I interviewed Jayanandhan Vasudevan who discussed Transformation of Large-scale Consumer Goods Distribution.
I've been in supply chain for close to 15 years now. I've handled roles across front-end distribution supply chain and the manufacturing supply chain. My span of experience has been in the Petrochemicals and Consumer Goods industry, predominantly from the consumer goods industry.I've handled large-scale distribution of food and non-food operations. That's the background. We deal with close to 4,000+ active SKUs, and we ship it to the customers.
So my experience encompasses front-end distribution and the manufacturing. And it's been in two markets – in India and in the Middle East.
Can you talk about what you've done regarding the transformation of large-scale consumer goods distribution?
What we've done here is mainly transformation of large scale logistics operation. The objective of the transformation was to optimize the cost across different businesses because of the changing business environment in the Middle East:
-There is a stagnation of business growth and profitability is to be secured.
-Change of Regulatory guidelines has forced business to rethink the logistics operations processes.
We have built a large distribution center to manage all of the businesses from one area. Earlier, each business had its own traditional warehouse set up; they were working in multiple silos. We have moved all these operations to one central distribution center. This has given us a huge synergy from an operations standpoint. We have been able to integrate the business into a modern operation, and have been able to save costs by close to 20%.
How we have been able to achieve this – Consolidation of demand and centralized distribution to customers. Earlier, each business would have its own logistics operation, but it's not optimal due to lack of “Economies of Scale”. By moving to the central distribution center, we have been able to consolidate the demand across different businesses, and we've been able to service our customers in a more efficient and productive manner.
And how we have been able to do this...I would say that Technology has enabled this change in a big way.We have used a mix of SAP warehouse management system and Mechanisation of our logistics operation-Introduction of Reach trucks, High Density Storage racks (Mobile/Shuttle) ,and usage of hand-held terminals for all the Putaway/Pick operations has enabled us to gain efficiency improvements.
Do you have any other recommendations? Any final recommendations regarding the transformation of supply chains?
I can talk from a Middle East standpoint. When you go for a supply chain transformation, first, you need to understand your baseline very effectively. Most of the companies go wrong on that front. They don't know what the objective of the transformation is. In our case, we had cost as an objective. It had to be in line with the regulatory requirement and also to meet the service level objective. Companies need to define their baseline very effectively. What are the long-term requirements from the current setup to the future setup?
It can either be a setup of large distribution center or Change the processes to receive and distribute the goods to the downstream demand center. They need to have a clear, long-term roadmap or at least an objective; this is a must to realize benefits from any transformation exercise.
So once you have the roadmap, then you need to build the blocks as to what can take me there. There can be multiple options that can go for assessment, the best option in line with the market scenarios is to be taken up for implementation.
Thanks for sharing today on this important topic of transformation of the supply chain. Did we cover all the points that you wanted to discuss?
- No.I have few points on IT systems.In modern supply chain, IT is a key enabler for large scale Logistics operations. It can be in the use of Mobility/Use of RFID/Hand held terminal for distribution center.
Most of the technologies are still in its nascent stage, but one needs to adopt the best technology in line with their business requirement. So here in the Middle East, RFID is not used in a big way, but we are extensively using barcode technology and mobility tools to gain efficiency in our operation.
Movement to mobility has enabled us to crash the “Order to Pick lead time” and enables us to serve customer demands in a faster manner.
We have been the pioneers to adapt technology for large scale logistics operation in our region, this has enabled us to improve our service and win in the market place.
About Jayanandhan Vasudevan
Head-Supply Chain at Khimji Ramdas LLC