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Distribution at supermax

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Distribution at supermax Distribution at supermax Presentation Transcript

  • Group B01 LSCM Final Presentation
  • Agenda Scope and Objectives Overview Issues Optimization Recommendations Conclusion L&SCM Group B01 2
  • Scope and Objectives  Objective: Rationalizing distribution channel, optimizing costs of production and distribution; reducing bullwhip effect  Scope: The Indian market (in terms of distribution) for Supermax double edge blades and production of these SKUs for sale in Indian markets will be studied. These blades are manufactured at three locations and each one has different manufacturing cost  Business Relevance:  Optimized production of SKUs at plants  Optimized supply of SKUs from plants to C&F agents  Bullwhip reduction L&SCM Group B01 3
  • Overview  Market size: INR 1500crore; CAGR: 11.5% (2004 to 2011)  Main market players  Supermax, Gillette, Topaz Double Edge blades: Commoditized market, competition majorly on price  Overview:  Presence in 150 nations  Market share: 60% in Indian double edged market  3 plants (Gagret HP; Bhiwandi MH; Hyderabad AP)  39 Warehouses or C & F Agents  51 double-edge blade SKUs produced at each plant  L&SCM Group B01 4
  • Strengths (Utilize) Weaknesses (Fix) • Large Volumes • Location of plants • Long experience • In house machine building • Poor information flow • Low advertising • Improper forecasting • Poor tracking of material • Unable to attract good stockists etc Opportunities (Exploit) Threats (Neutralize) • Reduction in number of SKUs • Rationalization of C&FAs • Better information sharing • Sales & demand tracking • Increasing competition • Gillette: P&G’s network • Unreliable C&FAs and SS L&SCM Group B01 5
  • Features of distribution network MOTHER DEPOTS C&F Agents Wholesale Super Stockist Retail Super Stockist Sub-Stockist/ Large Wholesalers Distributors Future Supply Chain Group Small Retailers Small Retailers Modern Trade L&SCM Group B01 6
  • Pareto Analysis of SKUs Pareto Chart - Double-Edge Yr 2011-12 4500 100% 3000 60% 2500 2000 40% AA279 AA278 AA266 AA264 AA247 AA246 AA245 AA243 C AA23A AA237 AA23 AA229 AA228 AA167 AA147 AA129 AA128 AA100 AA09P AA07P AA04P AA04B AA04 AA026P 500 AA02 1000 AA02 C 1500 0 Cumulative % 80% 3500 AA01 Volume in 1000 packets p.a. 4000 20% 0% SKU Fast moving No of SKUs %age by volume % of all SKUs Slow moving Negligible moving 11 10 6 75% 20% 5% 40.74% 37.03% 22.22% L&SCM Group B01 7
  • SKUs of double edge blades studied based on all India sales revenue AA04 AA286 AA284 AA23 AA51 AA04P AA53 AA305 AA317 AA07P AA73 AA285 AA147 AA129 AA264 AA328 AA243 C AA287 AA04B AA330 AA128 AA286B AA09P AA324 AA286P AA93a AA59 L&SCM Group B01 SMX SALOON 50 ZRK SP PLT ZRK SS S/P SMX ECO H/C ZORRIK SUPER ECO PACK SMX STAINLESS ECO 9+1 (PE DOLLAR SALOON ZORRIK SUPER STAINLESS D VIDYUT SUPER PLATINUM S/P SMX PET BOX (10+1) SAMRAT ECO(50) PACK ZRK PLTN ECO RISE SALOON PACK OF 50 BL RISE-ECO PACK OF 50 BLDS. D/E PLASTIC RAZOR + ZRK P SUPERMAX STAINLESS PLUS VIDYUT SUPER PLATINUM 5 B ZRK SUP HC SALOON 50+2 SUPERMAX STAINLESS PILLAR THAMES-ECO PACK OF 50 BLD ZORRIK SUPER PLATINUM (10) Zorrik Super Platinum Pet SMX Green Pet Box ZORRIK SUPER PLATINUM (PE SUPERMAX STAINLESS PILLAR SUPERSTAINLESS 8
  • Sales at C&F level Pareto Analysis of C&F Agents 4500 4000 3500 3000 2500 2000 1500 1000 500 0 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00% C&F Agents High turnover No of C&Fs %age by volume % of all C&Fs Low turnover Negligible turnover 9 5 2 75% 20% 5% 52.94% 29.41 17.64% L&SCM Group B01 9
  • Issues  High transit time for many SKUs  No optimized resource allocation at plants  Continuous production, inventory buildup  High Bullwhip Effect at CFA level  No sales tracking and retail sales estimates  Quantitative schemes to clear stock  No concrete demand forecasting mechanism  High down time; unreliable supply  Distribution & production: Not optimized  SKUs produced and dispatched on ad hoc basis L&SCM Group B01 10
  • L&SCM Group B01 11
  • Production-Demand mismatch LOW END ZORIK STD 6% 13% 1% 40% 47% 39% 28% 7% 12% NORTH CENTRAL EAST WEST 7% SOUTH NORTH CENTRAL SMX EAST WEST SOUTH ZORIK PLT 2% 9% 6% 5% 34% 44% 48% 33% 14% NORTH CENTRAL EAST WEST SOUTH NORTH L&SCM Group B01 CENTRAL 6% EAST WEST SOUTH 12
  • Plant Capacity Packets/per day 25000 40000 40000 Plant Depots – 3 CFA’s - 39 Thane Gagret Hyderabad L&SCM Group B01 13
  • Production Costs INR per packet THANE GAGRET HYDERABAD AA04 AA286 AA284 AA23 AA51 AA04P AA53 AA305 AA317 AA07P AA73 AA285 AA147 AA129 AA264 AA328 AA243C AA287 AA04B AA330 AA128 AA286B AA09P AA324 AA286P AA93a AA59 55.33 55.43 55.17 55.08 56.28 62.29 52.77 56.15 55.49 67.82 54.15 56.57 53.09 54.25 153.23 56.87 56.08 56.07 55.33 55.15 54.15 55.43 67.42 76.07 55.43 55.35 57.39 48.90 49.00 48.76 48.69 49.75 55.06 46.65 49.63 49.05 59.94 47.86 50.01 46.93 47.95 135.45 50.27 49.57 49.56 48.90 48.75 47.86 49.00 59.59 67.24 49.00 48.92 50.73 55.88 55.99 55.72 55.63 56.85 62.91 53.30 56.71 56.05 68.49 54.69 57.14 53.62 54.79 154.77 57.44 56.64 56.63 55.88 55.70 54.69 55.99 68.09 76.83 55.99 55.90 57.96 L&SCM Group B01 14
  • Transportation Costs (9MT) INR / per packet from each plant to each CFA (result for 1 SKU) AA04 (INR/ PKT) From Mumbai From Gagret From Hyd AP--HYDERABAD DEPOT Hyderabad 0.28 0.74 0.03 CENTRAL ---D.J. C & F AGENCIES, INDORE Indore 0.23 0.51 0.28 KAR---ASHOK AGENCY , BANGLORE Bangalore 0.36 0.98 0.15 KERALA---EXCEL MARKETING, COCHIN Cochin 0.51 1.23 0.28 TN---TAMILNDAU ASSOCIATES, CHENNAI Chennai 0.46 1.13 0.18 EAST2---PATLI PUTRA AGENCY, PATNA Patna 0.71 0.54 0.58 NORTH3----DEE AAR AGENCIES, JAMMU Jammu 0.43 0.20 0.57 EAST1----MANOJ ENTP, KOLKATA Kolkata 0.65 0.60 0.54 EAST1----SUJATA TRADE AGN, GUWAHATI Guwahati 1.06 1.08 0.66 NORTH1-G R ENT., DELHI Delhi 0.47 0.17 0.52 NORTH1---MAHESHWARI ENTERPRISE , UDAYPUR Udaipur 0.33 0.35 0.33 NORTH2---V.K. ASS., L'NOW Lucknow 0.49 0.37 0.47 NORTH2---KAMLA TRADER , GORKHPUR Gorakhpur 0.59 0.44 0.58 WEST---JEELANI C&FA, MUMBAI Mumbai 0.03 0.69 0.19 WEST---PURNA DEPOT Purna 0.03 0.69 0.19 WEST---DARYA SONS , NAGPUR Nagpur 0.300 0.529 0.229 GUJRAT---K K ENTERPRISES, AHMEDABAD Ahmedabad 0.18 0.49 0.30 L&SCM Group B01 15
  • Historical C&F agent demands ’000 packets AP--HYDERABAD DEPOT CENTRAL ---D.J. C & F AGENCIES, INDORE KAR---ASHOK AGENCY , BANGLORE AA04 AA286 AA284 AA23 AA51 AA04P AA53 AA305 AA317 AA07P AA73 755.4 46.9 53.2 2.5 0 122.4 183.4 0 63.7 90.1 18 450.884 286.315 493.965 15.432 0 105.046 75.274 13.796 166.530 62.656 51.494 1024.9 14 49.8 20.5 0 139.65 292 0 138 79.6 0 AA285 10 38.239 0 AA147 AA129 AA264 AA328 AA243 C AA287 AA04B AA330 AA128 AA286B AA09P AA324 AA286P AA93a AA59 83.2 0 65.374 7.639 6.2 0 0 7.116 0 0 3.6 1.839 0 0 0 85.493 92.173 246.878 13.440 0 15.089 20.4 9.459 38.048 0 2.86 11.396 15.247 0 0 10 0 66.572 24.7 0 0 15 32.334 15 0 0 0.74 0 0 0 L&SCM Group B01 16
  • Model  L&SCM Group B01 17
  • Optimized Plant to C&F SKU dispatch AA04 From Mumbai From Gagret From Hyd Hyderabad 0.00 0.00 755.40 Indore 450.88 0.00 0.00 Bangalore 253.85 0.00 771.05 Cochin 0.00 0.00 239.28 Chennai 0.00 0.00 1521.48 Patna 0.00 0.00 0.00 NORTH3----DEE AAR AGENCIES, JAMMU Jammu 0.00 0.00 0.00 EAST1----MANOJ ENTP, KOLKATA Kolkata 0.00 152.00 0.00 Guwahati 0.00 0.00 5.00 Delhi 0.00 244.85 0.00 NORTH1---MAHESHWARI ENTERPRISE , UDAYPUR Udaipur 197.30 0.00 0.00 NORTH2---V.K. ASS., L'NOW Lucknow 0.00 18.50 0.00 Gorakhpur 0.00 0.00 0.00 Mumbai 1817.60 0.00 0.00 WEST---PURNA DEPOT Purna 510.00 0.00 0.00 WEST---DARYA SONS , NAGPUR Nagpur 406.20 0.00 0.00 Ahmedabad 635.70 0.00 0.00 (result for a single SKU) ‘000 packets AP--HYDERABAD DEPOT CENTRAL ---D.J. C & F AGENCIES, INDORE KAR---ASHOK AGENCY , BANGLORE KERALA---EXCEL MARKETING, COCHIN TN---TAMILNDAU ASSOCIATES, CHENNAI EAST2---PATLI PUTRA AGENCY, PATNA EAST1----SUJATA TRADE AGN, GUWAHATI NORTH1-G R ENT., DELHI NORTH2---KAMLA TRADER , GORKHPUR WEST---JEELANI C&FA, MUMBAI GUJRAT---K K ENTERPRISES, AHMEDABAD L&SCM Group B01 18
  • SKU-wise Plant production output ‘000 packets AA04 AA286 AA284 AA23 AA51 AA04P AA53 AA305 AA317 AA07P AA73 AA285 AA147 AA129 Thane Production Gagret Production 4272 1912 1459 400 0 329 1505 17 961 0 512 80 808 607 415 1793 2736 159 100 586 0 1293 313 631 87 665 0 276 L&SCM Group B01 Hyderabad Production 3292 85 103 963 13 217 361 10 148 0 431 16 109 0 Total 7979 3790 4298 1522 113 1132 1866 1320 1421 631 1030 761 917 883 19
  • SKU-wise Plant production output ‘000 packets AA264 AA328 AA243 C AA287 AA04B AA330 AA128 AA286B AA09P AA324 AA286P AA93a AA59 Thane Production Gagret Production 0 338 28 15 157 145 290 93 0 0 73 0 0 2977 14 668 558 0 14 177 131 200 106 103 0 0 L&SCM Group B01 Hyderabad Production 0 54 12 5 136 70 17 0 0 0 0 0 69 Total 2977 406 707 578 293 229 484 224 200 106 176 0 69 20
  • Cost reduction Production of SKUs re-formulated  Dispatch to C&F agents from plants reformulated  Production costold (INR) Primary freight costold (INR) 210.72 4.85 Total cost (INR cr) 215.57 Optimized total cost (INR cr) 208.15 Savings amount (INR cr) Savings (%) 7.41 3.44% L&SCM Group B01 21
  • Result      Optimization model reshuffled the production of various SKU and from where it should be shipped Excess capacity; cost minimization equal to profit maximization Company must do it time and again Prepared a template which takes data for various SKUs and optimizes Total savings of INR 7.14 cr or 3.44% of total production and shipment costs L&SCM Group B01 22
  • L&SCM Group B01 23
  • Bullwhip at CFA level 1400 1200 AA04 CFA sales 1000 800 AA04 Retail Demand 600 400 200 L&SCM Group B01 Mar/12 Feb/12 Jan/12 Dec/11 Nov/11 Oct/11 Sep/11 Aug/11 Jul/11 Jun/11 May/11 Apr/11 0 24
  • Recommendations Uniform incentive schemes (Higher margins) Not based on sales quantitative quotas Inventory at CFA level maintained by company; at SS by CFA Change in terms of trade required Variability reduction Reduce number of SKUs Reduction in lead time by reducing transit time Sales tracking beyond CFAs Proper demand forecasting and sharing with each level L&SCM Group B01 25
  • Lessons from Industry Leaders Gillette HUL Gillette India reduced lead time from 520 days to 2-3 days and increased order fill average to 98% from 78% HUL controls redistribution stockists and sub-stockists while C&F agents are on a service charge basis (35 3rd party service charge based CFAs, 4000 company RSs) Implemented Make to Order instead of Make to Stock by using Push & Pull strategies and CPFR and EDI/RFID All RS interconnected through RSnet for better forecasting and timely replenishment, part of Project Leap that integrates supply chain and distribution Mother depots with some C&F agents near plants with EDI systems linked to distributors and factory for JIT supply L&SCM Group B01 26
  • Challenges faced Securing a live project with real impact on company operations Filtering huge and complex un-organized production and sales data Understanding company jargon and codes 27 SKUs * 3 Plants * 17 C&F Agents = 1377 variables; constrained by solver capability L&SCM Group B01 27
  • Thanks for your attention Group B01