance in terms of sales.

2.      The trust preserves the relationship during patchy times, especially when one of the partners goes against the will of the other.

3.      The two partners can easily share some of their confidential information for mutual benefits. They can also customize their information systems or dedicate their people and resources to serve each other better.

Another aspect of trust is that it encourages interdependence instead of independence. This, at first, might not be very comfortable for most organizations, but it is always advisable to develop long-lasting relationships based on inter-dependence. Additionally, no manufacturer can completely trust its retailer, and vice versa. There are at least a few aspects where the two partners can’t trust each other completely, as they do have some goals that are not in synchronization with each other. But these limitations are not strong enough to impede the development of a mutually benefitting relation.

The key to creating trust is to treat the weaker partner fairly, which not only means giving the partner a fair share of the profits and benefits, but also makes it essential for the stronger partner to ensure free and bilateral communication, impartiality among the different partners, respect, courtesy and transparent policies. Besides, complicated and lengthy contracts also hinder a healthy and strong relation.

Another aspect is that such a relationship might not be possible with every partner. Thus it is very essential that the partners be chosen judiciously. An easy way to judge the suitability is to see if the values of the potential partner match those of the seeking organization.

Procter & Gamble and Wal Mart represent an extraordinary example of a manufacturer-retailer relationship based on trust, even though they are both huge and powerful and used to be very tough adversaries of each other. They have gained a lot from this alliance over the years and are representing an inspiring, but not rare case in this regard.

The writer of this article, Akshay Agarwal is a PGP student of Indian Institute of Management, Raipur and has done his B.Tech from Indian Institute of Technology, Guwahati.