Vikram Agarwal Chief Supply Chain Officer of Avon
Listen to the full discussion here:
Vikram is a seasoned supply chain professional with a career spanning 30 years in the industry. He is responsible for leading the continued roll-out of Avon’s new Supply Chain transformation plan, aimed at delivering improved service and significant savings to fuel company growth.
Since joining Avon in early 2019, Vikram has successfully overhauled the company’s customer and Representative proposition, service offering, functional processes, and cost management. This part of the business touches more than 10,000 associates in the Supply chain function, as well as Avon’s footprint in more than 50 countries globally including eight manufacturing sites and 50 distribution centres.
Vikram joined Avon from Unilever where he served as Executive Vice President, Supply Chain, Africa, and was responsible for a multi-billion-dollar regional business, including end-to-end supply chain across 15 countries; 14 factories; and 25,000 employees. Prior to this, he was Group Vice President, Global Home Care Supply Chain at Unilever, where he was responsible for direct business planning with country and regional leadership.
Connect with the Guest:
Vikram Agarwal: Linkedin
Some of the highlights from the podcast:
- The difference between direct selling and FMCG supply chains
- How Avon successfully reduced its total number of SKU by 35%
- Reducing inventory by 20% while improving service to 800 basis points
- Differences between Avon supply chains in different parts of the world
- How Avon transformed from one-day delivery to one-hour delivery in certain markets
- Global trends shaping supply chains in different parts of the world
- Gender diversity in the organization and generating better livelihood for women.
- [01:41] How is managing Avon supply chain operations different in disrespect from Unilever and how is it similar?
- [02:29] The unique thing about Avon is it brings this front end and the back end together in a convergent model and very few companies around the world are in that space.
- [03:53] Every campaign, every three weeks, you want millions of representatives around the world placing their orders of maybe $20, $30, $40 equivalent consisting of 20 to 30 units.
- [05:59] Can you give us an example around supply chain – what you’ve done and what are some of the results?
- [07:12] We have successfully reduced our SKU count by about 35% in the past eight months.
- [07:50] In order to make the supply chain more regent is to bring the inventory onto a level that is optimum. It can still drive service and at the same time, it is fast-moving.
- [08:08] We have managed to reduce our inventory by around 20% of where it was but at the same time, we’ve also improved our service by almost 800 basis points.
- [10:33] We have increased our, what we call ‘out of meal plan’ excess by 50%. It went up by one and a half times to where it stood in 2018.
- [12:21] We are now starting to develop business models for delivering to the customers. Even in countries where we do not have a direct selling presence.
- [15:04 ] What’s your benchmark and strategy in terms of fulfillment last mile to keep pushing the envelope faster and faster to make sure that your clients and customers get the products fast?
- [16:44] It is important to look at options that give same-day delivery or four hours of delivery or one-hour delivery depending on what the expectations of your consumers are.
- [19:49] How did you get from delivering one day or a few days to an hour of delivery using your own kind of network?
- [22:06] There are two things to consider- first is partnership and second is a segmentation of the customer population and combined with the segmentation of some of our product portfolio.
- [23:07] How do you measure the duration of your service in a particular market? What are your criteria?
- [23:39] When e-commerce is visible in a market, customer’s expectation for quick and prompt delivery is higher.
- [24:35] It is important to know the penetration of e-commerce in that particular market, the stage of development of the country in terms of economic development, and the size of our business.
- [25:56] What would be some challenges may you have encountered in Latin America, Europe, Africa, and Asia? How are you addressing them?
- [26:17] It’s about making sure that your operations are as efficient as they can be, even if it comes at a cost. Because there is the ability to charge a price for this.
- [27:09] Affordability and reach would be the key to growing the business particularly in the Philippines.
- [30:12] Is there a certain tool or platform you implemented and rolled out in different sub-regions or continents that made a lot of impact in the Supply Chain operation?
- [32:14] You need to be careful of the quantity of the inputs that you’re able to provide.
- [33:36] What would be some of the low hanging fruits you would focus on first to optimize your supply chain in today’s world?
- [34:14] One can always increase the fixed cost by investing more capital. But the starting point as you are trying to expand is to keep those fixed cost low.
- [35:46] Whether you should go on your own or you should go in collaboration or partnership with somebody is a function of whether the other person can create more scale across different customers or you can create more scale across your entire portfolio.
- [38:32] How do you, in particular, managed to attract the right type of talent in your team and the right type of skills as well?
- [39:51] If we are doing something which is supply chain for the sake of supply chain, I think we should stop it, especially if it is not aligned with any of the business imperatives.
- [42:06] If you have the business acumen, you know exactly what skills you should be learning and could start picking them up pretty soon. It is about business acumen, functional skills and one’s ability to develop a team who can really work with the same level of enterprise and creativity.
- [43:28] Do you see a shift in the type of skill sets people need to pick up in the supply chain function in the next 10 years?
- [45:55] If we look at the footprint of products of personal care around the world, around 60% of the impact of the environment comes through the product itself.
- [47:40] So feasibility, sustainability, and technology linked towards blockchain are the other team that is developing in a major way.
- [48:36] The ability to create distribution models in this second-tier cities, which are increasingly coming up in every single country of the world would be the key driver from a supply chain point of view on how we enable growth.
- [49:51] How does gender diversity impact the company’s vision and strategy?
- [50:00] We pride ourselves in being one of the biggest livelihood generators for women around the world.
- [51:01] I think the first and foremost thing in this company is this prompt sense of purpose in generating earnings, generating livelihoods for millions of women who work for us around the world.
- [53:55] What would be that one piece of advice that stuck with you most and helped you most in your career?
- [54:13] Don’t be afraid to learn from others. There are enough global fora like yourselves in sharing peer knowledge and learning from what others are doing and be creative.
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