Dabur, India’s fourth largest Consumer Packaged Goods (CPG)
firm, has seen robust growth over the last four years clocking a
CAGR of 18 percent in net revenue and 33 percent in PAT. Despite
this robust growth, the Dabur management felt there was potential
to derive incremental growth of about
Rs 50 crore of potential benefits through supply chain
efficiencies. Dabur believed there was substantial opportunity to
enhance customer service, reduce working capital and reduce the
cost base.
Since the company was running on high efficiency, it was a
challenge for the management to further increase the
company’s efficiency to improve its profitability and
increase its bottom line. With help from IT, Dabur management
captured the total opportunity potential from a supply chain
exercise across the
different levers. It was observed that incremental revenue
through lost sales could account for six percent revenue. Cost
reduction was cited as an area where the company could become more
profitable. Damaged goods formed about 10 percent of the existing
spend. The company has implemented SAP APO modules: DP (demand
planning) and SNP (supply network planning) and integrated them
with some existing legacy applications.
The supply chain challenge
Dabur’s supply chain is far more complex than other FMCG
firms in India given its diverse product portfolio:
- More than 800 SKUs spanning multiple shelf-life foods,
personal
care, home and healthcare products
- A fragmented and multi-tiered distribution network, more
than 10
plants, more than 40 warehouses and 1,500 distributors
- It also has a large fragmented front end; general trade
has direct reach to
1.5 million retail outlets and indirect reach to more than six
million outlets;
modern trade consists of B2B and B2C institutional sales
- Seasonal products with a significant sales skew
To manage these challenges, Dabur innovatively used the APO
capabilities
in forecasting and SNP by modeling several internal and external
variables
for improving key performance levers. In addition, the program was
supported by a well-managed KPI dashboard — which was
supported by the IT system.
"Post deployment, Dabur has observed about 20 percent
savings in stockist subsidy reduction and 10 percent spend in SLOB
(slow moving and obsolete) and damaged goods"
- Anil Garg, General Manager - IT, Dabur India
Ever since the FMCG major reached out to new areas using BI or
analytics, it
has seen an improvement in its market share. The initiative is
expected to
deliver about six percent incremental revenue for Dabur, which is
quite
significant, given it is already growing in double digits.
In terms of costs, Dabur has observed about 20 percent savings
in stockist subsidy reduction and 10 percent spend in SLOB (slow
moving and obsolete) and damaged goods. The company has seen an
improvement of 8 to 10 percent in DIFOT (a measure of the delivery
performance in a supply chain) to customers and 6 percent in
incremental sales. With elaborate Excel planning being replaced by
the solution, the planning team now actually does reviews,
analysis, monitoring and followups.
Earlier, most of their time was spent in doing the planning
manually. Post
implementation, there is job enrichment for the team in addition to
increased
productivity. Supply chain being the backbone of FMCG companies,
Dabur
believes the solution is delivering the need of the hour.
Dabur is a Diamond EDGE
(2010) winner. The complete list of EDGE winners is published in
the October print issue of InformationWeek
(India)
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