Mondelez India, the maker of Cadbury Dairy Milk, BournVita, and Oreo is capitalising on digitisation and technology to ramp up supply across the country. Venkat Venepally, Vice-President - Supply Chain at Mondelez India, spoke to businessline on the expansion of its Sri City plant, use of technology to predict consumer demand, digitisation in the supply chain network, and green supply.
How is Mondelez using digitisation in its supply chain network in India?
As we went through a huge growth phase in India, we realised it was important to focus on being a digital, technologically-enabled automated supply chain. Covid enabled us to understand the importance of technology and digital supply chains. We continue to invest heavily in building a strong digital culture.
What are your expansion plans with the Rs 1,000-crore investment in the Sri City plant?
The Sri City plant, one of our biggest plants in the region, is critical for our supply chain network. We are investing further in Sri City, which will see us become one of the biggest chocolate plants for Mondelēz in the Asia-Pacific and the globe, and will allow us to deliver growth across categories in the country.
Investments enable us to produce high-quality products, which enhances consumer experiences and allows us to deliver at an advantageous cost. Capacity expansion will not only enable us to deliver products at a great cost, but also allow us to invest more in future technologies within the supply chain. Today, in Sri City, we run a just-in-time operation, leveraging technologies that we have implemented across the plant. Once we begin to realise the advantage in this, we can replicate it across our plants, in the country, the region and globally.
How is the company using technology to predict consumer demand?
Close to 18 months back, we started this journey as a pilot within the Mondelez India business unit, by deploying the AML tool, which we call advance statistics.. The tool requires information for prediction, like a traditional channel and an omnichannel, because the variability in the traditional channels is slightly lower than the omni-channels. The accuracy in traditional channels has risen to historical levels, way beyond what you would achieve without AML. However, when it comes to omnichannel, the variability is very high, and it’s not just by region, it could be as close as by store, by category, by region or city. For example, a festival happening in that region could change the variability of demand, because a big event in that region could change the demand.
We adapt AML tools to continuously read variability, learn and adapt within the machine, without a human interface.
How has prediction of consumer demand helped across the product value chain?
Accuracy is a huge advantage because it helps streamline the value chain. One does not need to have a multi-echelon inventory at every stage to manage huge variability. This also means that we can hold lesser inventory, which means lesser warehousing space. Less inventory also helps you in terms of the cost. It is not just a forecast accuracy, it streamlines the whole value chain. And then it eliminates many of the losses that one would see in a traditional model. I think for 30 to 40 per cent of our Stock Keeping Units (SKU) today, we do zero-touch forecasting. Zero-touch forecasting at a distribution level is when we don’t touch what the tool has predicted. 30 per cent of our planning is automated today. If we can get close to 60 to 70 per cent, that’s when we would have achieved the best efficiency from the planning tool.
How much has the use of technology contained costs in the supply chain?
Around 10 to 15 per cent in warehousing cost, while our efficiencies on average are around 12 per cent of forecasting accuracy. It has helped us drive the majority of our volume growth without adding to warehousing space. Instead of buying more space, we have been reducing space requirements in the base and adapting to the growth coming through it.
How is Mondelēz India using a green supply chain in its network?
Of our four plant sites today, three run 100 per cent on renewable energy. The fourth site operates close to 30 per cent on renewable energy. Despite huge volume growth, we have been able to reduce, in absolute terms, GHG emissions, compared to that in 2018. We are working closely with third-party manufacturers and big suppliers to optimise the entire value chain and get closer to zero greenhouse emissions.