Aug 28, 2016

Tips from Top by Mr. Jagadeesh Kunchey (ITC) - FMCG Supply Chain Management - A Key Perspective


Apt to the theme, the seminar started with defining Supply Chain Management. In the words of Mr. Jagadeesh Kunchey, National Supply Chain Head of ITC - “Supply Chain is the flow of material, money and information; and Supply Chain Management strives to stream line the flow, in order to ensure availability of right things at right place, in an optimized manner.”
The first slide of his presentation rightly summed it up as “The enabler of business growth”.  There after a brief overview was given about the FMCG industry in India, which stands at around 170,000 crore today, growing rapidly at a CAGR of 17% over last 5 fiscals. Following pie chart was presented, depicting various sectors of the FMCG industry in India as on date and as a matter of fact, ITC has presence in almost every sector!
Mr. Kunchey said that being one of the youngest and most populous countries in the world makes India one of the most attractive destinations for many companies. In terms of the FMCG sector this translates into a scenario of a whole lot of opportunities as well as challenges to the Supply chain. Increased premiumization, growing urbanization, evolving life styles, favourable government schemes, growing modern trade and increased rural income provide many opportunities to Supply Chain Management.
However, the increased income levels in rural areas are posing a threat because of reduction in availability of cheap labour in urban cities. Moreover, increase in logistics cost,
and surge in customer preference for variety are some of the challenges to supply chain. Further, talking about FMCG he said that the key challenges in this industry are: meeting customer expectations, Supply Chain Planning and Logistics infrastructure & execution.
Talking about technology, Mr. Kunchey said that Big Data, IoT and Social Media would be an aid to the Supply chain management since it would help in reducing risk, cost and inventory. Also implementation of GST, increase in ease of doing business, and disruptive start ups would provide an improved environment for Supply Chain management.

He further talked about the evolution of ITC brands through constant diversification. ITC has over 6 businesses, operating in over 20 categories, having more than 3000 store keeping units (SKU) with overall logistics expenditure over 650crores. The key challenges faced by ITC as discussed were- Complexity, Demand fulfilment, Supply side planning &; Execution and Alignment with stakeholders.  Citing example he said for product like cigarettes maintaining reliability is the most important factor while for a product like salt which has low margin, reducing the logistics cost is crucial.  There was also a discussion about the ways of reducing Bullwhip effect through segmentation of SKUs and innovation in reducing costs.

As a matter of fact, the spaces are going to be costlier in future. Hence to tackle this, the
way forward is a ‘Lean Supply Chain’ i.e. reaching directly to customer through start ups, moving from forecast to market orders and reducing the number of warehouses post GST. The enlightening session came to an end with an exhaustive discussion about supply chain, the newer challenges faced by it, and the way ITC is tackling with the same.


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