Supply Chain Management at Hindustan Levers – Suppose you were a student at the business school and a member of the audience at the presentation on SCM at HLL.
CASE – 5 Supply Chain Management at Hindustan Levers
The mini auditorium was full when the lecture started. The first thing the managers did was to introduce the company to the audience of students and faculty members of the business school. They also suggested that any one could ask question during the presentation they were going to make.
The head of information systems started by saying “as you must be aware, HLL, subsidiary of Unilever, is India’s largest fast-moving consumer goods (FMCG) company. We are the leaders in home and personal care products, foods and beverages, and specialty chemicals. Armed with a portfolio of 110 brands, HLL’s has a vision to meet everyday needs of people everywhere by anticipating the aspirations of customers and responding creatively and competitively with branded products and services that raise the quality of life.” He went to relate the experience of HLL at restructuring its businesses by informing that HLL initiated Project Millennium focussing on the four areas of growth, knowledge, talent, and cost. On being asked whether that was the first time that HLL was restructuring its businesses, the head of information systems replied that business restructuring is a continual process and HLL invested close to Rs 10 crore over a period of a year on the process itself. The process resulted in HLL moving out of its non-core areas, integration of existing core areas, and exploring new potential areas.
Supply Chain Management at Hindustan Levers
At this point, the infotech manager took over and explained the marketing set up of the company. He said, “Owing to the nature of our business activities, we need to launch several new products every year. Streamlining procurement, operations management, and marketing are mammoth operations. It is here that an operational effectiveness technique like SCM came to our aid. With SCM solutions, we are able to monitor all our production lines and manage existing distribution network to make way for new products.” On being asked to relate how HLL was using information technology (IT), the infotech manager said, “SCM mainly relies on the use of IT. For support, there is a satellite based communication system that offers voice and communication facilities linking over 200 locations all over the country. Other initiatives on the IT front have been taken to support the streamlining of the whole process. E-commerce and B2C portal are used to reduce the inventory levels and the working capital cycle. Continuous innovation in process and product management are the other supporting initiatives.”
Some of the students were interested in knowing the software used by HLL for SCM. To this, the infotech manager said that Mfg Pro, a software similar to Enterprise Resource Planning, was introduced in 1998. With this HLL has been able to reduce the duration of production runs. “Constant monitoring of inventory levels and servicing demand is done so that no bottlenecks hold up the supply lines so crucial to an FMCG company such as ours,” he added.
The students were quite impressed to know that the SCM system links the HLL’s headquarter at Mumbai with its 50 factories, an equal number of depots, and 200 sites. More than 750 of the larger
Supply Chain Management at Hindustan Levers
stockists have also been linked through a TCS EX software package. From the enthusiasm of the infotech manager, the audience could surmise the continual search for a software solution to enable seamless operations of its value chain seemed to be a fetish with HLL.
A young faculty member interjected at this stage to ask about the difficulties faced in SCM implementation is not always smooth. “The process involves changing established ways of working and it could turn out to be quite painful. The success of the SCM system depends on the quality of data provided to it. Training in error-free data logging is essential.” The head of the information systems added, “Then, there is a bigger challenge of decentralisation of decision-making to the shop floor level.
The fear of making mistakes and getting one’s inefficiencies exposed are the behavioural snags that any company implementing SCM has to contend with.” The presentation ended with the head of information systems encouraging the students to learn more about SCM as it offered a viable approach to managing the value chain in an integrated way.
Question
Supply Chain Management at Hindustan Levers
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