Shelf-life and Inv. Norm: MRSL/Rejection Criteria & Industry 4.0

Industry 4.0 is a name for the current trend of automation and data exchange in manufacturing technologies.

By * Animesh Kumar Jha


Introduction:

Industry 4.0Since FMCG firm operates with many input materials with limited shelf-life and thus need to maintain freshness in the supply chain and to be consumed at the factory within shelf-life. Thus, in order to control the same, it needs to devise a mechanism of Minimum Remaining Shelf Life as an important criterion for acceptance or rejection by the Quality and/or Stores Team at the factory. This helps to ensure control on shelf-life for the incoming materials, subsequently FIFO adherence at factory level during issue and consumption by Manufacturing.

In addition to this, timely production booking by Manufacturing Team helps in correct visibility in ERP about the inventory lying across different locations (like Store, Production Floor, External warehouse etc.) help in taking right and quick decision to ensure no interruption in production as per schedule.

Customer Service Management

This comprises of processing Customer Orders, checking Credit Limit, payments and delivering the products to the customers and involves lot of interactions with the customers and therefore need to ensure Customer satisfaction and do things better than competition by improving business process, training to the Customer Service Team, quicker service delivery, faster claim settlement etc.

This also comprises of Secondary Logistics of shipping products from C&F Agent / Depot to the Distributors or Super Stockists within agreed timeline from the time of invoicing (e.g. within 48 hrs). The timeline depends on the location of customers e.g. it varies from Urban, Semi-urban, upcountry depending on distance and supply frequency. This also includes the Sales Return process.

SCM Process Improvement:

Supply Chain as a strategy can be used when Supply Chain itself becomes Business enabler e.g. in case of many business arenas like e-commerce where the quick and accurate integrated supply chain systems with collaborations of multiple organizations like Amazon, its Logistics Partners, Sellers, and Banks work together to deliver a product to the final customer.

In order to have a competitive edge for firms like HUL and P&G, it’s the Supply Chain which can make difference and help in improving market share as today the customers have become used to quicker and better services experienced with e-commerce players. Thus, SCM Process improvements with respect to using Forecasting Tool, Transport Modelling, Use of Artificial Intelligence in Secondary Sales Forecasting, Use of Smart Devices by Salesforce into the market, improving supply chain infrastructure, reducing bottlenecks, strengthening business processes, adequate training to the relevant team and compulsory market visit by multiple departments people to understand the market and competition, stakeholders management are keys to improve SCM.

Moreover, there should be the Vertical alignment of Supply Chain Strategy with Business Strategy and need to have horizontal synergies within various facets of Supply Chain functions.

New Product Planning:

Depending on Product Life Cycle, FMCG firm needs to constantly offer innovative products, convenient packaging with new product lines and ensures growth and sustaining the market share. 3-There is average 30-45 % of Sales Revenue contribution from new products launched within the last two years, thus it’s important to successfully launch new products swiftly.

Thus, there should be proper Project Management on New Product Launches e.g. using Gantt Charts, Stakeholders Management, and Workflow arrangements to trigger tasks to be done by multiple departments viz. R&D and QA, Packaging Development, Marketing/Sales, Materials Planning & Procurement, Legal, Finance before Actual Production, Distribution and Launch.

Here, the material coverage risk assessment needs to be done before finalising the Ordering for new/unique raw material exclusive for the New Product (which cannot be used elsewhere). Depending on Lead time and thus Safety Stock required, need to align with Sales, Marketing and Planning before sourcing the material with known coverage of equivalent Finished Product and Write Off Risk of Materials (just in case couldn’t produce).

Moreover, if there is only packaging change and no recipe change, then need to control the supply of existing packaging and replace with new packaging (e.g. laminate with a new design), and ensure minimal write off during the transition by accurately planning the other components Packaging Materials. Need to closely monitor Supplier’s inventory as well.

Stakeholders Management:

Supply Chain has touch points with multiple internal functions including Sales & Marketing, R&D, and QA, Packaging Development, Manufacturing, Engineering, Projects, Maintenance and external entities like Suppliers, Traders, Vendors, Service Providers etc. Therefore Supply Chain Management involves greater need of Stakeholders Management and ensuring a neutral role and aligns multiple functional conflicts of interests towards common organizational goals.

Industry 4.0

Industry 4.0

Industry 4.0 is a name for the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things, cloud computing and cognitive computing. This is the fourth generation revolution in the Manufacturing Industry with the help of AI, Machine Learning and New Technology where machines/workstations can be controlled by computers and they can interact with each other to align themselves to schedule and deliver products as per dynamic demands of the marketplace.

In India, this is still under development, and only a few companies are working on this line. However, this will change the way Supply Chain operates and entire Value Chain Process for the Organization and also needs for upgrading skills required to work with New Technology as many of the jobs will become obsolete and thus, many people will lose jobs due to the use of AI and robotics in many of the repeated tasks which can be replaced by machines.

Industry 4.0 is definitely a revolutionary approach to manufacturing techniques. The concept will push global manufacturers to a new level of optimization and productivity. Not only that, but customers will also enjoy a new level of personally customized products that may have never been available before. As mentioned above, the economic rewards are immense.

However, there are still many challenges that need to be tackled systematically to ensure a smooth transition. This needs to be the focus of large corporations and governments alike. Pushing research and experimentation in such fields are essential.

While speculations regarding privacy, security, and employment need more study, the overall picture is promising. Such approach to manufacturing industries is truly revolutionary.

Conclusion

Supply Chain for FMCG is the backbone for the Business Delivery and thus, SCM should be looked as Strategic fit for the organisation and not only as Cost and CEOs must take SCM Leadership involvement in framing Business Strategy so that SCM Strategy can be quickly aligned with Business goals and also SCM lead can offer new business opportunity with the help of superior SCM performance. In order to be effective board member, SCM lead must understand business requirement, changes in supply chain adopted by the industry, exploring new ways of doing things, improving Supply Chain collaborations with the supplier and need to be agile and responsive enough to take Supply Chain performance to the next level quicker than Competition and simultaneously with less cost. SCM strategy needs to encompass how to reduce inventory and get the maximum inventory with the suppliers and towards Just in Time Process (eliminate wastage, prevent supply variability), Supply Chain Sustainability (Triple Bottom approach to cover people, society, and environment in addition to profit).


* Deputy General Manager, Supply Chain, FMCG Division, Dharampal Premchand Ltd.

Animesh has 14years+ experiencein FMCG, Food Process Industries, and Consumer Durables (Perfetti Van Melle, Britannia Industries Ltd., KDCMPU Ltd. (Amu Dairy), Almarai Company Ltd., etc.). He handles the entire gamut of Supply Chain, Operations, SCM, Transformation & Strategy, along with the Factory Operations.

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