HUL has decided to increase its reach in rural areas.

What are the

implications of this decision for the department that manages the supply
chain for HUL products?

The supply chain is a vital part of any organization, especially those selling
products. It involves many levels through which the product reaches from the
manufacturer to the customer. There are already a lot of issues involved in the
supply chain in urban cities. This implies that there might be a lot more while
spreading the business in rural areas.

If we talk about HUL, it is a very well-known firm. This can be a reason for
them not facing as many issues as any other small business would. But, HUL
too will face certain positive and negative implications if they are wanting to
reach rural places.

Here are some implications that one must talk about:

1. Organizational relationships
A supply chain works best when the correct number of organizations join hands
to do a particular work. If we talk about HUL, they might be having great
support in the cities, but the same cannot be said about rural places.

The supply chain officer of HUL will have to make sure to get in touch with
organizations that will help them in expanding their services in the rural areas.
A strong partnership will eventually lead to loyalty and even more efficient
working.

2. Inventory management
The inventory management game has come a long way now. Previously,
everyone believed that the more the inventory, the better the business will run.
With frequent changes in trends, it has now become a necessity to rely more on
JIT and lean manufacturing. This helps to eliminate waste and save a lot of
costs.

While trying to expand business in the rural areas, the supply chain of HUL will
face an issue where JIT might not work immediately. It will take a few months
for them to understand the likes and dislikes of the people of those areas and
their consumption. This way, even though things might not look great at first,
they will fall into place with time and determination.

3. Cost issues
The cost at which the products are sold in urban areas might not be affordable
for those in rural areas. This could create a problem where even the intended
amounts of products are not sold.

At this time, HUL could manufacture the same product in a smaller size. This
will result in the people buying the same quality product which will also be
affordable for them.

4. Customer service
A major implication HUL might face while spreading their business in rural
areas is the provision of customer services. To remain competitive, firms
implement supply chain management to improve customer service through
increased frequency of reliable product deliveries. Some respondents stated that
increasing demands on customer service levels is driving partnerships with
vendors and suppliers. The ability to serve their customers with higher levels of
quality service, including speedier delivery of products, is an important concept
that results in partnering. Having a successful relationship with a supplier or
vendor results in trust and the ability to be customer-driven, customer intimate
and customer-focused.

5. Logistics
The most important concept of a successful business partnership is the ability to
deliver a top-quality product. This ability was the most common issue addressed
when discussing minimum logistical capabilities. Many respondents used the
term “perfect order” to describe this ability. This concept consists of a product
order being 100 per cent complete, on time and damage-free, in addition to
adding value to the product. It is also important to have a strong quality and
inspection program to ensure that the perfect order concept is being followed.
ISO 9000 certification was mentioned as an important aspect of an inspection
program but is not an essential requirement.

Having access to low cost, reliable transportation is important to be a successful

supplier. The idea of backhauling is becoming an important concept to make
transportation more efficient and less costly. Rural areas will always suffer from
transportation capabilities and it will get worse. Supply chain management
cannot help a company resolve distance issues. They choose where they want to
locate and if the distance is a detriment, it is the company's fault. Rural suppliers
will need other assets to overcome the distance disadvantage. They can also
look out for third party logistics to get their products to the rural areas.

All these are a few of the implications that HUL might face while