Thursday, July 06, 2006

ROLE of IT in FMCG Organization


Just think of a situation: "Delivery of right stock to wholesaler/ distributor once/ twice a week"

Lets not go into National level delivery and try our hands with State first. Lets take Uttar Pradesh with number of Wholesalers/ Distributors (WDs)

We all know that India market in general is heterogenous and also the states. Even a city like Lucknow will have diverse people with different disposable incomes, lifestyles etc. Lets divide into Lucknow city into different small markets. Some market will smoke Wills Classic and others are extremely loyal to CAPSTON.

So its not toy handling to first of all estimate the demand for different regions. Lets assume even if you the right estimates for all markets for the next month (which actually is idealistic), how will you decide how much to deliver to different WDs every next few days. Lets go to some basics:

1. WD has a constraint of stock capacity which make him impossible to stock for the whole month, also it may lead to expiry of the products.
2. WD dont have the financial capacity to buy stock for a month, which make him appropriate to stock for few days.

SO there are huge calcuations required to come up with a DELIVERY SCHEDULE for a particular month. Here comes the ROLE OF IT - Information Technology. ITC has done it right by implementing SAP R/3. Let me mention few of its benefits:
  1. Provide real time Stock on Hand
  2. Brand wise pipeline is maintained
  3. Analyze the data to get the trends in the sales and other variables

Now think of a situation 5 years back when there was no IT and all this written above was done manually, must have been a nightmare for all these guys to come up with right Deliveries to the WDs.

But i must mention here one thing that FMCG companeis have still not fully leveraged IT to futher benefit in terms of operational efficiencies. There is a huge scope left. Do you guys have ideas?

7 Comments:

Blogger v2 said...

hey wat do u think bout companies like perfetti who deliberately dont use IT but r still doing well....i think the reason for this is they hav low no. of sku's which can be handled...so right from order to tracking sales everything is manuall the only IT i c in them is cellular phones

September 30, 2006 2:57 PM  
Blogger Nitin Kochhar said...

That was a good one. But its always good to have system and processes as done by ITC. May be when the base of perfetti will increase they will also step the bandwagon.

October 03, 2006 1:16 PM  
Anonymous Anonymous said...

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January 24, 2007 11:08 PM  
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February 22, 2007 7:27 AM  
Blogger Ashish Thatte said...

This comment has been removed by the author.

June 01, 2010 1:46 PM  
Blogger Ashish Thatte said...

This comment has been removed by the author.

June 01, 2010 1:47 PM  
Blogger Ashish Thatte said...

Good stuff..I also feel that IT will be of help to companies like perfetti as their base increases. It would not only help in tracking orders and providing real time stock etc but also in predicting the future needs/supplies. It could help figure out where the leakages lie( in terms of time, money) and also help in predicting future trends.

June 01, 2010 1:47 PM  

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