Making the move towards smart distribution models

Anjali Choudhary

1st Nov, 2022

innovative automation solution

Conventionally FMCG companies have been supplying their products to retailers, through wholesalers or registered distributors. Distributors reach out to retailers and get their requirements as per consumer demands. The company would then ship the products to the distributor, who would then distribute the products to its retailers. This distribution model worked well for some, but not so well for others, as it was time-consuming and calculating the fluctuating demand without any data analytics would either result in goods expiring or shortages in the supply.

In this era of 2 days delivery through eCommerce giants like Amazon, it is imperative that retailers also shift towards a lean distribution model to have a stronger and more efficient supply chain. To build an efficient supply chain, companies are now moving their business from the linear FMCG value chain of yesteryears to an Intelligent Enterprise built on a connected ecosystem of Company, Customer, and Operations with Data, Tech, and Analytics at the Distribution Centre itself.

To make its supply chain future-ready, to brace its operations for the next decade, Hindustan Unilever (HUL), the leader in the FMCG industry in India took one tech-heavy decision to ensure that the retailers get a timely delivery, while cutting down the operational costs involved in the distributorship model. However, the challenge here was, their Distribution Centre (DC) handled only case orders, whereas retailers order in eaches/pieces, e.g., the distributor would order 5 boxes of shampoo bottles, while the retailer would order only 10 bottles.

In the distributor model, breaking the cases into eaches is done by distributor and with the new system, HUL now intended to do this at their own DC. So, they did a pilot project with Addverb at their 450,000 Sq. Ft. Samadhan Warehouse in Chennai.

The major challenges in the transformation were:

  • Inclusion of each picking in the DC

The DC should serve around 4,000-5,500 customer orders every day, which comes down to 18,000-25,000 cases, which in turn comprises 8,00,000 eaches. In addition, the system should sustain a demand surge of up to 11,00,000 eaches on a peak day.

  • Ensuring timely delivery to the customers

The orders need to be fulfilled overnight and dispatched with absolute accuracy.

To help HUL in this quest, Addverb designed and delivered an innovative automation solution for HUL’s Samadhan warehouse in Chennai, that comprised of Carton Shuttle (Quadron), Pick-to-Light (Rapido), Box-It (Ergonomically Designed Picking Workstation), and Warehouse Control System (Mobinity) to enable delivery of orders to 28,000 Kirana (Mom-and-Pop Grocery) stores in the Chennai metropolitan region, within 24 hours.

With Addverb’s automation solution, HUL was able to service its Kirana stores faster without any minimum order size requirement and also improved its service levels. With this solution, each picker could achieve a pick rate of 9,500 picks per hour, which is 10 times the productivity of conventional paper-based picking. The solution enabled optimised material handling operations through fast picking and packing, dynamic load balancing, order scheduling, and scheduling of finished goods as per the optimised route, thereby enabling HUL to reduce the overall turnaround time for order fulfilment. With this solution, Addverb and HUL have pioneered a new paradigm in the supply chain in India for the FMCG industry.

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