Seasonal demand

Sathyananda, GM, supply chain, Cafe Coffee Day, talks on customer expectations.

What are the problems in logistics you face?

A major challenge is seasonality in supply and demand, cut-throat competition, demand for variety in product and packaging, higher expectations on quality and delivery and, of course, expansion.

How do you combat these logistical problems?

To over come the above problem CCD has adopted industry best practices in its supply chain network.

With the implementation of SAP, we are able to evaluate the seasonality, demand conditions, supply conditions across the country. Apart from the technology support a dedicated professional team is working hard to support the growing needs of our customer.

What is the existing structure for supply of raw materials to kitchens?

Some organisations adopt IT solutions for material management requirements with the aim of reducing inventory costs, cycle count across the supply chain.

However, in the absence of a clear inventory management strategy, technology alone will not solve all of the problems. We went in for a decentralised distribution strategy instead of a hub-and-spoke model, and set up regional hubs in Delhi, Mumbai and Kolkata.

These cities then linked to the towns in their neighbourhood. With this strategy we not only reduced the lead time, but also able to get the added advantage of VAT credit system.

What is the supply chain from kitchens to cafes?

Presently we have outsourced this activity to a service provider and dedicated vehicles are attached to each kitchen to ensure the smooth flow of material in a very Hygiene condition.

How many kitchens are linked to this?

We have a major kitchen in Kolkata and small kitchens in all highway cafés. We will be opening big kitchens soon in all metro cities.

What is the degree of automation used?

CCD recently introduced SAP across supply chain and Finance and very soon it will be integrated with the POS (point of sales) system. After this we will be having real time data at all level across café's and city stores.

How much is the cost of logistics in the company's operation?

Combined expenditures of logistics and warehouse will be 5-7 per cent of turnover. It has increased slightly because of high rent and increased manpower cost in the recent past.

How much of logistics is in-house and how much is outsourced?

Except the mother warehouse at Bangalore, most of the warehouses and transportation is outsourced to three 3PL partners for managing activities across the country.

Transport Corporation of India (TCI) is one among them. We have selected these companies based on the parameters like network, infrastructure support, professional approach, and of course price.

What is the transport mix?

It depends on factors like the type of the products, self life and lead time. For example, If it is a short shelf-life product, obviously we go for fastest mode of transportation. It can be rail or can be air shipments depending on the city. But more than 90 per cent of movement is happening through road transportation.

What is the average cargo handled in a month?

Outbound and inbound together will be around 300 trucks while approximate tonnage will be 3000t per month. Load factor varies from cities to city and regions to regions.

For example, the mother warehouse at Bangalore will have more than 60 trucks for outbound logistics while from regional warehouses it will be less than 15 trucks.

On an average more than 100 trucks will move across all the cities. It has significantly increased in the recent past because of our furniture factory.

At present 80 per cent of our café furniture are manufactured in house and it occupies more space in the truck for movement.