Retailers beef up cold chain infrastructure to pare wastage

Written by Sohini Mitter | Nikita Upadhyay | Nikita Upadhyay | Mumbai | Updated: Jun 20 2011, 07:17am hrs
Top retailers in the country are looking to beef up their cold chain infrastructure, in order to reduce wastage, especially in the food category that forms 50% of their inventory. Improving the agri supply chain, setting up collection centres closer to farms and partnering with logistics firms to ensure smooth delivery at stores, are some of the measures being adopted by industry majors.

While Future Supply Chains, the logistics division of the Future Group, has launched its integrated distribution centre and warehousing facility for FMCG goods, Reliance Fresh has a tie-up with Spear Contract Logistics for delivering dry packaged items and grains, while wet products such as fruits, vegetables and meat are handled in-house. Hypercity, on the other hand, has its own team that works on flooring at stores and packaging of items to lower wastage.

Bijou Kurien, CEO of Reliance Retail, says, "Items that a retailer buys from the farmers are brought to collection centres in open-air vans. During monsoons, it results in greater wastage. Bad roads and lack of good transport facilities add to it. There should be more investments in the agri-supply chain to arrest wastage."

He also feels there are low levels of value addition in India, leading to supply chain inefficiencies. However, some logistics companies look to tap retail clients by offering them better value adds. Ajay Chopra, CEO, DIESL, says, "We add value in procurement, by aiding the movement of stocks in a cost-efficient manner. Status and visibility of goods in the supply chain is crucial to manage inventory."

Meanwhile, Hypercity, where store-level shrinkage is well below 1%, faces distribution woes in the rainy season.

Vijay Nair, general manager, supply chain, Hypercity, said, "In monsoons, loading and offloading of products, especially food and beverage, take longer and transport is a problem. We're working to improve the distribution, and reduce delivery time."

Future Group aims to achieve 100% fill rates and zero shrinkage in the food and FMCG category through its newly launched distribution facility at Bhiwandi. Anshuman Singh, MD and CEO, Future Supply Chains, said, This offering integrates the supply chain from vendor to retailer and will reduce uncertainty in delivery.

While experts are of the opinion that zero shrinkage is "improbable", it can be brought down through better logistics. Gautami Seksaria, founder and partner, Supply Chain Leadership Council, said, The retailer's margin is directly dependent on his supply chain effectiveness and operational efficiency. In the run-up to the full opening of the retail market, logistics service providers are gearing themselves up to be able to manage their retail clients' supply chains in a world class manner and demonstrate their ability to positively influence revenue or cost.