Godrej: Enhancing presence through optimum stock management  ( July '3,2001, FE)

Turban-clad Mr Haqeekat Sandhu, a Godrej Consumer Products dealer at Phugwara district of Punjab is sitting alert, furiously sipping chai in his two-room, whitewashed office amid fragrant soaps in dusty brown coloured boxes embossed with the blue company logo. A sudden surge in demand for Fair Glow soap in some parts of Punjab propels Mr Sandhu to jump up to warn his head office for delivering more stock of the soap, for which hundreds are craving, due to the much sought-after fairness property the soap claims to deliver.

Mr Sandhu, his wrinkled forehead studded with beads of sweat, realises that his stock is depleting faster as demand catches on. Unable to keep pace with the rising demand for Fair Glow, he makes frantic calls to the brand manager at the Mumbai headquarters in Vikhroli. However, even a quick chat over the phone does not deliver the message across in a clear manner. A gap in clear communication results in a missed opportunity for the company.

Scene 2

The same situation prevails, and this time support is just a mouse click away. A worry-free and well-connected Mr Haqeekat Sandhu, while ordering his daily cuppa, is e-mailing his weekly data to the company on the latest demand-supply situation. Minutes after he sends the mail, he receives a positive response that fresh stock of Fair Glow will soon be delivered. A happy Mr Sandhu not just gains bonus points for the extra stock sold, he also knows he has managed to add that extra iota of profit to the company’s bottomline, resulting in bolstering Fair Glow’s marketshare in that region — thanks to the Web Enablement programme kicked off recently, and the MFG/PRO package adopted by the Rs 468-crore Godrej Consumer Products Ltd.
MFG/PRO (supplied by QAD of US) and Web Enablement is the package that Godrej Consumer Products Ltd (GCPL) has adopted to enable the company in demand forecasting, thus reducing chances of a “stock out”
situation. According to GCPL president Mr HK Press: “The idea is to drive out the waste from the system, and to achieve an optimum utilisation of inventory.”

Says GCPL general manager (marketing) Dr Rakesh Sinha: “A pilot study has been launched on secondary sales information and Web Enablement where distribution data is made available through the Internet.”

Under the pilot study, 10 distributors across the country have been Web enabled. These distributors have their own PCs and through the Net they share sales stock data with the company. Three months back, information from distributors on the demand-supply situation was being done randomly over the phone. Now, on a weekly basis data is available for the company to forecast demand at a given region.

The pilot study is expected to be over in the next 6-9 months. The next move then is to connect about 200 A-class distributors and then move on to B-class distributors. The total number of distributors with the company is 1,200. “The company will not penetrate deeper in the rural areas as the availability of PCs is questionable,” says Dr Sinha.

The company plans to take this initiative to cover those distributors who contribute 80-85 per cent to the company’s sales. Altogether, 600-700 distributors will be covered under Web Enablement and MFG/PRO.

The company has already seen the benefits trickling in. “For instance, the company discovered a sudden surge in demand of Fair Glow in Punjab. This demand was met immediately with the help of the pilot study. Say if there are 100 packs of Fair Glow and we are supplying at the rate of 25 per week, we increased this rate to 40 per week,” elaborates Dr Sinha.

In 1996, the company (then Godrej Soaps) implemented an ERP for sales forecasting at the depot level. “The next step in supply chain management (SCM) is to take it at the distributor level to retail forecasting weekly data on the stock level,” adds Dr Sinha.

The company hopes to reduce the inventory level from the current 15-20 days to about 10-15 days at the end of this initiative. “Our inventory levels have come down after the implementation of ERP. However, the reduction is mainly due to improvement in planning processes, which are now able to exploit the potential
unleashed by the ERP. In that sense, ERP implementation has served its purpose of being an enabler for business processes to exploit,” explains Dr Sinha.

MFG/PRO has wide functionalities to capture all types of business transactions, including the company’s dealing with its distributors. It is also Web-enabled to help collaborative planning. “We are using MFG/PRO for extending the initiative to capture distributor-level data. Even the Web-based initiative would exploit MFG/PRO functionalities,” he adds.

The company is implementing this initiative on its own. However, some external companies are involved at the pilot stage. “We did use Andersen Consulting for some part of the work. However, we have also worked with some other consultants/vendors on fine-tuning our project,” he adds.

“We have studied the models being adopted by several leading FMCG companies in India. Actually, most of them are trying out several alternate models, probably to help finalise the one best suited to the business,” says Dr Sinha. The company, however, did not divulge names of these companies or consultants. The models included connectivity using VSATs, Internet, dialling into the company server, etc.

GCPL was demerged from the erstwhile Godrej Soaps with effect from April 1, 2001. The company manufactures and markets consumer products such as soaps, hair colours, mens toiletries, among others.