Britannia Industries Limited, a leading Indian FMCG company, represents how optimizing transportation strategies can significantly enhance supply chain efficiency. This report goes into Britannia’s journey from 2016 to 2023, analyzing the specific transport-related initiatives undertaken and their impact on key performance indicators (KPIs) like lead time, inventory levels, and overall cost reduction. 

Britannia’s Supply Chain Landscape 

Prior to 2016, Britannia’s supply chain faced challenges: 

Fragmented Network

Products were distributed through a network of over 5000 distributors, leading to inefficiencies in route planning and delivery schedules. 

High Lead Times

Delays in product movement resulted in longer lead times, impacting product availability at retail outlets. 

Inventory Issues 

Inconsistent demand forecasting often led to excess inventory at warehouses or stock outs at retail stores. 

Transportation Costs 

Reliance on traditional transportation methods (trucks) incurred high fuel costs and limited real-time tracking capabilities. 

Leveraging Transport for Efficiency (2016-2023) 

Britannia implemented several strategic initiatives to address these issues, focusing on transport optimization: 

Network Optimization 

The company consolidated its distributor network, reducing the number to around 2000 by 2023. This improved route planning and streamlined delivery schedules, leading to a 15% reduction in overall lead time. 

Route Planning Software 

Britannia adopted advanced route planning software to optimize delivery routes based on real-time traffic data and order fulfillment requirements. This resulted in a 20% decrease in overall transportation costs by 2023. 

Multimodal Transportation

The company explored alternative transportation modes like rail for bulk deliveries to regional distribution centers. This strategy not only reduced fuel costs but also yielded a 10% improvement in on-time delivery rates. 

Vehicle Tracking Systems

Britannia implemented GPS-based vehicle tracking systems for its fleet, enabling real-time monitoring of location, speed, and fuel consumption. This improved driver behavior and route adherence, leading to a 5% reduction in fuel wastage by 2023. 

Transport & Advertisements 

Britannia has over the years transformed itself into a tech/data first company by partnering with behemoths like Accenture and has leveraged the power of data and technology which has aided them in substantial margin expansion. This, along with the growth in q-commerce has really pushed the frontiers of growth for this centenarian. 

Category FY 2008 (Crores)  FY 2014 (Crores)  FY 2023 (Crores)  
Revenue 2,776 100% 6,829 100% 15,984 100% 
COGS 1,692 61% 4,170 61% 9,590 60% 
Gross Profit 1,084 39% 2,659 39% 6,394 40% 
Employee Costs 126 5% 262 4% 658 4% 
Carriage & Freight 187 7% 387 6% 690 4% 
Advertisements 183 7% 603 9% 675 4% 
Conversion Charges 177 6% 453 7% 750 5% 
Others 174 6% 408 6% 1,104 7% 
Opex 847 31% 2,113 31% 3,877 24% 
EBITDA 237 9% 546 8% 2,517 16%  

Company has kept the gross profit margin at 40% over the years, but there was a significant increase in EBITDA margin from 9% to 16% from 2008 to 2023 due to a reduction in the cost of carriage & freight and advertisements from 7% in 2008 to 4% in 2023. 

Warehouse Consolidation 

Britannia streamlined its warehouse network, strategically locating facilities closer to major demand centers. This reduced transportation distances and improved product availability at retail outlets.

Source:Research Gate 

Impact and Results (2016-2023) 

These transport-focused initiatives demonstrably improved Britannia’s supply chain performance: 

Lead Time Reduction 

As mentioned earlier, lead time decreased by 15% due to network optimization and route planning software. 

Inventory Optimization 

Improved forecasting and streamlined delivery schedules enabled Britannia to maintain optimal inventory levels, leading to a 12% reduction in overall inventory holding costs by 2023. 

Cost Savings

The combined effect of these initiatives resulted in a significant cost reduction. Transportation costs decreased by 20%, with an additional 5% reduction in fuel wastage. 

Customer Satisfaction 

Faster deliveries, improved product availability, and enhanced on-time delivery rates contributed to increased customer satisfaction. 

Price Performance of Britannia Stock: POST 2016

Financials: 2016-2023 (consolidated) 

 MAR’16 MAR’17 MAR’18 MAR’19 MAR’20 MAR’21 MAR’22 MAR’23 CAGR 
Sales 8,397 9,054 9,914 11,055 11,600 13,136 14,136 16,301 9.94% 
Operating Profit 864 1,214 1,278 1,502 1,733 1,843 2,509 2,202 14.30% 
OPM (%) 10.29% 13.41% 12.89% 13.59% 14.94% 14.03% 17.75% 13.51%  
Net Profit 689 825 884 1,004 1,159 1,403 1,864 1,525 12.02% 
NPM (%)  9.11% 8.92% 9.08% 9.99% 10.68% 13.19% 9.36%  

Company has seen consistent growth in its Operating profit margin with CAGR of 14.3% and Net profit margin over the years with CAGR of 12.02%. 

Returns to Shareholders

 MAR’16 MAR’17 MAR’18 MAR’19 MAR’20 MAR’21 MAR’22 MAR’23 
ROCE (%) 57.06 48.17 44.48 42.2 38.79 60.51 73.2 58.32 
Return on Assets (%) 24.81 22.87 20.52 19.85 20.46 23.73 22.99 24.9 
ROIC (%) 62.51 42.99 33.26 34.66 51.93 78.26 91.33 67.32 
ROE (%) 37.86 32.68 29.3 27.78 34.72 53.02 66.73 67.25 
Adjusted EPS 31.8 35.15 39.48 46.7 61.72 73.06 66.55 88 

The company has consistently created wealth for its investors from the period of 2016-2023.

Challenges and Future Considerations 

Despite the success, Britannia faces ongoing challenges: 

Fuel Price Fluctuations

Rising fuel prices can impact transportation costs, requiring continuous monitoring and cost-optimization strategies. 

Last-Mile Delivery Challenges

Efficient last-mile delivery in urban areas with congested traffic remains an ongoing challenge. 

Sustainability Concerns 

Optimizing transport for efficiency must consider environmental impact. Exploring electric vehicles and sustainable packaging solutions are crucial for future success. 

Conclusion 

Britannia’s focus on optimizing transportation within its supply chain serves as a model for other FMCG companies. By embracing technology, adopting multi-modal transportation, and implementing strategic network planning, Britannia achieved significant improvements in lead time, inventory management, and cost reduction.