Amway to revamp supply chain, expand presence

Updated: Feb 1 2002, 05:30am hrs
Amway India Enterprises is redefining its distribution structure by overhauling its supply chain. The network marketing company is looking at reducing lead time by moving closer to the point of consumption, improving its information system and reaching out to homes through a better delivery system. It is also expanding its presence across the country and adding new products to its portfolio.

The company has done away with its central warehouse at Nagpur and opened four regional warehouses in Bangalore, Kolkata, Delhi and Mumbai that are serviced directly from the manufacturing units. This has helped it cut lead time and freight costs substantially and move closer to the point of consumption.

For a more effective information system, the company is now focussing on integrating the back-end of the supply chain (manufacturing planning and material planning) to its warehouses, pick-up centres and offices which are already online. This is expected to create a seamless supply chain, in which a product sale at one-end generates an order for raw material at the other end. Simultaneously, the company is also improving the flexibility and responsiveness of each and every element in the supply chain from raw material supply to manufacturing to home delivery.

The company also has aggressive plans to expand its home delivery coverage exponentially over the coming year. For this, it is not restricting itself to the courier mode alone but is setting up a hub and spoke system through its CFAs (clearing and forwarding agents), transporter network and local logistics service providers.

An aggressive product launch strategy has also been drawn up to introduce more high demand products. At present the company offers 31 products in four categories: Home Care, Personal Care, Nutrition & Wellness and Artistry.

In order to provide value-added services to its distributors, the company is looking at strategic alliances with companies which have products and services that are relevant and of use to them. For instance, it has a tie-up with Bharat Petroleum Corporation Ltd for its customer loyalty programme and has come up with a co-branded Amway-BPCL Petro Card for its distributors. The company also has a strategic alliance with Standard Chartered Bank for a co-branded Amway-SCB Credit Card for its distributors.

The new initiatives will provide an enhanced quality of service to distributors who are located in far-flung cities which do not have an Amway office, according to Mr William S Pinckney, managing director & CEO, Amway India Enterprises. This holds special significance as the company has no plans to get into indirect selling or adopt any other way of selling products by surpassing its distributors.

From a turnover of Rs 100 crore in the first year of operations (1999), the companys net income grew to Rs 553 crore in 2001. For the current fiscal, it expects to grow by 50-60 per cent over the previous year. Similarly, from five offices and six products when it started in 1998, the company today has 36 offices serving over 385 locations across the country. It plans to add 14 more offices to its network this year, taking the total number of offices to 50 which will serve over 450 locations. These new offices will be opened at strategic locations, spread across the country and governed by an unwritten rule of Be present where Amway distributors are, said a company official.