Understanding the Supply Chain of India’s most loved breakfast brand – Kellogg’s

In conversation with Saurabh Lal, Director Supply Chain, India & South Asia at Kellogg Company

In the year 1994, Kellogg entered India by setting up its first domestic manufacturing plant in Mumbai. The pioneering breakfast cereal brand came to India with an aim to make mornings trouble-free by bringing to the table convenience, nutrition and taste.

Kellogg’s growth in India has been largely fueled by the company’s motive to assert the importance of a healthy breakfast by introducing a newer alternative that is positioned to all members of the family and is easily available across the entire length of the country.

Saurabh Lal, Director Supply Chain, India & South Asia at Kellogg Company in an exclusive interview with Logistics Insider, shared the importance of future forecasts for a supply chain that relies heavily on consumer demand, faster replenishment with better modes of transportation and much more.

Q) How implementation of technology contributes in making a supply chain efficient and agile?

In a supply chain, the challenge is responding to variability in demand and supply. The key benefit of technology is making supply chain connected – which means information flows seamlessly across the chain allowing managers to respond to changes in the marketplace. It also helps the organisation work on a ‘single source of truth’ – whether data on availability or actual sales in the recent period. By eliminating people centered versions of cause of variability, it helps in decision making.

Technology also helps in improving speed of response, through improved analytics (learning from the past and current to improve the future) and transparency of data.

Q) Timeliness is one of the most important aspects a FMCG company has to focus on. So, how should companies plan their supply chain so that the products reach at every nook and corner of India in a timely manner?

A FMCG supply chain by nature is ‘make to stock’ which means products are manufactured based on future forecasts. There is a lead-time between procuring the raw material, converting it to finished goods and making it available at the distribution centers to fulfill orders.

Here the operating word is forecasts – which are only a best estimate of what the customers are going to order. The focus of a supply chain manager is however, to fulfill demand at a low cost-to-serve while ensuring freshness. Therefore, to reduce lead-time it is important for FMCG companies to focus on availability as close to the demand point as possible.

This can be achieved through a combination of centralised buffers, increasing frequency of manufacturing of SKUs, reducing time to replenish by using faster transportation modes or mixed loads among others.

A FMCG supply chain by nature is ‘make to stock’ which means products are manufactured based on future forecasts.

Q) How a company can maintain cost effectiveness and at the same time remove operational complexities from its supply chain?

Many strategies can be adopted to reduce cost-to-serve and simplify the supply chain operations.

First, the organisation must carry out a network study at regular intervals to check if its supply network is optimum for the demand. Using this, the network can be simplified by reducing the number of stocks, keeping points or combining leading points etc. to reduce costs.

Second, transportation costs can be examined to understand if optimal modes are being used – rail freight may be cheaper in some corridors versus road transport.

Third, the desired service level can affect costs significantly. Your supply chain may be targeting an unrealistic service level or leadtime based on what the market is demanding.

There are of course, many other tools including automation, renewable energy in manufacturing / warehouses, use of alternate fuels, activity-based costing, zero based budgeting etc. which can be employed.

Q) How are the hurdles faced in supply chain in India are different from those faced at a global level? In your opinion, what lesson supply chain of Indian businesses should adapt from the West to strengthen their supply chain?

As I interact with professionals across the world, I have come to understand that the hurdles faced by supply chain are the same across the world – be it poor forecast inaccuracies, high demand bias, availability of transportation among others. For example – availability of truck drivers is as acute in the United States as it is in India.

One of the practices I believe we need more in India is in terms of joint business planning with customers, which helps improve on shelf availability for the customers and reduce costs for the suppliers.

Q) You are a seasoned logistics professional with a successful track record of overcoming logistics challenges. Tell us about one such instance in your career when all technologies failed and ‘Jugaad’ was the only way to solve a problem?

One such instance was during a nationwide truck strike. The local customers were demanding stocks at any cost a regional logistics manager hired donkey carts to make multiple runs to supply stockists – effective use of available ‘power’. I assure the animals were not harmed in any way through the process.

Q) You have more than two decades of experience of handling supply chains of various businesses. What lesson you would like to give to the new-age entrants in the supply chain domain?

Use every opportunity to learn something new every day. Read every day, even if only a few pages – I recommend Gemba Kaizen by Masaki Imai, The Goal by Eliyahu Goldratt among others.

Regularly network with peers on platforms such as conferences or on LinkedIn and share the latest developments in our field.

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