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Role of IT & Operations in FMCG IndustryRoles of IT & Operations in Mondelez International Cadbury India

Veer GupteIBS Business School !G!MIBS Business School Mu"bai

Mu"bai India#eer$upte%$"ailco"

So"esh '("eraIBS Business School !G!MIBS Business School Mu"bai

Mu"bai Indiaso"esha("era%$"ailco"

AbstractThis paper is a research document to study

the Role of IT & Operations in FMCG Industry with the

help of Mondelez International Cadbury In our study!

we ha"e #i"en information on how Cadbury uses

Information Technolo#y and Operations Mana#ement to

achie"e its Mission and $ision Cadbury has always beena pioneer in the Chocolate and Confectionery Industry

Cadbury is the Mar%et eader in this se#ment

I I)TRO*+CTIO)(HEADING1)

The fast,"o#in$ consu"er $oods -FMCG. sector in India isthe fourth lar$est sector in the econo"y It also called theconsu"er pac/a$ed $oods sector The FMCG sector inIndia has "ar/et size in e0cess of +S1 232 billion as of theyear 4524 The FMCG sector in India had a $ro6th rate of278 in the year 4522 The FMCG Industry has

outperfor"ed all other sectors contributin$ to India9s G*!In our paper 6e ha#e considered Mendelez InternationalCadbury to hi$hli$ht the role of Infor"ation Technolo$y-IT. and Operations in the FMCG Industry 't Cadbury

Mission: Financial Scorecard (udiciously reinforced by our!riorities Co""it"ents and Culture

Core $alues: !erfor"ance ;uality Respect Inte$rity andResponsibility

Cadbury India

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include Cadbury *airy Mil/ *airy Mil/ Sil/ Bourn#ille7,Star !er/ Ge"s -a #ersion of M&M>s. clairsBourn#ita Celebrations Bil/ul Cadbury *airy Mil/ ShotsToblerone alls Tan$ and Oreo

II MTO*STOIM!ROVIT& O!R'TIO)S

Information Techoloy and !"eration# are thebackbone of any orani#ation$ Cadbury relie# on

%ariou# o"eration# throuh it# IT #er%ice#$

A$ !"eration# at Mondele& International Cadbury

Cadbury is /no6n to be one of the best run co"panies inIndia Credit $oes to its operations Operations Mana$e"entat Cadbury is ta/in$ into consideration its factory locations6arehouse locations stoc/ deli#ery and production

processes

Cadbury Factories in India: Thane !une i"achal !radesh G6alior yderabad Ban$alore

Cadbury Cocoa Operations: *harapura"

Out of all the factories in India the factory at Baddii"achal !radesh is the lar$est production facility forCadbury Operations include different processes in all thefactories 6hich are e0actly sa"e at all the factories acrossthe $lobe

'roduction processes(

Process followed while making chocolate:

ar#est Fer"entation *ryin$ Cleanin$ Roastin$ Crushin$ and shellin$ Blendin$ Grindin$ Eneadin$ Rollin$ Conchin$ !ac/in$ and pac/a$in$

Total )uality Mana#ement(

'ny lapses in the Duality control at any ofthesta$es li/e no proper dryin$ o#er roastin$ not$ettin$ proper consistency can result inDuality

proble"s in the chocolate

ater e0tre"e te"peratures andi"proper pac/a$in$ and stora$e are thearchene"iesof chocolate

The only Duality proble" e#er to ha#ebeenassociated 6ith Cadbury is the6or"contro#ersy that hit Maharashtra in duetoi"proper stora$e and pac/a$in$

T;M ensures that the products that Cadbury produces:

tastes $ood to the custo"ers is appealin$ to the custo"ers custo"er co"plaints are sol#ed listenin$ to custo"ers "a/in$ continuous to their products

'ast 'roduction 'rocesses(

azard 'nalysis and Critical Control !oint-'CC!. : Means of pre#ention rather thanfinishedproduct inspection

Good Manufacturin$ !ractices -GM!.: GM!s are$uidelines that outline the aspects of productionthat 6ould affect the Du al it y of a pr od uc t

!atho$en testin$ syste" Operate audited Duality "ana$e"entsyste"s Guarantee that our custo"ers andconsu"ers co"e

first Maintain a ri$ht first ti"e culture 'ssi$n clear "ana$e"ent accountability or/ 6ith our supply chain and business

partners et c

'$ Im"ro%ement# in roduction "roce##e#

'roducti"ity impro"ements(

Replacin$ 'ir Co"pressors Chillin$ syste" "achines atManufacturin$ and !ac/a$in$ lines

Technolo#ical Chan#es(

Rin$6ood Victoria !lant Identifies "any opportunitiesfor "a/in$ inno#ation and technolo$ies that 6ill reducethe 6aste fro" the Chocolate

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*i"ersity in the +or%place(

,*i#ersity & Inclusi#enessN is the punch line on its6ebsite for creatin$ a 6elco"e or/place for e#eryone

-ppro"ed by the Food and -#riculture Or#anisation

of the ./0s +orld 1ealth Or#anisation

Incorporate elements of the International 2tandards

Or#anization0s )uality Mana#ement 2ystem

Cadbury monitor the production process by usin# Total

)uality Mana#ement 3T)M4

Cadburys ha"e super"isors that monitor the

machines!the other wor%ers and the products

C$ Internal Con#traint#

The e0istin$ scale and capacity of buildin$s and"achinery used in the production

process-Good. The s/ills and trainin$ of the labor force-Bad. The a#ailability and fle0ibility of the labor

force-Bad. 'ccess to an abundant supply of parts and ra6

"aterials-Good. Ti"e-Good. Finance-Good.

D$ !"eration#* roduction and roduction +ine

Operations, The core acti#ities of a business'roduction, 'cti#ities in#ol#ed in creatin$ aproduct&'roduction line, a set of seDuential operations establishedin a factory 6hereby "aterialsare transfor"edin order to

produce an end,product or co"ponents are asse"bled to"a/e a finished article&

Cadbury India has #ery fe6 hu"an resources 6hich arein#ol#ed in production of the final product& Robots"achines con#eyers rotators Infor"ation Technolo$ySoft6ares etc& ta/e care of all different production lines&Cadbury de#elops its final product in sta$es& 'part fro"the production processes Cadbury India has de#elopedtheir operations in local "ar/et and deli#ery syte"s toaid better in#entory "o#e"ent dispatch and help in$ro6th of sales& Cadbury India has strate$ically placedall the 6arehouse facilities near the Tier 2 Tier 4 Tier 3

cities& This has resulted in better In#entory Turno#er andhi$her )et Sales& Operations related to the better brand#isibility such as Visi,coolersN MerchandiseN etc&ha#e been pro"oted& Visi,coolers are the coolers that areseen at #arious outlets for stora$e of CadburyChocolates& They are pro#ided to the Top Outletsdependin$ on the Sales and Outlet throu$hput& Visi,coolers are produced by third party #endors li/eVoltasN& Such facilities pro#ided to the top outlets ha#ehelped the outlets to store "ore in#entory for lon$er

period& Cadbury has al6ays loo/ed at e0pandin$ itsoperations by inte$ratin$ IT in the syste"& Cadbury Indiashall soon start 6or/ on the bi$$est production facility in'sia,!acific in 'ndhra !radesh&

Statistical correlation bet6een the adoption of the #alues ofT;M and successful Duality "ana$e"ent One of the core#alues of the or$anization is to put Duality and safety at theheart of all their acti#ities their products custo"ers

partners and perfor"ance Total ;uality Mana$e"entis one of the "ain reasons for the success of the co"pany

E$ Information Technoloy

Infor"ation Technolo$y -IT. plays a /ey role in the successof Cadbury India Currently Syste"s 'nalysis and !ro$ra"-S'!. and nterprise Resource !lannin$ -R!. are bein$successfully used at Cadbury ' lot of the production

processes hea#ily sepends on the IT Soft6are that ise"bedded into the robots and #arious production "achinery

5R' IM'5M5/T-TIO/ M5T1O*OOG6C1-5/G52

Cadburys India 6as the #ery first or$anisational unit allo#erthe 6orld to i"ple"ent R! in its processes Thei"ple"entation process in India 6as started fro"scratch asthey 6ere the first to i"ple"ent that in allo#er $lobalapplication of the Cadbury They tried to inculpate the best

practises of the co"pany and triedto build on the stren$thsthe past syste"s in ne6 R!syste"sCadburys /ne6 that for i"ple"entation 6ill they 6illbestandardizin$ the processes in 2? different locations

The R! initiati#e 6as to brin$ about a co"pleteinte$rationof the "a(or processes in the business The"a(or processes

bein$ procure"ent syste" financesyste" the u"anResources and other depart"entsCadburys ha#e four branch operations and 23"anufacturin$ operations and each had their o6n syste"srunnin$ in isolation The finance depart"ent 6as the onlyone co""on to all R! ser#ed as an inte$ratin$ syste" anda solution for theirthen e0istin$ decentralised "odel

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R! ser#ed as an inte$ratin$ syste" and a solution fortheirthen e0istin$ decentralised "odelThe i"ple"entation"ethodolo$y adopted by Cadburys happened in 2@@7 andthey 6ent ahead usin$ a bi$ ban$ approach They did thei"ple"entation co"pany 6iseCadburys had one "a(ore0pectation fro" R! ie IT to help the "ana$e"ent 6or/

better than before 6ith the e0istin$ syste"s in placeIn orderto carry out the R! i"ple"entation Cadburys had to ali$n6ith an e0ternal #endor For R! partnership 6ith Sie"ensand for infrastructure "ana$e"ent partnership 6ith IBM

Initially Cadburys 6ent 6ith Finance and then subseDuentlyto production and supply chain They6ent for a function

based bi$ ban$ approach in India and then i"ple"ented the6hole "odule all acrossco"pany in span of 2 year so it can

be said as bi$ ban$ as 6hole It 6as co"pletely top"ana$e"ent dri#en Cadburys ha#e a proper MIS no6 *atais entered only once The entire syste" $ets updated Onecan see theconsolidated data fro" any6here and "a/edecisionsFro" "anual entries it has beco"e a totallysyste" dri#en data entry no6

hile i"ple"entin$ the R! syste"s the co"pany hasbuilt it upon the past stren$ths of the co"pany thereby notlosin$ out on itsco"petiti#e ad#anta$e and at the sa"e ti"esaddlin$ itself up for a fast paced $ro6th The initiali"ple"entation too/ ti"e and then the successi#ei"ple"entations too/ lesser ti"e and cost and there is ahu$e ad#anta$e in sa#in$ cost 6hile in the i"ple"entation

phase itself The reaction fro" co"petition does not "atterin this because thisis not a chan$e that 6as ad#ertised to the"ar/et This is an internal process restructurin$ and 6as a6elco"e chan$e 6ithin the co"pany 6hich badly needed

the chan$eThe co"pany also has built in a robust re$ular feedbac/syste" to"onitor the chan$es and chec/ if they $oaccordin$ to the initialplan The entire i"ple"entation iscross functional and hence it is i"portant that there is a hi$hincrease in the efficiency The R! #endor 6as alsoselected fro" a"on$ the best in class #endors 6hich helpedthe process occur in a strea"lined fashion and a#oided any

possible chances of hiccups durin$ the initiali"ple"entation phase The syste" has also been deployedup to the #endors They ha#e aportal called #endor connect6here they can see their in#entory "o#e"ent and "a/e

plans accordin$ly ence the restructurin$ happens not onlyinternally but also across to the supplier 6hich 6ill add onto the benefits that are accrued It 6as considered allo6 costand hi$h result i"ple"entation 6hich by itself hi$hli$htsthe success and the benefits

Syste" 'nalysis & !ro$ra" -S'!. has helpedCadbury forecast its production sales lo$isticsin#entory etc S'! is used to enable s"ooth flo6of production processes 6ith (ust in ti"e principle'll the Functional *epart"ents in Cadbury ha#e

been brou$ht on to a sin$le platfor" usin$ S'! 'ne"ployee data can be fetched fro" any 6here in the6orld S'! has enabled the co"pany to be "ore

bounded internally but uni#ersally accessible

S'! has been a /ey co"ponent for s"ooth inte$ration ofEraft Foods ta/eo#er 6ith Cadbury Both Eraft and

Cadbury rely on syste"s pro#ided by S'! one of the 6orldleaders in enterprise resource plannin$ -R!. syste"s S'!also pro#ides financial plannin$ and hu"an resources -R.syste"s called R! Financials and R! u"an CapitalMana$e"ent respecti#ely

Eraft up$raded all of its S'! syste"s in 455 Cadbury onthe other hand has had a tryin$ ti"e 6ith S'! Beforede"er$in$ fro" Sch6eppes Cadbury reported that trouble6ith its S'! i"ple"entation had i"pacted on perfor"anceand contributed to its P24" deficit It see"s to ha#e beensorted out since

Eraft e0pects to spend P4" inte$ratin$ the t6oco"panies> production "ana$e"ent and IT syste"s and alar$e part of that 6ill probably $o to S'! or one of itsinte$ration specialists Ob#iously it is /eepin$ the details toitself and S'! is notorious for $i#in$ a6ay as little as

possible e#en to its custo"ers

III RS+s IT to Duantify any ris/s to business continuityoutline the reDuired operational and capital e0penditure forthe first 24 "onths follo6in$ the acDuisition identify theopportunities for syner$y and define the hi$h le#elinte$ration plan

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Sounds $ood but it>s an unfortunate fact of business life that"er$ers and acDuisitions are often contro#ersial 6hetherit>s t6o s"all co"panies "er$in$ a"icably or a hostileta/eo#er of a lar$e corporation by an e#en lar$er one thetendency is for ne$otiations to be conducted by a #ery s"all$roup of people often (ust the proprietors in the case ofs"all co"panies or a handful of directors and the chieffinancial officers in the case of lar$er ones The IT "ana$er-CIO in a lar$e or$anisation. is often one the last to /no6

o6 IT inte$ration proceeds after the "er$er or acDuisitiondepends on "any factors not least the relati#e sizes of theco"panies here a lar$er co"pany ta/es o#er a s"allerone it is co""on to e0port data fro" the s"aller co"panysyste" and "er$e it into the lar$er one ith SMs this can

be relati#ely strai$htfor6ard thou$h ti"e and "oney 6illha#e to be spent retrainin$ the staff fro" the old co"pany touse the ne6 syste"

ith Eraft and Cadbury the principle is the sa"e but thesu"s a lot bi$$er The fact that both rely on S'! $i#es the"

a sli$ht ad#anta$e but S'! and other R! syste"s areusually hea#ily custo"ised to suit different situations so it>snot $oin$ to be li/e a co"pare docu"ent operation on t6o6ord processed files

Operations Mana$e"ent 6ith Total ;uality Mana$e"ent-T;M. has helped Cadbury deal 6ith #arious issues relatedto production Duality life cycle of the product Cadbury inIndia is the "ar/et leader 6ith "ore than 5 8 of "ar/etshare Cadbury is no6 loo/in$ at Cloud Stora$e of data6hich needs to be accessed $lobally Thus sa#in$ ti"e andalso "inisin$ cost The co,Friendly approach is #arious

operational acti#ities can help the co"pany $ain $oodCorporate Social Responsibility -CSR. Ratin$s

IV *ISC+SSIO)S

The FMCG Industry can easily be related to 6hat CadburyIndia has been able to do 6ith the help of IT and OperationsIt is i"portant for any or$anisation to consider the constantup$radation of its IT Resources and also its Operations '$ood MIS can 6or/ li/e an open library to the e"ployees ofany or$anisation o6e#er care should be ta/en so as to"aintain pri#acy of the sensiti#e data Thus 6e conclude that

IT and Operations play a /ey role in the FMCG IndustryFMCG or fast "o#in$ consu"er $oods is a rapidlye0pandin$ industry 6ith an e#er,$ro6in$ de"and and "anystores rely on FMCG as a core part of their business Thelo$istics of a FMCG business "ust be perfectly scheduledand e0ecuted in order to /eep the business runnin$ properly

Custo"er ser#ice is also an area 6hich usually sees thebenefits of FMCG IT Mana$e"ent as reduced costs arepassed to consu"ers as Duality i"pro#es Other /noc/,on

effects of IT control of production is effecti#e "ana$e"entof suppliers 6hich aids or$anisation 6ithin the co"panyand can conseDuently create a solid 6or/in$ at"osphere6ith hi$h e"ployee "orale

S'! and other R! syste"s are usually hea#ily custo"isedto suit different situations

' co"pany that is $ro6in$ should ensure that its IT isfle0ible and able to support its $ro6th plans

'CE)O