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Acknowledgement
It would be of great pleasure for me to take the opportunity of thanking nearly everybody who had been of great help in the completion of my dissertation. My sincere gratitude goes to MR.KAPIL GARG (DEPPT. OF MANAGEMENT) and MR.MANORANJAN (DEAN). My institute guide, without whose help this dissertation would have seemed impossible. I owe immensely for the minute help that was forwarded to me by friends in my organization. Both of the above mentioned persons supported me incredibly and guided me with suggestions and probations for the betterment of my accomplished work. It has been of great learning to be on the job and doing the dissertation simultaneously, which enriched my knowledge and developed my outlook. I am looking forward to continued support from my friends and colleagues in future as well. Only with their encouragement and coorporation.
SARITA KUMARI
Content
Chapter 1: Introduction -Need of the study - Background Research methodology -Objectives of the study -Research Methodology (sample size, instrument used, Methods of data collection) Descriptive work of subtopic on study Data analysis & Interpretation Suggestions & Conclusions Bibliography & Annexure
Chapter 2:
SYNOPSIS
TOPIC: - STUDY OF SUPPLY CHAIN MANAGEMENT AT BRITANNIA INDUSTRIES.
Chapter 1:
INTRODUCATION:What is supply chain management? Supply chain management is a process of strategically managing the procurement, movement and storage of materials, parts and finished inventory through the organization and its marketing channels in such a way that current and future are maximized through the cost effective fulfillment of orders. Elements of supply chain management: - Two main elements Supply chain management planning: based on optimization theory and the use of highly sophisticated systems are imperative to arrived at the most efficient production schedules, distribution plans and transportation plans. Supply chain management execution: start from date of schedule. Due to various practical reasons and limitations deviations from the plans are generated. An execution level decision includes re-planning of the material flows, loading factors and the margins. Primary focus of SCM is to serve consumers with excellent goods and services against minimum possible costs and response times. It based on sophisticated IT systems and knowledge workers.
Chapter 2:
RESEARCH METHODOLOGY:The non-exploratory research methodology will be used for thesis writing. OBJECTIVES: Analyze the effects of supply chain management on Britannia industries process. Supplier Chain management in Britannia industries visa priyagold biscuits. To provide possible strategies for better implementation in SCM in Britannia industries.
RESEARCH INSTRUMENTS:The secondary data will be collected through internet, books and the materials published in journals and magazines. SCOPE OF THE STUDY: In competitive scenario how to increases the business with the implementation of supply chain management. LIMITATIONS: Not private datas or primary datas which really give correct information. Chapter 3: Descriptive works on the other biscuits producers companies. Chapter 4: Data analysis & Interpretation Base on the secondary datas which will be collect through internet, magazines, books etc. Chapter 5: Suggestions & conclusions Chapter 6: Bibliography & Annexure
INTRODUCATION:
In todays rapidly changing business environment, ever greater demands are being placed on business
to provide products and services quicker with greater added value to the correct location With no relevant inventory position.
Customers want more quality, design, innovation, choice, convenience and service, and they want to spend less money, effort, time and risk. The supply chain of a company consists of different departments, ranging from procurement of materials to customer service. Supply Chain Management means transforming a companys "supply chain" into an optimally efficient, customer-satisfying process, where the effectively of the whole supply chain is more important than the affectivity of each individual department.
4. Deliver This is the part that many insiders refer to as logistics. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.
5. Return The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.
organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved. Supply chain management is typically viewed to lie between fully vertically integrated firms, where a single firm and those own the entire material flow where each channel member operates independently. Therefore coordination between the various players in the chain is keys in its effective management. Cooper and Ellram [1993] compare supply chain management to a well-balanced and wellpracticed relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.
Strategic decisions: strategic decisions are made typically over a longer time
horizon. These are closely linked to the corporate strategy (they sometimes the corporate strategy), and guide supply chain policies from a design perspective. Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities. Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics. Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management Information Technology infrastructure, to support supply chain operations. Where to make and what to make or buy decisions Align Overall Organizational Strategy with supply strategy
Tactical decisions:
Sourcing contracts and other purchasing decisions. Production decisions, including contracting, locations, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone Payments
Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.
Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. Performance tracking of all activities
Location Decisions
The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level.
Production Decisions
The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to direct customers, and direct customers to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends on the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.
Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in process between locations. Their primary purpose is to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.
Transportation Decisions
The mode choice aspects of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are keys in effective management of the firm's transport strategy.
get them to become partners in business in a win/win relationship. The benefits are seen in reduced purchase order (PO) processing costs; increased numbers of POs processed by fewer employees, and reduced order processing cycle times.
Inventory management: the goal is to shorten the order-ship-bill cycle.
When a majority of partners are electronically linked, information faxed or mailed in the past can now be sent instantly. Documents can be tracked to ensure they received, thus improving auditing capabilities. The inventory management solution should enable the reduction of inventory levels, improve inventory turns, and eliminate out-of-stock occurrences.
Distribution management: the goal is to move documents related to
shipping (bills of lading, purchase orders, advanced ship notices, and manifest claims). Paperwork that typically took days to cycle in the past can now be sent in moments and contain more accurate data, thus allowing improved resources planning.
about changing operational conditions to trading partners. In other words, technical, product, and pricing information that once required repeated telephone calls and countless labor hours to provide can now be posted to electronic bulletin boards, thus allowing instant access. Thus electronically linking production with their international distributor and seller networks eliminates thousands of labor hours per week in the process.
Payment management: the goal is to link the company and the suppliers
and distributors so that payments can be sent and received electronically. This process increases the speed at which companies can compute invoices, reducing clerical errors and lowering transaction fees and costs while increasing the number of invoices processed.
Financial management: the goal is enable global companies to manage
their money in various foreign accounts. Companies must work with financial institutions to boost their ability to deal on a global basis. They need to assess their risk and exposure in global financial markets and with global information as opposed to local market information.
Sales force productivity: the goal is to improve the communication and
flow of information among the sales, customer, and production functions. Linking the sales force with regional and corporate offices establishes greater access to market intelligence and competitor information that can be funneled into better customer service and service quality. Companies need to collect market intelligence quickly and analyze it more thoroughly. They also need to help their customers introduce their products to market faster, giving them a competitive edge. In sum, the SCM process increasingly depends on electronic markets because of global sourcing of products and services to reduce costs, short product life cycle, and increasingly flexible manufacturing resulting in a variety of customizable products.
Collaboration strategy
The response that maximizes the firms profitability and growth should be determined.
Manufacturing
Transportation
Materials management
Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. Distribution Strategy: Centralized versus decentralized, direct shipment, pull or push strategies, third party logistics. Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation. Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.
decisions. These models typically assume a "single site" (i.e., ignore the network) and add supply chain characteristics to it, such as explicitly considering the site's relation to the others in the network. Simulation methods are a method by which a comprehensive supply chain model can be analyzed, considering both strategic and operational elements. However, as with all simulation models one can only evaluate the effectiveness of a pre-specified policy rather than develop new ones. It is the traditional question of "What If?" versus "What's Best?"
local taxes) is maximized through the design of facility network and control of material flows within the network. The cost structure consists of variable and fixed costs for material procurement, production, distribution and transportation. They validate the model by applying it to analyze the global manufacturing strategies of a personal computer manufacturer. Finally, Arntzen, Brown, Harrison, and Trafton [1995] provide the most comprehensive deterministic model for supply chain management. The objective function minimizes a combination of cost and time elements. Examples of cost elements include purchasing, manufacturing, pipeline inventory, transportation costs between various sites, duties, and taxes. Time elements include manufacturing lead times and transit times. Unique to this model was the explicit consideration of duty and their recovery as the product flowed through different countries. Implementation of this model at the Digital Equipment Corporation has produced spectacular results --- savings in the order of $100 million dollars. Clearly, these network-design based methods add value to the firm in that they lay down the manufacturing and distribution strategies far into the future. It is imperative that firms at one time or another make such integrated decisions, encompassing production, location, inventory, and transportation, and such models are therefore indispensable. Although the above review shows considerable potential for these models as strategic determinants in the future, they are not without their shortcomings. Their very nature forces these problems to be of a very large scale. They are often difficult to solve to optimality. Furthermore, most of the models in this category are largely deterministic and static in nature. Additionally, those that consider stochastic elements are very restrictive in nature. In sum, there does not seem to yet be a comprehensive model that is representative of the true nature of material flows in the supply chain.
inventory management approach. The thrust of the rough cut models is the development of inventory control policies, considering several levels or echelons together. These models have come to be known as "multi-level" or "multiechelon" inventory control models. Multi-echelon inventory theory has been very successfully used in industry. Cohen et al. [1990] describe "OPTIMIZER", one of the most complex models to date --- to manage IBM's spare parts inventory. They develop efficient algorithms and sophisticated data structures to achieve large scale systems integration. Although current research in multi-echelon based supply chain inventory problems shows considerable promise in reducing inventories with increased customer service, the studies have several notable limitations. First, these studies largely ignore the production side of the supply chain. Their starting point in most cases is a finished goods stockpile, and policies are given to manage these effectively. Since production is a natural part of the supply chain, there seems to be a need with models that include the production component in them. Second, even on the distribution side, almost all published research assumes an arborescence structure. Each site receives re-supply from only one higher level site but can distribute to several lower levels. Third, researchers have largely focused on the inventory system only. In logistics-system theory, transportation and inventory are primary components of the order fulfillment process in terms of cost and service levels. Therefore, companies must consider important interrelationships among transportation, inventory and customer service in determining their policies. Fourth, most of the models under the "inventory theoretic" paradigm are very restrictive in nature. Mostly they restrict themselves to certain well known forms of demand or lead time or both, often quite contrary to what is observed.
Market summary:
Indias food-processing sector, though still developing, contributes 14 percent to the manufacturing GDP (5.5 percent of aggregate GDP), produces goods worth Rs. 2.8 trillion ($64 billion), and employs 13 million people. Much of Indias food-processing industry is small-scale and involves very little value addition, although in recent years several multinational food-processing companies have started operations in India. A plethora of internal restrictions, including (a) prohibition on foreign direct investment in retail, (b) prohibitions on contract farming, (c) barriers to interstate commerce based on revenue and food security concerns, (d) some of the highest taxes on processed foods in the world, and (e) inefficient in infrastructure and marketing networks seriously constrain growth of the sector. The almost year-round availability of fresh products across the country, combined with the consumers preference for fresh products and freshly cooked foods has dampened demand for processed food products. The level of processing varies across segments ranging from less than 2 percent of the production in the case of fruits and vegetables to over 90 percent in nonperishable products such as cereals and pulses. In the latter, however, processing involves very little value addition, and is mostly confined to grading, cleaning, milling, and packing; with negligible use of additives, preservatives, and flavors. Level of processing in perishable products: Product Level of Processing (% of total production) Unorganized Total Organized Sector 1/ Sector & 1.2 0.5 1.7 15.0 21.0 6.0 1.7 0.4 22.0 0 0 9.0 1.0 37.0 21.0 6.0 10.7 1.4
Unorganized in fruits and vegetables includes unbranded pickles, sauces. And potato chips, but excludes processing by street vendors; unorganized in dairy includes processing by sweet food makers; unorganized in marine products includes processing by small fishermen. According to the Ministry of Food-processing Industries (MFPI), the foodprocessing industry over the last decade has grown at an average annual rate of 7.1 percent. This higher rate is indicative of the relatively low base, the increasing marketable surpluses of agricultural products, changing consumer life styles and tastes, and the countrys higher disposable income. The growth is projected at around 7.3 percent per annum over the next five years. Of the estimated total food sales of rupees 8.6 trillion ($198 billion) in 2003/04, processed food consumption was valued at Rs. 5.3 trillion ($122 billion), with the share of value-added foods (juice, jams, pickles, cheese, butter, ghee, processed meat, confectionary and chocolate, alcoholic beverages, aerated beverages, malted beverages, food services, etc.) estimated at 37 percent.
Entry strategy
It is essential to survey existing and potential markets in India for products before initiating export sales. The Office of Agricultural Affairs in the American Embassy New Delhi (see Section V) and market research firms in India can assist new exporters. If the US companies do have products of promising sales potential in India, they can either set up a base in India or appoint distributors or agents. The Indian government encourages foreign investment in the food-processing sector. Hundred percent equity participation or joint ventures with Indian companies are possible. Tax benefits and incentives are available to companies setting up operations in Special Economic Zones (SEZ). o Determine through surveys that their potential customers are, and where in India these customers are located o Recognize that agents with fewer principals and smaller set-ups often are more adaptable and committed than those with large infrastructure and big reputations. o There may be a conflict of interest where the potential agent handles similar product lines, as many agents do.
Indias food-processing industry can be broadly classified into the following categories:
Fruits and vegetable based products Dairy products Cooking oils Meat and poultry Fisheries Non-alcoholic beverages Alcoholic beverages Confectionary Grain and grain-based products (milling & baking) Milling and baking: 75 percent of Indias wheat production is milled into wheat flour (atta) to make rotis or chapattis (unleavened flat bread), mostly in small chakkis (small wheat grinding mills) in the unorganized sector. Branded atta is a relatively new segment, developed to provide consumers a more hygienic quality, as compared to chakki atta. Annual production of branded atta is about 1 million tons, and is growing at 7 to 9 percent annually. Major players are ITC, Pillsbury, HLL, Agro Tech Foods, and Shakti Bhog Foods. Bakery products constitute the largest segment of grain-based processed foods. Small and medium unorganized local players and a limited number of organized units dominate the industry. Major players are Britannia, HLL, ITC, Parle, Priya Gold, and Cremica. The grain-based snack market, comprising extruded snacks and savories, is estimated at around ($667 million). Of this, the organized segment contributes only 15 percent of sales. Major players are Pepsi, Haldiram, SM Dyechem, Bikanerwala, etc. Breakfast cereal production in the organized sector is very small, and is mainly confined to corn flakes. Major producers are Kelloggs and Mohan Meakins. Pepsi is reportedly interested in investing in the breakfast segment over the next five years.
Company profiles
Indian food processors may be divided into the following main categories: Large Indian companies that have their production base in India or neighboring countries (for tax-saving purposes) Multinational and joint-venture companies that have their production base in India Medium/small domestic food-processing companies with a local presence Small local players in the unorganized sector
Company Name
INDIAN COMPANIES Products Godrej Foods Vegetable oils, fruit juices, tomato Ltd. paste, soy beverages Dabur India Fruit juices, cooking paste, honey Ltd. Mother Dairy Dairy products, ice cream, canned Dhara vegetables, fruit juices, cooking oils Amul Dairy products, ice cream, chocolate ITC Hindustan Lever (HLL) VH Group Britannia Industries Parle Products Branded wheat flour, biscuits, readyto-eat food, confectionary Ice cream, branded wheat flour, bread, sauces, jams, jellies Poultry products Biscuits, bread, packaged food Biscuits, candies, toffees
Nutrine Confectionary Company Weikfield Products Company Rasna (Pioma Industries) Haldirams UB Group Marico Industries MTR Foods Punjab Markfed Vista Processed Foods Dynamix Dairy Industries
Custard powder, baking powder, jelly crystals, drinking chocolate, sauces, soups Instant drink, health drink, soft drink concentrates, flavors Snack foods Beer, alcoholic beverages Vegetable oils, jams Ready-to-eat foods, soups, spices, ice cream mixes, pickles Canned food, rice, vegetable oils Frozen chicken and vegetables
Products Soft drinks, potato chips, snack food, fruit juices Vegetable oils Ketchup, health drinks Breakfast cereals, biscuits Vegetable oil, margarine Coffee, chocolates, confectionary, instant noodles, milk products, beverages, health drinks Chocolates, health drinks Soft Drinks, beverages
Agro Tech Branded vegetable oils, branded Foods wheat flour, snack food, popcorn (ConAgras) Pillsbury Wheat flour, cake mixes GlaxoSmith Kline Perfetti Wrigley Health drinks Chewing gum, candy Chewing gum
Lotte India Confectionary Corporation Ltd. (Parrys) McCain Foods French fries Adani Wilmar Cooking oils, bakery shortenings Ltd. The Solace Soy nuggets Company
Sector trends Production: The food-processing industry in India has undergone big changes over the last six to seven years, in terms of types, variety, quality, and presentation of products, which is mainly a result of the liberalization that led to foreign direct investment (FDI) in the processed food sectors. Most food-processing sectors have been brought under the liberal, transparent, and investor-friendly FDI policy, which allows 100 percent FDI. However, the small-scale farming system in India, marketing problems, lack of grading and standards, poor distribution channels, and onerous government policies continue to pose problems for the processing industry to source the right type of raw materials and to discourage more investment in the sector. Nevertheless, the proportion of FDI in the food-processing sector to total FDI into India is low, constituting about 4 percent of total FDI inflow from 1991 to 2004. Several multinational companies, including US-based companies like Pepsi, Coca Cola, ConAgra, Cargill, Heinz, Kelloggs, IFF, and Mars (pet food only) have entered the Indian food-processing industry with significant investments. Indian food and beverage companies are expanding their operations to neighboring countries like Bangladesh, Nepal, Sri Lanka, Commonwealth of Independent States countries, and the Middle East. Takeovers and mergers are beginning to occur in the Indian foodprocessing sector, leading to consolidation.
The food-processing industry is beginning to focus on, and invest in, advertising and awareness campaigns about products and brands. Companies have added extras to their existing brands, including stylish packaging. The growth in the food-processing sector has generated increased interest in high quality food ingredients in order to produce high quality foods. The ready-to-eat food sector is growing at a high rate due to the changing lifestyles of the middle-class consumers (both partners working, etc.). Some previously unknown regional brands are gaining national acceptance because of consistent quality and product safety, thereby providing some competition to established companies. The GOI is in the process of enacting a Food Safety and Standards Bill, which if properly done and implemented, would provide increased transparency, better food safety management systems, and science-based standards.
Consumption:
The following factors influence the type and quality of inputs in processed foods: A large and an exceedingly wealthier middle class are creating growing demand for a wider variety of high quality processed foods. The changing age profile (sixty-five million people expected to enter 20-34 year age group by 2010) and increasing exposure to western-type products and lifestyles. The market entry of several multinational food-processing companies and ingredient suppliers. The increasing number of fast food chains. The recent trend toward a healthier lifestyle has generated a niche market for diet, healthy, low-calorie, and non-fat food products. The increasing urbanization and growing number of working women. A slow but steady transformation of the retail food sector in cities.
Competition
Indias domestic industry is the primary competitor for US food-processing and ingredients suppliers in India. India, with diverse agro-climatic conditions, has a production advantage in many agricultural goods, with the potential to cultivate a large range of agricultural raw materials required by the foodprocessing industry. India is a major producer of spices, spice oils, essential oils, condiments, and fruit pulps. Significant variations in food habits and culinary traditions across the country translate into a competitive advantage for small and medium local players, who are familiar with local food habits and markets. Some Indian food-processing companies have increased market share by decreasing product prices. High import duties on processed food and food ingredients make
imports relatively costly. Existing domestic food laws restrict the use of several ingredients, flavors, colors, and additives, thus posing an additional challenge to US exporters interested in the Indian market. Foreign competition to the United States is mostly from countries in closer geographic proximity to India, such as Australia and New Zealand. Suppliers from other countries often supply inferior goods at cheaper prices in comparison to those available from the United States. European suppliers are major competitors in the food ingredient sector. Several foreign firms, including some from the United States, have started operations in India. After all these, find out that in India there are lots of scope for organized sectors like ITC, BRITTANNIA and PRIYAGOLD to increase the business by applying supply chain management process for right quantity on right time to right customer.
BACKGROUND:
HISTORY OF BISCUITS: Sweet or salty. Soft or crunchy. Simple or exotic. Everybody loves munching on biscuits, but do they know how biscuits began? The history of biscuits can be traced back to a recipe created by the Roman chef Apicius, in which "a thick paste of fine wheat flour was boiled and spread out on a plate. When it had dried and hardened it was cut up and then fried until crisp, then served with honey and pepper." The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus' (meaning cooked or baked). The word 'Biscotti' is also the generic term for cookies in Italian. Back then, biscuits were unleavened, hard and thin wafers which, because of their low water content, were ideal food to store. As people started to explore the globe, biscuits became the ideal travelling food since they stayed fresh for long periods. The seafaring age, thus, witnessed the boom of biscuits when these were sealed in airtight containers to last for months at a time. Hard track biscuits (earliest version of the biscotti and present-day crackers) were part of the staple diet of English and American sailors for many centuries. In fact, the countries which led this seafaring charge, such as those in Western Europe, are the ones where biscuits are most popular even today. Biscotti is said to have been a favorites of Christopher Columbus who discovered America
Making good biscuits is quite an art, and history bears testimony to that. During the 17th and 18th Centuries in Europe, baking was a carefully controlled profession, managed through a series of 'guilds' or professional associations. To become a baker, one had to complete years of apprenticeship - working through the ranks of apprentice, journeyman, and finally master baker. Not only this, the amount and quality of biscuits baked were also carefully monitored. The English, Scotch and Dutch immigrants originally brought the first cookies to the United States and they were called teacakes. They were often flavored with nothing more than the finest butter, sometimes with the addition of a few drops of rose water. Cookies in America were also called by such names as "jumbles", "plunkets" and "cry babies". As technology improved during the Industrial Revolution in the 19th century, the price of sugar and flour dropped. Chemical leavening agents, such as baking soda, became available and a profusion of cookie recipes occurred. This led to the development of manufactured cookies. Interestingly, as time has passed and despite more varieties becoming available, the essential ingredients of biscuits haven't changed - like 'soft' wheat flour (which contains less protein than the flour used to bake bread) sugar, and fats, such as butter and oil. Today, though they are known by different names the world over, people agree on one thing - nothing beats the biscuit!
The inspiration for fortune cookies dates back to the 12th and 13th Centuries, when Chinese soldiers slipped rice paper messages into moon cakes to help coordinate their defense against Mongolian invaders
smaller quantities are hand weighed and added into the mixing bowl for each batch of dough to be mixed.
2. The ingredients are then mixed to form dough in the mixing bowl according to a specific mixing procedure. 3. The dough is then tipped into a hopper and gravity-fed into the dough sheeting section of the machine. In this process the dough is fed through various rollers to form a sheet of dough. Depending on what type of biscuit is being produced, this process varies. 4. Different forming techniques are used to get the required shape and size of the piece of dough which will form the biscuit. 5. The raw biscuits are transported through a gas-fired oven on a metal conveyor band where they are baked to form fresh, warm and deliciously smelling biscuits. While still hot, the savory biscuits are sprayed with oil and one of a number of types of flavoring is added to produce what is required for that particular biscuit.
6.Biscuits are baked rather than fried, so the oil merely assists the flavour particles to cling to the biscuit surface. The flavored biscuits then travel along a cooling conveyor in order to cool off.
7. Once the biscuits have been cooled, they are packed into wrappers, cartons and cases, ready for distribution to one of the warehouses
8. Quality checks are conducted at key points in the process to ensure process control and product quality is constantly maintained at a high standard. 9. The finished product is then transported in cases to state-of-the-art distribution warehouses. Stock is loaded as per delivery orders and sent to the various customers
Britannia Industries:
Britannia Industries Limited is an Indian company based in Kolkata that is famous for its Britannia brand of biscuit, which is highly recognized throughout the country. The Company's principal activity is the manufacture and sale of biscuits, bread, Rusk, cakes and dairy products like cheese, butter and milk. The brand names of biscuits include Vita Marie Gold, Tiger Variants, Nutri choice Junior, Good Day, 50 50 variants and Good Morning. Its Non-Executive Chairman is Mr. Nusli Wadia, and Chief Executive is Ms. Vinita Bali. The Britannia's fame is largely acknowledged through the colorful Britannia logos, Indian cricketers such as Virender Sehwag, and Rahul Dravid wear on their bats. Britannia's controlling stake is jointly with Groupe Danone and Nusli Wadia. Groupe Danone is one of the leading players in the world in bakery products business. The Company is based in the Indian city of Kolkata. Britannia Industries Ltd (BIL) -- one of India's leading food companies & a leading manufacturer of biscuits in the country has always been the pioneer in product innovation. Biscuits contribute to nearly 90 % of Britannia's total turnover, the rest coming from a rapidly growing portfolio that includes Cakes, Bread and Rusks. Britannia is synonymous with 'biscuits' and its brands like MarieGold, Good Day, 50-50, Treat and Tiger have become household names in the country.
Company overview:
The story of one of India's favorite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today. The beginnings might have been humble-the dreams were anything but. By 1910, with the advent of electricity, Britannia mechanized its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia's business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value. As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of "service biscuits" to the armed forces. As time moved on, the biscuit market continued to grow and Britannia grew along with it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry's who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark. On the operations front, the company was making equally dynamic strides. In 1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporate identity - "Eat Healthy, Think Better" - and made its first foray into the dairy products market. In 1999, the "Britannia Khao, World Cup Jao" promotion further fortified the affinity consumers had with 'Brand Britannia'.
Britannia strode into the 21st Century as one of India's biggest brands and the pre-eminent food brand of the country. It was equally recognized for its innovative approach to products and marketing: the Lagaan Match was voted India's most successful promotional activity of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India's most successful product launch. In 2002, Britannia's New Business Division formed a joint venture with Fonterra, the world's second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia 'One amongst the Top 200 Small Companies of the World', and The Economic Times pegged Britannia India's 2nd Most Trusted Brand. Today, more than a century after those tentative first steps, Britannia's fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia's shareholders. The company's offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. Having succeeded in garnering the trust of almost one-third of India's one billion populations and a strong management at the helm means Britannia will continue to dream big on its path of innovation and quality. And millions of consumers will savoir the results, happily ever after.
Companies values:
The Britannia values are those guidelines that help us add value to the life of the consumer. Energize your Body and Mind - This is Britannia's Promise to the Consumer All our actions should ensure that this promise is delivered to the consumer. Optimized delivery to the AW, the retailer and the end consumer is how we can deliver this value to the consumer. Organizational efficiency for healthy eating - This means that the retail relationship management has to be extremely effective so as to minimize costs and maximize coverage and range in each store. Laddering Innovation - There has to be a stretch in the implementation of newer approaches to access the existing and new consumers. Horizontal Empowerment- which in case of the sales function, translates to confident interaction with all customers and consumers such that the company is represented in the best possible manner.
is heavily dependent on commodities like wheat and sugar. The hedging activity will help control costs. It is now implementing a commodity buying strategy for managing input cost," added Wadia. According to him, the focus on cost control and supply chain management yielded savings of Rs20.2 crores in 2004-05. BIL has already appointed KPMG for supply chain management. "KPMG is looking into 48 projects like efficient procurement of raw materials, manufacturing and distribution logistics etc," said Wadia. The chief executive officer of Britannia, Vinita Bali, said the company was looking at new distribution channels like malls. "The company is investing around 15-20 per cent of revenue from a brand into brand promotion," she said. "Our company has six power brands in the portfolio each exceeding Rs 100 crore in annual sales," she added. Meanwhile Field Marshal Sam Manekshaw, one of the hero's of 1971 IndoPak war, is stepping down from the board of Britannia Industries. The eminent soldier served in the board of BIL for more than a decade. "He intimated to the company that he does not seek reappointment. The company will not propose to fill up the vacancy in the forthcoming annual general meeting," an official said.
BRITANNIA Industries has sure come a long way from being a company with a stodgy but well-recognized brand name and an inconsistent financial performance in the mid-1990s. After a thorough overhaul of the operational structure, a revamp of its product portfolio and an ambitious foray into new areas, such as dairy products and snack foods, the company has managed to turn in robust financial performance over the past four years. The stock market has also taken notice; re-rating the stock, pushing up its price earnings multiple from 14-15 times in 1997 to around 30 times now. The stock now ranks among the preferred investment options within the universe of FMCG companies. So, what has driven Britannia's valuations and what are its prospects?
which faces competition from a host of local brands, apart from national players such as Pepsi Foods and Haldirams. However, in both dairy and snack foods, Britannia outsources manufacturing. Therefore, should these forays fail to contribute on the expected lines; Britannia's losses would be restricted to its investments in product promotion. A proposed foray into bottled water, which was on the cards earlier, appears to have been put on the hold.
With Hindustan Lever and Nestle India also planning to expand their presence in the confectionery segment, the threat to Britannia in this segment could be potent. Of course, Britannia also does have the option to draw from the product portfolio of one of its parents, Groupe DANONE, one of the largest food companies in the world. However, unlike Nestle or Hindustan Lever, Britannia has seldom drawn from the parent's product portfolio for its domestic product launches. And Groupe Danone, which controls 36 per cent of Britannia's equity, does not hold a majority stake in Britannia.
A `Kwality' acquisition
As to the threat from the slowing sales growth in biscuits, Britannia's recent acquisition of an equity stake in Kwality Biscuits should provide some spark to the performance over the next one year. The purchase, which cost Rs 30 crores, would have made but a small dent in Britannia's overall cash flows. (Britannia generated operating cash flows of Rs 97 crores in 1999-2000) the Britannia Industries stock, which now trades at a price-earnings multiple of around 30 times its earnings for 2000-01 (based on nine-month per share earnings of Rs 17), should offer scope for reasonable capital appreciation over a three-year period. Investors can use any decline in stock price in keeping with market trends to build exposures to this stock.
SHAREHOLDERS can hold the Britannia Industries stock; given its relative low valuation visa other FMCG players. At its current price-earnings multiple of about 15 times its trailing 12-month earnings, the stock valuation is at a discount to other FMCG peers, which are hovering at 20-22 times. However, significant price appreciation on the stock is unlikely in the near term. The company's numbers for the June quarter display a continuing trend of decelerating sales growth, suggesting loss of market share to rivals in the biscuit business. Profit growth has been outpacing sales growth due to cost savings. This is likely to continue as the company ramps up production in the newlycommissioned manufacturing facility in Uttaranchal and reaps tax savings. The company's ongoing buyback programmed may also provide a stable underpinning to the stock price.
Duet Treat, and buoyancy in rural market growth a key market for the Tiger brand.
Triggers:
Investors should also watch for a couple of additional triggers to the Britannia stock price. The company has been steadily shrinking its equity base through buyback of its shares from the open market. The fourth tranche of the latest buyback program was concluded in 2004-05, at a maximum price of Rs 650 per share. Announcements on the next tranche of buyback, if any, are awaited. If Britannia decides to continue with its open market buyback program, it would be a positive for the stock, as buybacks have proved to be good tools to protect against downside in stock prices for other FMCG stocks. Second, Groupe DANONE, one of Britannia's overseas co-promoters, has recently been the object of speculation about a possible takeover. Though nothing concrete has happened, any possible consolidation of DANONEs food business at the global level with another strong FMCG player could have implications for Britannia Industries. Shareholders need to watch out for developments on both these fronts, so that they can be factored into the investment decision.
the new generation a healthy and nutritious alternative - that was also delightful and tasty. Thus, the new logo was born, encapsulating the core essence of Britannia healthy, nutritious, and optimistic - and combining it with a delightful product range to offer variety and choice to consumers.
Global partners:
The Wadia Group of India along with Group Danone of France is equal shareholders in ABIL, UK which is a major shareholder in Britannia Industries Limited. GROUPE DANONE is an International FMCG Major specializing in Fresh Dairy Products, Bottled Water and Biscuits/Cereals. One of the World leaders in the food industry, these are some of the laurels it possesses:
worldwide in Fresh Dairy Products worldwide equally placed in Bottled Water (by volume) worldwide in Biscuits and Cereal Products
Through its three core businesses (Fresh Dairy Products, Beverages and Biscuits and Cereal Products), GROUPE DANONE is committed to improving the lives of people around the world by providing them with better food products, a wider variety of flavors and healthier pleasures. Its dominant position worldwide is based on major international brands and on its solid presence in local markets (about 70% of global sales come from brands that are local market leaders).
GROUPE DANONE is recognized for the dynamism and strength of its brands:
DANONE: the leading brand worldwide for Fresh Dairy Products; DANONE represents almost 20% of the international market. DANONE is present in 40 countries worldwide. Evian: the best selling mineral water brand, with 1.5 billion bottles sold every year. Present in the 5 continents, in 125 countries. LU: the second brand worldwide, the first biscuits brand of GROUPE DANONE, which represents almost the half of the sales for the Biscuits and Cereal Products division. LU is mainly present in Western Europe. Wahaha: the leading brand for refreshing still water (water, readymade tea, fruit juices). The brand is one of the most popular in China, with more than 1.5 billion liters of water sold each year. Its name means "the child who laughs".
Company releases:
Britannia reports robust top line growth of 24%. Mumbai, October 28th, 2006: Britannia Industries Ltd. (BIL) has delivered its 4th Successive quarter of 20%+ growth. Net Sales Revenue at Rs. 550 crores represents a growth of 24%. Profit after Tax declined by Rs. 23 crores for the quarter, impacted by unprecedented and inordinate inflation of 15% - 20% in commodities like wheat, sugar, milk and edible oils. Biscuit prices to the consumer have remained firm for the last 5-6 years. Cost effectiveness and technical efficiencies have significantly absorbed the extraordinary inflation in all input costs. Net Profit is also impacted by the onetime exceptional income of Rs. 117 Mn available in the previous period (six months ending Sep 05) that did not re-occur in the current period. The accelerated trajectory of 20%+ top line growth continued this quarter as well with all of the company's key brands - Good Day, Tiger, 50:50 etc., and categories, like bread, cakes and exports, posting double digit growth, in excess of 40%. Specifically:
This quarter's growth of 24% continues the accelerated trend achieved over the last four quarters - with the Company consistently growing more than 20% each quarter for the last 4 quarters. To meet the high rate of growth, the Company is also investing in augmenting its manufacturing capability with plans to invest over Rs. 150 crores in infrastructure. Britannia has led the industry in innovation bringing delightful, 'new to the market' offerings like 50:50 Pepper Chakkar, MarieGold Doubles, Chota Tiger, Good Day cup cakes. The range of Festive Packs under the "Greetings" umbrella has doubled sales this Diwali. Consistent with its strategy of innovation, Daily Bread in which Britannia had acquired a strategic stake, has opened its first Italian frozen dessert parlour 'DeLuca's Gelato Italiano' in Bangalore.
Milestones:
1892
The Genesis - Britannia established with an investment of Rs. 295 in Kolkata Advent of electricity sees operations mechanized
1910 1921
Imported machinery introduced; Britannia becomes the first company East of the Suez to use gas ovens Sales rise exponentially to Rs.16,27,202 in 1939 During 1944 sales ramp up by more than eight times to reach Rs.1.36 crores
1939 44
Britannia Biscuit Company takes over biscuit distribution from Parry's Public issue - Indian shareholding crosses 60% Re-christened Britannia Industries Ltd. (BIL) The Executive Office relocated to Bangalore BIL celebrates its Platinum Jubilee Wadia Group acquires stake in ABIL, UK and becomes an equal partner with Groupe DANONE in BIL Volumes cross 1,00,000 tons of biscuits
1994
1997
Re-birth - new corporate identity 'Eat Healthy, Think Better' leads to new mission: 'Make every third Indian a Britannia consumer'
1999
BIL enters the dairy products market "Britannia Khao World Cup Jao" - a major success! Profit up by 37%
2000
Forbes Global Ranking - Britannia among Top 300 small companies BIL ranked one of India's biggest brands No.1 food brand of the country Britannia Lagaan Match: India's most successful promotional activity of the year Maska Chaska: India's most successful FMCG launch BIL launches joint venture with Fonterra, the world's second largest dairy company Britannia New Zealand Foods Pvt. Ltd. is born Rated as 'One amongst the Top 200 Small Companies of the World' by Forbes Global Economic Times ranks BIL India's 2nd Most Trusted Brand Pure Magic -Winner of the Worldstar, Asiastar and Indiastar award for packaging 'Treat Duet'- most successful launch of the year Britannia Khao World Cup Jao rocks the consumer lives yet again
2001
2002
2003 2004
Britannia accorded the status of being a 'Superbrand' Volumes cross 3,00,000 tons of biscuits Good Day adds a new variant - Choconut - in its range
2005
Re-birth of Tiger - 'Swasth Khao, Tiger Ban Jao' becomes the popular chant! Britannia launched 'Greetings' range of premium assorted gift packs The new plant in Uttaranchal, commissioned ahead of schedule. The launch of yet another exciting snacking option - Britannia 5050 Pepper Chakkar.
Britannia's gross sales turnover increased to Rs 18,179 mn in 2005-06 from Rs 16,154 mn in the previous year, registering a growth of 13%. Operating profit at Rs 1,763 mn increased by 7%, profit before tax and exceptional items at Rs. 1,958 mn declined by 19% against 2004-05 , Impacted by the profit on sale of long term investments that accrued to 'other income' last year. The Company achieved these results despite significant increases in input cost, particularly sugar, fuel and Oils, coupled with aggressive pricing in the industry. Your Company's focused initiatives on commercializing market place opportunities, supply chain efficiencies and overall cost management resulted in its top line growth and profitability. Operating margin at 10.3% in 2005-06 compared with 10.9% in the previous year was impacted by the inflation in input costs.
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Dividend Percentage 40.00 40.00 50.00 55.00 45.00 55.00 75.00 100.00 110.00 140.00 150.00
Bonus History
Year 1961 1966 1968 1971 1976 1984 1987 1990 2000 Bonus Particulars 1 equity share for every 2 shares held 4 equity shares for every 10 shares held 2 equity shares for every 3 shares held 2 equity shares for every 3 shares held 7 equity shares for every 10 shares held 2 equity shares for every 5 shares held 2 equity shares for every 5 shares held 1 equity share for every 2 shares held 1 equity share for every 2 shares held
Brand milestones:
Overview:
The success of Britannia lies in its strategy of identifying high value opportunities and capitalizing on them through relevant and differentiated brands, supported by an effective and efficient supply chain. The fountainhead of this strategy is Brand Building, i.e. increasing consumer relevance, preference and purchase. The key drivers are availability, presence, and merchandising for brands that offer consumers a satisfying experience across a variety of consumption occasions, and price points that represent good value for money.
As a corporate, Britannia has worked for the benefit of all stakeholders shareholders, consumers, dealers, suppliers, bankers, and employees. It has established an excellent track record in terms of its financial performance and dividends distributed to its shareholders. This has been adequately demonstrated with the Company's top line growing from Rs. 7,523 mn in 1997 to Rs. 18,179 mn in 2006 -a growth of 142% over the last 10 years. The net profit grew even more significantly at 718% from Rs. 179 mn in 1997 to Rs. 1,464 mn in 2005-06, giving a CAGR of 26.30%. As of 31st March 2006, the issued and paid up capital of Britannia amounts to 23,890,163 equity shares having a nominal value of Rs. 10/- each. The shareholder base is about 23,000 in number. Britannia's shares are listed at the Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange.
As part of the promotion, a life-size Tiger mascot visited select schools and distributed the 3D collection to the lucky children. They even got to photograph themselves with their favorite Tiger! This exciting offer ran at retail stores across the country. Buzz was created with in-store display materials like attractive dispensers and branded posters all based on the Alti Palti theme. The Alti Palti craze caught on like wildfire amongst the kids - just like Britannia Tiger biscuits!
Recent Developments
A new initiative taken by Britannia, to cater to all the taste fads of the consumer, seeks to widen the range of its snack foods. This will be Britannia's biggest challenge in the next few years. Meanwhile in existing categories of biscuits and baked products, innovation will be the key principle. A host of new flavors and food-formats, as never seen before in the Indian market, are due to enter the market in 2004. Thus, Britannia will continue to define the Indian market in biscuits and other food products.
Promotion:
The role of promotions for Britannia is especially important in this highly fragmented and competitive market. Today, the company prides itself on communication that is innovative, yet constantly able to strike a chord in the consumers' hearts and minds. Britannia's promotions have virtually redefined consumer expectations from this category. To reach out to the Indian consumer, Britannia has successfully leveraged India's two prime passions - cricket and movies. Britannia addressed these platforms in a manner true to its unique innovative style. It capitalized on every Indian's dream to watch a cricket World Cup match and created the 'Britannia Khao, World Cup Jao' contest in 1999. It based itself on instant gratification. The entire consumer needed to do was buy packs of Britannia biscuits, scratch a lucky card and win an all-expenses paid trip to England to watch a World Cup match. This promotion was so successful that it set a trend that has got every company scrambling for tickets to take their consumers for the World Cup. This promotion was repeated successfully in 2002/03 with the destination of choice being South Africa. Taking the success further was the promotion of 'Britannia Khao, Cricketer Ban Jao' that was fuelled by the need of every Indian to be a part of the passion called cricket. Britannia followed it up with another unique promotion; a vehicle that dealt with India's other passion movies. A promotion called 'Britannia Lagaan Match' that revolved around a movie called Lagaan was based on a cricket match. This promotion gave the consumer a chance to interact with the film stars and also get to play cricket with them. The match had over 40,000 spectators and made the headlines of leading newspapers and news channels. Britannia promotions have proved to the marketing world that promotions per se need not be only tactical but could also be strategic - used as a tool to further brand equity. Britannia advertising has distinguished itself from competition in terms of imagery and recall value. The innovation of such communication was exemplified through the launch of Britannia's salt-sweet biscuit. The brand name was 50-50 and the consumer was never to upfront that the product was saltsweet. But by just allowing the consumer to decipher the message himself, the company was able to draw the consumer closer and distinguish the offering from competition.
Brand Values:
The Britannia brand is all about eating healthy, to lead a better life. It advocates values that stand for health, hygiene, family, trust and taste. It reflects the strong link between physical and mental well-being that is so important to a person, and is typically a result of what one eats. Today, Britannia, driven by a passion for excellence, manifested by its innovative thinking, has been able to weave itself into the fabric of the consumer's everyday life. While Britannia strives to give consumers a healthier life, the consumer on the other hand, has come to expect innovation from Britannia's offerings - a huge challenge for the company.
Research methodology
The non-exploratory research methodology will be used for thesis writing.
Objectives:
Analyze the effects of supply chain management on Britannia industries process. Supplier Chain management in Britannia industries visa priyagold biscuits. To provide possible strategies for better implementation in SCM in Britannia industries
Research instruments:The secondary data will be collected through internet, books and the materials published in journals and magazines.
Limitations:
Not private datas or primary datas which really give correct information
In other towns and cities of northern India, Priyagold has become a determining factor for whatever large players like Britannia and Parle plan to do. From modest sales of less than Rs 28 crores in 1998, Priyagold has become an Rs 100 crores brand. And the target this year is Rs 200 crores. "We hope to cross the Rs 400 crores mark by 2004-end, when we'll be selling in the South and the East and expanding in the West," says Agarwal. That may not impress the DANONEs of the world, but considering that the growth for Priyagold comes primarily from a limited geographical coverage, it speaks volumes for the potential of the Indian market. Priyagold hasn't succumbed to pressures from mega-brands Britannia and Parle, which enjoy greater clout due to large product portfolios. Not all distributors and retailers are happy with big brands, claims Agarwal: "We've tried to give a healing touch to egos bruised by the arrogant attitude of the MNCs and large companies." Hand-in-hand with better returns, it can work wonders. And Agarwal gives margins that are far more attractive than those offered by the large players. Distributors get seven per cent against 4-4.5 per cent from Britannia, and retailers get 20-25 per cent rather than an industry average of 10-15 per cent in the organized sector. Unlike bigger companies, Agarwal ensures distributors operate in clearly demarcated territories so they are able to cover all retail outlets in their areas more efficiently. "This allowed a faster inventory turnover," says Agarwal. At the same time, Agarwal identified newer segments and flavors where there was virtually no competition, and launched variants like Kesar Bite, Cheese Crackers and Cashew Chat Masala. In the cream segment, which accounts for almost 40 per cent of the total biscuit market by volume, Priyagold had the regular chocolate, orange and elaichi. But Agarwal decided to target kids and launched new flavors like butter, chocolate and strawberry. "We wanted to give consumers a new base of flavors and train them to experience new tastes," he explains. Today he offers around 20 varieties, and retailers have begun to see Priyagold as an alternative to big brands. Agarwal has gone more by gut feel and understanding of the consumer, than relying on marketing textbooks. In order to emphasize the value-for-money proposition, Agarwal focused on economy packs and Priyagold was the first to enter the 250 gm segment when its Butter Bite was launched in 1993. Seeing the success of Butter Bite, Britannia's Good Day, which sold in 100 gm packs (priced at Rs 10), also entered the 250 gm segment at Rs 18, the same as the former. Agarwal takes pride in the fact Priyagold has strength to make big players react. Today Priyagold biscuits come in 100 gm, 250 gm and ATC packs. When Britannia introduced its Marie sachet of two, Priyagold responded with a pack of four at the same price of one rupee.
Agarwal is targeting hospitals like Apollo for these sachet packs. According to Radhika Roy, national qualitative head, NFO India, biscuits, as a category, bring certain category boundaries. Overall, (barring the cream variety) most formats are driven by 'rational' consumption triggers and aspects like taste, indulgence and gratification are less dominant. "Often it's as a filler, cheap hospitality item or sustenance that one buys biscuits," she says. And this is the need gap that Agarwal wants to fill. The larger players have been trying to change this by imbuing the category with higher order rational vales (health, vitamins etc). For Priyagold, it makes sense to push sales through salience and retail measures. "The strategy in the short term to build critical mass is good from their point of view. But when they become significant players, they will have to look at more enduring and long-term initiatives", says Roy. That will be the challenge for people like Agarwal. After all, the task of brand differentiation is a huge one, expensive and fraught with many pitfalls. Analysts agree that while not necessary for market leaders, for challengers, the strategy adapted by Priyagold seems more prudent and effective. "Instead of reinventing some of the issues, they've focused on value-adding, such as putting more sugar or making biscuits softer and crunchier," adds Roy. For six years since its launch in 1994, Priyagold clung to its obvious target consumer, the middle and lower middle class in SEC B and C. Direct competition came from local cousins in north India, like Apsara, Anmol, Cremica and Crown. Agarwal had enough money (from his oil mills) to pump into his new venture. Clearly savvier than local rivals, he communicated with consumers by spending on the mass media. This was enough for him to leave local rivals far behind and quickly become acceptable to the middle class. Starting with UP and New Delhi, Priyagold expanded into Punjab, Haryana, J&K and Rajasthan. While the brand got a stronghold on the SEC B and C consumer segment, over the years, it distanced itself from the high-end consumers, who turned to Britannia and Parle. "We're still not acceptable to top-end consumers in the large cities," confides a senior staffer in the company.
Last year, Agarwal decided to take the brand to up market retail shelves in Delhi to attract consumers in the upper income strata. But resistance came from large retailers in localities like Greater Kailash and Panchsheel Park. In a bid to convince them Agarwal undertook a complete packaging overhaul across the entire range. Agarwal convinced big-time retailers to let Priyagold set up a counter and was even willing to pay them says a big Priyagold distributor. The results were good, if not amazing the brands found a place in swanky outlets, like Morning Stores in Delhi. Although he hiked Priyagold advertising budget from Rs 5 crores last year to Rs 7 crores, Agarwal believes smaller players will not be able to match resources of national marketers and MNCs when it comes to frills and imagery. "It's more essential to improve processes in your back-end operations to convince people about quality and hygiene," he says. That's surely one thing consumers evaluate while considering local brands. Therefore, Agarwal is pumping money into extensively modernizing his factory. Surya is setting up a new integrated plant at Surajpur on the outskirts of Delhi at a whopping Rs 50 crores, which will have flour, oil mill and biscuit making and packaging units. Another new plant is being set up in Lucknow at a cost of Rs 20 crores so that Priyagold can cater to the eastern UP market better. Agarwal is now importing a state-of-the-art cream sandwiching machine for Rs 5 crores which, he claims, nobody has in the whole of south Asia. These may be small things for global giants, but give tremendous joy to Agarwal.
Meanwhile, Surya Food plans to set up a fresh manufacturing facility in Greater Noida (UP) next financial year, on an investment of Rs 20 crore. The company's third manufacturing base in Lucknow, set up on an investment of Rs 5 crore, kicked off production in February this year, and is expected to begin production in full swing later this month, he said. Surya Food's existing manufacturing bases are in Surajpur (where it has seven biscuit lines) and Faridabad (a franchisee unit). The Priyagold brand already claims market leadership in the non-glucose biscuit segment, which, according to industry estimates, accounts for 30 per cent of the overall biscuits market. Meanwhile, Britannia's market share dropped to 45.2 per cent in October from 46.5 per cent in September last year, according to AC Nielsen data. He ruled out the privately-held Surya Food entering into joint ventures or tieups at this stage, even as he admitted that several multinationals have expressed interest in either buying out or forging strategic alliances with his company. Priyagold which currently has 23 varieties of biscuits, plans foray into salty biscuits next year. The company plans to hike its consolidated ad spend from Rs 5 crore last year to Rs 8 crore this fiscal. Exports of Priyagold biscuits to markets such as Dubai, Muscat and Oman are on the cards, and the first consignment is expected to be shipped later this year.
While speaking on the company's performance, he said, "We face immense competition not just from competitors in organized retail but also from the unorganized market which holds almost 40 per cent of the market share and has the benefit of not being subject to any taxes." The government needs to look into the matter before the situation worsens, he added.
Before data analysis we should know the strategic area of a company. So that a company can analyze the business processes. Strategic areas:
Leadership: Investing in leaders who are personally involved in the development and achievement of the organizations vision and Corporate Objectives, who develop values required for long-term success, and implement these via appropriate actions and behaviors and manage the workforce in a fair and supportive manner. People: Developing a learning organization which cultivates the full potential of its people at an individual, team and organization level and provides them with the competencies and skills needed to meet service requirements in a constantly changing environment. Policy: Developing an organization, which manages fairly, consistently and effectively within a sound framework of stakeholder focused strategies, supported by relevant policies, plans, objectives, targets and processes. Partnership: Building an outward looking organization, which values the diversity of the community it serves, seeks to reflect this within its workforce, and nurtures partnerships for the benefit of the community. Resources: Continuously improving the use of resources (both internal and external) to maximize the effectiveness and efficiency of the Organization.
The food marketing and supply chain management group combines expertise in marketing and supply chain management in the context of the food industry. Current research is focused on a number of inter-related issues.
food safety and risk management demand management and promotional planning brand equity and segmentation food labeling and communication sustainable sourcing Corporate social responsibility.
Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management
One could suggest other key critical supply business processes combining these processes stated by Lambert such as: a. b. c. d. e. f. g. Customer service Management Procurement Product development and Commercialization Manufacturing flow management/support Physical Distribution Outsourcing/ Partnerships Performance Measurement
a) Customer service management process Customer service provides the source of customer information. It also provides the customer with real-time information on promising dates and product availability through interfaces with the company's production and distribution operations. b) Procurement process Strategic plans are developed with suppliers to support the manufacturing flow management process and development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship, where both parties benefit, and reduction times in the design cycle and product development is achieved. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkages to transfer possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers. This requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage and handling and quality assurance. Also, includes the responsibility to coordinate with suppliers in scheduling, supply continuity, hedging, and research to new sources or programmes. c) Product development and commercialization Here, customers and suppliers must be united into the product development process, thus to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched in ever shorter time-schedules to remain competitive. According to Lambert and Cooper (2000), managers of the product development and commercialization process must: 1. coordinate with customer relationship management to identify customerarticulated needs; 2. select materials and suppliers in conjunction with procurement, and 3. Develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination.
d) Manufacturing flow management process The manufacturing process is produced and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes, and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency of demand to customers. Activities related to planning, scheduling and supporting manufacturing operations, such as work-in-process storage, handling, transportation, and time phasing of components, inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. e) Physical Distribution This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g. links manufacturers, wholesalers, retailers). f) Outsourcing/Partnerships This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, to manage and control this network of partners and suppliers requires a blend of both central and local
involvement. Hence, strategic decisions need to be taken centrally with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.
g) Performance Measurement Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. By taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can be both correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes narrower. According to experts internal measures are generally collected and analyzed by the firm including 1. 2. 3. 4. 5. Cost Customer Service Productivity measures Asset measurement, and Quality.
External performance measurement is examined through customer perception measures and "best practice" benchmarking, and includes: 1) Customer perception measurement 2) Best practice benchmarking
The data analysis Base on the secondary datas which I have collected through internet, magazines, books etc.
DATA ANALYSIS:
As per my analysis I find out these factors in both companies:
Wadia. Groupe Danone is one of the leading players in the world in bakery products business
Britannia strode into the 21st Century as one of India's biggest brands and
the pre-eminent food brand of the country. It was equally recognized for its innovative approach to products and marketing. Britannia will continue to dream big on its path of innovation and quality The focus on cost control and supply chain management yielded savings of Rs20.2 crores in 2004-05.
Profit growth has been outpacing sales growth due to cost savings Net Sales Revenue at Rs. 550 crores represents a growth of 24%.
Britannia's gross sales turnover increased to Rs 18,179 mn in 2005-06 from Rs 16,154 mn in the previous year, registering a growth of 13%. Operating profit at Rs 1,763 mn increased by 7%, profit before tax and exceptional items at Rs. 1,958 mn declined by 19% against 2004-05.
Despite stiff competition, your Company stabilized and held its overall
market share at 31.7% in volume and 38.8% in value for the last year. As of 31st March 2006, the issued and paid up capital of Britannia amounts to 23,890,163 equity shares having a nominal value of Rs. 10/- each. The shareholder base is about 23,000 in number. Britannia's shares are listed at the Bombay Stock Exchange, National Stock Exchange and Calcutta Stock Exchange.
Commenting on the performance, Ms. Vinita Bali, Managing Director, BIL
said, "Overall, in a year characterized by extraordinary and unprecedented inflation in key inputs, we have created a step change in our growth rate, and in fact doubled it. This is driven by focused investment in fundamental growth pillars like renovating existing bands, launching new innovative products, creating efficient capacity, strengthening infrastructure and building organizational capabilities. Britannia brands now have greater reach in rural markets and pervasive presence in modern trade" Brand Values: The success of Britannia lies in its strategy of identifying high value opportunities and capitalizing on them through relevant and differentiated brands, supported by an effective and efficient supply chain. The fountainhead of this strategy is Brand Building, i.e. increasing consumer relevance, preference and purchase. The key drivers are availability, presence, and merchandising for brands that offer consumers a
satisfying experience across a variety of consumption occasions, and price points that represent good value for money.
Priyagold hasn't succumbed to pressures from mega-brands Britannia and Parle, which enjoy greater clout due to large product portfolios.
INTERPRETATION:
Britannia industries covering more market share.
Britannia is a global brand and it has global partners like Groupe Danone
and Nusli Wadia. Brand value of Britannia is more as compare to any other bakery industries. As per the products categories Britannia is in biscuits, breads, and packed food. A Britannia biscuit is an industry but priyagold is the product of company Surya Food & Agro Ltd which produces juice also. Britannia has covering both rural and urban areas but priyagold only urban Giving divided and bonus to shareholders and registered in BSE, NSE stock exchange. Britannia has wide network with big infrastructure, new technology and good customer relations. Britannia is working on supply chain. Britannia biscuits have wide variety and flavor in biscuits. But priyagold is not as much.
ADVANTAGES AND CHALLENGES Advantages Challenges Increasing disposable income; High tariffs and increasing changing life style of consumers nontariff barriers Growing health and hygiene Antiquated food laws and awareness among the middle class internal policies which restrict marketing Governments high priority on Inadequate infrastructure food-processing industry facilities, like cold storage and roads Plentiful availability of raw Increasing competition from materials local players Increasing presence of Long and fragmented supply multinational companies chain Modernizing retail sector in big Problems in tapping the vast cities rural market and unorganized retail sector Move towards a new Food Safety Consumer preference for fresh and Standards legislation by the foods government
SUGGESTIONS:
Among the factors, which have contributed the most towards growth are market related factors and IT factors like rise in e-commerce and usage of Internet. The food and beverage industry has very small margins and is very dynamic .for these accurate supply chain information is absolutely key, not just for planning, but also for operational efficiency. Britannia biscuits industries has a great opportunity to take advantage of the modern technologies available that can help it to increase the level of customer service, create new operational efficiencies, reduce risk, and increase profitability. Its still a vastly untapped area of supply chain management. The common factors which have contributed towards manufacturing and service both are rise in e commerce and sourcing out. Globalisation and Liberalisation policies have benefited the service sector more than the manufacturing sector. Improving supply chain processes requires better collaboration between retailers and suppliers. So keep good relation with them. The customers today are not very forgiving, referring to the consequences of missed delivery schedules. If a company was able to manufacture a product with the right quality and the right price but missed on delivery, the other two got nullified. So company should deliver on right time. Services should be standardized. Managing the supply chain was not just about transportation of goods. It was about managing the mismatch of stocks, looking at high inventory and eliminating premium freight, and managing many suppliers. There is the need for improving infrastructure to take advantage of the wave of outsourcing.
CONCLUSIONS:
During this thesis I have read lots of material about the organization and their process of manufacturing the products. I find one similarity between these is that the organizations want value for their money. They want quality and quick services. This is because time saved is the money gained. So that organizations fulfill the requirement of the customers with the satisfaction and make good relations. Britannia industries also try to give maximum satisfaction to their customers. The company main motive is to provide the right quality to right customer at right time with satisfaction. Company is using supply chains to control the cost. The Britannia brand is all about eating healthy, to lead a better life. It advocates values that stand for health, hygiene, family, trust and taste. It reflects the strong link between physical and mental well-being that is so important to a person, and is typically a result of what one eats. Today, Britannia, driven by a passion for excellence, manifested by its innovative thinking, has been able to weave itself into the fabric of the consumer's everyday life. While Britannia strives to give consumers a healthier life, the consumer on the other hand, has come to expect innovation from Britannia's offerings - a huge challenge for the company.
ANNEXURE:
Financial results:
Net sales in 2004: 13,024 million Euros (+6.1% at comparable scope) Operational Income: 1,706 million Euros
Websites:
http://www.thehindubusinessline.com.
Books:
Frontiers of electronic commerce, KOLKOTA. Page-52, 53, 442. Supply chain management: concepts and cases. page-33- 36 Lee, H. L. and C. billing ton. Material Management in Decentralized Supply Chains. 835-847. Lee, H. L., and C. Billington. Supply Chain Management: Pitfalls and Opportunities. 65-73 Cooper, M. C. and L. M. Ellram. Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy. 13-24. Houlihan J. B. 1985. International Supply Chain Management.22-38. Lambert, D & Cooper, Industrial Marketing Management. Pages 65-83