As with other industries, technology and digitalisation are expected to play a big role in transforming the operations of FMCG companies. Realising this potential, organisations are not only leveraging digital technologies to change their front-end (customer interfaces) but also their back-end (supply chain and distribution networks). Deependra Khandelwal, Sr Manager- Supply Chain and Logistics at Ruchi Soya explains Upamanyu Borah on how they are making use of technology to build on emerging opportunities in an evolving marketplace and ensure that products are fresh, there is enough market reach and that working capital ratios are constantly improving.
Company overview
Formed in the year 1986, Ruchi Soya Industries Ltd (RSIL), now a subsidiary of Patanjali Ayurved, is the largest edible oilseed extraction and refining company in India with combined capacity of 3.3 million metric tonnes per annum in its 13 facilities spread across the country. RSIL is also the largest player in the cooking oil and soya foods category in the country. Its brand portfolio includes Nutrela, Mahakosh, Sunrich, Ruchi Gold and Ruchi Star.
Besides being a leading manufacturer of high quality edible oils, soya foods, vanaspati and bakery fats, RSIL is also the highest exporter of soya meal, lecithin and other food ingredients from India. It features among the top players based on market share in the overall Refined Oil in Consumer Packs (ROCP) in India.
An integrated player from farm to fork; RSIL is also the pioneer of oil palm plantations in the country.
Supply Chain strategies
At RSIL, supply chain is a critical business process, and not just a business function.
Our focus is on shorter lead times and increased customer satisfaction.We have integrated SAP ERP software system for end-to-end supply chain operations and ensuring the seamless flow of materials right from forecast and demand planning to supplies.
RSIL works on the following principles:
- Identifying areas where technology can help improve and streamline processes
SAP monitors real-time availability of stock at several locations. Demand planning is anticipated based on the sales trend and seasonality factor which help to derive the production planning. Aging report is monitored on a daily basis for all stock keeping units (SKUs) to keep a check on the expiry of products and implementing a First in First out (FIFO) approach. GPRS tracking system are used to monitor the stock in transit and arranging their delivery on time.
- Optimising inventory for reduced cost
We focus on how to reduce costs and improve the bottom line. This is especially needed considering the global economic downturn and after effect of COVID-19. In these efforts, we consistently look at optimising inventory quantities. For the same, we use proper tools and technologies for forecasting and demand planning.
- Cycle time/turnaround time (TAT) compression
We closely monitor the time from placement of trucks and rake, from its loading to the completion of the delivery in two stages, i.e.
- Completion Time (CT): This is the time when the process completes its execution, i.e. material loading to invoicing.
- Arrival Time (AT): This is the time when the material has arrived/reached its destination.
- Regular reviews to ensure efficiency and mitigate risk
We constantly review procedures and policies to ensure compliance, efficiency and cost. This helps avoid process bottlenecks and help streamline operations while mitigating the risk of theft, fraud, etc.
- Establishing green initiatives
We focus more on rail freight logistics service solutions and try to move more than 30 to 35 per cent cargo through the country’s railway network.
Overcoming hurdles
Currently, we are dependent on imported edible oil since there is a huge gap in domestic production v/s consumption. Sometimes our import activities get affected due to a sudden change in import policies, import duty or congestion at port. To overcome this situation, we have to keep a buffer stock which involves lot of funds blocking. Moreover, at times we have to purchase from other importers and because of this our procurement cost increases.
On the other side, we also face problems in delivery of finished goods due to poor availability of trucks and delay in rake placement by the railways. We have to keep switching from one mode of transportation to another to continue the supply.
Production management
RSIL has a strong production, supply chain and logistic network along with a comprehensive pan-India presence to cater to our customers.
We have set up regional offices for monitoring the market demand and analysing the data for future demand and supply.
RSIL sales team takes orders from the market and communicates it to the nearest regional office who in turn informs the concerning plant from where this demand will be met out by adjusting production.
Warehousing tactics
Additionally, demand for our products varies as per the climate and season. Thus we have to be very flexible in producing different goods. A very fast setup and installation of a production line is necessary to achieve this and therefore, we align the activities accordingly.
When supply exceeds demand, our warehouses store products in anticipation of customer’s requirements. When demand exceeds supply, the warehouse can speed up the product movement to the customer by performing additional services like marking prices, packaging products. Here, batch code wise stacking plays an important role.
Digitally-enabled procurement
We have adopted several forms of core procurement technologies which combine functionality such as spend analytics, e-Sourcing, contract management, e-Procurement, e-auctions, and e-Invoicing, etc.
Many of these are driven by the SAP/ERP in search for lower computing costs, data storage and mining, enhanced forecast accuracy, delivery of reliable data, and analysis of supplier performance, etc.
Significance of logistics
To achieve a leaner cost-effective distribution model, we have outsourced entire logistical functions to specialised third-party logistics (3PLs) providers who carry out warehousing activities such as receipts, shipments, inspections, packaging, reverse logistics, etc.
They assists us in maintaining the smooth flow of materials across the supply chain by enabling timely delivery of finished goods to our end customers, or storing and supplying the raw materials to our manufacturing locations for just-in-time manufacturing.
Our LSPs are Indian Railways, Container Corporation of India (CONCOR), Transport Corporation of India (TCI), Gati, Darcl Logistics, Patanjali Parivahan, and Alps Logistics, to name a few.
Back-end SCM
At RSIL, back-end essentially involves production, assembly, and physical movement. Major decisions include:
- Procurement (supplier selection, optimal procurement policies)
- Manufacturing (plant location, product line selection, capacity planning, production scheduling)
- Distribution (warehouse location, customer allocation, demand forecasting, inventory management)
- Logistics (selection of logistics mode, selection of ports, direct delivery, vehicle scheduling)
- Market decisions (product and process selection, planning under uncertainty, real-time monitoring and control, integrated scheduling)
Identifying megatrends
At RSIL, we have started feeling the disruption in the supply chains as the coronavirus continues to spread, affecting the availability of raw materials and logistics arrangements. Production disruptions largely affect the consistent supply which plays a core role in the supply chain and production planning. This is the phase of a new transition. Demand patterns are changing due to this. Key supplier locations are shifting. Technology is evolving more rapidly than ever before for hands free operations. We are working on this and trying to make a best blend of our knowledge and technological experience so as to meet the demand with speed and efficiency.
