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Navigating Disruptions – How ITC kept the Supply Chain Active

Shom Chatterjee
23rd June 2020

Shom Chatterjee, Head of Procurement & Logistics (ITC Foods Division) speaks to Dr. Rakesh Singh on how they kept the supply chain active.

The present situation has placed an enormous amount of stress on the supply chains. The essential commodity supply chains were severely tested – they could not afford any disruption. SCMPro Knowledge spoke to Shom Chatterjee, Head of Procurement & Logistics (ITC Foods Division) on the challenges they faced, and how they managed to ensure continuity of supplies even at the height of the lockdown.

How did COVID 19 change the business paradigm? What where the larger challenges faced by ITC? What were your immediate plans? What has been your learnings from the lockdown?

I have always been an optimistic individual and would like to start with quote: ‘When written in Chinese the word crisis is composed of two characters – one represents danger, the other represents opportunity’ – John F Kennedy

Indeed there has been complete shift in business paradigm but it has brought along humongous opportunity of managing it differently.

When it comes to emergency supply chain management, a little preparedness will go a long way. Responding effectively to Pandemic threats requires a well-functioning supply chain. However, this poses particular challenges – visibility into both demand and supply, and involvement of multiple stakeholders requires significant coordination. Investment in preparedness combats these challenges by planning for a range of possible scenarios and outlining stakeholder roles to mitigate the impact of these “unknowns.”

It can be rightly said that corona virus crisis has dramatically amplified our VUCA world (Volatility, Uncertainty, and Complexity and Ambiguity).

However, no one can whistle a symphony alone, it takes a whole orchestra to play it.  With an enthusiastic team, we can achieve almost anything.

Key  Challenges  faced  can  be  summarized  as  follows :

In terms of supply shock, what were the likely challenges?   Which markets did you source from? What was the nature of the supply risk you faced?

In a scenario where the entire country is facing restriction of all kinds of people/material, we were negotiating with our external stakeholders (.i.e) Vendors, transporters, arranging for labor and educating them.

To service our 100+ units, we had our network of 30+ warehouses where with the help of our service providing partners, we were able to maintain the essential commodity pipeline and thus were able to stand up to ITC’s tenet of Sab Saath Badhein by putting the nation and its citizen first.

ITC foods must be sourcing from other countries too. What was the impact of the pandemic on these supplies? What did you do to secure these supplies?

Being agile has helped us in managing our operations. With first sign of COVID-19 in China in Jan 20, we started our planning and took all possible actions to cope with the disruptions on all imported items. These actions paid off and we did not encounter any issue with respect to availability of materials – local or imported.

In this pandemic situation, we took this as a challenge of ensuring that none of our plants faces stock out so that we can deliver to the needy people.

Hence, as such we were able to navigate with NIL impact on material sourced from other countries during lockdown.

What were other supply chain and logistics disruptions that complicated sourcing? What are the challenges going forward?

With entire country sealed, people were inside their homes, and the authorities restricted all kinds to people and material movement or mode of transportation. In this pandemic situation, we took this as a challenge of ensuring that none of our plants faces stock out so that we can deliver to the needy people.

The road is not that easy, there are many challenges, like dealing with transporters for placing trucks, convincing labor for loading and unloading, liaising with local authorities for taking necessary approvals to operate warehouses and cold stores.

Our Logistics Team managed movement of Raw Materials, Packaging Materials, and Perishable Raw Materials from source to destination on timely manner during lock down. Educating various supply chain vendors about importance of continuity of food supply chain in the lockdown period and directing them for obtaining passes from various Government authorities for transport operation, cold store operation etc.

Agriculture and allied activities are expected to be relatively less impacted in such a scenario given its categorization under essential goods and services

ITC Foods are sourcing from the Indian agricultural markets. Was there an impact of the pandemic on this? How did you manage the supply of agricultural commodities?

With the sudden announcement of nation-wide 21-Day lockdown,things on the field turned upside down overnight. Demand for certain products of ours suddenly surging to about as high as 150% in these times of complete lockdown.We had to go out of the way and do that extra bit to tide through these testing times.

This is a massive exercise involving 400-500 Labor and hundreds of trucks. By maintaining compliance to all norms with utmost importance to the safety and basic hygiene (Hand washing at regular time intervals with an alcohol-based sanitizer, using a 3 – Ply Mask, etc.) of all resources involved, and ensuring ‘Social Distancing’ throughout the operations by deploying surveyors, we could win the confidence from the local government authorities and worker groups involved to deliver this humongous task.

Farmers and traders can enjoy freedom of choice of sale and purchase of agri-produce and open additional trading opportunities outside the APMC yards to help farmers get remunerative prices due to enlarged competition

Going forward what do you feel are challenges for food industries in terms of sourcing agricultural produce? Will reform announced by the government be helpful in terms of bringing more win-win situations for both industry and farmers?

Agriculture and allied activities are expected to be relatively less impacted in such a scenario given its categorization under essential goods and services. This assumes further relevance in the current context when the Rabi crop, where the output estimates are favorable, is under harvesting phase across the country.

While the pan India lockdown continues to create challenges in the availability of labor and transportation even in the agricultural sector, both the central and the state governments have taken various measures to ensure that crop harvesting, logistics and warehousing activities are not unduly impacted in the current season.

COVID-19 pandemic has put nearly 140 million households dependent upon agriculture and allied activities under severe stress and an uncertain future, economically, this segment contributes 17% to the national GDP.

The Agriculture sector has been provided a great boost by some key reforms. One, opening up of the APMC Act. Allowing farmers to sell produce to buyer of their choice. Two, removal of barriers for inter- state trade and facilitative legal framework, enabling farmers to deal directly with traders. Three, processors in a fair and transparent manner.

These agricultural reforms will pave the way for:

  • The creation of One India, One Agriculture Market
  • These will increase usage of technology and enable effective dispute resolution mechanisms.
  • Farmers and traders can enjoy freedom of choice of sale and purchase of agri-produce and additional trading opportunities outside the APMC yards to help farmers get remunerative prices due to enlarged competition. It will enable better price realization for the country’s farmers
  • These will promote barrier free inter-state and intra-state trade in agriculture produce
  • Empowering farmers to engage with processors, aggregators, wholesalers, larger retailers and exporters through contract farming
  • What is your vision of future procurement and supply chain planning post this pandemic?

    Social distancing will definitely be a norm for the next 12 months at least. Once business continuity plans are settled and operating, once immediate tasks are complete, organizations need to focus on how to work toward a ‘new normal’for every business,there will be different context, but procurement and supply chain functions will be critical to identifying opportunities and needs for change and facilitating these adjustments through suppliers and partners in the chain.

    Would like to end my conversation with a quote:

    ‘There are decades where nothing happens, and there are weeks where decades happen’ — Vladimir Lenin.

    COVID-19 has been a good learning not for us but across the world.One can only keep these events in mind while creating strategies for the future. ♦♦♦♦♦

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