Commercializing Innovations!

By Rahul Gupta, Vice President – Procurement, Planning and Contract Manufacturing, Amway India

What comes to your mind when you think of the Supply Chain? Cost efficiency, value chain simplification, profitable growth, rationalization and may be contribution to bottom lines. This is what the supply chains have been mostly known for till most recent times. With changing times now, Supply Chain is being well recognized as a “Key Contributor” to topline as well.

Amway is the world’s largest Direct Selling Company with presence in over 100 countries & territories. The company sells more than 130 daily use products across categories like Nutrition, Beauty, Personal Care, Home Care and Consumer durables.The company has a strong R&D workforce both at its headquarters located in Ada, Michigan, USA. In India, Amway has been very open to ‘Innovation from its business partners’ that is promoted as ‘externally linked business solutions’ that Supply Chain can bring to the table for the company.

Over the course of 19 years of operations in the country, Amway has emerged as the leading direct selling FMCG Company in India. Reiterating the company’s belief in the Indian market and in keeping with its commitment to the ‘Make in India’ policy, Amway invested more than Rs 600 crores in a world-class manufacturing facility in Madurai, Tamil Nadu in the year 2015, as part of the Rs 1000 Crores investment in India. This is Amway’s third manufacturing plant located outside of USA. The manufacturing facility in Madurai was recently accorded with a Gold certification under the LEED 2009 New Construction and Major Renovations Rating System by the US Green Building Council, making it one of the most environmental friendly and sustainable facilities in the country.

Essentially, Amway’s business is like any other conventional FMCG company offering a huge portfolio of products. Like many other FMCG companies, Amway is engaged in sourcing, manufacturing, distribution and marketing, with an exception of selling it through the direct sellers (Amway Distributors) who engage in one-on-one sale of products also provide extensive post-marketing support through personal contact with consumers, and this is what makes Amway unique. Amway Direct Sellers are given intensive training, education and in-depth knowledge about all products. According to the Indian Direct Selling Association (IDSA), the direct selling industry in India is around INR 8000 crores with an impressive direct seller base of more than 5.7 million. There is a huge potential for direct selling in India and this has been validated by various studies. According to the FICCI-KPMG report, with the right regulatory environment, the potential of direct selling in India will reach Rs. 72,000crores by 2025. The direct selling industry in India currently constitutes just 0.4% of the total retail sales. This is much lower as compared to other economies like China where it is 1%; and Malaysia where direct selling is 4% of total retail sales.

Supplier events are a very common industry practice. Amway organizes annual supplier events wherein, the key suppliers participate; they are taken through the company’s key priorities for the next few years and the support that is expected from the participating business partners. In 2016, Amway raised the bar and took the supplier events to the next level by developing a robust 30-60-90 day action plan that was followed up with a very structured ‘innovation day’ where supplier organizations presented ideations that could work for Amway. These ‘innovation days’ were attended by key management team members from India as well as regional teams from Europe with a mind-set of having all decision makers available at one place so as to shortlist a pipeline of possible future launches. These innovation days proved to be a turning point in further developing supplier relationships and also created a win-win situation for both Amway and the suppliers. Amway was able to harness the ‘innovation’ capabilities and ‘pick them early’ with external partners, while for the supplier organizations, this proved to be a big motivation to develop and offer bigger and better innovation pipelines to the organization. These events also gave an excellent opportunity to the company to pick up product ideas from the current ‘white spaces’ and chose some of the products that were missing from the basket in the portfolio. Some of these product launches will help the company test some niche concepts and see the acceptance of these concepts for mega launches going forward.

As a Supply Chain, not only were these innovations delivered within 3 to 6 months to its business from an ‘idea on the table’ to a ‘commercially available product’ which is 50% lower than usual ‘Idea to Market’ time, the team was also able to significantly improve bottom lines and add to the top-line for the company. The innovations from these events contributed2% to the top-line (which is a significant contribution in a 10% growth year) for Amway in this year which has been not only very inspirational but has also made Supply Chain more involved and committed to front end of its business. Going forward, the company intends to continue this practice and co-create strategies with its business partners to jointly and mutually grow business along-with each other thereby truly living one of  its core values of ‘partnership’ at Amway. 

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