Case Studies of the winning
Dabur tackles the secondary supply
In 2001, Dabur decided to tackle its extended supply chain of over 30 factories,
six key warehouses, and 52 stocking points distributing over 1,000 SKUs to 10,000
stockists countrywide. The company needed a system to accurately control distribution
and sales forecasting to reduce inventory in the pipeline.
Dabur went ahead and built a system using Visual Basic and ASP with SQL Server
2000 as the database. It decided not to use a packaged SCM solution due to the
high cost and relative lack of complications in its supply chain.
An in-house developed, easy-to-use, Intranet based data-warehouse displays as-of-yesterday
sales, stock, receivables, banking, and other MIS. Over 5,000 ASP pages meet
almost all reporting requirements and make this a single source of MIS for all
levels of decision makers.
This success paved
the ground for the company's supply chain initiative. Fifty-five Ku Band TDMA
VSATs were used to link primary distributors to the system. Factories were hooked
up using PAMA (Permanent Assigned Multiple Access) VSATs. At some locations
VPNs had to be used because it was not possible to set up a dish. The zonal
offices in Mumbai were hooked up in a similar manner.
The hardware is mostly owned by the primary CFA (Carry and Forward Agent) except
for the networking equipment, which is owned by Dabur. In the case of the secondary
systems, stockists wholly own the hardware.
The primary rollout began in April 2001 and took 16 months. The first six months
were used to create a business model common to all divisions (family products,
healthcare, ayurvedic products, and pharmaceuticals), and testing and piloting
The integrated primary and secondary system has a number of unique features.
The features like tight integration of schemes, stockists credit limit control,
automated banking of cheques, and online cheque reconciliation have obvious
advantages in the primary distribution. These are basically extensions to the
MFG/PRO ERP system and not core customizations.
Dabur's stockists supply to 1.5 million retailers. Seventy percent of the sales
are accounted for by the top 500 stockists. The incorporation of these top stockists
into its supply chain is a first for any FMCG company in India. The average
sale of each stockist and the current stock are the two parameters.
A 'My Page' allows the stockist to see the 'as-of-yesterday' details pertaining
to the in-transit shipments, transporter details, back-orders, account statement,
cheque status, credit notes, and claim settlements.
Details are collected from stockists on a weekly basis. In case of primary distribution
points, an incremental backup is sent to the central location when the CFA closes
operations for the day. These are computed at night in a process called cubing.
And when managers come into office in the morning the information is ready for
The integrated system allows each Area Manager to plan for the month's sales
forecasts, stockists performance, and sales officers' performance.
The integration allows better control on pipelines in primaries and secondaries,
brings down inventories, and offers better control on production and sales against
a confirmed forecast.
The company has added an SMS interface that lets authorized phones query
the system for aspects like stock status, credit limits, current outstanding,
and division-wide sales. An access control list of mobile phone numbers is used
to restrict access to the system. Salespeople can get responses to their queries
in a minute with this system," said Gopal Shukla, Chief Information Officer,
Dabur India Limited.
The Internet connectivity had to be provided to secondary stockists and wasn't
always reliable. Dabur's solution was to offer the option of downloading software,
working offline, and connecting later to send in updates.
Power was another issue. The company laid down stringent standards. Every stockist
had to have an UPS, and in cases where the power shortages are chronic, a genset.
By integrating its primary and secondary supply chains, Dabur intends to reduce
the days of inventory carried in the pipeline by four days from the present
29 days. It aims to save Rs 5 crore by means of this system.
Beyond this, the system lets it forecast seasonal spikes in sales and manufacture
accordingly. The aim is to shift focus to the stockists rather than the CFAs
to get a true picture of what's happening in the market and react faster.
Schemes based on secondary volumes will help control secondary pipelines and
sales. Primary sales will therefore come from a resultant 'pull' from secondary
Sales order servicing can be further improved by taking orders through the Internet,
and by setting stocking norms and replenishing stocks to improve ROI of stockists.
Sales officers' targets can be set against a measure of secondary sales and
pipelines to further improve control and avoid stuffing of CFAs to meet targets.