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Supply Chain Management

GROUP  –  9

Shobhit Pathak

Dhruv Bansal

Shubham Sharma

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Flow Of Presentation

• About the Company

• About Supply Chain Management

• SCM Component in ITC

• The Composition

• Analysis

• E-chaupal

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ABOUT ITC•

ITC is one of India's foremost private sector companies with amarket capitalisation of $ 45 billion and a turnover of $ 7 billion.

• Today ITC is the country's leading FMCG marketer, the clear marketleader in the Indian Paperboard and Packaging industry

• It is the second largest Hotel Chain in India and a trailblazer in

'green hoteliering'.•  ITC has established vital brands like

Aashirvaad, Sunfeast, Dark Fantasy, Bingo!, mint-o, Kitchens ofIndia in the Branded Foods space;

Fiama Di Wills, Vivel and Superia in the Personal Care products

segment;

Classmate and Paperkraft in Education & Stationery products;

 Wills Lifestyle and John Players in the Lifestyle Apparelbusiness;

 Mangaldeep in Agarbattis

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Cont… • One of the 8 Indian Companies to feature in ‘Forbes A-List’ for 2004 

• Featuring 400 of the World’s ‘best  big companies’ with M-cap. > USD 7

billion . & are rated as the ‘most  attractive companies for investor

• Only Indian FMCG Company to feature in Forbes 2000 List

• A comprehensive ranking world’s  biggest companies measured by a

composite of sales, profits, assets & market value

•  Among top in :

•  Sustained value creation (BT-Stern Stewart survey)

• Operating profits

• Cash Profits Ranks

• No. 8 among Indian listed

Companies by Market cap

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•  “..Supply Chain Management is Getting the right things

to the right places at the right times, for profit..” 

• New information and communications technologies have

revolutionized today’s supply chains, making them

extraordinarily better and faster

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SCM Components practiced at ITC 

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• Demand creation and forecast – understand needs/ perceptions,

gauge market potentials, study competitor environment

• Product development and commercialization – product packaging,

process structure

• Distribution network configuration – number and location of

supplier, production facilities, distribution system, warehouse andcustomer

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Cont… 

• Distribution strategies –

 centralized and decentralized, directshipment, push / pull strategies

• Information –

  integrated system and processes throughsupply chain to share valuable information, demand

forecasting, demand signals, inventory and transportation.

• Inventory management  –  quantity and location of inventory

including raw materials, work-in-process and finished goods.

reduce bull whip effect

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ITC’s Supply Chain (Before IT implementation) 

• ITC receives various grades of Tobacco Leaf and Stem from Indian

Leaf Tobacco Division (ILTD) based mainly in Guntur, Andhra

Pradesh

• Processed to form tobacco blends at one of the three Tobacco Processing

Units at Bangalore, Saharanpur an Munger.

• Tobacco Processing Unit is called PMD or Primary. Manufacturing

Division. The cut tobacco is then sent to the Secondary ManufacturingDivision (SMD) for making and packing cigarettes

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ITC Supply Chain Model

• ITC Ltd. uses “Hub And Spoke Model”  for the distribution of

its product.

• The hub and spoke model is a system which makes

transportation much more efficient by greatly simplifying a

network of routes.• The spoke-hub distribution paradigm is a system of

connections arranged like a chariot wheel, in which all traffic

moves along spokes connected to the hub at the centre.

•

The model is commonly used in industry, in particularin transport, telecommunications and freight

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ITC FMCG Supply Chain

• Consists of diverse categories with different priorities.

• More than 1000+ SKUs.

• Buying Value $68 MM.

• Warehousing space of more than 3.5m ft2 around 55+

Locations.

• Products manufactured at 45+ plants.

• More than 650 trucks moved every day.

• Direct distribution from factories to Distributors.

• Indirect movement through RDCs.

• Combination of Rail/Road/Sea movement within the country

depending on the product type.

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THE COMPOSITION

• MANUFACTURING UNITS

Separate for each product

Contract manufacturing

Backward integration

E-chaupal

• STORAGE HUBS

Stores all the products

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CONT… 

• DISTRIBUTORS

Exclusive based on population

Needs to stock all FMCG products(except stationary)

• WHOLESALERS

• RETAILERS

• PANWALAS

Deepest penetration possible

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ANALYSIS

• ITC has the most popular brand of cigarettes in India.

The sale of ITC product takes place from the largest of

retailers like big bazaars, spencers to roadside panwalas.

So, ITC has successfully and deeply penetrates the Indian

market

• With an already established channel for cigarettes, ITC is also

selling its FMCG products using the same channel itself