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 firstname.lastname@example.org