Britannia maintains customer service levels through optimized inventory
Best known for its biscuits, Britannia is one of India’s oldest and most revered companies. For the 130-year-old organization, maintaining its hard-earned market position was critical during the frequent COVID-related lockdowns. Britannia engaged NTT DATA’s Integrated Demand and Supply practice to strengthen inventory numbers without compromising customer trust and loyalty.
Business Needs
The Indian baked goods market is worth about Rs. 37,000 crore (4.8 bn USD). Established national brands and smaller regional players vie for market share in a segment that’s growing at about a 9% Compound Annual Growth Rate (CAGR). At this level of sustained growth, it’s essential to keep shelves stocked, if only to maintain valuable market share.
With a complicated manufacturing and distribution network spread across a large and varied landscape, uncertainties can be difficult to plan for. That’s why the manufacturer reached out to NTT DATA to help build the capability to reduce inventory levels with no room for compromise on customer satisfaction. The implemented solution also needed to be flexible and scalable — with no IT intervention necessary.
As with most food and beverage manufacturers during the pandemic, Britannia saw a significant downturn in sales followed by an abrupt recovery. These fluctuations affected recently collected historical inventory numbers in extreme ways. An ideal market state needed to be identified, isolated and benchmarked.
Outcomes
- Focuses investment on segments with high velocity and profitability
- Reduces need for excessive levels of working capital
- Enables lower overall inventory levels
- Establishes strict inventory norms at all warehouses
- Improves inventory performance
The inventory optimization project with NTT DATA helped us take a segmented approach that looked at multi-dimensional levels of variability, gross margin and our core and non-core portfolio. This helped us simultaneously optimize inventory and improve service levels.
– Abhishek Gaurav, Head of Planning, Britannia
Solution
Quantifying ideal performance from odd numbers
A garden-variety project begins with collecting data and assessing current performance, but this situation wasn’t straightforward. Anomalous historical data — a secondary effect of COVID-19 and its mitigation procedures — drastically complicated the assessment process.
Aside from the expected number-crunching, delivering a usable assessment required specific qualitative input from relevant managers. Their perspectives helped Brittania understand common demand patterns, define actionable trends and extrapolate the ideal inventory requirements from the data.
A segmented view of the product portfolio
The assessment uncovered high variations in inventory performance across SKUs. These caused many overstock and stock-out situations, which led NTT DATA to leverage proven inventory planning methodologies and its product segmentation framework. Britannia arrived at optimized inventory targets across different product segments and channels — meeting its customers’ needs and identifying recoverable value.
The company can now identify segments of the portfolio with high velocity and profitability, which allows it to focus investment and maintain lower overall inventory levels.
Determining and evaluating interrelated inventory targets
The most important benefit NTT DATA’s inventory optimization tool delivered was the ability to determine target stock. Along with the determination of “cycle stock” (stock levels needed to fulfill demand), “safety stock” (stock that buffers against uncertainties) and “reorder point” (stock levels that trigger an upstream reorder), these capabilities allow Britannia to maintain strict inventory norms at all its warehouses.
Visibility into scenario building and performance
NTT DATA’s solution also provided a scenario-by-scenario comparison of how inventory targets perform when maintaining differently targeted levels of service. The comparison gave the company insights into the level of inventory investment required to improve and maintain the ideal customer delivery performance.
A continuously updated agile solution
This tool continually refreshes information such as network changes as well as demand and supply transactions. NTT DATA’s tool can dynamically calculate, revise and confirm inventory allocations to maintain desired customer service levels.
By developing the ability to maintain determined optimized inventory levels, no matter how demand fluctuates, Brittania is more prepared than ever. The company can now contend with demand uncertainties within its supply chain. It improved inventory performance while reducing its need for excessive levels of working capital.
About Britannia Industries Limited
Britannia Industries Limited is an Indian multinational company specializing in the food industry. Founded in 1892 and headquartered in Kolkata, it's one of India's oldest existing companies and best known for its biscuit products.