Summer Internship Project Report

On

Designing Purchase Order process for Modern

Trade of ITC Ltd

Submitted towards the partial fulfilment

of
Post graduate diploma in management
Academic session: 2018 – 2020

Submitted by:
Ankita Karmakar
BM - 018043

Industry guide Faculty Guide

Mr.Lohith Kumar Menchu Dr. Sunayana Jain
Asst. Manager – Modern trade and Professor IMS
Emerging channels, ITC Limited,Kolkata

INSTITUTE OF MANAGEMENT STUDIES

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 DECLARATION

I hereby declare that “Designing Purchase Order process for Modern Trade at ITC
Ltd ” is a result of project work carried out by me under the guidance of
Dr.Sunayana Jain in partial fulfilment for award of post graduate diploma in
management from Institute of management studies (IMS), Ghaziabad.

The matter presented in this project report has not been submitted by me for the
award of other degree of this or any other university.

Signature of faculty guide Signature of student

Date:

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 Certificate

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 ACKNOWLEDGMENT
The satisfaction that accompanies the successful completion of any task would be
incomplete without mentioning people who have made it possible, whose
encouragement and consistent guidance crowned my efforts with success.
The two months summer internship programme is an integral part of post graduate
diploma in management curriculum of IMS ,Ghaziabad. It provides a platform for
the students to interact and work with industry experts, along with an experience that
helps in shaping one’s career. For this I am indebted to ITC Limited and the
Institute of Management Studies, Ghaziabad, for providing me the great
opportunity.
The friendly environment and the vibrant culture of ITC Limited helped me enjoy
the whole experience.
I would like to take this opportunity to sincerely thank Mr Lohith Kumar Menchu,
my industry guide and Dr. Sunayana Jain, Professor IMS for their cordial support,
guidance, monitoring and valuable information and knowledge throughout the
course of this project.
I would also like to thank Mr.Prathwyraj Panoli,National Operations Head,
Operations , ITC Ltd for his continuous support and necessary guidance.
I would like to thank all the business leaders for sharing rich experience and vast
knowledge that proved me to insightful for the project.
Finally, I would like to thank those who have directly or indirectly helped me in my
project. I express my profound thanks to my teachers, and my friends who are the
constant source of my encouragement.

Regards,
Ankita Karmakar
BM-018043

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 TABLE OF CONTENT

Sr. NO TITLE PAGE OF CONTENT

1 CHAPTER 1 – EXECUTIVE SUMMARY 06

2 CHAPTER 2- INTRODUCTION 07-18

3 CHAPTER 3- LITERATURE REVIEW 19

CHAPTER 4- RESEARCH
4 METHODOLOGY 20-21

5 CHAPTER 5- FINDINGS AND ANALYSIS 22-36

6 CHAPTER 6- CONCLUSION AND 37-40

RECOMMENDATIONS

7 CHAPTER 7- REFERENCES 41

CHAPTER 1

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 EXECUTIVE SUMMARY
The Indian retail sector is –
 For the organised sector is seeing high rates of growth.
 Ranked as one of the world’s most exciting retail destinations.
 Consumers have visited most who have higher consumer confidence levels.
Studies have shown that Modern Trade –
 Wastage across India’s farm-to-fork supply chain is reduced.
 India’s position as a sourcing hub to the world is strengthened.
 There is employment increation.
 There is an increased choice and variety of products into the market is
introduced.
 Major technology investments and best transfer practices are ushered.
Indian consumers are becoming global in their preferences , orientation , thinking as
their western counterparts . Today people are able to travel abroad for business and
recreation, the Internet exposure and other information and communication tools,
lifestyle influencers from print, Television and film media, among other drivers, are
shaping Indian consumers’ shopping behaviours and mindsets towards consumption
of products. Indians follow a savings-oriented approach, but now they are enjoying
the benefits of higher incomes and are often spending on lifestyle-oriented goods.
The increased spending power and the desire to acquire global, trendy and current
products are incentivising consumers to purchase products across categories, in the
mass, premium and luxury segments.
The results of Modern Trade are-
 There should be equalisation in the standards of living available to
consumers between countries.
 Food and Non food product should have better quality.
 Prices should be rationalised and converged.
 There will be ample availability of choice in products and services.
ITC is conducting experiments that integrate head-load and pushcart vendors, and
also women, into the benefits of modern trade. In addition to helping smaller
participants in the retail sector modern trade also enables ITC to further enhance
brand equity and increase sales.
ITC’s diversified business includes – FMCG , Hotels , Paperboards , Packaging ,
agri Business and Information Technology.
While studying the fill rates for food category of ITCs Modern Trade channels it was
seen that there was sales drop and it had reasons , demand forecasting and demand
estimation was not proper and how the purchase order process can be designed so
that the sales can be improved and purchase order process redesign.

CHAPTER 2

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 INTRODUCTION

ABOUT THE INDUSTRY

Modern trade as opposed to refers to a full range of sale methods based on marketing
techniques: for instance in self-service shops if there is no more sales attendants
behind a counter;now the customer can touch the articles.The more expensive goods
will be ready at hand whereas customers will have to bend to reach good with less
added value for the store.A few articles will be offered at rock bottom prices with
much publicity in order to attract as many customers as possible.The display of
goods is very important and needs an elaborate know-how.
Modern Trade has increased sales of some FMCG categories. Food categories such
as salty snacks, cheese, biscuits, noodles, breakfast cereals and chocolate in MT has
shown over 20% growth .
The growing popularity of MT is reflected in the fact that this retail channel is the
preferred channel for the sale of FMCG products such as packaged rice, liquid soap,
floor cleaners, breakfast cereals and air fresheners . Hindustan Unilever (HUL)
claims that in, certain categories, its sale volumes through modern trade are growing
faster than through general trade. This faster growth of certain product categories in
MT have led to the emergence of private label brands. These are essentially in-house
"retailer" brands (for example Future Group's Tasty Treat snack foods) sold at lower
prices than higher ad spending main-frame brands. Despite the relatively recent
arrival of private label products, it has already clinched 7% of overall MT sales. 
This report has identified some issues related to modern trade & recommend changes
in supply chain strategies of most Indian FMCGs to reach the benchmark fill rate of
95%.
Some reasons for Low fill rate has been listed below :
 Frequent New product introduction
 Demand variability caused by promotions and discounts.
 Shorter product life cycle
 Price and CFC issues
 Freshness Issue
 WSP (Warehouse Service Provider) Issue
 Truck load issue
 Estimation issue

Most FMCGs classify their trade channels into 2 categories General Trade (GT) &
Modern Trade (MT). Modern Trade channel supplies to the demands of organized
retail. FMCGs service Modern Trade customers through 2 modes viz: direct and
indirect modes:

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  Direct Servicing- In case of direct servicing account, Purchase Orders are
processed, stocks are provided to accounts from company Warehouse
Service Provider (WSP).
 Indirect Servicing- In case of indirect servicing, account Purchase Orders are
processed by company’s Wholesale Distributors. Stocks are supplied from
WD( Wholesale Distributor ) point. Regional and local Modern Trade outlets are
serviced through indirect route

BUSINESS PROFILE:
ABOUT THE INDUSTRY:
What motivates the customers to purchase FMCG products in India ?
The Indian economy has been fuelled to a large extent by the growth of fast-moving
consumer goods (FMCG), which form its fourth-largest sector. While growth
prospects are abundant for the FMCG sector, failing to identify true demand may
stem expansion. Changes in consumer needs, weak consumer sentiment and inflation
may further impact the sector’s chances of attracting and retaining customers. So
with those potential headwinds in mind, it’s important for brands and retailers to
listen to what shoppers have to say about their needs, preferences and attitudes.
 

 Key source of awareness for 60% of Indian shoppers is word of mouth.

 One in every three modern trade shopper goes online to get information
before making a purchase
 Shoppers buy more than they plan when stores offer promotions

Modern Trade has seen increased acceptance with the proportion of urban shoppers
regularly visiting Modern Trade going up by 2.5 times to 44 percent today.
Moreover, this channel increases the maximum share of wallet for more than 1/4th
of shoppers. As a result, Modern Trade contributes to 10 percent of FMCG sales for
urban India and has grown at par with the overall market over the last year.
Modern Trade is expected to grow three times to $180 billion in 2020 By 2020,
average household income will increase three times to $18,448 from $6393 in 2010.
Moreover, urbanisation will increase to 40% from 31% and over 200 million
households will be nuclear, representing a 25-50% higher consumption per capita
spend. Also, attitudinal shifts will be seen as 75% of the population will belong to
generation I, that is they were below 14 years of age when the economy started
opening and hence will have higher consumption levels, said the report.
Modern trade includes supermarkets, hypermarkets and other organized retail
outlets, while much smaller grocery stores are classified under traditional channels.

o Between 2016 – 2020, the Indian FMCG market is expected to grow at a

CAGR of nearly 21%
o Rise in rural consumption is all set to drive the FMCG market. It is estimated
to grow at a CAGR of 14.6% during the period 2016-2025. A major reason behind

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 the spurt is explained by an increased disposable income that has grown at a CAGR
of 64.1%.
o Penetration of modern retail is expected to see a substantial rise at a CAGR
of 24.6% by 2020.
o The middle income class population to grow at a CAGR of 10.8% and
estimated to nearly double by 2020.

TRENDS IN FMCG:

o Brand consciousness – Consumers are increasingly becoming aware and

prefer lifestyle and premium range products owing to higher disposable
income.
o FMCG companies building focus on innovating their existing product
portfolio and developing new ones.
o Trend towards mass customization of products is expected to intensify
further owing to increased preferences in consumer demand.
o Companies are aggressively introducing smaller SKUs at reduced prices to
sustain margins and maintain volumes to expand consumer base.
o More and more products are focusing on reducing carbon foot print by
creating eco-friendly products.

STRATEGIES ADOPTED BY FMCGs:

 Customised product offers to distinct customer preferences. Example –

Womens Horlicks for women and Junior Horlicks for kids
 Online research enables customers to make informed purchasing decisions.
Hence, FMCG companies are focusing on building their online presence.
 Varied choices are available for a singular product so customers are less
likely to stay brand loyal. Hence, FMCG players massively spend on product
innovation and promotion to stay ahead in the competition.

Having extensively discussed the FMCG landscape in India, it becomes clear that it
is on an upswing today growing at a fast pace. However, in order to scale up and
maintain this pace, FMCG sector is subsequently investing in new sales technologies
such as SFA among others. Increased internet users across the country, higher
consumption and spends pattern in the rural segment, cut throat competition,
emergence of Modern trade and need for an organized retail distribution system has
therefore prompted leading FMCG players to integrate SFA solutions in their sales
system. This will create an automated , robust and seamless business environment
for organizations.

ABOUT THE COMPANY:

ITC is one of India's foremost multi-business enterprises with a market capitalisation

of US $ 52 billion and Gross Sales Value of US $ 10 billion. ITC is rated among the

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World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable
Companies by Forbes magazine and as 'India's Most Admired Company' in a survey
conducted by Fortune India magazine and Hay Group. ITC also features as one of
world's largest sustainable value creator in the consumer goods industry in a study
by the Boston Consulting Group. ITC has been listed among India's Most Valuable
Companies by Business Today magazine. The Company is among India's '10 Most
Valuable (Company) Brands', according to a study conducted by Brand Finance and
published by the Economic Times. ITC also ranks among Asia's 50 best performing
companies compiled by Business Week.
ITC's aspiration to create enduring value for the nation and its stakeholders is
manifest in its robust portfolio of traditional and greenfield businesses
encompassing Fast Moving Consumer Goods (FMCG), Hotels, Paperboards &
Specialty Papers, Packaging, Agri-Business, and Information Technology. This
diversified presence in the businesses of tomorrow is powered by a strategy to
pursue multiple drivers of growth based on its proven competencies, enterprise
strengths and strong synergies between its businesses.

The competitiveness of ITC's diverse businesses rest on the strong foundations of

institutional strengths derived from its deep consumer insights, cutting-edge
Research & Development, differentiated product development capacity, brand-
building capability, world-class manufacturing infrastructure, extensive rural
linkages, efficient trade marketing and distribution network and dedicated
human resources. ITC's ability to leverage internal synergies residing across its
diverse businesses lends a unique source of competitive advantage to its products
and services.
Within a relatively short span of time, ITC has established vital brands like
Aashirvaad, Sunfeast, Fabelle, Sunbean, Dark Fantasy, Mom's Magic Bingo!,
Yippee!, Candyman, mint-o, Kitchens of India, Farmland, B Natural, ITC
MasterChef in the Branded Foods space; Essenza Di Wills, Fiama, Vivel, Engage,
Savlon, Charmis, Shower to Shower and Superia in the Personal Care products
segment; Classmate and Paperkraft in Education & Stationery products; Wills
Lifestyle in the Lifestyle Apparel business; Mangaldeep in Agarbattis and Aim in the
Safety Matches segment. This growth has been rated by a Nielsen Report to be the
fastest among the consumer goods companies operating in India.

CREATING ENDURING VALUE:

Today, ITC is India's leading Fast Moving Consumer Goods company, the clear
market leader in the Indian Paperboard and Packaging industry, a globally
acknowledged pioneer in farmer empowerment through its wide-reaching Agri
Business and a trailblazer in green hoteliering. ITC Infotech, a wholly-owned

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subsidiary, is one of India's fast-growing IT companies in the mid-tier segment. This
portfolio of rapidly growing businesses considerably enhances ITC's capacity to
generate growing value for the Indian economy.
ITC's Agri-Business is one of India's largest exporters of agricultural products. The
ITC Group's contribution to foreign exchange earnings over the last ten years
amounted to nearly US$ 6.8 billion, of which agri exports constituted 57%. The
Company's 'e-Choupal' initiative has enabled Indian agriculture significantly
enhance its competitiveness by empowering Indian farmers through the power of the
Internet. This transformational strategy has already become the subject matter of a
case study at Harvard Business School apart from receiving widespread global
acclaim.
As one of India's most valuable and respected corporations, ITC is widely
perceived to be dedicatedly nation-oriented. ITC believes that its aspiration to
create enduring value for the nation provides the motive force to sustain
growing shareholder value. ITC practices this philosophy by not only driving each
of its businesses towards international competitiveness but by also consciously
contributing to enhancing the competitiveness of the larger value chain of which it is
a part. ITC group directly employs more than 32,000 people and the Company's
Businesses and value-chains generate around 6 million sustainable livelihoods many
of whom live at the margin in rural India.

GLOBAL EXEMPLAR IN SUSTAINABILITY:

Acknowledged as a global exemplar in sustainability, ITC is the only enterprise in

the world, of comparable dimensions to be carbon-positive, water-positive, and
solid waste recycling positive. A testimony to its commitment to a low carbon
growth path - over 41% of the total energy requirements of ITC is met from
renewable sources. All ITC's premium luxury hotels are LEED (Leadership in
Energy and Environmental Design) Platinum certified making it the "greenest luxury
hotel chain" in the world. ITC's Paperboards and Paper business is an icon of
environmental stewardship.
ITC's production facilities and hotels have won numerous national and international
awards for quality, productivity, safety and environment management systems. ITC
was the first company in India to voluntarily seek a corporate governance rating.
The Company continuously endeavours to enhance its wealth generating capabilities
in a globalising environment to consistently reward more than 9,00,000
shareholders, fulfill the aspirations of its stakeholders and meet societal expectations.

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It is ITC's strategic intent to secure long-term growth by synergising and blending
the diverse pool of competencies residing in its various businesses to exploit
emerging opportunities in the FMCG sector.
Some of ITC's brands that have gained significant market standing among
consumers are Aashirvaad, Sunfeast, Bingo!, YiPPee!, Candyman, mint-o and
Kitchens of India in the Branded Packaged Foods space; Essenza Di Wills, Fiama Di
Wills, Vivel and Superia in the Personal Care Products segment; Classmate and
Paperkraft in Education & Stationery products; Wills Lifestyle and John Players in
the Lifestyle Apparel business; Mangaldeep in Agarbattis as well as Aim in
Matches.

LIST OF PRODUCTS & BRANDS OF ITC:

In FMCG, ITC has a strong presence in:

Cigarettes:
 W. D. & H. O. Wills,
 Gold Flake Kings,
 Gold Flake Premium,
 Navy Cut,
 Insignia,
 India Kings,
 Classic
 Verve,
 Menthol,
 Menthol Rush,
 Regular,Citric Twist,
 Mild & Ultra Mild,
 555,
 Benson & Hedges,
 Silk Cut,
 Scissors,
 Capstan,
 Berkeley,

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  Bristol,
 Lucky Strike,
 Players and
 Flake.
Foods:
 Kitchens of India;
 Aashirvaad,
 Minto,
 Sunfeast,
 Candyman,
 Bingo,
 Yippee,
 Sunfeast Pasta brands in Ready to Eat, Staples, Biscuits,
Confectionery, Noodles and
 Snack Foods

Apparel:
 Wills Lifestyle and
 John Players

Personal care:
 Fiama di Wills;
 Vivel;
 Essenza di Wills;
 Superia;
 Vivel di Wills brands of products in perfumes, hair care and
skincares

Stationery:
 Classmate and
 PaperKraft brands

Safety Matches and Agarbattis:

 iKno;

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  Mangaldeep;Aim brands

Other businesses include:

 Hotels: ITC's hotels have evolved into being India's second largest hotel chain
with over 80 hotels throughout the country. ITC is also the exclusive franchise in
India of two brands owned by Sheraton International Inc-The Luxury Collection
and Sheraton which ITC uses in association with its own brands in the luxury 5
star segment. Brands in the hospitality sector owned and operated by its
subsidiaries include Fortune and Welcome Heritage brands.

 Paperboard, Specialty Paper, Graphic and other Paper;

 Packaging and Printing for diverse international and Indian clientele.

 ITC Infotech

RURAL INITIATIVES TAKEN BY THE COMPANY

ITC's Agri-Business is India's second largest exporter of agricultural products. ITC

is one of the
India's biggest foreign exchange earners (US $ 2 billion in the last decade). The
Company's 'EChoupal' initiative is enabling Indian agriculture significantly enhance
its competitiveness by empowering Indian farmers through the power of the Internet.
This transformational strategy, which has already become the subject matter of a
case study at Harvard Business School, is expected to progressively create for ITC a
huge rural distribution infrastructure, significantly enhancing the Company's
marketing reach.

The company places computers with Internet access in rural farming villages; the E-
Choupals serve as both a social gathering place for exchange of information
(Choupal means gathering place in Hindi) and an e-commerce hub. What began as
an effort to re-engineer the procurement process for soy, tobacco, wheat, shrimp, and
other cropping systems in rural India has also created a highly profitable distribution
and product design channel for the company—an e-commerce platform that is also a
lowcost fulfilment system focused on the needs of rural India. The E-Choupal
system has also catalyzed rural transformation that is helping to alleviate rural

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isolation, create more transparency for farmers, and improve their productivity and
incomes.

CORPORATE PHILANTHROPY

ITC E-Choupal creatively leverages information technology to set up a meta-market

in favour of India's small and poor farmers, who would otherwise continue to operate
and transact in 'un-evolved' markets.

As of July 2010, services through 6500 E-Choupal across 10 states, reach more than
4 million farmers in about 40,000 villages. Free access to Internet is also opening
windows of rural India to the world at large.

ITC E-Choupal is now being regarded as a reliable delivery mechanism for resource
development initiatives. Its potential is being tested through pilot projects in
healthcare, educational services, water management and cattle health management
with the help of several service providers including nongovernmental organizations.

Classmate notebooks were launched with the initiative of contributing 1 rupee

towards the education of poor children, from every four notebooks it sold.

Classmate, has launched a programme called Classmate Ideas for India challenge.
The programme would be a part of the company's centenary initiative. The nation-
wide programme would invite ideas of the youth, who have the potential to
transform India. Classmate Ideas for India challenge plans to reach out to 25 lakh
students across 30 cities, 500 schools and 200 colleges across the country.

COMPETITORS OF ITC LTD.

Industries Where ITC Limited Competes:

Tobacco Product Manufacturing
Crop Production
Information Technology Services
Consumer Products Manufacturing
Apparel Manufacturing
Main Competitors of ITC ltd.:

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Hindustan Unilever
Golden Tobacco Ltd.
Godfrey Philips India Ltd.
RTCL Ltd.
VST Industries Ltd.
Marico Ltd.

ITCs FOOD BUSINESS:

ITC's Branded Packaged Foods business is one of the fastest growing foods
businesses in India, driven by the market standing and consumer franchise of its
popular brands - Aashirvaad, Bingo! Sunfeast, Fabelle, Sunbean, Yippee! Kitchens
of India, B Natural, ITC Master Chef, Farmland, mint-o, Candyman and GumOn.
The Foods business is today represented in multiple categories in the market -
Staples, Spices, Biscuits, Confectionery & Gums, Snacks, Noodles & Pasta,
Beverages, Dairy, Ready to Eat Meals, Chocolate, Coffee and Frozen Foods.
ITC's uncompromising commitment to the health and safety of its consumers ensures
adherence to the highest levels of quality, safety and hygiene standards in
manufacturing processes and in the supply chain. All ITC-owned manufacturing
units are Hazard Analysis and Critical Control Point (HACCP) certified. The quality
performance of all manufacturing units is monitored continuously online. Going
beyond process control, ITC ensures that quality standards are scrupulously adhered
to while choosing ingredients that go into the preparation of its food products.
ITC's Foods brands delight millions of households with a wide range of
differentiated, value-added products developed by leveraging ITC's in-house R&D
capabilities, relevant consumer insights, a deep understanding of the Indian palate
gained from its Hotels business, its agri-sourcing & packaging strengths, exciting,
innovative communication and an unmatched distribution network.
The business continues to invest in every aspect of manufacturing, distribution and
marketing to ensure that it can leverage emerging opportunities and fulfill its
aspiration of being the most trusted provider of Branded Packaged Foods in the
country. ITC's Foods business also exports its products to the key geographies of
North America, Africa, Middle East and Australia.

ITCs VISION:
Sustain ITC's position as one of India's most valuable corporations through world
class performance, creating growing value for the Indian economy and the
Company's stakeholders.
ITCs MISSION:

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To enhance the wealth generating capability of the enterprise in a globalising
environment, delivering superior and sustainable stakeholder value
ITCs CORE VALUES:

ITC's Core Values are aimed at developing a customer-focused, high-performance

organisation which creates values for all its stakeholders.

Trusteeship

As professional managers, we are conscious that ITC has been given to us in 'trust'
by all our stakeholders.
We will actualise stakeholder value and interest on a long term sustainable basis.

Customer Focus

We are always customer focused and will deliver what the customer needs in terms
of value, quality and satisfaction.

Respect for People

We are result oriented, setting high performance standards for ourselves as

individuals and teams. We will simultaneously respect and value people and uphold
humanness and human dignity.

We acknowledge that every individual brings different perspectives and capabilities

to the team and that a strong team is founded on a variety of perspectives.

We want individuals to dream, value differences, create and experiment in pursuit of

opportunities and achieve leadership through teamwork.

Excellence

We do what is right, do it well and win. We will strive for excellence in whatever we
do.

Innovation

We will constantly pursue newer and better processes, products, services and
management practices.

Nation Orientation

We are aware of our responsibility to generate economic value for the Nation. In
pursuit of our goals, we will make no compromise in complying with applicable
laws and regulations at all levels.

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 OBJECTIVES

 To design purchase order process for ITCs Food Business

 To study the key areas of low fill rate and analyzing the historical data and
estimating future demand.

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 CHAPTER 2

LITERATURE REVIEW

Lambert,D.Cooper,M(2000): Cross functional integration and marketing play an

important role in successful supply chain management. Collaborative marketing and
logistics integration will be of great help.

Harbi,S.Bahroun,M.Bouchriha,H.(2018): Supplier fill rate affects the performance

of retail supply chains directly .This paper studies the uncertainty of supply and the
decision variables are order time and supply lead time .

Aramyan,LH. Oude Lansink,AGJM(2007) Efficiency, flexibilty and

Responsiveness are the key factors for supply chain performance measurement
system the choice of appropriate supply chain performance indicators is rather
complicated due to the presence of multiple inputs and multiple outputs in the
system.

Vaidya,R(2011) The research shows that companies collects liquid balances when
the monetary policy is loose and use these to extend trade credits in time when
monetary conditions are tight.

Slabinac,M(2014) Distributive trade contributes to national GDP. Studying the

functions of specific channels , the provision of place, time directly influences
people’s quality of life.

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Premchandani,S.Khurana,S.Khurdelia,A.Assudam,M(2014)This paper tells
about how the order management system is replenished and suggest measures for
better synchronization of data. How the distribution costs can be optimized is also
learnt from this paper.

CHAPTER 3
RESEARCH METHODOLOGY
RESEARCH TYPE

My research is based on the secondary data ,ie , historical data of ITC Limited.
Secondary data has been used to understand the fill rate of some market SKU of
Food division of Modern trade channel and then to make suggestions for successful
business strategy for the company’s use to increase its sales i.e. to increase the fill
rate to 95 % for ITC’s food Business

DATA TYPE

Secondary data has been used for the purpose of study of ' Designing PO process for
MT channel for ITC’s Food Business '.
Secondary data was collected from the modern trade dashboards of ITC Limited for
the months of January, February, March and April.

DATA COLLECTION METHOD

In order to collect the secondary data, Modern Trade dashboards of ITC limited for
4 months was used that was already provided . The dashboards of January, February
, March and April 2019 were given and then after thorough understanding , studying
and analysing came to a conclusion about understanding the drops in fill rate that
affects the sales directly , causes of drop and how to improve the fill rate were
prepared

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TOOLS USED FOR DATA ANALYSIS

No study could be successfully completed without proper tools and techniques, same
was with this project. For the better presentation and right explanation , statistical
tools and Microsoft excel was used very frequently. Basic tools which was used for
this project are-
 Bar Charts
 Pie-Chart
 Tables
 MAPE( MEAN ABSOLUTE PERCENTAGE ERROR)
 Pareto analysis

Bar charts and Pie-Charts proved really useful tools to show the result in a well
clear, ease and simple way. Bar charts in project are for showing data in a systematic
way, so it is not necessary for any observer to read all the theoretical detail, simply
on seeing the charts anybody could understand that what is being studies and how
the analysis has been done.

Pareto analysis was done by –identifying and listing the problems , then identifying
the root cause and grouping them . Then the causes of the problems are dealt with
proper analysis and it helps to prioritize decisions so that managers know what will
influence the company’s goals maximum and what will influence the least.

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 CHAPTER 4
ANALYSIS AND FINDINGS
 Modern trade data for the months of January , February , March and April
2019 was provided by the company. From that data , demand estimation and
forecasting was studied . Causes of low fill rate was analysed .

CHALLENGES IN MODERN TRADE FMCG INDUSTRY:

1. How easily product is visible to customers and how sales is affected?
- There is sales drop when products are sold singly and there is increased sales
when discounts, promotions and value packs are offered by the company.

Discounts, Promotions and value packs attract

customers
No discounts or promotions attracts less
customers

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2. One MSKU has 2-3 SSKUs, so tracing of product is difficult with same EAN,
what exactly customer has asked.

MSKU SSKU

ASATTANMP10KG FE2111 EAN

FE2111R 8901725121716

FJ2111

EAN(European Article Numbering) is same for 2-3 SSKUs for one MSKU
MSKU: Market Stock Keeping Unit
SSKU : Service Stock Keeping Unit

4. Sufficient data is not available to do statistical forecast accurately for a MSKU

30000 27930.6
24477
25000 22976

20000
16660
15000
11350
9960
10000

5000 253624272176 2856 2314.6

176414401740 1512 20901680
666
0

PO QTY INVOICE QTY ESTIMATE

MODERN TRADE PRODUCT CATEGORY (some) AND

BRANCH LOCATION:

CATEGORY TOP MSKU

1. AT (ATTA) ASATTANMP10KG

ASATTANMP5KG

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 ASATTAMP1KG

ASATTAMP0.5KG

ASATTAMP2KG
2. BI
(BISCUITS) SF MOM MAGIC RB 10

SFDFCHOCOFILLS90

BNC CHOC TWST MRP5

SFMARIELT77

SF HIFI CASHEW 5

SF MOM MAGIC CA 30
3.
ND(NOODLES) MAGICMASALA45

MAGICMASALA90

4. SX (SNACKS) YMT FLCUT CHL RS20

MA TOM MADNESSRS20

YMT FLCUT SAL RS20

BRANCH LOCATION
EGAU GAUHATI
ECAL CALCUTTA
EBEN BENGAL
EORI ORISSA
EVIZ VIZAG
NJAM JAMSHEDPUR
NCHA CHANDIGARH
NDEL DELHI
NLUC LUCKNOW
NJPR JAIPUR
NSAH SAHARANPUR

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 SBLR BENGALURU
SCOI COIMBATORE
SHYD HYDERABAD
SERN ERNAKULUM
SCHE CHENNAI
WPUN PUNE
WMUM MUMBAI

SUPPLY CHAIN PROCESS:

 Marketing plans for next planning horizon - Consumer promo/new launches
 Preparation of DPN & Validation
 Master Data Updation
 Estimations by KAMs (Key accounts Manager)
 CDM (Category Team)
The category team then reports to value chain, brand ,supply chain, finance and
logistics
 Pre S&OP meeting.
 Rough cut capacity planning.
 Post S&OP meeting.
 Consensus estimates are uploaded in the system
The above four processes takes place in (WD – Branch - SSKU Level)
(WD - Wholesale Distributor)
This happens in the 19th-20th of every month.
 Updated STR( Stock Transfer) will be generated as new estimates. ( for next
3 months)
 Sales closing for last month
 Forward estimates and current pipelines.
According to these processes, Manufacturing Requirement and and rolling plant
wise
PROCESS MAPPING FOR ORDER FULFIMENT:
On DAY1 , at 9:00 AM , POs (purchase orders) are received from KAs( Key
Accounts )
ON DAY1 , at 9:15 AM , POs (purchase orders ) are downloaded by COP(Central
Order Processing) team

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AT 10:05 AM, POs are processed in 2 ways-
 POs are processed manually- STOCKS ARE ALLOTED MANUALLY
 POs are processed through SAP – AUTOSTOCK ALLOCATIONS
AT 10:15 AM , PO amendment takes place.
After that POs are sent back to accounts ( example – Walmart,Reliance,Spencers,
Trent etc) to correct
-Price issue
-CFC issue (Corrugated Fibre Carbon)
-EAN issue (European Article Numbering)
Stock allocation starts at (D-2) days. [D= Delivery date]
Then is the Appointment date set.
Then truck planning vehicle scheduling takes place.
Finally, vehicles are optimised by weight and volume.
At 6:00 PM, Delivery Order (DO) is created.
Then shipment creation , shipment is released to WSP (Warehouse Service Provider)
Finally, the final shipment is planned and Truck indent is prepared at 8:00 PM.
At 9:00 PM , there is execution of shipment
At 9:45PM , Picking , Staging and Loading takes place.
At 10:00 PM, PGI ( Post Goods Issue), Invoice and e-bill is generated.
Next morning at 6:00 AM , the shipment is dispatched and received by KA(key
accounts).
ANALYSIS:
ND ,AT, BI, SX contributes approximately 90 % of total PO value & PO qty
ND-noodles, AT-atta,BI-biscuits, SX-snacks
CATEGORY WISE PO VALUE:

MONTH ATTA BISCUITS NOODLES SNACKS

JAN 2191633 6072458 7229938 338657

FEB 1813814 6512031 9319810 1505146

MARCH 2048094 6301445 8814558 1591889

APRIL 2037599 6222637 6885479 1693382

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 PO VALUE CATEGORY WISE
3500000

3000000

2500000
PO quantity
2000000 FILL RATE %
1500000

1000000

500000

CATEGORY WISE FILL RATE%:

MONTH ATTA BISCUITS NOODLES SNACKS

JAN 90.00 86.00 97.00 86.00

FEB 85.00 81.00 97.00 78.00

MARCH 85.00 78.00 97.00 71.00

APRIL 90.00 86.00 96.00 84.00

PO QUANTITY CATEGORY WISE

3500000 98

3000000 96
94
2500000
92
2000000 90
1500000 88
86
1000000
84
500000 82
0 80

PO quantity FILL RATE %

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The above two tables and graphs shows the trends of Purchase Order for some SKUs
mentioned . The study is based on the data provided in Modern Trade Dashboard for
the months of January, February, March and April.
SALES DROP VALUE CATEGORY WISE:

PO QUANTITY VALUE CATEGORY WISE:

 There were ESTIMATION issues of the SKUs . A detailed analysis revealed

the comparison between months change and percentage change has been
recorded.

%
% increase
increase in
from forecast
L3M(in LM(in MAY(in L3M to from
CATEGORY MSKU kg/L) kg/L) kg/L) LM LM
AT ASATTANMP10KG 74999.6 32574.1 9642.50 -13024% 7040%
ASATTANMP5KG 208830.8 7862.3 32020.40 - -

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 255610% 30727%

ASATTAMP1KG 104336.3 348170 347787.60 7003% 11%

ASATTAMP0.5KG 0 0 0 0% 0
ASATTANMP2KG 130774.5 41070 43591.50 -21842% -614%
SF MOM MAGIC RB
BI 10 32781.03 8530.8 10927.01 -28427% -2809%
SFDFCHOCOFILLS90 83387.41 32879.7 27795.80 -15361% 1546%
BNC CHOC TWST
MRP5 102292.4 27512.1 34097.47 -27181% -2394%
SFMARIELT77 0 0 0 0% 0
SF HIFI CASHEW 5 0 0 0 0% 0
SF MOM MAGIC CA
30 5898.81 2035.6 1966.27 -18978% 341%
ND MAGICMASALA45 1255984.92 319749 418661.64 -29280% -3093%
MAGICMASALA90 213041.74 65691.08 71013.91 -22431% -810%
YMT FLCUT CHL
SX RS20 25641.224 11095.5 8547.07 -13110% 2297%
MA TOM
MADNESSRS20 19108.28 8141.8 6369.43 -13469% 2177%
YMT FLCUT SAL
RS20 14165.47 5077.5 4721.82 -17899% 700%
The percentage change shows that estimates are not correctly done and so there is
drop in fill rates .
[AT- ATTA , ND- NOODLES , BI – BISCUITS , SX – SNACKS , LM – LAST
MONTH]
Estimates are for the month not on weekly or daily basis , so even if we have correct
estimate we don’t know on which date PO will come.

Forecasted Estimates:
Based on the historical data of ITC’s Modern Trade dashboard for the months of
January , February ,March and April 2019,
Estimates were done for the next 4 months
Estimates were calculated by taking the average(ie, for may estimate, average of Feb
, March and April were taken ) of PO values for some MSKUs mentioned below.

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 Forecasted Estimates
250000
200000
150000
100000
50000
0
G G G G G 0 0 5 7 5 0 5 0 0 0 0
1 0K P5K P1K .5K P2K B 1 LLS 9 R P LT7 EW CA 3 LA4 LA9 RS 2 RS2 RS 2
P 0 R FI M E S A S A HL S S AL
M M P M IC T RI S H IC
ANM TAN TTA TAM TAN AG CO WS MA I CA AG MA MA T C DNE T S
T T A T T O
M CH C T SF HIF C
M GI G IC CU A CU
AT AS A AS AS A AS A M F O L M L
AS O F D CH S F OM MA MA T F M T F
M S M O
SF
C
SF YM A T YM
BN M MAY
Linear
(MAY)
JUNE
JULY
AUGUST

MSKU MAY JUNE JULY AUGUST

ASATTANMP10KG 5893 6335 6859.33 6362.444

ASATTANMP5KG 83009 87086 93595.67 87896.89

ASATTAMP1KG 44658 42565 46867.67 44696.89

ASATTAMP0.5KG 0 0 0 0

ASATTANMP2KG 8627 8207 8399.33 8411.111

SF MOM MAGIC RB 10 3376 3201 3308.33 3295.111

SFDFCHOCOFILLS90 67928 78915 91105.33 79316.11

BNC CHOC TWST MRP5 9024 9056 7850.67 8643.556

SFMARIELT77 0 0 0 0
SF HIFI CASHEW 5 0 0 0 0

SF MOM MAGIC CA 30 11872 13012 13404 12762.67

MAGICMASALA45 164328 201464 207298.67 191030.2

MAGICMASALA90 26787 28644 30128.00 28519.67

YMT FLCUT CHL RS20 3630 4008 4264.67 3967.556

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MA TOM MADNESSRS20 7097 7783 8977.67 7952.556

YMT FLCUT SAL RS20 2102 2234 2313.33 2216.444

Reasons for drop

12 120
10 100
8 80
6 60
4 40
2 20
0 0
REASONS Stock out Dropped by Price issue Cfc issue Freshness
wsp issue

Main Reasons for Drop were:

1. Stock out –
 No Estimation
 Over demand/ overselling
 Manufacturing Adherence
2. Master Issue –
 CFC issue ( Corrugated Fibre Carbon)
 Price Issue
 DPN issue (Demand Planning Note)
 Funds issue
 Freshness Issue
3. WSP Drop ( Warehouse Service Provider)
 Truck load Issue
 Vehicle Placement Issue
4. Other Issues –
 Appointment Issue
 Child Pack Issue
 AE confirmed ( AE- AREA EXECUTIVE)
 SAP Issue

ROOT CAUSES:

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  Load Issues
 Transportation issue
 Reduction in PO lead time
 Overselling limited available inventory.
 SKU returned – wrong / inactive SKU
 Duplicate PO
 Low quality forecast
 Overselling limited available inventory
 Unexpected surges in demand – a promotion – whether price
reduction or product bundle draws customers
 Delays in revealing Product discharges.
 Inactive SKUs count
 Production issues
 No planning
 KAM/branches problem.
 Stock movement issue from factory due to insufficient truck load.

Reasons of Overselling:

 Unexpected surges in demand – a promotion – whether price

reduction or product bundle draws customers.
 Freshness has also been an issue: Generally MT does not accept the
stock less fresh than 75% w.r.t to its expiry date.
 Master issue includes - CFC issue and Price issue
 WSP Drop - If the PO order quantity is < 2 tonnes then, it is dropped
also if the value is < 1 lakh then also it is dropped.

Top 6 selling MSKU

MAGICMASALA90
YMT FLCUT SAL RS20
MAGICMASALA45
YMT FLCUT CHL RS20
SF MOM MAGIC CA 30
MSKUs

SF HIFI CASHEW 5
MA TOM MADNESS RS 20
SF MARIELT 300
SFDF CHOCOFILLS 90
ASATTANMP1KG
ASATTANMP5KG
0.00 20000.00 40000.00 60000.00 80000.00 100000.00 120000.00

PO QTY

Top 6 selling MSKUs

32 | P a g e
 top 10 master drop SKU
SVAL100
ASATTAMP5KG
SF BRBN BLISS 26
MAGICMASALAMRP40
MA MAS MADNESSRS20
MSKU

MA TOM MADNESSRS20
MD20SAND
MA ACH MASTI RS20
ASATTAMP1KG
MA CHAT MASTI RS20
0 5000 10000 15000 20000 25000

PO QTY

Top 10 master drop SKU

ESTIMATES
450000.00
300000.00
150000.00
estimates

0.00
G KG KG 0 77 30 90 20 ESTIMATES
0K P1 P2 S9 LT LA RS
P1 M M ILL IE CA A S Linear (ESTIMATES)
M A A OF AR IC AS ES
T AN A TT A TT OC F M AG ICM DN
H M A
AT AS AS C S
AG M
AS DF OM M
S F M T OM
SF A
M
MSKUs

Bar chart of Estimates from dashboard

300000
200000
100000
0
PO QTY

MSKU

PO QTY INVOICE QTY FILL RATE

Bar Chart of PO Qty , Invoice Qty , Fill rate from dashboard

33 | P a g e
MASTER ISSUE:
Current process:
MSKU Existing MRP SSKU
SF MOM MAGIC CA 30 15.00 FB452519
30.00 FB452519
ASATTAMP10KG 440.00 FL2111
733.33 FL2111
ASATTAMP5KG 245.00 FH2112
198.33 FH2112

To be process:
ITC Ltd
Category MSKU
Sub Category SSKU
Key Account(s)

Attributes Existing Suggested

MRP
Grammage
Margin
EAN
Description
Image Change
Case Size sample format

Activation Date
De-activation Date
Prepared by
Approved by
Department to informed about the above changes:

This is the sample format which has to be processed for better sales. Format to be
filled in by the person who will be initatiting the changes in the company.

ESTIMATION ANALYSIS:
Estimation analysis has been done by using MAPE (Mean Absolute Percentage
Error)
¿
MAPE¿ ¿ PO Qty−Estimate∨ PO Qty X 100¿

 As MAPE is greater than 100%, estimates are much higher than PO Qty.

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  2 accounts are taken for ECAL location where MAPE has been used to see
the differences in estimation analysis that is generated by ITC and the actual
PO order quantity.(ECAL – EAST CALCUTTA)
FOR RELIANCE RETAIL ACCOUNT:

RELIANCE RETAIL
MARKET SKU MAPE
ASATTANMP10KG 5.99%
ASATTANMP5KG 26.00%
ASATTAMP1KG 2500%
ASATTAMP0.5KG 1400%
ASATTAMP2KG 1396%
SF MOM MAGIC RB 10 -5.68%
SFDFCHOCOFILLS90 90.32%
BNC CHOC TWST MRP5 100%
SFMARIELT77 100%
SF HIFI CASHEW 5 100%
SF MOM MAGIC CA 30 266.00%
MAGICMASALA45 100%
MAGICMASALA90 272.00%
YMT FLCUT CHL RS20 94.50%
MA TOM MADNESSRS20 270%
YMT FLCUT SAL RS20 1.48%

FOR WALMART CNC ACCOUNT:

WALMART CNC
MARKET SKU MAPE
ASATTANMP10KG 30.40%
ASATTANMP5KG -66.60%
ASATTAMP1KG 66.32%

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ASATTAMP0.5KG 116%
ASATTAMP2KG 733%
SF MOM MAGIC RB 10 100%
SFDFCHOCOFILLS90 95.50%

BNC CHOC TWST MRP5 100%

SFMARIELT77 100%
SF HIFI CASHEW 5 100%
SF MOM MAGIC CA 30 255%
MAGICMASALA45 100%
MAGICMASALA90 274%
YMT FLCUT CHL RS20 100%

MA TOM MADNESSRS20 57%

YMT FLCUT SAL RS20 2%

CHAPTER-5
CONCLUSION AND RECOMMENDATIONS
Recommendations:

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 • Make estimates for those SKUs which contributes 80% of sales and rest be
system generated.
Example- Reliance Retail- 16 MSKUs (Account for 90% sales)
• Ask estimate for next 2-3 months from KAM and make the comparison for
variation. (KAM- Key Account Manager)
• Make dashboard to integrate fill rate report , estimates by KAMs and stock
on hand at WSPs to have better visibility of Modern Trade channel.
• Sync the data with key accounts and make necessary changes.
• Use standard format for communication for easy record and understanding.
• Acknowledgement Mail from key account once changes are updated.

• To avoid Master Issue , DATAKART is used.

Redesign the Product Master Management for organized customers by DATAKART
tool
made available by GS1

Enter core product attributes :

 Product name
 Packaging type- primary for new launch

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  Brand name
 Category & Sub-category
 Description
-Date of activation & Date of de-activation and-
-DATAKART will generate GTIN automatically (GTIN- Global Trade Item No)
And EAN issues will be solved.

BENEFITS OF USING DATAKART :

• With this innovative offering from DATAKART, it is expected that there
will be significant improvement in ordering process due to instant alerts that
will be received about product launches and new product variants .
• Besides, this system is also expected to help avoid sales loss resulting from
PO mismatches.

Solutions to the root causes:

• “just-in-time” ordering and receiving, for better reaction to consumer demand
patterns and optimize inventory productivity.
• Extend PO lead time. – Increase order frequency
- Provide a sales forecast
• Longer lead time result in higher on-hand and in-transit inventory.
• Improve quality of forecast.
• Provide a forecast.
• PO s should be segmented into 3 categories – Late shipments, On time
shipments, early shipments. For these 3 categories, a different supply chain
speed can be applied by introducing slower, more cost effective supply
chains for early items and faster delivery time for tardy products in order to
optimise the on time delivery.
• Proper demand planning
• Shorter the lead time, more accurate the demand forecast should be.
-demand will be levelled.
-Allowing suppliers to order materials according to forecast.
-Getting supplier create a dedicated line.
-Synchronising ordering, manufacturing and shipping schedule.
• Lessen the loss of perishable products by minimising distribution of stocks
to key accounts based on their freshness.

• The stocks less fresh than 75% will be sent for liquidation in GT. If GT
doesn’t accept the stocks they are declared to be damaged and defective.(GT-
General Trade)
• Improve forecasts for new products.
• Boost manufacturing capacity for high demand products.
• Demand planning should be strengthened.
• Timely communication of product promotion and introduction is important.

38 | P a g e
 • Sending clearer information to service area.
• Establish advanced negotiations of liquidation terms by category
• Help determine discounts on obsolete inventory relative to size and other
inventories.
• Closing gap between actual sales and supply chain forecast using
CDSN( Consumer Driven Supply Network).  
Example - By making consumer the centre of all its core operations, P&G initiated
Customer Driven Supply Network (CDSN) that starts from customer choice at the
store shelf and works backwards towards product manufacture; a paradigm shift
from forecast-based supply chain to the one based on real time demand. P&G's
relationship with Wal-Mart exemplifies the success of CDSN.

Recommendations to decrease overselling:

 Always keep track of products that are low in stock- It should be make sure
which products require a longer order time and reorder early when stock gets to a
set level. Any good stock management software should allow to sort and filter by
stock levels.
 Looking after stock in warehouse - Another possible reason is that we have the
actual stock in warehouse, but it becomes damaged, lost or cannot be sent out.
Older stocks should be supplied out before newer stock.
 We should not treat all SKU s the same - There is no such thing as one size fits
all solution. Each and every product does not have the same supply and demand
variability pattern. We should focus on those 20% that make up 80% of volume
and manage the inventory well to maximise sales and profit.
 Using Multichannel Inventory management software – a certain way to avoid
overselling would be to segregate the stock to different channels .
 PULL type system should be used (eg- JIT,CRP) to manage inventory.ie.
Production is based on actual demand.
JIT – Just In Time
CRP – Collaborative Replenishment Planning

Conclusion:
 The Indian Retail Sector has caught the world’s attention in few years .
Indian organized retail sector (Modern Trade) is bound to grow multi fold
and hence every FMCG is keen to leverage this opportunity .
 Modern trade is very particular about the delivery slot timings , stock
availability and quality of products and is giving a new dimension to FMCG
companies and this channel is being used to earn more revenues .

39 | P a g e
 CHAPTER 6
REFERENCES
1. Premchandani, S., Khurana, S., Khurdelia, A., & Assudani, M. (2014). Improving
the Fill Rate Performance of FMCG Products in Modern Trade: An Indian
Scenario.
2. Panuganti, R. (2012). Supply Chain Management Challenges for FMCG in retail
sectors in India.
3. Bighane, N., & Devi, S. Continuous Inventory Level Monitoring Replenishment
Model for Modern Trade.
4. Bahroun, M., & Harbi, S. (2015, October). Risk management in the modern
retail supply chain: Lessons from a case study and literature review. In 2015
International Conference on Industrial Engineering and Systems Management
(IESM) (pp. 1161-1170). IEEE.
5. Lambert, D. M., & Cooper, M. C. (2000). Issues in supply chain
management. Industrial marketing management, 29(1), 65-83.

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 6. Cooper, M. C., Lambert, D. M., & Pagh, J. D. (1997). Supply chain
management: more than a new name for logistics. The international journal of
logistics management, 8(1), 1-14.
7. Bechtel, C., & Jayaram, J. (1997). Supply chain management: a strategic
perspective. The international journal of logistics management, 8(1), 15-34.
8. Haq, A. N., & Kannan, G. (2006). Fuzzy analytical hierarchy process for
evaluating and selecting a vendor in a supply chain model. The International
Journal of Advanced Manufacturing Technology, 29(7-8), 826-835.

BOOKS:
1. Operations and supply chain management – F.robert.Jacobs
2. The Art of process Improvement – Abdul.a.jaludi
3. Operations Management – Steve Patton

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