Inbound Logistics | August 2022

LARGE BRAND SELLS DIRECT TO SMALLEST RETAILERS

In India, fast-moving consumer goods (FMCG) normally move through more than one wholesale layer before they reach the shelves of the small mom-and- pop shops that sell about 80% of the category’s products in that country. Looking to simplify its supply chain, get better market data, and move closer to its end consumers, Hindustan Unilever (HUL), the country’s largest FMCG manufacturer, created a business-to-business ordering platform for the region’s smallest retailers in 2020. More than 800,000 small retailers now use the Shikhar app, which allows them to bypass middlemen and place orders directly with the manufacturer for next- day delivery. It also provides access to inventory nancing through a State Bank of India partnership. And, it generates data that both the manufacturer and retailers can use to rene business operations. Allowing the mom-and-pop shops that dominate the Indian landscape to order directly, however, requires signicant distribution center changes. “Like all FMCG companies, small businesses usually supply full boxes to the big grocers and distributors,” says Pieter Feenstra, CEO of Addverb EMEA, a global robotics company based out of India. “But the small mom-and-pop shops will not order a full box of shampoo—they

To better serve small retailers in India, HUL launched Samadhan, a tech-enabled direct-to- trade order fulfillment center that is fully integrated with its digital order capturing platform.

will more likely order three bottles. So some of the HUL distribution centers that supplied full boxes all of a sudden had to begin picking eaches.” ENTER SAMADHAN As part of that shift, HUL piloted Samadhan, an innovative, direct- to-trade order fulllment center in Chennai. Built adjacent to an existing facility that supplies large quantities of boxes to larger stores that include big box-type retailers, it is fully integrated with the manufacturer’s digital order capturing platform. By using Addverb robotics and software, the company can provide fast, reliable service to retail outlets through warehouse automation and optimized last-mile logistics. Automation pulls full cases from the rst warehouse to the second, where employees decant the merchandise into plastic crates from which they later pick individual orders. The system uses

a sophisticated conveyor trafc system for goods-to-person picking, storing completed orders, and moving the sealed crated orders in optimized route sequence to delivery trucks. Trucks pick up empty crates when delivering orders, returning them to Samadhan for reuse. Because the pilot center uses double- deep storage and retrieval and has optimized the picking process, it can operate on a smaller footprint than less automated facilities. Automation makes it possible to reduce the number of employees during a tight labor market. With the recent addition of direct- to-consumer sales, which also require fast order fulllment, HUL is exploring implementing the pilot model in other warehouse locations as well. BEAUTY BRAND IMPLEMENTS MULTI-NODE FULFILLMENT While many consumer brands struggled to maintain their customer base when stores closed during the pandemic and shoppers were forced to buy online, “nonessentials” selling on Amazon were especially hard hit. “Amazon prioritized essentials like toilet paper and hand sanitizer in its distribution centers, resulting in delays and reductions in other product categories such as luxury or prestige beauty,” says Kamran Iqbal, commerce strategist at e-commerce fulllment provider PFS. The solution for one of PFS’s high- end beauty brands was to leverage its presence on other existing online retail channels, including its own branded website. The challenge was to make sure its e-commerce operation could protect the brand’s reputation for quality by handling the volume increase quickly and efciently.

As brands and retailers rethink the function and structure of traditional stores, they turn to technology. RetailConnect, for example, is a cloud-based omnichannel solution that automates e-commerce fulfillment operations within brick-and-mortar locations, without interrupting ongoing store operations.

August 2022 • Inbound Logistics 47