ITC bets big on digital to bring in process efficiency, cost optimisation across value chain

From using AI and ML tools to sharpen social listening skills to be able to customise products for its consumers to bringing in process efficiency in manufacturing and using big data analytics and algorithms to strengthen its distribution footprint, to even farmer engagements, ITC is betting big on digitalisation across the value chain.

According to B Sumant, Executive Director, ITC, the company has accelerated its digital transformation over the last two-to-three years. It has not only helped bring process efficiency but has helped in cost optimisation.

While on one hand, the company is customising advertisements and communication campaigns to target consumers through digital media platforms, on the other hand, it is using insights from social listening to customise its offerings. The diversified conglomerate has rolled out close to 110 products over the last one year.

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Following consumer trends

“ITC has been closely following the emerging consumer trends and has enhanced social listening that fuels our product development engine and provides valuable inputs for product launches. We are probably one of the most prolific product innovation companies and we launched 110 products last year during Covid. We launched a number of products based on what consumers want,” Sumant told BusinessLine.

Some of these products will continue to have sustained demand, but some may moderate over time. ITC dynamically realigns its supply chain based on the prevailing demand conditions and consumer preferences, he added.

ITC created Sixth Sense, the company’s marketing command centre, which uses digital tools for social listening to observe the key trends, issues, needs, and concerns on people’s minds through social media forums.

“The relationship of brand owners with consumers has always been disintermediated by retail so while we make a lot of products and we put out a lot of ads but we cannot directly talk to consumers. Digital provides that unique opportunity to cross that barrier and engage with consumers directly. If you know who you are advertising to, you can tailor-make the content and serve it in the right places and to the right people,” he said.

So from running big ads and campaigns, the company has been focusing on rolling out customised ads. The Sixth Sense works with a variety of agencies and tech partners to optimise the cost of customer acquisition and that of ad spends.

Insiders say that ITC’s Chairman Sanjiv Puri, who has led ITC Infotech in the past and is tech-savvy himself, has been driving a digital-first culture in ITC. His vision of ITC as a future-tech enterprise has catalysed the creation of Smart ecosystems with digitalisation being pursued at every node of business.

Puri is said to have spearheaded the setting up of a ‘Young Digital Innovators Lab’ consisting of digital natives drawn from across ITC’s businesses to crowdsource digital strategies. He has also formed a dedicated digital council of senior ITC managers — the ‘DigiNext’, which ideates and supports high-impact digital interventions.

Digital in process efficiency

ITC has also been using digital heavily to improve internal process efficiency. It has implemented Project Zen which helps integrate right from demand forecasting to inventory planning to manufacturing.

With rising inflation and surge in prices, it is important for companies to protect consumers as much as possible and for that the first recourse would be to reduce cost by finding better efficiency, improve conversion and yields across the board.

“There are a large number of projects going on in every business, we have strategic cost management teams and they are looking at ways to reduce cost, lower wastages, improve yields, and improve conversion efficiencies. Today, many of them are digital projects. It is happening across the board and in all manufacturing processes, we are using IoT across multiple product lines and plants,” he said.

ITC calls the digital umbrella initiative in manufacturing Industry 4.0. Infact various initiatives of digitalisation and implementation of Industry 4.0 technologies has enabled ITC Paperboards and Specialty Paper Business to expand margin by 230 basis points over the last two years, sources said.

Digital initiatives

The company is also undertaking a lot of digital initiatives on the distribution front using big data analytics and algorithms to break up its network of 2.5 million direct retailers into cohorts based on size, range, locality, population around the retailer, etc. This would help salesmen visiting the retailers to suggest what kind of an assortment of products to be kept at his outlet. It also has B2B apps called Unnati and VIRU to help retailers place orders.

“We work extensively with e-comm players and our share of e-comm sales is much higher than that of the industry. We have more than doubled the share of e-comm to our sales. We undertake aggressive marketing on these platforms and we have dedicated teams to handle these platforms,” he said.

ITC’s sales through the e-commerce channel grew by 50 per cent during the year, taking the channel salience to seven per cent. ‘ITC e-store’, the company’s exclusive D2C platform, is now operational in 15 cities and offers over 700 ITC FMCG products across over 45 categories.

The company also uses the digital platform for raw material sourcing and for better price discovery. It has a number of projects for sourcing optimisation and has been able to get “significant benefits” because of sharper procurement.

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