Our rapid consumer-centric innovations and speed-tomarket were underpinned by our strong manufacturing capabilities and the integration of various aspects of our supply chain. While we went about successfully meeting the emerging consumer needs, we also continued our focus on developing a more efficient, cost-effective, reliable and environment-friendly business model.
Our Manufacturing Footprint
Our manufacturing processes are part of a complex and integrated value chain aimed at delivering safe, efficacious and quality products to meet the emerging and ever-changing needs of our consumers across the globe.
With the COVID pandemic, there was marked shift in consumer needs with Ayurvedic Health Care, Personal & Household Hygiene products gaining importance in consumer mind space. Responding to this need, we revamped our portfolio mix with immunity boosting healthcare and hygiene products gaining prominence.
During the year 2020-21, Dabur infused 311 Crore as Capital Expenditure to expand the manufacturing capacity at its existing units to meet the growing demand for Ayurvedic Health Care products. The Company is further expanding its domestic manufacturing footprint by setting up a new greenfield unit near Indore in Madhya Pradesh to produce a range of Ayurvedic products for the domestic market. Dabur has pledged an investment of 550 Crore in Capex over the next 5 years. In addition, Dabur has decided to incorporate a wholly owned subsidiary in India, with initial equity capital of 1 Crore, to manufacture Consumer Care products, primarily for exports.
Capex investments were made to upgrade our worldclass manufacturing facilities, besides adding IT capabilities. Investments were also done to ensure ongoing compliance to Good Manufacturing Practices (GMP) besides enhancing our manufacturing capacity to meet both current and future operational requirements.
Over the years, Dabur has been on a continuous manufacturing excellence journey through improvements in processes, incorporation of new systems and technologies, and adoption of automation across manufacturing units. We are one of the early adopters of using herbal waste to run our boilers across manufacturing locations. We continue to invest in this process as we move forward on our journey to ensure sustainability of the environment while developing a range of new products for emerging consumer needs. We strive to maintain world-class manufacturing standards while rolling out continuous improvement initiatives to sustain a cost competitive manufacturing base. In line with these objectives the Company’s OEE (covering both domestic and overseas operations) increased to 74.1% from 73.5% in the previous year.
To meet the rapid growth in demand and to roll out a range of new products in the shortest possible duration, Dabur has been engaging with third-party contract manufacturers for flexible production support. As volumes for these new products grow, Dabur brings them in-house and sets up production lines at own plants for some of these products.
In 2020-21, Dabur added 40 new third-party manufacturers, creating a sustainable, collaborative model to develop products more efficiently and in the shortest possible time during the COVID year. We depend on these contract manufacturers to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable quality and at acceptable manufacturing yields and to deliver those products to us on a timely basis and at acceptable prices. Our quality personnel are placed within the third-party manufacturing unit to track their progress and ensure strict adherence to quality standards.
Being a purpose-led business, Dabur has been engaging with its big and long-term contract manufacturers on important issues such as protecting human rights and eliminating forced labour and child labour in the extended value chain. We are also preparing a roadmap to help them develop capabilities on issues such as fire safety and environment sustainability.
With a highly diverse product portfolio covering sectors like Health Care, Home Care, Personal Care and Foods, Dabur today operates one of the most complex Supply Chains in the industry. We work closely with over 1,500 suppliers of goods, services and raw materials -- ranging from medicinal herbs to fruits and vegetables, and specialty oils -- with our supply chain sourcing these materials and ingredients that go into our products. Our Supply Chain maintained its relentless focus on driving quality, customer service and cost effectiveness across the value chain despite disruptions caused by COVID-19.
The Supply Chain team responded quickly not just to find solutions for the sudden disruptions but also to address the sudden fluctuation in demand, while observing strict safety protocols, and ensured that our products reached store shelves and consumers’ homes.
To ensure smooth manufacturing operations and uninterrupted supply during the lockdown, we operated special COVID-safe transportation for our workers and sourced additional manpower from far off locations like Jharkhand to bridge the gap due to reverse migration of labour in the initial months, besides making alternate arrangements to transport key raw material and sourcing alternative packaging formats. While maintaining and even accelerating the speed and agility of our supply chain, we ensured that we do not lose focus on safety or product quality.
Dabur has a Unified Sourcing mechanism in place which gives us access to more suppliers and buying options, in order to get the world’s best ingredients. The year 2020-21 saw Dabur optimise its global footprint while supporting the Government’s Vocal for Local movement through import substitution of key raw materials with locally procured items.
We expect our suppliers and contractors to treat their employees and to interact with communities in ways that respect Human Rights. We also require our suppliers and contractors to adhere to all domestic laws.
Dabur has been continuously infusing future ready technologies like machine learning, artificial intelligence, robotics and automation to drive greater efficiency in the Supply Chain while delivering cost savings. As part of the Procurement Division’s e-procurement platform, key processes are completely automated. Product demands are shared on the platform, and supply of vital ingredients for Dabur’s wide range of products is managed under one channel. This efficiency model not just saves valuable time and money, but also creates the potential for microanalysis of every step on the e-procurement journey.
Our highly experienced production team has enabled us to handle fluctuations in demand by slowing or speeding up production, wherever required. This was aptly displayed during the initial days of the COVID pandemic-induced lockdown, when Supply Chain operations had come to a virtual standstill early last year. Dabur had temporarily suspended production at its manufacturing units at the beginning of the 2020-21 financial year, except for essential products like Ayurvedic medicines, Chyawanprash, hand sanitisers, hand wash etc., in the larger public interest. Within a fortnight, Dabur sought and received permissions to operate its manufacturing units for producing a range of essential items like Hand Sanitisers, Hand Wash, Disinfectants, Ayurvedic Medicines, Juices, Coconut Water, Honey etc.
In view of the growing demand for its Ayurvedic medicines and products like Dabur Chyawanprash, Dabur Honey, Dabur Giloy and Dabur Ahwagandha, production capacities for these products were quickly ramped up. To ensure smooth functioning of our production units during the nationwide lockdown, special arrangements were made to ensure availability of workmen at the factories while putting in place measures for their safety and well-being. We also appointed new vendors for key raw material and packing material; actioned alternate options quickly and standardised RM, PM across categories, wherever possible so that manufacturing operations are not impacted and supplies to consumers remain uninterrupted. New Third-Party contract manufacturing units were also activated at a short notice to produce a range of new hygiene products to meet the emerging consumer need. These steps helped us bounce back and bring our manufacturing operations to normal levels in the shortest possible time.
Our products, made at state-ofthe-art manufacturing locations across the country, reach our consumers through a large network of stores, covering large supermarkets, hypermarkets, wholesalers, cash-and-carry outlets, mom-and-pop convenience stores, institutions and hospitality chains as well as the new-age fast-growing channels like e-commerce and direct to consumer mobile outlets. Today, our network of 3,762 distributors help us ensure uninterrupted supply of our products to meet the needs of our consumers.
The pandemic has led to a shift in shopping behaviour of consumers with the propensity for online shopping increasing. Targeting this emerging trend, we have already started launching a series of new products exclusively for online markets. In the recent months, we have launched over a dozen new products specially for the e-commerce on online retail space, like Dabur Apple Cider Vinegar and a ‘Dabur Baby Range’ with 8 products: Dabur Baby Oil, Dabur Baby Wash, Dabur Baby Cream, Dabur Baby Shampoo, Dabur Baby Daily Moisture Lotion, Dabur Baby Moisturizing Wipes, Dabur Baby Talc-Free Powder and Dabur Baby Gentle Nourishing Soap, besides Himalayan Honey, Organic Honey, Cold Pressed Mustard Oil, 100% Cow Ghee and Vatika Select range of shampoos. The contribution of e-commerce has moved up to about 6% in March 2021 from around 2-3% a year earlier, with categories such as Healthcare, Oral Care and Shampoos doing very well on this channel. Our growing focus on digital and e-commerce, which has increased considerably during the COVID crisis, has helped us build a closer connect with our consumers.
During the lockdown, we developed several innovative solutions to ensure uninterrupted supply of our essential products to retailers, which include:
- Created a special App for Retailers for placing orders
- Initiated Retailer order-booking through WhatsApp
- Activated our Call Centre to receive orders directly from retailers
- Booked orders through tele-calling
- Joined hands with online delivery service providers like Swiggy, Dunzo etc to ensure uninterrupted supplies of our products to retail outlets and consumer households
- Introduced Dabur Immunity Vans, which moved around residential localities across India, reaching out to consumers educating them about the need to boost immunity to fight illnesses, while giving them access to our range of Ayurvedic Preventive Healthcare products.