FMCG supply chains have gone through a major transformation in the last couple of years, especially that of shifting from traditional to modern practices of operations. But adapting technology also comes with its own complexities, and even more when you are working with multi-product supply chains under a single umbrella. In this interview with Ashish Mehta, National Head – Logistics, Reckitt, we get to know the intricacies of managing supply chains in a post pandemic era.
Q] Reckitt must have a complex mix of many supply chains, each with their own type of product from hygiene to health. How do you plan your supply chain in order to meet the consumer demand and reduce delays?
Absolutely! Every supply chain is different by industry, sometimes within the same industry as well, and has its own set of complexities. Our supply chain at Reckitt is an amalgamation of 3 different sets across health, hygiene & nutrition. The upstream supply chains are different for all 3 business from suppliers to manufacturing – as they are meant to be – given the nature of these products. But while planning the downstream, from our factories to our customers, we take advantage of scale & prefer to keep the volume and value synergies going.
What helps is:
- a very well designed & a well-implemented S&OP process
- supported by an evolved & consolidated mufti-echelon logistics network
- integrated DC network for all of these 3 types of products, with each of these supported by a rightful dedicated infra within the larger umbrella of an integrated DC, to bring scale & cost optimization
- balance between manufacturing capacity and inventory at each node, at intended service level
- technology enablement, right from planning with SAP APO & IBP to execution, with WMS for inventory management, and TMS for transportation management & visibility
- integrated/dedicated transportation as per the regulatory requirement & continuous improvement approach.
Q] What benefits can FMCG supply chains derive by using alternative and diverse modes of transportation/multi-modal transportation to ship their products?
In a country like ours, where the manufacturing is concentrated in hubs & long hauls in transportation is a part & parcel of logistics, of course the multi-modal logistics approach makes sense with advantages of cost optimization & reduced carbon footprints. There are some good patches of point-to-point connectivity, but at an aggregate level, 60-65% of inland logistics in India still takes place by road, whereas, it is at an average of 30% in the developed countries – and this ratio worsens further when it comes to FMCG. It is a stark reality that our road transport infrastructure is not one of the best, which means that the average running kilometers per day are still 350, while in the USD it is around 800-1000 kilometers per day. The reasons for this disconnect, despite a lower cost in multi-modal transport, is the slow evolution of a connected network that transcends road, rail & waterways, because of which the challenges such as unreliable lead times, and increased product damages, are faced by the logistics industry. While this could vary from business to business, it is notable that reliability is something that impacts the service levels in an FMCG in a big way – given the inventory levels that we operate on.
This is an abridged version of the original interview that was published in the April edition of the Logistics Insider magazine. To read the complete article, click here.