Chitra Narayanan, The Hindu Businessline
Bengaluru, 18 August 2016
When Harry Potter and the Cursed Child
was launched globally, Snapdeal arranged deliveries of the book within
two hours of the order being placed. It could do so thanks to its
predictive demand management system fuelled by big data, and its 69
‘fulfilment’ centres across the country.
In the age of instant
gratification, it’s getting harder and harder for companies —
especially e-commerce retailers — to meet customer expectations as
shoppers want stuff here and now. Drones may help in the future. But
today, as Samay Kohli, CEO and co-founder of Grey Orange, a logistics
start-up that builds robotic solutions, says, “The only way you can do
two-hour deliveries is if you set up automated warehouses which are
closer to market.”
Snapdeal’s chief Customer Experience Officer
Jayant Sood says the company is focusing on leveraging cutting-edge
technologies — from big data and predictive analytics to IoT
technologies — to bring previously unexplored operational and business
efficiencies at each leg of customer engagement.
how the e-commerce major is now operating closer to customer clusters,
reducing last-mile delivery gaps, and has introduced six new one-touch
fulfilment centres which combine warehousing, quality control and
transportation in one complex.
It has also piloted a
plug-and-play model in Delhi-NCR, which, he says, “allows our partners
to integrate with our supply chain management system on their own and
work towards better resource allocation.” This will be scaled up
Dutta, chief executive of retail consultancy Third Eyesight, says that
across India, you will still find old-style godowns “where workers
clamber over sacks like monkeys” and where no digital inventory is
maintained. Yet, you are also seeing highly automated warehouses with
intelligent tracking software that tells you exactly where a
consignment is, he says.
feels e-commerce is leading the change. “E-commerce is mostly run on
cash on delivery. The faster you can move products through by reducing
shipping times and holding times, the quicker you can get your cash,”
says Dutta, pointing out that such considerations are driving companies
to improve their supply chain.
key concern is to reduce fraud. Says Kohli of Grey Orange, “Our focus
is to fight inefficiencies in the system, add scale and flexibility to
Remember the time somebody ordered a laptop on
Flipkart and got three stones instead? Or when somebody ordered a
mobile phone on an e-commerce site and got a Vim bar?
describes how a lot of fraud happens within the supply chain. He cites,
for instance, a case where laptops were being shipped out of a
warehouse but were being billed as toys.
“Somebody was going
online and ordering toys and these laptops were being shipped out,”
says Kohli. The solution: sorters with X-ray machines which can catch
Kohli also talks of how once a warehouse is
automated, it allows the e-commerce company to actually create demand
and service it instantly. It can also be geared for unpredictability.
For instance, a tweet with a picture of red shoes got an apparel
company a whopping 160 orders for the pair. In normal circumstances it
would not have been able to service the order quickly. But thanks to
the demand management software, very quickly the company caught on that
something strange was happening.
“They spotted that order gap
time was reducing — earlier it was a week, now orders were coming in
every five minutes. By the time the fourth order came up, the message
had been communicated and, at the warehouse, robots moved the rack with
red shoes right up front,” says Kohli.
“Through automation we can take care of all the spikes — both predictable and unpredictable,” says Kohli.
not just e-commerce companies. FMCG behemoth ITC, with brands such as
Sunfeast, Bingo and Yippee noodles, has also done formidable work on
its distribution chain, putting in place an IT backbone to power it. In
terms of scale, ITC has about 50 distributors, 2,800 stockists, and
8,000-plus salesforce on ground and reaches out to two million
The IT backbone created by ITC’s Infotech division links the entire chain from head office down to every single outlet.
back-end individualised analytics capture outlet-level sales. Once the
sales data is captured, and a pattern emerges, the company uses an
algorithm called the Schemulator to develop promotional schemes for
If, say, a particular biscuit variety is doing well
at a kirana storeoutlet, then very quickly the Schemulator formulates a
discount incentive for that outlet — perhaps a pack of four biscuits
for the price of three, which is offered at the shop in next to no
time. Given that ITC owns the packaging business, it can very quickly
change packaging for individual outlets to match the scheme.
is already moving towards a distributed manufacturing and an integrated
warehouse strategy. Once GST happens, a lot more companies will change
their warehousing strategy. Currently, taxes determine where companies
set up distribution centres. “But once GST kicks in, distribution centres will come up based on where your market is,” predicts Dutta .
however, rues that despite being such an important cog in a company’s
operational wheel, most companies still do not give supply chain
management the importance it deserves.
most companies it is not a board-level issue. You won’t find the supply
chain head sitting in the board. You will have a marketing guy, a
finance guy on the board, but the GM Logistics will be reporting to the
finance guy,” he says.
However, a recent high-profile
announcement from ITC headquarters is the appointment of its trade and
marketing distribution head B Sumant as the President of its FMCG
business. Shows which way the wind is blowing?
in The Hindu Businessline)