Complex and layered distribution network leading to high cost of operations and inventory holding
The company, one of the leading manufacturers of energy drinks and non-alcoholic beverages, has a manufacturing unit and central warehouse in the northern region of India. It operates from 17 active state warehouses to store inventory which further supplies material to over one lakh retail outlets through 400 distributors in various states. For the movement of goods from its central warehouse to the state warehouses, as well as from state warehouses to distributors it uses full truck load services from various local logistics partners. This causes high inventory holding time in both warehouses and distributor points. The company wanted to reimagine its supply chain by choosing the part truck load alternative to bring down overall logistics cost and ensure adequate inventory levels at every step of the value chain. Its supply chain was faced with various challenges, specifically
Logistics partner with pan India presence, technology integration and operational efficiency
The company had experience of working with a logistics partner having consistent on-time express delivery capability, highest reach to over 29,000 pin codes, reliable service and easy customer integration solution decided to reimagine its supply chain by fundamentally questioning the high number of state warehouses and the use of full-truck loads for its material movement. It also saw the opportunity to make its logistics more efficient in terms of both operations and cost.
Consolidate to a single logistics partner with faster delivery time, reliable service and pan-India presence
The company decided to structurally improve its efficiency in operations, reduce overall supply chain costs and increase profitability by reimagining its distribution network. The company tied up with single national logistics partner and used its capability of up to 50% faster transit time and largest serviceability of over 29,000 pin-codes. The logistics partner helped the company switch to part-truck loads for material movement from its central warehouse directly to distributor points, bypassing the need of state warehouses. This reduced inventory holding time from 70 days to 30 days which reduced the risk of damages and expired products significantly.
The company also optimized its distribution network by reducing its 17 state warehouses to only 3 regional warehouses. These changes have reduced costs by 40% across the value-chain, thereby maximizing profitability for the company. Additionally, by leveraging technology capabilities of its logistics partner, it also increased its resource efficiency by over 60% by generating automatic pickup requests, consignment note, proof of delivery and billing and has complete visibility of material movement to all distribution partners and retail outlets.
Lasting business impact
The company was able to improve its profitability by reducing overall supply chain cost through the capabilities of its logistics partner. It is now in full control of its material movement to over 1 lakh outlets across the country. The business impact brought by this partnership was,
The company has used supply chain as a tool for maximizing profitability by ensuring availability of products and reducing overall logistics cost across the value chain.
