Supply Chain Efficiency- Britannia Industries
- Share.Market
- 5 min read
- 03 Jul 2024
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.