ITC Limited is investing in automated information technology (IT) systems and has lined up a number of initiatives this year aimed at making stock tracking and clearance more efficient.
According to V V R Babu, chief information officer of ITC Limited, with new businesses and diversification, ITC’s stock keeping units (SKUs) have increased by over 50 per cent in the last few years.
“To keep track of stocks, bring down distribution costs and to ensure prompt stock clearance, we are investing substantially into IT and have lined up a number of new projects to ensure ease in operations,” Babu said.
So far, all ITC products were bar coded at the retail level. But now, ITC will bar code its products at the warehouse itself. This is expected to help ITC keep track of product manufacturing time, thereby enabling implementation of first-manufactured-first-out (FMFO) strategy, which means items manufactured first are shipped out of the factory and the warehouse earlier than products manufactured later. This has been facilitated by the implementation of identification technologies and controlled batch management processes.
The automated IT systems will not only keep track of date-of-manufactuing, but also details like weightage and the factory location that manufactured respective products.
Currently, ITC has over 39 warehouses in India and uses close to 500-800 trucks per day for shipment.
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So far, ITC's Rs 100 crore investment announced earlier in infrastructure upgradation has reduced lead time, improved availability and brought down stockouts. The IT network of ITC covers over 550 locations in urban, semi-urban and remote rural locations, enterprise mail messaging for more than 8,000 users, six different ERP systems, linked 25 warehouses and 14 processing plants in a year and is capable of setting up operational IT facilities in a rural hypermart in three days.
Among other projects, ITC will also implement this year usage of ‘push technology’ for its salesforce.
“Each salesman is allotted specific locations and he has to track sales and requirements of all shops and stores of a particular area. We are working on an integrated IT system which will gather and push information onto our salesmen’s laptops so that they don’t have to waste time looking up details on the company portal. For instance, if a salesman is covering 10 outlets of a region, every evening ITC’s systems will push onto his laptop the sales, distribution and requirements of that region and also the target to be met,” explained Babu.
“Moreover, with 1400 SKUs and diversified product portfolio, it is not possible for the salesmen to remember the sales for each. So, we thought of using technology in a way which could track all our products and sales of each area and make it easier for our salesmen to use when on field,” Babu added. Under this initiative, around 2000 salesmen would be provided laptops which will be ‘push technology’ enabled, ensuring easy information sharing.
ITC had earlier moved towards expanding the reach of its field force using handheld devices. The initiative is expected to connect the field force of around 3,000 through sales force automation tools and handheld devices.
According to Babu, ITC over the last few years has forayed into a diverse portfolio of businesses including FMCG, paperboards and packaging, hotels, agri-business and foods, which has led to the rapid expansion of the supply chain and also enhanced its complexities.
ITC’s manufacturing locations have increased rapidly to about 200 or more locations from about a dozen owned manufacturing facilities for its different businesses.
In addition to these manufacturing locations, ITC’s aggregating godowns and shipment warehouses have grown exponentially in the last couple of years.
“Two predominant challenges confront ITC in managing this complex supply chain network, that of optimising transportation logistics and ensuring freshness at the retail outlet,” Babu pointed out.
Transportation logistics and costs have emerged as major challenges given the fact that approximately 700 trucks carry finished goods every day from ITC’s manufacturing locations and warehouses to its customers compared to about 100 trucks earlier.
“Moreover, due to unfavorable weight-value and volume-value ratios of food products compared to other products, a truckload of atta or biscuits is valued significantly lower than a truckload of other products. So, transportation costs as a percentage of sales is significantly higher for food products and directly impacts profitability,” Babu added.
To address these areas of concern and to minimize the logistics costs, ITC has implemented efficient software systems that run optimising algorithms to arrive at the number of trucks required, the route to be followed and the way the truck is to be loaded with finished goods.