offering a wide range of health care, personal care and food products to customers in more than 50 countries. Dabur is also the worlds largest manufacturer of Ayurvedic medicines, which are based on an ancient Indian system of health care, and promote natural and holistic living. The company reported 2007 revenues of more than US$543 million. Business challenge Consumer packaged goods companies operate in a global marketplace that is highly competitive and commoditized. These organizations need to work smarter, perform better and make faster, wiser decisions than ever before. Dabur is no exception. Nearly five years ago, Dabur clearly identified these challenges and set out to outpace its peers in the industry in terms of revenue and profitability growth. To build a competitive edge, the company asked Accenture to help identify specific opportunities that would lead to short- term advantage and long-term growth. Accenture was well suited for the task. In addition to its highly respected business consulting skills and deep industry insights, Accenture brought a solid understanding of what companies need to Helping Dabur India achieve high performance through operational excellence and competitive advantage do to achieve high performance in the consumer products sector. This under- standing is based not just on Accentures global experience, but also on its ongoing research into the character- istics of high-performance businesses. Accentures research indicates that high- performance businesses relentlessly pursue operational excellence. They do this in a number of ways, including: Competing on core competencies, while outsourcing non-core functions to trusted third-party providers. Viewing information technology (IT) as a strategic asset that creates real valuenot simply a cost to be managed. Streamlining processes wherever possible. Accentures recommendations for Dabur addressed all these drivers of high performance, focusing on improvements that would allow the company to work smarter and generate the greatest and longest-lasting value. How Accenture helped Accenture proposed that Dabur improve its supply chain management, sales and distribution capabilities and use IT as a strategic enabler for its busi- ness strategy. From an IT perspective, Accenture recommended a two-pronged strategy: migration to a nimbler outsourcing model that would gener- ate value through agility and support business initiatives and maintenance of its SAP enterprise resource planning (ERP) system. To bring these initiatives to life, Accenture assembled a team of highly skilled industry experts, as well as professionals with extensive SAP design and implementation experience. Working closely with Dabur, the Accenture team initiated a number of high-impact projects, including: Implementing a new sales and distribution strategy. Accenture helped develop a comprehensive retail strategy that marked Daburs first significant effort to identify key customer segments in urban and rural markets, customize sales programs for key accounts and reorganize Daburs sales teams by one of four trade channels (modern trade, rural, mom-and-pop and drugstores). Accenture supported this business strategy with a cost-effective IT solution, developed in-house over several platforms, which captured actionable information across the national footprint of nearly 500 distributors. In the area of product distribution, the team focused on bolstering efficiencies and rural market penetration and designed a channel-specific strategy for grocers, chemists, modern trade, wholesalers and convenience stores. In developing a more effective sales program, Accenture paid special at- tention to how Dabur might improve service to Indian mega retailers, which are expected to account for more than 15 percent of consumer product sales by 2010. For this group of customers, the team established a new operating model that included a pricing architecture framework to aid negotiations, an activation strategy to guide tactical initiatives, and revised roles and responsibilities for all members of the trade field force. In devising this strategy, the Accenture and Dabur team optimized the companys internal logistics and distribution processes for mega retail customers, and put metrics and incentives in place to drive specific goals such as consistency of sales in grocery stores, improved service to drug stores and increased sales via wholesale channels. Developing a new supply chain management capability. Accentures research into the characteristics of high-performance businesses has shown that leading organiza- tions reorient their supply chains based on capability building for revenue enhancing opportunities. For Dabur, Accenture proposed strengthening demand forecasting capabilities, which would result in greater operational efficiencies and lower inventory costs. The team also focused on bringing a market-driven perspective to the new supply chain and building collaboration skills, which are vital for engaging partners across functional areas throughout the company and across the supply chain. Accenture helped Dabur create capabilities to facilitate the launch of new initiatives, products and trade promotions. This effort entailed putting complex metrics into place via the IT landscape. Accenture then instituted a plan to leverage SAP by automating Daburs material resource planning processes across the complex manufacturing arena. The new approach allowed employees to shift their focus from simple transac- tions to more strategic procurement efforts such as cost management. Optimizing Daburs ERP capabilities. Accentures research indicates that high-performance businesses invest in state-of-the-art information technology infrastructure, especially ERP software, and are, more impor- tantly, able to leverage it for strategic cost management and collaboration with customers and suppliers. While Dabur had deployed a SAP ERP system to link its corporate headquarters, 12 manufacturing plants and more than 30 distribution centers, the company was not using the system to its maximum potential. Accenture launched a three-phase ERP improve- ment program that involved: Correcting the transactional and management information systems. Conducting change management and synchronizing Daburs business processes with realities in an ERP context. Developing value realization projects. Once the system was collecting accurate and timely data, Accenture identified key performance indicators and created management dashboards to improve and speed executive decision making. Leveraging IT for business initiatives. In addition to revitalizing Daburs ERP system, Accenture applied its deep technical skills to create entirely new IT capabilities. For example, Accenture designed a Web-based demand planning and trade promo- tion forecasting tool, and installed point-of-sale software at select retail and wholesale sites. This latter initiative allowed Dabur to integrate key customers into its IT network and gather real-time market information that would drive better sales and distribution decisions. Outsourcing IT operations. Dabur realized the significant commitment of resources and time that the ongoing management of its IT opera- tions, including its core ERP system would entail. Given the success of Accentures strategy and implementa- tion efforts to date, coupled with the strong reputation Accenture has achieved in the application and infrastructure outsourcing markets, the company decided to outsource its IT management to Accenture for 10 yearsmarking one of the first IT outsourcing agreements to be forged by an Indian company. In its capacity as IT outsourcing provider, Accenture delivered industrialized and cost-effective skills that would allow Dabur to remain at the leading edge of IT delivery. Plus, Dabur gained the flexibility of being able to focus on its core capabilities while realizing increased value and lower costs through improved performance. According to Anil Garg, assistant general manager of IT at Dabur, Accentures role is like any other department in this organization. They are like my extended IT arm. That is, after all, the spirit of outsourcing. He goes further saying, Today, my CEO will not approve a new IT project unless I can tell him the impact it will have on the bottom line. These questions were not asked of me three years back; they were asked of the functional heads. If I was on the IT operations side, I would not have been able to do all this. In addition to managing the clients information technologies, Accenture continues to be involved in helping Dabur achieve operational excellence in a number of areas. The two companies are collaborating to extend ERP implementations in new geographies to support international growth. They are jointly examining strategic opportunities such as mergers and acquisitions. And they are working together to explore the creation of even greater value through the development of business cases and diagnostic capability assessments. High performance delivered With Accentures help, Dabur has implemented strategic and operational changes that have led to a much higher level of performance. Dabur is now one of Indias fastest-growing companies. Annual sales are up by 17 percent. Year- over-year profits have increased by 40 percent. The companys new sales force structure has significantly enhanced channel throughput and productivity. Accentures role is like any other department in this organization. They are like my extended IT arm. That is, after all, the spirit of outsourcing. Anil Garg Further, the new sales and distribution strategy has enabled the company to expand distribution by 19 percent and add approximately 80,000 sales outlets, bringing its total to 630,000. This expansion has had a direct effect on Daburs bottom line. Dabur estimates that six percent of its 14 percent revenue growth in 2007 is due to the new retail strategy alone. Analyst HSBC estimates that about 30 percent of the revenue growth was due to increased distribution reach. 1
The successes to date have laid a foundation for continued excellence. By year-end, Dabur expects to install point- of-sale software to support faster and more accurate decisions on everything from inventory levels to new product roll-outs at 500 additional customers. Accentures ongoing management of Daburs IT operations has also generated significant benefits. Most notably, it is allowing Dabur to leverage IT as a strategic asset and is ensuring a constant availability of IT talent, regardless of business demands. For example, during Daburs acquisition of Balsara (a manufacturer of cosmetics, hygiene products and home products), the outsourcing team provided the deep skills necessary to carry out the phased merger of the two companies core enterprise systems. Equally important, the outsourcing arrangement has freed Daburs IT professionals to focus on more strategic issues such as aligning IT initiatives to business goals. The Balsara acquisition provides evidence of this greater utilization of resources, as well. Because Accenture was managing the companys IT operations, Daburs IT leadership was available to be involved in early discussions about the pending acquisition. This leadership team was also able to tap Accentures expertise to determine the best way forward. This early involvement and access to Accentures expertise allowed Dabur to carefully consider the IT ramifications of the merger and develop a phased implementation plan that corresponded and supported the acquisition strategy. With all of these efforts aimed at achieving operational excellence, Dabur is poised to realize its aggressive revenue growth target. Analysts are taking notice of Daburs ambitions, and its new capabilities that will bring these ambitions to life. HSBC has reported, We believe Dabur plays the focused differentiator to perfection. It thrives on identifying opportunities based on consumer needs, tailoring products for that audience and expanding with the segment, while retaining its overall leadership position. 2 And crediting major distribution and sales force improvements and new products, Citigroup notes that Dabur is best positioned among Indias consumer goods companies to deliver consistent sales and earnings growth. 3 The expectation is that Dabur will outpace its peers. Dabur is not surprised by such reports. After all, outpacing the competition to enable high performance is exactly what Dabur and Accenture set out to do. 1 HSBC Securities and Capital Markets (India), 15 June 2007. 2 HSBC Securities and Capital Markets (India), 15 June 2007. 3 Citigroup Investment Research, 23 July 2007. About Accenture Supply Chain Management The Accenture Supply Chain Management service line works with clients across a broad range of industries to develop and execute operational strategies that enable profitable growth in new and existing markets. Committed to helping clients achieve high performance through supply chain mastery, we combine global industry expertise and skills in supply chain strategy, sourcing and procurement, supply chain planning, manufacturing and design, fulfillment, and service management to help organizations transform their supply chain capabilities. We collaborate with clients to implement innovative consulting and outsourcing solutions that align operating models to support business strategies, optimize global operations, enable profitable product launches, and enhance the skills and capabilities of the supply chain workforce. For more information, visit www.accenture.com/supplychain. About Accenture Application Outsourcing For over 15 years, Accenture has worked with senior executives around the world to address their most critical business imperatives through application outsourcing. Accenture's application outsourcing approach transforms application development and maintenance to help clients achieve high performance. Accenture offers a full life-cycle service in application software. We can design, build and run an entire solution or provide point of needs solutions in areas like testing, software development, enterprise software (e.g., SAP) support and much more. Accenture has the people, processes and global service network to deliver the business results clients need. For more information, visit www. accenture.com/ao. About Accenture Infrastructure Outsourcing Accenture is a leading global infrastructure outsourcing service provider. We have more than 10,000 people worldwide serving more than 160 clients daily. Drawing on unbiased technology solutions, our infrastructure outsourcing services offer executives more control over their IT value chains, performance and investment focus. We offer a flexible set of servicesfrom totally transforming the client service delivery model to simply addressing a specific cost or performance issue with fully integrated remote and on-site delivery. To enable clients businesses to achieve high performance, they need the right infrastructure at the right cost to support critical applications and business processes. For more information, visit www.accenture.com/io. About Accenture Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high- performance businesses and governments. With more than 178,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended August 31, 2007. Its home page is www.accenture.com. Copyright 2008 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.