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India is the 2nd largest producer of footwear and leather garments in the world. As per Statista, the revenue in the footwear market amounts to US$24.86bn in 2023, and it is expected to grow annually by 4.84% (CAGR 2023-2028). Contributing to this growing market is Relaxo Footwear which has been a household name for decades. With 10 brands and more than 10,000 SKUs, the company is the largest footwear manufacturer in the country in terms of volume and the second-largest in terms of revenue. To get a closer look at its supply chain operations, we got in touch with Vijay Wadhwani, AVP – Supply Chain and Logistics, Relaxo Footwear Ltd. who has been associated with the organization for over 16 years. Mr. Wadhwani, in this enlightening interaction, gave us a closer picture of the organization’s journey of becoming a household name, its supply chain operations, the changing retail dynamics, and much more.
How has the Relaxo evolved over the years and used supply chain and logistics as a building block in its journey to success?
In Relaxo, we achieved tremendous growth in the last two decades in all aspects. We are expecting consistent growth in the coming future; at present our strategy is to focus more on retail, export, and e-commerce business. While we already have a remarkable presence in these domains, we also enjoy a strong network in wholesale business pan India. We enjoy our stronghold in the market, on back of our infrastructure, and our focus on quality and customer service. Speaking of our infrastructure, in addition to our strong wholesale and retail network, we also have highly sophisticated manufacturing plants which have expanded from earlier three to now ten, whereas the production capacity has increased to 7 lakh pairs per day and is set to touch a million soon. Our brands are known globally.
In supply chain and logistics at Relaxo, the supply chain is relative to a variety of factors such as fulfilling customers’ expectations for faster lead times, expanding product and services portfolio as well as ensuring a tailored output. It also refers to the ability to react quickly to sudden changes that affect your supply chain and logistics efficiencies. For example, during the COVID-19 pandemic, we fulfilled the market requirement in the perfect manner in which we modified the demand pattern since the demand from e-commerce businesses raised exponentially.
The consumer product and retail landscape continue to evolve as companies race to catch up with leading e-tailers. What new supply chain approach have you taken to deliver an impeccable omnichannel service for evolving consumer needs?
As omnichannel is becoming the new norm in the footwear industry, therefore at Relaxo, the first and most important building block is a customer-centric supply chain strategy. We are doing that by digitization and process automation with end-to-end planning and information flow.
In any case, to get success in the field of omnichannel, one needs to choose logistics partners who can deliver small shipments quickly, reliably, and relatively inexpensively. So, in addition to the logistics service provider that we had for bulk business, we started focusing on such logistics partners who fulfil deliveries of small lots efficiently and also keep costs down and ensure a consistently high quality of service. Also, last mile deliveries requires efficient IT systems, and a local fulfillment network. So, logistics players need to find solutions that meet consumer expectations on service and lead time, while also offering full transparency and control over the cost.
India’s retail industry is one of the most complex industries in the world. How has the use of digitalization within the supply chain helped the industry?
Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players but it is the most complex industry in the world. It is estimated that there are around 12 million retail outlets in the country, with about a million wholesalers.
The market size is estimated at 900 billion USD. It accounts for 10% of the country’s GDP and around 8% of employment. Most of these retail outlets, however, choose to operate without a digital presence.
The pandemic exposed the vulnerabilities in the retail industry supply chain. There were substantial disruptions that caused issues in inventory supply. People started to panic-buy and stock up on a lot of necessary household items for fear they may not be able to find them when needed. Companies themselves were having trouble sourcing raw material, while social distancing measures meant they were not able to operate their stores with complete staff. These issues have shown the importance of digitalization in the retail industry.
Just like any digital transformation process, it needs a new mindset rather than just implementing a few fancy systems. It’s more about adopting the technology that works in tandem and harmony with people and existing processes. Apart from implementing or upgrading order fulfilment technology and software applications, enhancing inventory management and delivery management process capabilities of upskilling staff needs to be addressed.
When done right, the main benefits of a digitally transformed supply chain that can differentiate the brand are primarily visibility into real-time inventory, lower cost by improving shipping services and resilience in the supply chain.
This is an abridged version of the interview published in the April edition of the Logistics Insider Magazine. To read the complete interview click here.
