Consumer Staples

<h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">I did my initial schooling in Lucknow before enrolling in a Dairy Engineering Diploma course in Etawah. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Joined Glaxo India at their Aligarh plant immediately after completing college in 1994. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Handled various roles in the Supply chain- Manufacturing, Procurement, Supplier Management, Third Party Manufacturing, Supply and Demand Planning, and Logistics within the Food FMCG across the last three decades.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">I have more than two decades of experience at a Dairy Manufacturing plant, covering the domains of milk procurement, processing, spray and roller drying, blending, and final packaging of milk and milk products. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Procurement experience includes direct materials, indirect, Capex, category management, contract management, and SRM as well as leading full procurement teams with responsibilities for policy, risk, ethics, governance, savings programs, technology, and capability development.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Worked with food giants Kraft Heinz (Head of Procurement 2017 to 2019) and Fonterra (Head of Operations 2019 to 2022) for approx. 28 years before joining the procurement function of Wockhardt- a leading pharmaceutical company in the Procurement function, in 2022.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">A firm believer in using technology as a disruptor cum enabler in supply chain processes. Comprehensive understanding of supply management processes, ERP systems, and continuous improvement tools. Key driver for value engineering projects and inventory management for the organisation. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Led one of the path-breaking projects of rolling out a milk procurement process integrated with online quantity and quality captured live at the 35 milk collection centres through SAP way back in 2010 in Uttar Pradesh.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;"><strong>Core belief</strong>: Delivering great results while we leverage the capabilities in team an develop breakthrough strategies. I am a firm believer in developing Supply chain process and creating an environment of adherence to the process.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">&nbsp;</span></p><h2 style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q2. How do you ensure a seamless flow of materials and products through the FMCG supply chain?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The planning process is key to maintaining continuity in operations.&nbsp; </span></p><ul style="text-align: justify;"><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The entity should use an ERP to convert the sales orders to production orders and purchase requisitions. </span></li><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">It is desirable to have live visibility of materials in the system so that relevant measures can be taken.&nbsp;</span></li><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The supply planning team should have visibility on manufacturing capacities in the short- and long-term.</span></li><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The annual production plan should be converted from month-wise requirements to plant-wise and shift-wise manufacturing schedules. </span></li><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Key KPIs such as PTP and CTP are to be measured based on plant performance.</span></li><li class="MsoNormal"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Post-production, FG visibility at warehouses and plants should also be correct and live. FG covers and the OTIF should be measured to ensure compliances of the process.</span></li></ul><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">&nbsp;</span></p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q3. Are there recent or planned investments in technology to improve the operational efficiency of the FMCG supply chain?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Talking specifically about the Dairy industry, fortunately, we were leaders in defining the design of the MCCs (Milk Collection Centres) based on the latest GMP requirement and standardizing the template across our network, underlying the belief in the process. We ensured that the old MCCs were renovated to meet the GMP /FSSAI guidelines, and the new ones were set up with a common layout and design template.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;"><strong><span data-preserver-spaces="true">Integrated Milk Information and Collection System (IMICS)</span></strong></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The major disruption was created by the introduction of technology when the company started to put in the IMICS, which collected the live data of milk quality and quantity, which related to SAP way back in 2010 when the internet connectivity at villages used to be a major challenge. An invoice was immediately generated and given to the farmer, and the &lsquo;PAYMENT DUE&rsquo; details were flashed on a screen. This brought transparency in data apart from providing granularity of each pouring, leading to more trust with the farmer. This also led to the dilution of the authority of the agents.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;"><strong><span data-preserver-spaces="true">Electric Cooling System in Refrigerated Vans</span></strong></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">In recent times, breakthroughs have been made in electric cooling systems in refrigerated vans, which do not use compression technology for cooling during transit.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;"><strong><span data-preserver-spaces="true">Other Technologies in Dairy FMCG</span></strong></span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Another rapidly used technology is maintaining the temperature control of refrigerated vans on the cloud and monitoring their GPS Signals. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Captive solar power generation is also widely used at plants and offices.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Nowadays, milk procurement uses various technical tools like:</span></p><ul style="margin-top: 0cm; text-align: justify;" type="disc"><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Automated milk testers and rapid adulterant testing kits</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Load cell-based weight recorders</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Milk temp transmitters with 24/7 temp record on the server</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Highly efficient DGs and milk bulk coolers</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Granularity of milk collection record and analysis with various software</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Rapid milk chillers</span></li><li class="MsoNormal" style="mso-list: l2 level1 lfo1; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Robotic milking ensures a high level of sanitation</span></li></ul><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">&nbsp;</span></p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q4. How do you align procurement activities with inventory management to avoid overstocking or stockouts in FMCG?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Accurate demand forecasts are crucial for effective inventory management. Historical data, market trends, and seasonal patterns are key inputs into the supply chain planning process.</span></p><ul style="margin-top: 0cm; text-align: justify;" type="disc"><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The procurement team must be governed by the inventory norms to purchase adequate quantities. A periodic review of slow-moving and non-moving inventories has to be done with the stakeholders to take appropriate actions.</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The procurement team will negotiate favourable terms on lead times, MOQ, and payment terms. This will help optimize costs, inventory, and cash flow.</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The share of business across the strategic supplier base has to be spread to eliminate dependency on sole vendors and the risk of non-supplies.</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Organizations should adopt inventory optimization techniques like ABC analysis and days cover and, at times, use the replenishment model.</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">VMI can empower suppliers to manage inventory levels for specific products. This can improve supply chain efficiency and reduce inventory holding costs.</span></li><li class="MsoNormal" style="mso-list: l0 level1 lfo2; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">ERP and supply chain management systems can streamline operations and improve visibility.</span></li></ul><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">&nbsp;</span></p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q5. What methods do you use for demand forecasting in the FMCG industry?</span></h2><ul style="margin-top: 0cm; text-align: justify;" type="disc"><li class="MsoNormal" style="mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">In the Indian market, past sales data are the first-hand reference for organisations to identify the patterns and trends in sales for the various SKUs.</span></li><li class="MsoNormal" style="mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The historical data provides the much-needed input for factoring seasonality and promotions into sales numbers.</span></li><li class="MsoNormal" style="mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">When a new SKU launches, the sales team incorporates the building blocks of sales by identifying the factors influencing the demand and incorporating their impact into their predictions.</span></li><li class="MsoNormal" style="mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Very important input comes from the sales force on the ground, who can provide insight into competitor activity and suggest marketing campaigns to counter it.</span></li><li class="MsoNormal" style="mso-list: l1 level1 lfo3; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">All the plans must be discussed with the sales team at the ground level during their regional meetings (preferably quarterly). This will help better alignment across the organization and help make last-minute corrections if required.</span></li></ul><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">&nbsp;</span></p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q6. How do you manage inventory turnover within FMCG warehouses?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Inventory turnover is influenced by factors such as sales, demand, and lead times.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Regular tracking of sales data helps you monitor inventory levels. The planning team also works with the supply chain to reduce lead time for key SKUs, which impacts inventory levels. Emphasis is placed on implementing Vendor-Managed Inventory (VMI) for key suppliers.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">The slow-moving FGs are identified, and the sales and marketing team is highlighted on the stock levels every month. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">They are advised to work with the Demand planner to move the inventory to a region with higher demand. </span><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Parallelly, they are requested to work on schemes and promotions to liquidate within its shelf life.</span></p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt; line-height: 107%; font-family: Verdana, sans-serif;">Q7. If you were an investor looking at companies within the FMCG space, what critical question would you pose to their senior management?</span></h2><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">As an investor, I would be keen to look for the following while choosing them to fund</span></p><ul style="margin-top: 0cm; text-align: justify;" type="disc"><li class="MsoNormal" style="mso-list: l3 level1 lfo4; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Do the brands have a competitive advantage over the competition?</span></li><li class="MsoNormal" style="mso-list: l3 level1 lfo4; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">What is the unique selling point, pricing, or marketing strategy in the crowded market?</span></li><li class="MsoNormal" style="mso-list: l3 level1 lfo4; tab-stops: list 36.0pt;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">What are their target consumers, and how is the company analyzing consumer behavior and leveraging the insights available?</span></li></ul><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">I would also dig deep to explore the resilience of the supply chain regarding risk management, contingency plans, and how it can react to disruptions and volatility in the market.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">For a company to do well in the long run, it would have a clear vision of growth and the innovation funnel to lead the momentum of growth.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">If the company is spending adequately on research and development, is focused on innovation, and has a long-term funnel of new products, then there are good chances of staying on the market and working on long-term strategies. This also helps to align with the changing consumer preferences.</span></p><p class="MsoNormal" style="text-align: justify;"><span style="font-size: 10.0pt; line-height: 107%; font-family: 'Verdana',sans-serif;">Lastly, the company&rsquo;s outlook on spreading awareness of sustainability across the value chain and conformance to best business ethics are also very important criteria to judge its value.</span></p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p>