A Project Report on Impact in the effectiveness of the Supply chain Integration at HUL LTD

Impact in the effectiveness of the Supply chain Integration of HUL

EXECUTIVE SUMMARY The nature of competition is rapidly changing, and with this change comes the need to redefine and reappraise the modes of management prevailing, so as to equip us with more appropriate ways to manage in the 21st century. Supply chain is the field of study that is still evolving. As of now there are no agreed definitions, concepts or a conceptual framework. However it is imperative for business to realise the importance of this concept and not lose time awaiting the evolution of formal definitions.

Supply chain management is a customer-oriented approach, designed to deliver maximum value to the customer. It is basically oriented towards the control and coordination of three flows i.e. Material Flow, Information Flow and cash Flow.Previous survey and research findings indicates that purchasing and supply management in India lack strategic direction and focus, while by their very nature these are essentially strategic activities, requiring top managements time and involvement. It is therefore possible for company’s that recognise and act on this need to gain competitive advantage over companies that do not.

The global competition environment has made reduce costs, improved quality, improved responsiveness and customer service, flexibility and better product availability a top priority agenda for business. In meeting this challenge, a business can no longer expect that the objectives can be meet just by becoming efficient in itself. The situation requires therefore value to reach the customers, this efficiency be evident even in the suppliers, the distribution channel, and all associated activities and partners. Competition is no longer between individual businesses but between groups of companies that are linked together in a chain for delivering customer value.

Business is no longer a gladiatorial combat, it is a team game. This engenders the need for supply chain management to ensure that all the elements participating in the

Babasabpatilfreepptmba.com

1

Impact in the effectiveness of the Supply chain Integration of HUL

customer value chain can be integrated, co-ordinated and managed effectively to reach the common objective in terms of cost, quality, responsiveness, service and flexibility Though today supply chain management practices are beginning to evolve and firms are beginning to realise the criticality of integrated supply chain management to gain competitive advantage. Yet supply chain management to this day remains a relatively untapped arena for productivity improvement. Emerging information technology has yet to make dent in Indian supply chain management. And that is where this dissertation has been targeted.

An effort has been made to analyse the different key factors of supply chain management with a special reference to Fosroc Chemicals (India) Pvt. Ltd. And also to recommend useful suggestions which will help the company to optimise their business processes. But it does not mean that this study unearths all supply chain management operation and study stops here. It does not. Because supply chain management is unique and it never stops.

Following is the chapter classification of the study: 

Chapter 1: COMPANY PROFILE

This chapter describe the different aspects of Indian tobacco company including History of the company, Current operation, Client base, Product range etc. 

Chapter 2: INTRODUCTION

Introduction chapter deals with the background of the study as well as with study scope, objective of the study and also limitation. 

Chapter 3: REVIEW OF LITERATURE

Review of literature deals with the different theoretical aspects of the subject Supply Chain Management.

Babasabpatilfreepptmba.com

2

Impact in the effectiveness of the Supply chain Integration of HUL



Chapter 4: RESEARCH METHODOLOGY

This chapter deals with the methods used in the study including sampling technique, sample description, instrumentation technique.



Chapter 5: DATA ANALYSIS AND INTERPRETATION

This chapter actually analyse the collected data through questionnaire and it also interprets the different charts and graphs.



Chapter 6: FINDINGS AND RECOMMENDATIONS

This is the concluding chapter, which describes the overall findings and it also focus on the recommendations for farther enhancement.

Babasabpatilfreepptmba.com

3

Impact in the effectiveness of the Supply chain Integration of HUL

FMCG INDUSTRY IN INDIA

Babasabpatilfreepptmba.com

4

Impact in the effectiveness of the Supply chain Integration of HUL

FMCG INDUSTRY IN INDIA As the name suggests, products of daily usage under the heads of personal care, fabric care, household care, packaged foods, beverages and tobacco characterize the sector. These are part of the monthly purchase basket. Such products generally have a non-cyclical consumer demand, low unit value, are mostly branded products, involve high marketing expenditure and have to be widely distributed. This sector has observed a 2% decline in the past 4 year period. FMCG pundits attribute this to various theories like FMCG commanding lower share of the wallet, what with several other newer expenditures in mobiles, computers, automobile etc. Other reasons to the decline may be down trading in brands or lower rural off takes. The Industry has a lot of potential since the product penetration and the per capita use is still low in India. As a matter of fact TV, which is the major source of information, reaches out to 80% of urban and 46% of the rural population. The key entry barriers into this section are the Brand, Supply Chain Management and the complexity involved in managing SKU’s (Stock Keeping Units). Also an Indian FMCG Company faces strong competition from the existing MNC-owned brands.

Babasabpatilfreepptmba.com

5

Impact in the effectiveness of the Supply chain Integration of HUL

THE CHALLENGE INVOLVED India has around 7.3 million retail outlets of which 3.0 million are in the 3768 towns and 4.3 are in the 627,000 villages. This fact is significant since the biggest challenge is to reach out to every nook of such a huge and diverse nation as India. As aptly said by Mr. Pusalkar, Supply Chain can be well learnt here.

For a typical mid-size FMCG company, the numbers would be as…

•

C&FA (Carrying & Forwarding Agent) 30

•

Distributors & Super-stockiest 1,200

•

Sub-stockiest 1,000

•

Retailers reached

•

Retailers directly covered 500,000

•

Retailers via wholesalers 1,000,000

•

TOTAL 1,500,000

•

Consumers 10,000,000 The 7.3 million outlet strong retailing industry provides direct employment to

more than 18 million people which roughly means one in every 25 families in India is engaged in the business of retailing.

The rural markets are emerging to be the growth drivers of the future. The industry seeks to cater to a large rural population of the order of 700 million people.

Of the 7.3 million retailers 58% are in rural areas. In most categories penetration is low and innovative packaging such as sachets and promotion is required. Achieving cost effectiveness to make the products reach rural outlets is essential.

Babasabpatilfreepptmba.com

6

Impact in the effectiveness of the Supply chain Integration of HUL

THE ECONOMICS For an FMCG company, the direct customer is the distributor. The several intermediaries between the company and the actual consumers ( C&FA, Distributors, Super-stockiest, Sub-stockiest, Wholesalers, and Retailers ) need compensation for the costs incurred, namely the inventory holding costs, manpower costs, credit provided to the next intermediary, transportation costs, overheads, and entrepreneur’s risks and efforts. The remuneration is provided as a combination of gross margin (mark-up) on sales, commission on sales, and reimbursements.

Typical Margins in such Supply Chain are:•

Distributor – 5%

•

Retailer – 7-15%

•

Wholesaler – 1-1.5%

•

Super-stockiest – 2%

•

Sub-stockiest – 5% A distributor’s investment consists of inventory, Accounts receivable and

accounts payable. He draws his income from gross margin or commission on sales.

The expenses include discount expense, distribution expense and overheads. Typically an FMCG distributor expects a 25% ROI.

Babasabpatilfreepptmba.com

7

Impact in the effectiveness of the Supply chain Integration of HUL

EMERGING TRENDS IN FMCG BUSINESS The industry has lately observed a rise of regional stalwarts such as Ghadi detergent, Baagh Bakri Tea etc. who are very strong in their respective geographical areas. Another emerging trend has been the rush to design products for the mass market in villages. C.K. Prahlad’s famous “Bottom of the Pyramid” theory is the guiding principle.

The market is moving really fast as constant innovations are required in product, packaging and distribution. With the growth of information technology, the retailer has transformed from the old “gala owner” to a much better informed businessman. Direct Selling (e.g. Amway) as a parallel way of marketing is picking up. Increasing role of influencers (such as “Media influence the consumer buying decision process) has also emerged. There has been an influx of imports and ever increasing presence of multinational companies in this sector.

The retailing business is also becoming more organized. Organized retailing comprises professionally managed single or chain of self-service stores. This has implications such as shorter supply-chain, move from inventory build-up method to collaborative planning, forecasting, and replenishment system, greater dependence on few ‘sophisticated’ buyers, customer management strategy etc. To sum up all A ‘world-class’ FMCG Sales & Distribution system.

•

Ensures product availability

•

At the right place

•

In the right quantity

•

Ensures product replenishment

•

Ensures ‘profit’ for all intermediaries

Babasabpatilfreepptmba.com

8

Impact in the effectiveness of the Supply chain Integration of HUL

•

At a minimal cost

Babasabpatilfreepptmba.com

9

Impact in the effectiveness of the Supply chain Integration of HUL

GROWTH IN SALES OF FMCG COMPANIES All top 10 categories record growth, the only exception being packaged tea.

Spurred by high rural demand and retail sales, the fast-moving consumer goods (FMCG) sector posted 10.6 per cent growth year on year in February, the highest in the past five years, according to data provided by market research agency AC Nielsen.

The rise does not come on a low base since the sales growth in February 2005 was 8.1 per cent year on year. And what is more, the growth has been broad-based with all the top 10 categories growing, the only exception being packaged tea.

Besides, five of these categories have posted double-digit growth. And for the first time in four years, all the companies tracked by AC Nielsen have posted a growth in sales.

The revival in the sector has been evident for some time now and the December quarter saw strong top line growth.

For example, Dabur saw its revenue grow 26 per cent year on year, while Colgate’s sales grew 21 per cent. Besides, most companies now have far more pricing power than they did a year ago, which is reflected in the better operating margins last quarter.

Colgate’s margin, for instance, was up 10 percentage points at 23 per cent, while that of Godrej consumer Products was up 270 basis points at 23.8 per cent.

According to analysts, Hindustan Lever in February experienced the highest growth in five years while others such as Tata Tea and Dabur saw sales grow at a much faster pace compared with the December quarter. Tata Tea’s sales rise, for instance, is the highest since June 2007 while Britannia’s is the highest in 27 months.

Analysts believe that the pick-up in the larger categories such as biscuits, washing powder, detergent cakes, shampoos and tea indicates a rise in demand for such categories in rural areas.

Babasabpatilfreepptmba.com

10

Impact in the effectiveness of the Supply chain Integration of HUL

This, they point out, is the main driving force behind the performance of companies such as Hindustan Lever, which recorded double-digit top line growth last quarter, the first time in six years. Very few segments in the FMCG space were now seeing a deceleration in growth and the momentum was expected to continue, analysts added.

Even as the sector continues its strong run, the BSE FMCG index hit an alltime high of 2,103.5 on Friday with three of its components, ITC, Nestle and McDowell hitting all-time highs.

ITC, incidentally, has the highest weight of 48 per cent in the index. The FMCG index has outperformed the Sensex for the better part of 2005 and has been a big out performer so far in 2006.

Distribution Strategy: One of the ways could be using company delivery vans which can serve two purposes- it can take the products to the customers in every nook and corner of the market and it also enables the firm to establish direct contact with them and thereby facilitate sales promotion. However, only the bigwigs can adopt this channel. The companies with relatively fewer resources can go in for syndicated distribution where a tie-up between non-competitive marketers can be established to facilitate distribution. Annual “melas” organized are quite popular and provide a very good platform for distribution because people visit them to make several purchases.

According to the India n Market Research Bureau, around 8000 such melas are held in India every year. Urban markets have the practice of fixing specific days in a week as Market Days (often called “Haats’) when exchange of goods and services are carried out. This is another potential low cost distribution channel available to the marketers.

Also, every region consisting of several urban market is generally served by one satellite town (termed as “Mandis” markets) where people prefer to go to buy their durable commodities. If marketing managers use these feeder towns they will easily be able to cover a large section of the urban population.

Babasabpatilfreepptmba.com

11

Impact in the effectiveness of the Supply chain Integration of HUL

Promotional Strategy: Firms must be very careful in choosing the vehicle to be used for communication. Only 68% of the urban population has access to a newspaper. So, the audiovisuals must be planned to convey a right message to the urban area. The rich, traditional media forms like folk dances, puppet shows, etc with which the consumers are familiar and comfortable, can be used for high impact product campaigns.

Babasabpatilfreepptmba.com

12

Impact in the effectiveness of the Supply chain Integration of HUL

COMPANY PROFILE

Babasabpatilfreepptmba.com

13

Impact in the effectiveness of the Supply chain Integration of HUL

INTRODUCTION TO THE COMPANY Hindustan Lever Limited (HLL) and its constituent companies have been in India since 1931. Over these decades, while HLL has benefited from the developments in the country, it has contributed equally to these developments.

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Their deep roots in local cultures and markets around the world give us their strong relationship with consumers and are the foundation for their future growth. We will bring their wealth of knowledge and international expertise to the service of local consumers - a truly multi-local multinational.

Their long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.

To succeed also requires, we believe, the highest standards of corporate behavior towards everyone we work with, the communities we touch, and the environment on which we have an impact.

This is their road to sustainable, profitable growth, creating long-term value for their shareholders, their people, and their business partners In the summer of 1888, visitors to the Kolkata harbor noticed crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers".

With it began an era of marketing branded Fast Moving Consumer Goods (FMCG).Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937.

Babasabpatilfreepptmba.com

14

Impact in the effectiveness of the Supply chain Integration of HUL

In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HLL in November 1956; HLL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 51.55% equity in the company. The rest of the shareholding is distributed among about 380,000 individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition. The erstwhile Lipton's links with India were forged in 1898.

Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated.

Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond's USA in1986.

Since the very early years, HLL has vigorously responded to the stimulus of economic growth. The growth process has been accompanied by judicious diversification, always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in HLL's and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HLL, effective from April Babasabpatilfreepptmba.com

15

Impact in the effectiveness of the Supply chain Integration of HUL

1, 1993. In 1995, HLL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited, to market Lakme's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HLL and divested its 50% stake in the joint venture to the company.

HLL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HLL has also set up a subsidiary in Nepal, Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The NLL factory manufactures HLL's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India.

The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Ice cream business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in July 1993, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995 the Milk food 100% Ice-cream marketing and distribution rights too were acquired.

Babasabpatilfreepptmba.com

16

Impact in the effectiveness of the Supply chain Integration of HUL

Finally, BBLIL merged with HLL, with effect from January 1, 1996. The internal restructuring culminated in the merger of Pond's (India) Limited (PIL) with HLL in 1998. The two companies had significant overlaps in Personal Products, Specialty Chemicals and Exports businesses, besides a common distribution system since 1993 for Personal Products. The two also had a common management pool and a technology base. The amalgamation was done to ensure for the group, benefits from scale of economies both domestic and export market.

In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HLL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners.

HLL's entry into Bread is a strategic extension of the company's wheat business. In 2002, HLL acquired the government's remaining stake in Modern Foods.

In 2003, HLL acquired the Cooked Shrimp and Pasteurized Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.

Hindustan Unilever Limited, 51.6% subsidiary of Unilever Plc, is the largest FMCG Company in the country, with a turnover of Rs118bn. The company’s business sprawls from personal and household care products to foods, beverages and specialty chemicals. The company has a dominating market share in most categories that it operates in such as toilet soaps, detergents, skincare, hair care, color cosmetics, etc. It is also the leading player in food products such as packaged tea, coffee, ice cream and other culinary products.

Brand equities are built over a period of time by technological innovations, consistent high quality, aggressive advertisement and marketing. Availability near the consumer through a wide distribution network is another crucial success factor, as products are of small value, frequently purchased, daily use items. HLL is strong on both these fronts with leading brands, which are market leaders in their respective categories, and a 1mn strong direct retail reach.

Babasabpatilfreepptmba.com

17

Impact in the effectiveness of the Supply chain Integration of HUL

HLL is the market leader in the detergent and toilet soap industry with market share of 60% and 40% respectively. Nirma is a close competitor in detergents and has been slowly gaining ground in toilet soaps too. The other significant competitor in detergents is P&G. In oral care segment, HLL has emerged as a strong No 2 player with 36% market share. In the hair care segment, HLL dominates the shampoo market with a 64.5% share and is the No 2 player in hair oils. HLL has a 54% market share in skin creams. In the foods business, Tata Tea in packet tea, Nestle in coffee and culinary products, GCMMF (Amul) in ice creams, and Godrej Pillsbury in staple food are the main competitors.

HLL grew at a fast pace in the mid 90’s driven by its aggressive acquisition spree. From Rs38bn turnover (contributed 70% by soaps, detergents and personal products), HLL’s turnover has now grown to Rs118bn, with soaps and personal products contributing 57% to turnover and beverages and food products contributing to 29% of turnover. Growth during the last few years has largely been driven by the personal products business.

However the pace of growth has slackened significantly in the last two years with several key segments registering a growth in 2001 soaps business (Rs21bn) degrew by 1% and detergent sales (Rs20bn) grew by 7%. Other personal products (household care, oral acre, skin care, hair care, color cosmetics) registered a 14% yoyo growth to Rs24.6bn. Expansion of the foods business, which has been identified as a major growth area, has not been as fast as anticipated. Beverage sales move largely with commodity price trends, which have remained on a downtrend. Branded tea business degree by 10% in F12/01 to rs16bn, while the Rs3bn coffee business registered a 7% yo-yo growth. Ice-cream business has failed to takeoff registering a 3% growth. The staple food business, once considered a high potential growth area witnessed a decline of 10% yoy to Rs2.4bn.

Babasabpatilfreepptmba.com

18

Impact in the effectiveness of the Supply chain Integration of HUL

Profitable growth has been the new mantra of the FMCG major’s Chairman, M S Banga, who took over the reins from Keki Dadiseth 2 years ago. In contrast to Dadiseth’s strategy of expansion through acquisition, Mr. Banga’s strategy revolves around rationalization. A focus on 30 power brands, which are major contributors to profitability, seeking new avenues of expanding distribution reach, improving profitability of foods businesses have been the thrust areas. Non-FMCG businesses are either being are hived off or are being strengthened by partnerships with players who have the technological expertise in those businesses. The strategy has paid results with profits registering a 24% yo-yo growth in 2001, despite a flat top line growth.

PRESENT STRUCTURE Hindustan Lever Limited (HLL) is India's largest Fast Moving Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They have the company with a scale of combined volumes of about 4 million tones and sales of Rs.10, 000 cores.

HLL is also one of the country's largest exporters; it has been recognized as a Golden Superstar Trading House by the government of India.

The mission that inspires HLL's 36,000 employees, including over 1,350 managers, is to "add vitality to life." HLL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HLL shares with its parent company, Unilever, which holds 51.55% of the equity. The rest of the shareholding is distributed among 380,000 individual shareholders and financial institutions.

HLL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, KnorrAnnapurna, Kwality Wall's – are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured in close to 80 factories. The operations involve over 2,000 suppliers and associates. HLL's distribution network, comprising about 7,000 redistribution stockiest, directly covers the entire urban Babasabpatilfreepptmba.com

19

Impact in the effectiveness of the Supply chain Integration of HUL

population,

and

HLL has traditionally been a company, which incorporates latest

technology in all its operations. The Hindustan Lever Research Center (HLRC) was set up in 1958, and now has facilities in Mumbai and Bangalore.

HLRC and the Global Technology Centers in India have over 200 highly qualified scientists and technologists, many with post-doctoral experience acquired in the US and Europe.

HLL believes that an organization’s worth is also in the service it renders to the community. HLL is focusing on health & hygiene education, women empowerment, and water management. It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development.

HLL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HLL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in south India.

Over the last three years the company has embarked on an ambitious program, Shakti. Through Shakti, HLL is creating micro-enterprise opportunities for rural women, thereby improving their livelihood and the standard of living in rural communities. Shakti also includes health and hygiene education through the Shakti Vani Program, and creating access to relevant information through the Shakti community portal. The program now covers about 50,000 villages in 12 states. HLL's vision is to take this program to 100,000 villages impacting the lives of over 100 million rural Indians.

HLL is also running a health program – Lifebuoy Swasthya Chetana. The program endeavors to induce adoption of hygienic practices among

Indians and aims to bring

down the incidence of diarrhea. It has already touched 70 million people in approximately 15000 villages of 8 states. The vision is to make a billion Indians feel safe and secure.

If Hindustan Lever straddles the Indian corporate world, it is because of being single-minded in identifying itself with Indian aspirations and needs in every walk of life.

Babasabpatilfreepptmba.com

20

Impact in the effectiveness of the Supply chain Integration of HUL

LATEST DEVELOPMENT Hindustan lever is now Hindustan unilever limited FMCG major Hindustan lever has informed that it has received government approval changes its name to “Hindustan Unilever Limited” following which its new corporate identity represented by a new logo will come into effect, “the identity symbolize the benefits we bring to our consumers and the communities we work in our new identity will help us confidently position ourselves in every aspect of our business” Hindustan Unilever CEO Doung Boillie said.

“The new name and the new logo will leverage the positioning, sale and synergy that comes with being part of Unilever globally. It position our organization on a global scale and through the combination of retaining ‘Hindustan’ in the name brings the very best of local and global to the forefront. For us this is really an opportunity, collectively as an organization, to renew and strengthen our commitment to continue our endeavour to earn the love and respect of India, by making a real difference to every Indian,” Mr. Baillie added.

Babasabpatilfreepptmba.com

21

Impact in the effectiveness of the Supply chain Integration of HUL

MANAGEMENT STRUCTURE Hindustan Lever Limited is India's largest Fast Moving Consumer Goods (FMCG) Company. It is present in Home & Personal Care and Foods & Beverages categories. HLL and Group companies have about 36,000 employees, including 1350 managers.

The fundamental principle determining the organization structure is to infuse speed and flexibility in decision-making and implementation, with empowered managers across the company's nationwide operations. For this, HLL is organized into two self-sufficient divisions - Home & Personal Care & Foods - supported by certain central functions and resources to leverage economies of scale wherever relevant.

Board Divisions Central functions Businesses Board At the apex is the Board, headed by the Chairman, and comprising 5 whole time Directors and 5 independent non-executive Directors. The day to day operations are supervised by the National Management comprising the Vice Chairman, Managing Director (HPC), Managing Director (Foods) and the Finance Director.

Divisions Each division is self-sufficient with dedicated resources and assets in sales, marketing, commercial, and manufacturing. The two divisions are further reorganized into categories.

Babasabpatilfreepptmba.com

22

Impact in the effectiveness of the Supply chain Integration of HUL

Typically,

each

category

and

each

function

-

Sales,

Commercial,

Manufacturing - is headed by a Vice President. They with their respective Managing Director comprise that Division's Management Committee.

For managing sales operations, HLL divides the country into four regions, with regional branches in Delhi, Kolkata, Chennai and Mumbai. Headed by a Regional Manager, they comprise Regional Sales Managers and Area Sales Managers, assisted by dedicated field forces, comprising Sales Officers and Territory Sales In charges. In Marketing, each category has a Marketing Manager who heads a team of Brand Managers dedicated to each or a group of brands.

The commercial team of a Division is responsible for its supply chain management.

There are teams dedicated to sourcing, planning and logistics. Each Division has a nationwide manufacturing base, with each factory peopled by teams of Production, Engineering, Quality Assurance, Commercial and Personnel Managers.

Central functions HLL's Central Functions are Finance, Human Resources, Technology, Research, Information Technology, Legal & Secretarial, and Corporate Affairs. Their services are shared across the company. But, wherever necessary, managerial resources are dedicated exclusively to a business. For example, each Division now has dedicated HR managers.

HLL believes that while it leverages the scale of a large corporate, it must also retain the soul of a small company. Its organization structure, which has and will continue to evolve with time, is aimed at achieving this knitting.

Babasabpatilfreepptmba.com

23

Impact in the effectiveness of the Supply chain Integration of HUL

Businesses Home & Personal Care • Personal Wash • Fabric Wash • Home Care • Oral Care • Skin Care • Hair Care • Deodorants & Talc’s • Color Cosmetics Foods • Tea • Coffee • Branded Staples • Culinary Products • Ice Creams • Modern Foods ranges New Ventures • Hindustan Lever Network • Ayush ayurvedic products & services • Saga • Purest water purifiers Exports • HPC • Beverages • Marine Products • Rice • Castor Babasabpatilfreepptmba.com

24

Impact in the effectiveness of the Supply chain Integration of HUL

BRANDS OF HLL: HOME AND PERSONAL CARE: Lux Breeze Liril Dove Lifebuoy Pears Hamam Rexona LAUNDRY: Surf Excel Rin Wheel SKIN CARE: Fair and Lovely Ponds HAIR AND CARE Sun silk Natural Clinic ORAL CARE: Pepsodent Close-Up DEODRANTS: Axe Babasabpatilfreepptmba.com

25

Impact in the effectiveness of the Supply chain Integration of HUL

Rexona COLOUR COSMETIC: Lakme AYURVEDIC PERSONAL AND HEALTH CARE: Ayush TEA: Brooke bond Lipton COFFEE Bru FOODS Kissan Knorr Annapurna ICE CREAM Kwality Wall’s

Babasabpatilfreepptmba.com

26

Impact in the effectiveness of the Supply chain Integration of HUL

M/S MANGALWADE TRADERS (URBAN DISTRIBUTOR) BIJAPUR Mangalwade traders are the urban distributors for Hindustan Lever Limited and also they are supplying the products to the wholesaler and retailer.

Solapur Road Adarsh Nagar Gandhi Circle Banjar Cross Minaxi Circle Golgummaz They deal in products of HLL  Lux, Pears, Hamam, Rexona, Liril,Life bouy  Surf excel, Rin, Wheel  Sunsilk, Clinic plus  Pepsodent, Close-up  Fair and lovely, Pond’s  Brooke bond, Lipton Bru etc…..

Babasabpatilfreepptmba.com

27

Impact in the effectiveness of the Supply chain Integration of HUL

HUL's INITIATIVE IN URBAN DEVELOPEMENT Hindustan Lever Limited (HLL) and its constituent companies have been in India since 1931. Over these decades, while HLL has benefited from the developments in the country, it has contributed equally to these developments.

HLL has consciously woven India's imperatives with the company's strategies and operations. The company’s main contributions include developing and using relevant technologies, stimulating industrialization, boosting exports, adding value to agriculture and generating productive employment and income opportunities.

HLL has been proactively engaged in urban development since 1976 with the initiation of the

Integrated urban Development Program in the Uttar Pradesh, in tandem

with the company’s dairy operations. This Program now covers

500 cities in the district. Subsequently, the factories that HLL

continued establishing in developed regions of the country have been engaged in similar program in urban areas.

These factory-centered activities mainly focus on training to distributor, Retailers which can helpful for the generating alternative income, health & hygiene and infrastructure development.

The company has acquired a wealth of experience and learning from these activities.

Babasabpatilfreepptmba.com

28

Impact in the effectiveness of the Supply chain Integration of HUL

KEY LEARNINGS ON URBAN DEVELOPEMENT The principal issue in rural development is to create income-generating opportunities for the rural population. Such initiatives are successful and sustainable when linked with the company’s core business and is mutually beneficial to both the population for whom the program is intended and for the company.

Based on these insights, HLL launched New variety of the product every year

keeping with the purpose of integrating

business interests with national interests

FMCG major Hindustan Unilever Limited (HUL), formerly known as Hindustan Lever Limited, employs 36,000 people, including over 1,350 managers. It is one of the earliest MNCs to have entered India. It was in the summer of 1888 that Unilever of England first marketed Sunlight soap in India. This was followed by brands like Pears and Vim. Vanaspati was launched in 1918 and Dalda came to the market in 1937. In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HUL in November 1956.

A number of prominent companies came into the HUL fold as result of Unilever’s international acquisitions. These included Brooke Bond (1984), Lipton (1972) and Pond’s (1986). In 1993, Tata Oil Mills Company (TOMCO) merged with HUL. Two years later, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited. Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50 per cent stake in the joint venture to the FMCG giant.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies diapers and Kotex sanitary pads. HUL has also set up a subsidiary in Nepal, Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in the Babasabpatilfreepptmba.com

29

Impact in the effectiveness of the Supply chain Integration of HUL

Himalayan kingdom. In a historic step, HUL picked up 74 per cent of the equity of Modern Foods from the Indian government. In 2002, HUL acquired the government s remaining stake in Modern Foods.

Business HUL’s business activities are divided into four broad areas: Home and personal care (personal wash, fabric wash, home care, oral care, skin care, hair care, deodorants and talcs, colour cosmetics) Foods (tea, coffee, branded staples, culinary products, ice creams, Modern Foods ranges) New Ventures (Hindustan Lever Network, Ayush ayurvedic products and services, Sangam, Pureit water purifiers) Exports (HPC, beverages, marine products, rice)

Brands HUL s brands are household names across the country. They include Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond s, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna and Kwality Wall s.

Location HUL products are manufactured in 80 factories. The operations involve over 2,000 suppliers and associates. HUL s distribution network, comprising about 7,000 redistribution stockists, directly covers the entire urban population, and about 250 million rural consumers.

Mission

Babasabpatilfreepptmba.com

30

Impact in the effectiveness of the Supply chain Integration of HUL

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

QUALITY POLICY Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.

Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers - a truly multi-local multinational.

Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.

To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact.

This is our road to sustainable, profitable growth, creating long-term value for our shareholders, our people, and our business partners.

What Makes HLN's Promise Unique And Competitive ⇒ Reputation of Hindustan Unilever HLN requires one of the lowest investments for entry (Rs.2450 only to register as a consultant) ⇒ A richly rewarding Compensation (earning opportunity) Plan providing 7 types of earning backed by a powerful business development system

Babasabpatilfreepptmba.com

31

Impact in the effectiveness of the Supply chain Integration of HUL

⇒ Widest reach amongst Direct Selling companies in India (over 250 servicing points ) ⇒ Widest range of top quality Home Care, Personal Care and Food products ⇒ Highly affordable prices ⇒ Focussed training system and tools to aid self development Today, HUL is one of India’s Largest exporters of branded Fast Moving Consumer Goods. It has been recognized by the Government of India as a Golden Super Star Trading House Over time HUL has developed into a viable & competitive sourcing base for Unilever world wide in Home and Personal Care & Foods & Beverages category of products. HUL is also a global marketing arm for select licensed Unilever brands and also works on building categories with core country advantage such as branded basmati rice.

HUL Exports offers high level of service with flexibility and responsiveness thorough out the supply chain. It has a dedicated organization structure to support this endeavour and this has helped in growth of these businesses in particular. Intrinsic cost competitiveness in the end to end Supply chain with appropriate technology and competitive capital investment operations while delivering best in class quality enables HUL to position itself as a key sourcing hub for Unilever and also become a preferred partner for Global customers in categories we operate.

HUL’s key focus in the exports business is on two broad categories. It is a sourcing base for Unilever brands in Home & Personal Care (HPC) and Food and Beverages (F&B) for supplies to other Unilever companies. It also focuses on becoming a preferred supplier to both non-Unilever and Unilever clients in three categories in which India, as a country, has competitive advantage – Branded Rice, Marine Products and Castor and its Derivatives. HUL enjoys international recognition within Unilever and outside for its quality, reliability and speed of customer service.

Babasabpatilfreepptmba.com

32

Impact in the effectiveness of the Supply chain Integration of HUL

HUL's Exports geography comprises, at present, countries in Europe, Asia, Middle East, Africa, Australia, North America etc

Babasabpatilfreepptmba.com

33

Impact in the effectiveness of the Supply chain Integration of HUL

HUL DISTRIBUTION NETWORK

Babasabpatilfreepptmba.com

34

Impact in the effectiveness of the Supply chain Integration of HUL

HUL DISTRIBUTION NETWORK The company salesman grouped all these orders and placed an indent with the Head Office. Goods were sent to these markets, with the company salesman as the consignee. The salesman then collected and distributed the products to the respective wholesalers, against cash payment, and the money was remitted to the company.

The focus of the second phase, which spanned the decades of the 40s, was to provide desired products and quality service to the company's customers. In order to achieve this, one wholesaler in each market was appointed as a "Registered Wholesaler," a stock point for the company's products in that market. The company salesman still covered the market, canvassing for orders from the rest of the trade. He would then distribute stocks from the Registered Wholesaler through distribution units maintained by the company. The Registered Wholesaler system, therefore, increased the distribution reach of the company to a larger number of customers.

The highlight of the third phase was the concept of "Redistribution Stockiest" (RS) who replaced the RWs. The RS was required to provide the distribution units to the company salesman. The RS financed his stocks and provided warehousing facilities to store them. The RS also undertook demand stimulation activities on behalf of the company.

The second characteristic of this period we realized that the RS would be able to provide customer service only if he was serviced well. This knowledge led to the establishment of the "Company Depots" system. This system helped in transshipment, bulk breaking, and as a stock point to minimize stock-outs at the RS level.

In the recent, a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer stock-points to ensure that stock-outs did not take place. The C&FA system has also resulted in cost savings in terms of direct transportation and Babasabpatilfreepptmba.com

35

Impact in the effectiveness of the Supply chain Integration of HUL

reduced time lag in delivery. The most important benefit has been improved customer service to the RS. The role performed by the Redistribution Stockiest has also undergone changes over the years. Financing stocks, providing manpower, providing service to retailers, implementing promotional activities, extending indirect coverage, reporting sales and stock data, screening for transit damages are some of the functions performed by the RS today.

HLL has grown manifold over the years. In the process, the number of factories and the number of SKUs too have increased. In order to rationalize the logistics and planning task, an innovative step has been the formation of the Mother Depot and Just in Time System (MD-JIT). Certain C&FAs were selected across the country to act as mother depots. Each of them has a minimum number of JIT depots attached for stock requirements. All brands and packs required for the set of markets which the MD and JITs service in a given area are sent to the mother depot by all manufacturing units.

The JITs draw their requirements from the MD on a weekly or bi-weekly basis.

At present, HLL's products, manufactured across the country, are distributed through a network of about 7,000 redistribution stockiest covering about one million retail outlets. The distribution network directly covers the entire urban population.

In addition to the ongoing commitment to the traditional grocery trade, HLL is building a special relationship with the small but fast emerging modern trade. Our scale enables us to provide superior customer service including daily servicing, improving their range availability whilst reducing inventories. We are using the opportunity of interfacing more directly with our consumers in this retail environment through specially designed communication and promotions. This is building traffic into the stores while yielding high growth for our business.

Babasabpatilfreepptmba.com

36

Impact in the effectiveness of the Supply chain Integration of HUL

An IT-powered system has been implemented to supply stocks to redistribution stockiest on a continuous replenishment basis. The objective is to catalyze HLL’s growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. For this, stockiest have been connected with the company through an Internet-based network, called RS Net, for online interaction on orders, dispatches, information sharing and monitoring. RS Net covers about 80% of the company's turnover. Today, the sales system gets to know every day what HLL stockiest have sold to almost a million outlets across the country. RS Net is part of Project Leap, HLL's end-to-end supply chain, which also includes a back-end system connecting suppliers, all company sites and stretching right up to stockiest.

RS Net has come as a force multiplier for HLL Way, the company's action-plan to maximize the number of outlets reached and to achieve leadership in every outlet, by unshackling the field force to solely focus on secondary sales from the stockiest to retailers and market activation. HLL Way has also led to implementing best practices in customer management and common norms and processes across the company.

Powered by the IT tools it has further improved customer service, while ensuring superior availability and impact visibility at retail points.

SUPPLY CHAIN The primary objective of supply chain management is to fulfill customer demands through the most efficient use of resources. A supply chain, logistics network, or supply network is a coordinated system of entities, activities, information and resources involved in moving a product or service from the supplier to the customer.

Babasabpatilfreepptmba.com

37

Impact in the effectiveness of the Supply chain Integration of HUL

Typically a simple supply chain model will be as follows:-

Primary (Shipment)

Factory

Secondary (Retailing)

Distribu tor

C&FA

Consumer Purchase (Off take)

Retailer

Super-

Sub-

Stockist

Stockist

Consu mer

There are several stages through which the money circulates. The distribution intermediaries make the whole system of supply chain economically viable. Each “layer of intermediaries” implies fewer transaction complexities for all the “layers”, augmenting the reach. The experience, specialization and knowledge of local conditions, contacts and scale through such a network help achieve Operational Efficiency.

Without having to focus upon distribution, the brand managers can concentrate on their core activity of product development, sourcing and marketing. The companies get a cost advantage since most intermediaries are family owned businesses with low overhead and operational costs. The brand owners get a better return on capital employed as intermediaries hold the inventories.

Babasabpatilfreepptmba.com

38

Impact in the effectiveness of the Supply chain Integration of HUL

THE CHALLENGE OF THE URBAN MARKETS 35%of India's population resides in urban. Penetrating the urban markets is, therefore, one of the key challenges for any marketer. While urban markets present a great opportunity to companies, they also impose major challenges. At HLL, they have been at the forefront of experimenting with innovative methods to reach the urban consumer.

And lot of competition face by HLL and the increase the profit margin of retailers Indirect coverage Under the Indirect Coverage (IDC) method, company vans were replaced by vans belonging to Redistribution Stockiest, which serviced a select group of neighboring markets.

Operation Harvest The reach of conventional media and, therefore, awareness of different products in urban markets is weak. It was also not always feasible for the Redistribution Stockiest to cover all these markets due to high costs involved. Yet, these markets are important since growth opportunities are high.

Operation Harvest endeavored to supplement the role of conventional media in India and, in the process, forge relationships and loyalty with urban consumers.

Operation Harvest also involved conducting of product awareness programs on vans.

Cinema van operations these are typically funded by the Redistribution Stockiest.

Cinema Van Operations have films and audio cassettes with song and dance sequences from popular films, also comprising advertisements of HLL products Single Distribution Channel. For India, HLL has established a single distribution channel by consolidating categories. In a significant move, with long-term benefits, HLL has mounted an initiative, Project Streamline, to further increase reach with the help of distributers-stockiest. It has already appointed 6000 such sub-stockiest. As a

Babasabpatilfreepptmba.com

39

Impact in the effectiveness of the Supply chain Integration of HUL

result, the distribution network directly covers about 50,000 urban, reaching about 250 million consumers.

CHANNEL STRUCTURE

Babasabpatilfreepptmba.com

40

Impact in the effectiveness of the Supply chain Integration of HUL

CARRY AND RE-DISTRIBUTOR STOCKIEST RE-DISTRIBUTOR STOCKIEST Supermarkets- Self- service stores where there is a room for shoppers to browse and interact with the products.

Family grocer- Over the counter store mainly for monthly household shopping Kiosk- A tiny over the counter store, easily accessible for emergency purchases. It stocks solely low unit packs.

Wholesale- Sells stock to small retailer and end user.

Babasabpatilfreepptmba.com

41

Impact in the effectiveness of the Supply chain Integration of HUL

DISTRIBUTION CHANNEL Current supply chain process network : Manufacturer (Chennai)

C & F (Hubli) Distributor Wholesalers

Retailers

End customer

Notation: 1) C & F: Carriage Forward

Babasabpatilfreepptmba.com

42

Impact in the effectiveness of the Supply chain Integration of HUL

THEORETICAL FRAME WORK

Babasabpatilfreepptmba.com

43

Impact in the effectiveness of the Supply chain Integration of HUL

BACKGROUND OF THE STUDY This phase of the report deals with the different theoretical aspects of the supply chain management. A strong theoretical base will help us to understand the subject and it will also highlight the need to explore the particular subject. Major theoretical aspects are discussed under the following heads: WHAT IS A SUPPLY CHAIN A supply chain consists of all stages involved directly or indirectly in fulfilling a customer request. This not only includes the manufacturer and supplier but also transporters, warehouses, retailers and customers themselves. Within each organisation such as a manufacturer the supply chain includes all functions involved in filling a customer request. There functions include but not limited to new product development, marketing, operations, distribution, finance and customer service.

A supply chain is dynamic and involves the constant flow of information, product and funds between different stages. Each stages of supply chain perform different process and interact with other stages of supply chain. Customer is an integral part of the supply chain. The primary purpose for existence of any supply chain is to satisfy customer needs, in the process generating profits for itself. Supply chain activities begin with customer order and end when a satisfied customer has paid for his/her purchase.

The term supply chain conjures up images of product a supply, moving from supplier to manufacturer to distributors to retailers to customers along a chain. It is important to visualise information, funds and product flows along both direction of this chain. The term may also imply that only one player is involved in each stage. In reality a manufacturer may receive raw materials from several suppliers and then supply several distributors. Therefore most supply chain is an actually network.

Babasabpatilfreepptmba.com

44

Impact in the effectiveness of the Supply chain Integration of HUL

It may be more accurate to use the term Supply Chain Network or supply web to describe the structure of most supply chain.

A typical supply chain involves a variety of stages. The following diagram illustrate different supply chain stages:

Supplier

Manufacturer

Distributor

Retailer

Customer

Supplier

Manufacturer

Distributor

Retailer

Customer

Supplier

Manufacturer

Distributor

Retailer

Customer

THE SUPPLY CHAIN RENAISSANCE The conceptual basis of Supply Chain is not new. Actually supply chain has gone through several evolutionary stages starting with physical distribution management in the 1950’s, which evolved into logistics management in the 1970’s and then supply chain management in the 1990’s.

HISTORY

OF

SUPPLY

CHAIN

1950’s PHYSICAL DISTRIBUTION

1970’s LOGISTICS

1990’s SUPPLY CHAIN LOGISTICS

Babasabpatilfreepptmba.com

45

Impact in the effectiveness of the Supply chain Integration of HUL

DECISION PHASES IN A SUPPLY CHAIN SUPPLY CHAIN PHASES Successful supply chain management requires several decisions to the flow of information, product and funds. These decisions fall into three categories or phases depending on the frequency of each decision and the time frame over which a decision phase has an impact.

Supply Chain Strategy or Design During this phase, a company decides how to structure the supply chain. It decides what the chain’s configuration will be and what processes each stage will perform. Strategic decisions made by companies include the location and capacities of production and warehousing facilities, products to be manufactured or stored at various locations, mode of transportation to be made. Consequently, when companies make these decisions, they must take into account uncertainty in anticipated market conditions over the next few years.

Supply Chain Planning As a result of the planning phase, companies define a set of operating policies that govern short-term operations. This configuration establishes constrains within which planning phase with a forecast for coming year or a compatible time frame of demand in different market. Companies in the planning phase try to incorporate whatever flexibility may have been built into supply chain in the design phase and exploit it to optimise performance in the shorter term.

Babasabpatilfreepptmba.com

46

Impact in the effectiveness of the Supply chain Integration of HUL

Supply Chain Operation The time horizon here is weekly or daily, and during this phase companies make decisions regarding individual customer order. At the operation level supply chain configuration is considered fixed and planning policies already defined. The goal of this phase is to implement the operation in best possible manner.

VIEWS OF SUPPLY CHAIN A supply chain is sequence of processes and flows that take place within and between different supply chain stages and combine to fill a customer need for a product. There are different ways to view the processes performed in a supply chain: 1. Cycle view The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of a supply chain.

Cycles

Stages Customer

Customer Order Cycle Retailer Replenishment Cycle Distributor Manufacturing Cycle Manufacturer Procurement Cycle Supplier

Babasabpatilfreepptmba.com

47

Impact in the effectiveness of the Supply chain Integration of HUL

2. Push/Pull View The processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order or in anticipation of customer order. Pull processes are initiated by a customer order and Push processes are initiated and performed in anticipation of customer orders.

DRIVERS OF SUPPLY CHAIN PERFORMANCE To understand how a company can improve supply chain performance in terms of responsiveness and efficiency, we must examine the four drivers of supply chain performance: inventory, transportation, facilities and information. These derivers determine whether strategic fit is achieved or not.

Inventory Theses include all raw materials, work in progress and finished goods within a supply chain. Inventory is an important supply chain driver because changing inventory policy can dramatically alter the supply chain’s efficiency and responsiveness.

Transportation This entails moving inventory from point to point in the supply chain.

Transportation can take from of many combinations of modes and routs, each with its own performance chrematistics.

Facilities These are the places in the supply chain network where inventory is stored, assembled or fabricated. Two major types of facilities are production sites and storage sites. Flexibility in facilities has significant impact on supply chain’s performance.

Babasabpatilfreepptmba.com

48

Impact in the effectiveness of the Supply chain Integration of HUL

Information It consists of all data and analysis regarding inventory, transportation, facilities and customers throughout the supply chain. Information potentially the biggest driver of performance in supply chain as it directly affects each of the other driver.

Following figure illustrate the each driver and its impact.

Competitive Strategy

Supply Chain Strategy Efficiency

Responsiveness

Supply Chain Structure

Inventory

Transportation

Facilities

Information

OBSTACLES TO SUPPLY CHAIN ACHIEVMENTS A company’s ability to find a balance between responsiveness and efficiency along the responsiveness spectrum that best matches the type of demand it is targeting is the key to achieving strategic fit. In deciding where this balance should be located on the responsiveness spectrum, companies face many obstacles.

Babasabpatilfreepptmba.com

49

Impact in the effectiveness of the Supply chain Integration of HUL

On one hand, these obstacles have made it much more difficult for companies to create the ideal balance. On the other hand, they have afforded companies increased opportunities for improving supply chain management.

The following headings describe the recent obstacles faced by the companies:  Increasing Variety of Products  Decreasing product Life Cycle  Increasingly Demanding Customer  Fragmentation of supply chain ownership  Globalisation  Difficulty in Executing New Strategies KEY SUPPLY CHAIN PRINCIPLES Efficient supply chain management can be undoubtedly identified as one of the single most important factor for a company, which wants to be a leader in the targeted market. Following are some of the key principle to create efficient supply chain management.  Link supply chain strategies to corporate objective.  Active support from top management.  Deep understanding of cost drivers.  Cooperative supplier relations.  Cross-functional approach.  Intelligent development of advance technology.  Proper investment.  Creating a culture of continuous improvement.  Proper measurement of each supply chain drivers.

Babasabpatilfreepptmba.com

50

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

51

Impact in the effectiveness of the Supply chain Integration of HUL

RESEARCH METHODOLOGY

Babasabpatilfreepptmba.com

52

Impact in the effectiveness of the Supply chain Integration of HUL

STATEMENT OF THE PROBLEM The integrated supply chain management approach is still in its infancy.

Emerging Technology has yet to touch the fertile arena of supply chain. Hence supply chain to this day remains a relatively untapped arena for productivity improvement.

Keeping this in mind, an attempt has been made to analyse the different key aspects of supply chain, which will improve efficiencies of current business operations.

As it is an analytical study, so a definite problem line cannot be stated as such.

OBJECTIVES OF THE STUDY The main purpose of the project has been to identify the areas of strength and weaknesses of Supply Chain network of Indian tobacco company and suggest an action plan for improvement in those areas, which have key impact in the effectiveness of the Supply chain Integration.

Following are the specific objectives of the study:  To study the effectiveness of the current supply chain system.  To analyse the strategic plan regarding supply chain integration.  To focus the general problem creating areas in the supply chain network.  To recommend new ways for better supply chain integration to gain more competitive advantage and for better customer response.

Sample design :

Babasabpatilfreepptmba.com

53

Impact in the effectiveness of the Supply chain Integration of HUL

Population for this research is 403 retailers and including wholesalers of Bijapur city sample is 100.

Bijapur city Solapur Road Adrash Nagar Gandi Circle Banjar Cross Minaxi Circle Golagumaz Sampling Method: The process o drawing sample units from the population is called sampling method. In order to have the unbiased results in the survey, the appropriate method of sampling i.e. “stratified sampling’ adopted. It also includes convenience sampling.

Duration of the Project Four months.

TOOLS USED FOR ANALYSIS 1. Sample testing in spss software 2. Graphical representation of analysis: Bar charts.

DATA COLLECTION APPROACH PRIMARY DATA Primary data is collected in two phases within Bijapur city-Primary data has been used to carry out the research successfully. The SECONDARY DATA HAS BEEN COLLECTED FROM VARIOUS JOURNALS AND publications. For the purpose of gathering primary data a structure and non- disguised questionnaire was designed to collect data from the retailer. The questioner contains both open-ended and close ended questions.

Babasabpatilfreepptmba.com

54

Impact in the effectiveness of the Supply chain Integration of HUL

THE SOURCES OF THE DATA ARE AS FOLLOWS The study relies to a great extent on primary data and to some extent on secondary data: PRIMARY DATA: Questionnaire Observation and interview technique SECONDARY DATA: Information is collected through internet From various text books Journals and magazines.

Babasabpatilfreepptmba.com

55

Impact in the effectiveness of the Supply chain Integration of HUL

SCOPE OF THE STUDY Today’s companies are facing a tough competition in every aspect due to Globalisation and Liberalised economy. Hence the companies have to move from traditional view of business like product and selling philosophy to a customer and marker philosophy. So the companies can go about winning customer and more market share and outperform competitors by doing a better job of meeting and satisfying customer needs.

Companies wanting to win, let alone survive, need a new philosophy. Only customer-centered companies that can deliver will be adept at in building customer, not just producing product in a large quantity.

The research has been designed to suggest the company under study, i.e. Indian tobacco company. to find the best possible supply chain network in compare to its competitors to gain an extra competitive advantage.

Babasabpatilfreepptmba.com

56

Impact in the effectiveness of the Supply chain Integration of HUL

LIMITATIONS OF THE STUDY Every effort has been made to keep the study as objective and unbiased as possible. An attempt has been made to capture the true picture of the Supply Chain Network both in quantitative and qualitative terms. But Supply Chain covers a broad domain area, so some constraints or limitation are unavoidable and it affected this project also.

The following are the specific limitations of the project:  The study has been conducted within the vicinity of Bangalore operation of the company.  The interaction with the respondents was limited.  This study report focus the supply chain network mainly practiced by industrial manufacturer.  Findings or suggestions of the study were based on the assumption that the respondents have disclosed correct information.  There may be errors due to bias respondents.  The recommendations or suggestions are yet to be implemented.

Though there exists some limitations but it has not affected the quality of the study. The study paves way for conducting further study.

Babasabpatilfreepptmba.com

57

Impact in the effectiveness of the Supply chain Integration of HUL

REVIEW OF LITERATURE This chapter deals with various theoretical backgrounds necessary to carryout this project. Every study or project needs some amount of theoretical background and existing published literature is one of the major sources for that. For this project different kinds of literature review has been done. Several books, research papers are available in the supply chain field and Internet is also a useful way to get the important, key points regarding the subject.

Following are the different sources of literature used in this project.

Supply Chain Information (Books) Literally many books are available in the market on supply chain management.

But “Supply Chain Management” by Sunil Chopra and Peter Meindl helped me a lot to get the baseline of the subject. “Logistic Management” by Donald J. Bowersox and David J. Closs also gave valuable input.

Babasabpatilfreepptmba.com

58

Impact in the effectiveness of the Supply chain Integration of HUL

Research Papers A no. of studies regarding supply chain management have been carried out in India as well as abroad, which gave valuable information’s, few of them are 

Supply Chain Analysis and Management – by Vikas Chandra in Management Review.



Case study analysis of IBM – by Robert J. Bowman and of Wal-Mart – by P.Mahon Chandran.

World Wide Web (Internet) The Internet, more particularly, World Wide Web used to gather information regarding current supply chain scenario in the world. In fact, browsing the net helped a great deal to understand everyday pragmatic supply chain business issues.

PURPOSE Literature review is one of the prime parts of every project. The very basic purpose of the literature review is to gain insight on the theoretical backgrounds of the research problem. It helps the researcher to gain strong theoretical basis of the problem under study and also helps to explore whether any one has done research on the related issues. That’s why literature review helps one to find out the path of problem solving.

In this regard the very basic purpose of literature review in this dissertation is same as mentioned above.

Babasabpatilfreepptmba.com

59

Impact in the effectiveness of the Supply chain Integration of HUL

METHODOLOGY For simplicity and proper understanding of the subject, the literature review has been divided into the following parts. 

Basic introduction and different approaches to supply chain management.



Identifying the key elements and drivers of supply chain and their importance.



Understand the different assumptions necessary to make optimised supply chain network.

BENEFITS The major benefits of literature review are:



It helps to identify the key variables of the supply chain network.



It gave a strong theoretical background of the subject.



It produced a macro view of different work in supply chain field.

Babasabpatilfreepptmba.com

60

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

61

Impact in the effectiveness of the Supply chain Integration of HUL

DATA ANALYSIS AND INTERPRETATION

Babasabpatilfreepptmba.com

62

Impact in the effectiveness of the Supply chain Integration of HUL

ANALYSIS INTERPRETATION 1) Are you aware of new product launched by HUL? Awareness Table No.1

Valid

Frequen cy 76 24 100

yes No Total

Percent 76.0 24.0 100.0

Valid Percent 76.0 24.0 100.0

Cumulativ e Percent 76.0 100.0

Graph 1 Awareness

Frequency

80

60

40

20

0 yes

No

Awareness

Table No 1 reveals that 76% of the retailers aware of new product launch by the company and 24% of the retailer not aware of the new product launched by the company.

Babasabpatilfreepptmba.com

63

Impact in the effectiveness of the Supply chain Integration of HUL

2) Do the company executives help in launching new product?

Help of company executive Table No.2

Vali d

yes No Tota l

Frequen cy 76 24

Percent 76.0 24.0

Valid Percent 76.0 24.0

100

100.0

100.0

Cumulativ e Percent 76.0 100.0

Graph 2 Help of company executive

80

60

40

F R E Q U E N CY

20

0 Yes

No

Help of company executive

Babasabpatilfreepptmba.com

64

Impact in the effectiveness of the Supply chain Integration of HUL

It is clear from the Table No-2 that 76% sales executive help the launching of the new product and 24% retailer not agree that sales executive can’t help

to launching the

new product

3) What do you feel that current supply chain system is Current supply chain Table No.3 Frequen Valid cy Percent Percent Vali d

Excelle nt Very good Good Average Total Graph 3

Cumulativ e Percent

32

32.0

32.0

32.0

32

32.0

32.0

64.0

24 12 100

24.0 12.0 100.0

24.0 12.0 100.0

88.0 100.0

current supply chain

40

Frequency

30

20

10

0 Excellent

Very good

Good

Average

current supply chain

From Table No-3 it is clear that 32% retailer agree that the current supply chain is excellent. And 32% retailer said that the current supply chain is very good. And 24% retailers agree that the current supply chain is good and remaining 12% said that they are satisfied with the current supply chain.

Babasabpatilfreepptmba.com

65

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

66

Impact in the effectiveness of the Supply chain Integration of HUL

4] Are you satisfied with time to time delivery of HUL company.

Time to Time delivery Table No.4 Frequen Valid cy Percent Percent Vali Excelle d nt Very good Good Averag e Total

Graph 4

Cumulativ e Percent

20

20.0

20.0

20.0

38

38.0

38.0

58.0

26

26.0

26.0

84.0

16

16.0

16.0

100.0

100

100.0

100.0

Time to Time delivery

Frequency

40

30

20

10

0 Excellent

Very good

Good

Average

Time to Time delivery

It may inferred that according to the Table N0-4 that 38% retailer agree that there is a time to time delivery of the product is excellent. And 26% retailers are agree that

Babasabpatilfreepptmba.com

67

Impact in the effectiveness of the Supply chain Integration of HUL

delivery system is good.And 20% agree that it is very good and remaining 16% said that it is an average.

5] What is your opinion about suppliers booking procedure.

Suppliers booking procedure Table No.5 Frequen Valid cy Percent Percent Vali d

Excelle nt Very good Good Average Total

Cumulativ e Percent

26

26.0

26.0

26.0

40

40.0

40.0

66.0

24 10 100

24.0 10.0 100.0

24.0 10.0 100.0

90.0 100.0

Graph 5 Suppliers booking procedure

40

Frequency

30

20

10

0 Excellent

Very good

Good

Average

Suppliers booking procedure

Information gathered Table NO-5 it reveals that 40% retailers agreed that the suppliers booking procedure is very good. And 26% retailers said that the excellent booking procedure. And remaining are satisfied the suppliers booking procedure.

Babasabpatilfreepptmba.com

68

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

69

Impact in the effectiveness of the Supply chain Integration of HUL

6] Rate suppliers local call off co-operation Local call off co-operation Table No.6 Frequen Valid cy Percent Percent Vali d

Excelle nt Very good Good Average Total

Graph 6

Cumulativ e Percent

34

34.0

34.0

34.0

22

22.0

22.0

56.0

26 18 100

26.0 18.0 100.0

26.0 18.0 100.0

82.0 100.0

local call off co-operation

40

Frequency

30

20

10

0 Excellent

Very good

Good

Average

local call off co-operation

From

the Table N0- 6 it is clear those 34% sales executives are excellent co-

operative to the retailers. And 26% are doing well in co-operation and 22% are very good and 18%are average in local call off co-operation.

Babasabpatilfreepptmba.com

70

Impact in the effectiveness of the Supply chain Integration of HUL

7] Is their any sales return policy

Vali d

Yes No Tota l

Sales return policy Table No.7 Frequen Valid cy Percent Percent 94 94.0 94.0 6 6.0 6.0 100

Graph 7

100.0

Cumulativ e Percent 94.0 100.0

100.0

Sales return policy

100

Frequency

80

60

40

20

0 Yes

No

Sales return policy

From the Table No-7 it reveals that 94% retailers are aware of the sales return policy of the company and the 6% cant aware of the sales return policy of the HUL.

Babasabpatilfreepptmba.com

71

Impact in the effectiveness of the Supply chain Integration of HUL

8] Are you satisfied with credit policy of HUL

Vali d

Yes No Tota l

Satisfied with credit policy Table. No 8 Frequen Valid cy Percent Percent 96 96.0 96.0 4 4.0 4.0

Graph 8

100

100.0

Cumulativ e Percent 96.0 100.0

100.0

Satisfied with credit policy

100

Frequency

80

60

40

20

0 Yes

No

Satisfied with credit policy

According to Table N0-8 it is clear that 96% of the retailer is satisfied with the credit policy system which can provided by the company and 4% are not satisfied with the credit policy of the company.

Babasabpatilfreepptmba.com

72

Impact in the effectiveness of the Supply chain Integration of HUL

9] What Is the suppliers response for quality problems Supplier’s response for quality Table No.9 Frequen Valid Cumulativ cy Percent Percent e Percent Vali YES d

Graph 9

100

100.0

100.0

100.0

Suppliers response for quality

100

Frequency

80

60

40

20

0 YES

Suppliers response for quality

It is clear from the Table NO-9 that 100% retailers are satisfied with the quality of the product and also the supplier’s response for quality is very good.

Babasabpatilfreepptmba.com

73

Impact in the effectiveness of the Supply chain Integration of HUL

10] Do they handle complaints given by you Handel complaints given by you Table No. 10

Vali d

Yes No Tota l

Frequen cy 96 4

Percent 96.0 4.0

Valid Percent 96.0 4.0

100

100.0

100.0

Graph 10

Cumulativ e Percent 96.0 100.0

Handel compliants given by you

100

Frequency

80

60

40

20

0 Yes

No

Handel compliants given by you

Table No- 10 it shows that 96% retailers a complaint is handled by the distributor .and 4% are not agree that the complaints are handle.

Babasabpatilfreepptmba.com

74

Impact in the effectiveness of the Supply chain Integration of HUL

11] What is time taken to handle your complaint

Vali d

Time taken to handle the complaint Table No.11 Frequen Valid cy Percent Percent Few hours 30 30.0 30.0 2 days 26 26.0 26.0 4 days 22 22.0 22.0 More than 4 22 22.0 22.0 days Total 100 100.0 100.0

Graph 11

Cumulativ e Percent 30.0 56.0 78.0 100.0

Time taken to handel the complaint

30

Frequency

20

10

0 Few hours

2 days

4 days

More than 4 days

Time taken to handel the complaint

Table NO-11 inferred the information 30% retailers agree that the few hours taken for complaints handled. And 26% retailers agree that 2 days require for complaints handle 22% retailers said that 4 days is require for the complaints handle and 22% retailers agree Those more than 4 days are requiring for complaints handle.

Babasabpatilfreepptmba.com

75

Impact in the effectiveness of the Supply chain Integration of HUL

12] What is your opinion about HUL company distributor service HUL company distributor service Table No.12 Frequen Valid Cumulativ cy Percent Percent e Percent Vali Excelle 28 28.0 28.0 28.0 d nt Very 26 26.0 26.0 54.0 good Good 28 28.0 28.0 82.0 Average 18 18.0 18.0 100.0 Total 100 100.0 100.0 Graph 12

HUL company distributor service

30

Frequency

20

10

0 Excellent

Very good

Good

Average

HUL company distributor service

Babasabpatilfreepptmba.com

76

Impact in the effectiveness of the Supply chain Integration of HUL

The presented in Table NO-12 that 28% retailers are agreed that HUL company distributor service is excellent and 28% retailers opinion is that good distributor service.

And 26% retailers are agreeing that distribution service is very good and remaining 18% retailers are agreeing that it is an average.

FINDINGS

Babasabpatilfreepptmba.com

77

Impact in the effectiveness of the Supply chain Integration of HUL

FINDINGS  It is clear fromTable No 1 reveals that 76% of the retailers aware of new product launch by the company and 24% of the retailer not aware of the new product launched by the company.  It is clear from the Table No-2 that 76% sales executive help the launching of the new product and 24% retailer not agree that sales executive can’t help

to

launching the new product  It is clear from the Table No-3 it is clear that 32% retailer agree that the current supply chain is excellent. And 32% retailer said that the current supply chain is very good. And 24% retailers agree that the current supply chain is good and remaining 12% said that they are satisfied with the current supply chain.  It may inferred that according to the Table N0-4

that

38% retailer agree that

there is a time to time delivery of the product is excellent. And 26% retailers are agree that delivery system is good.

and

20% agree that it is very good and

remaining 16% said that it is an average.  Information gathered Table NO-5 it reveals that 40% retailers agreed that the suppliers booking procedure is very good. And 26% retailers said that the excellent booking procedure. And remaining are satisfied the suppliers booking procedure.  It is clear From

the Table N0- 6 it is clear that

34%

excellent co-operative to the retailers. And 26% are doing

sales

executive are

good in co-operation

and 22% are very good and 18%are average in local call off co-operation

Babasabpatilfreepptmba.com

78

Impact in the effectiveness of the Supply chain Integration of HUL

 It is clear From the Table No-7 it reveals that 94% retailers are aware of the sales return policy of the company and the 6% cant aware of the sales return policy of the HUL.  According to Table N0-8 it is clear that 96% of the retailer is satisfied with the credit policy system which can provided by the company and 4% are not satisfied with the credit policy of the company  It is clear from Table No- 10 it shows that 96% retailers a complaint is handled by the distributor .and 4% are not agree that the complaints are handle.  It is clear from Table NO-11 inferred the information 30% retailers agree that the few hours taken for complaints handled. And 26% retailers agree that 2 days require for complaints handle 22% retailers said that 4 days is require for the complaints handle and 22% retailers

agree that more than 4 days are require for complaints handle.

 The presented in Table NO-12 that 28% retailers are agreed that HUL company distributor service is excellent and 28% retailers opinion is that good distributor service .And 26% retailers are agreeing that distribution service is very good and remaining18% retailers are agreeing that it is an average.

Babasabpatilfreepptmba.com

79

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

80

Impact in the effectiveness of the Supply chain Integration of HUL

SUGGESTION

Babasabpatilfreepptmba.com

81

Impact in the effectiveness of the Supply chain Integration of HUL

SUGGESTION  Promptness in delivery and time more e to be exercised in this regard to maintain the customer relation.  Creating awareness regarding the schemes and informing retailers about the schemes and new launches by products and providing the broachers of the Products to the retailers.  Providing quick delivery of goods when required urgently by the wholesalers and retailers.  Improve speed of dispatches of goods according to the order.  Providing cash discounts to the wholesalers and retailers according to their transaction of the business.  Providing the uniform to the sales executive which can helpful for the increase the image in the minds of the sales executive and also to the retailers.  Modernization and standardization of Bijapur retailers’ network must be carried out in order to exchange ideas on successful selling strategies and identifying areas of improvements “Sales through Services” and a Retailer Development Program must be carried out.  Distributor should maintain stock of all HLL products  Discount and company incentive should be passed on to the retailer by the distributors and distributor should periodically review the performance of their retailer.  It is advised to the sales representative, to give an opportunity to retailers to put their point of view during visit.

Babasabpatilfreepptmba.com

82

Impact in the effectiveness of the Supply chain Integration of HUL

CONCLUSION

Babasabpatilfreepptmba.com

83

Impact in the effectiveness of the Supply chain Integration of HUL

CONCLUSION Hindustan unilever

ltd company is the largest manufacturer of the FMCG

Product which is having more than 700 products.

The importance of supply chain management which can helpful for the time to time delivery of the product and also helpful for the increase the market share of the company. And also helpful for the purpose of the retailers’ satisfaction stretches from introducing more and more new product launches activities, good margin and better services from distributor.

It is expected that with a moderate implementation of basic suggestions be bound to improve.

The company is having good supply chain network, strong sales force and advanced techniques like the palmtop, good computer software package makes Hul in a good position.

76% of the retailers aware of new product launch by the company so that they are aware of the different schemes of the company.

76% sales executive help the launching of the new product which means that promotional activity is to be done through the sales executive mouth to the retailers in Bijapur city.

It is clear that 32% retailer agree that the current supply chain is excellent. And 32%

retailer said that the current supply chain is very good. So the retailers are

satisfied with the current supply chain.

To conclude, it is very much limited time to clearly understand the supply chain management. Apart from this we need to focus on each retailers view carefully in regular time intervals (periodically) so to the best possible is presented here. Still there is a lot of scope for developing on this subject, as excellence is not limited always.

Babasabpatilfreepptmba.com

84

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

85

Impact in the effectiveness of the Supply chain Integration of HUL

BIBLIOGRAPHY

Babasabpatilfreepptmba.com

86

Impact in the effectiveness of the Supply chain Integration of HUL

BIBLIOGRAPHY A] List of Books



Supply Chain Management- Sunil Chopra



Research Methodology- C. R. Kothari



Statistics For Management- Richard I. Levin & David S. Rubin



Marketing Management- Philip Kothler

B] Websites 

www.hul.com



www.supplychain.com



www.supplycore.com



www.logisticsworld.com

Babasabpatilfreepptmba.com

87

Impact in the effectiveness of the Supply chain Integration of HUL

Babasabpatilfreepptmba.com

88

Impact in the effectiveness of the Supply chain Integration of HUL

QUESTIONNAIRE Respected sir, Name: _________________________.

1. Nature of business. : ______________________________________ Phone No: ______________ 1] Are you aware of new product launched by HUL a. Yes

No

2] Do the company executives help in launching new product a. Yes b. No 3] What do you feel that current supply chain system is a. Excellent b. Very good c. Good d. Average 4] Are you satisfied with time to time delivery of HUL company. a. Excellent b. Very good c. Good d. Average 5] What is your opinion about suppliers booking procedure. a. Excellent

c. Good

b. Very good

d. Average

6] Rate suppliers local call off co-operation. a. Excellent b. Very good c. Good

Babasabpatilfreepptmba.com

89

Impact in the effectiveness of the Supply chain Integration of HUL

d. Average 7] Is their any sales return policy Yes No 8] Are you satisfied with credit policy of HUL Yes If No , specify

No

9] What Is the suppliers response for quality problems Yes If No , specify

No

10] Do they handle complaints given by you Yes No 11] What is time taken to handle your complaint a. Few hours b. 2 days c. 4 days d. More than 4 days 12] What is your opinion about HUL company distributor service a. Excellent b. Very good c. Good d. Average 13] Is there any suggestion please mention ________________________________________________________________

THANK YOU

Babasabpatilfreepptmba.com

90