The supply chain capability of a retailer is a good indicator of modernity, that is, up-to-date, novel, and efficient. Supply chain capability may be achieved through functional integration and development of advantages in lowering costs, increasing revenue, improving quality of service levels, and building consumer loyalty. Many supply chain programmes have reached a varied degree of success in Indian food retail industry, but they are well short of excellence achieved by modern retail the world over.
In the session, "Supply Chain, Who’s Job is it to Fix it," industry experts discussed how retailers should collaborate with food and grocery companies and vendors; how they should take their vendors’ help in managing the inventory; whether direct delivery to stores is a good idea and feasible; which vendors qualify to get visibility of demand and point of sales data; and how should the data be analysed for faster filling of shelves. Also, why are we not able to make the cold chain cost effective, and lastly, who will fix these problems?
The panel comprised heads of supply chain from leading players in the food industry, and the discussion was moderated by Sanjay Sethi, CEO of Export Trading Group. It was unanimously felt that basic Infrastructure, Automation and Information Flow is key to an effective Supply Chain.
As regards the best practices being followed internationally, Rajdeep Datta, Director, E Business & Supply Chain, Carrefour WC&C India, said that B2C is core competency, operating in B2B space in India with bar coding and seamless check-out at POS. He further added that the retailer should have products with enough shelf life to be able to sell. This integration is not seamless at the moment. Datta said that Carrefour is trying to put together a framework that will enable integration of RFID, Cloud, etc, and initiatives have also been taken by manufacturers down the line.
But to what extent is it possible to bring best practices to India? Chandramohan Gupta, Director, Supply Chain, Coca Cola, said that his understanding of what consumer wants is very basic: Availability of brands we love in right pack; Product safety – traceability; Freshness of product; and Pricing.
Stated VPS Malik, VP Sales, Modern Retail & Institution, Parag Milk Foods: "The supply that we give to stores are much more efficient in terms of temperature and freshness, and much more efficient than those coming from the distribution channel of the retailer. We have to manage the supply as per the time given to us by the retailer. We can control our own manpower, stock, and shipping, but cannot control that of the retailers. Let us all get the basics right in terms of SCM before we go for modernisation, etc."
Software technology was discussed as a solution to address the issues in SCM. Ravi Mandayam, Founder, Director – Technology, Frontal Rain Technologies, stated that the major problem is the information. "There is a need for a collaborative platform to share the information across all the players – manufacturer, distributor, and retailer."
Rustom B Irani, CEO, Promethean Spenta Technologies, expressed that cold supply chain is a huge problem in the industry. Most part of India has acute power problem, and since diesel prices were going up, maintaining cold storage has become extremely difficult. He added that technology by their company decouples Refrigeration from Electricity. Thy have patented a breakthrough Thermal Battery that stores thermal energy and can be used whenever needed. The company has launched a Thermal Milk Chiller at the village level, which can bring the temperature of milk from 30 degree centigrade to 4 degree centigrade, thereby increasing the shelf life of milk.
According to Srinivasa Ramanujam, Business Head, Adani Agrifresh Ltd., the problem of modern retail is that all retailers are trying to compete on the price front rather than on quality. In modern retail, the number of skus are too many and different skills are needed to handle different skus, but the price points are low, hence, retailers are bleeding. He added that the problem in modern retail is that there is no concept of collection centers.
Balaji V, COO, Future Supply Chain Solutions, added that in store education and automation is needed. There are several problems which exists in a store which include inventory mismatch, MRP mismatch, low infill rate, and SKUs mismatch.