Complex and high cost layered distribution network
One of India's most trusted manufacturer and OEM for automotive filtration products currently operates through two manufacturing facilities in West and North India.
As was the case with many of its market competitors, the company was operating with a layered distribution structure - with one regional warehouse in the North in Uttarakhand and several smaller state-based warehouses in the same region across Rajasthan, Uttar Pradesh, Uttarakhand, Haryana, Delhi, Punjab and Himachal Pradesh. These state based warehouses were being run by CFA agents who were also supplying these goods to dealers located within these states.
The company had set up a warehouse in each state in order to comply with variable tax structures levied by the respective state governments. However, this layered structure had resulted in many challenges that severely impeded the growth potential of the company. Specifically,
In 2017, with the introduction of the Goods and Services Tax (GST), the country witnessed a transformation through a uniform and easy-to-implement taxation policy across supply chains. Presented with this opportunity and an experience of working with a reliable logistics partner, the company decided to reimagine its supply chain by fundamentally questioning the need for the multiple state warehouses. The company wanted to become first company to deliver directly from factory to dealer thereby improving dealer service level and reducing safety norm requirement at dealer location
Redesigning the company's distribution network
Formerly, the company was using FTL movement for moving goods from their factory to the regional distribution center in north, followed by PTL movement from regional distribution to state warehouses and then final distribution amongst its 78 dealers.
In a historic move, the company decided to close all the warehouses in North.
By partnering with its logistics vendor, the company used a combination of FTL movement from their factory to the logistics vendor managed processing center in Haryana for breakbulk into part loads and final direct distribution to dealers across the states.
In addition, the entire distribution ordering system and supply chain was remodeled from push stock to pull requirements based on the demands of the market.
Lasting business impact
The company with its agile thinking was able to make the most of the opportunity presented by GST, by reimagining its supply chain and challenging the need for warehouses. The business impact that the supply chain team was able to deliver was,
The company's drive for continuous improvement by embracing the modern-day best practices has positioned it well for fast growth in today's rapidly transforming business environment.