Supply chain of itc cigarattes

PRESENTED BY :

Iqbal Singh Kalsi …………..(25)Hitesh Salian ..………….(40)Hardik Dhruve ..………….(60)

PRESENTATION SUMMARY

• INTRODUCTION TO TOBACCO CIGARETTES.

• MANUFACTURING OF CIGARETTES.

• INTRODUCTION TO ITC LTD.

•SUPPLY CHAIN MANAGEMENT & DISTRIBUTION.

Introduction to tobacco & cigarettes.

TOBACCO

The taste for tobacco, first acquired by the Indian royals, soon spread to the commoners and, in the seventeenth century, tobacco

began to take firm roots in India. It was with the establishment of British colonial rule, however, that the commercial dimensions of India’s tobacco production and consumption grew to be greatly magnified.

The British East India Company began growing tobacco in India as a cash crop. Attempts were made, under the colonial rule, both to increase the land under tobacco cultivation and to enhance the quality of the leaves produced.

As domestic consumption of cigarettes rose, the Imperial Tobacco Company commenced production within India.

Today tobacco occupies a prime place in the Indian economy on account of its considerable contribution to the agricultural, industrial and export sectors. India is the second largest producer of tobacco in the world.

CIGARETTES

A cigarette is a product consumed through smoking and manufactured out of cured and finely cut tobacco leaves and reconstituted tobacco, often combined with other additives, then rolled or stuffed into a paper-wrapped cylinder.

Components of a Cigarette

1. Filter made of 95% cellulose acetate.

2. Tipping paper to cover the filter.

3. Rolling paper to cover the tobacco.

4. Tobacco blend.

Introduction to ITC LTD.

ITC was set up in 1910 by the name of 'Imperial Tobacco Company of India Limited'. It change its name on September 18th,2001 and now the company is known as ITC ltd. (Indian Tobacco Company Ltd.)

Presently, ITC has a market capitalization of nearly US $ 15 billion and a turnover of over US $ 4.75 billion. It employs over 21,000 people at more than 60 locations across India. ITC has been rated as: World's Best Big Companies by Asia's 'Fab 50' .World's Most Reputable Companies by Forbes magazine.India's Most Respected Companies by Business World. India's Most Valuable Companies by Business Today. 

ITC LTD CIGARETTES

ITC is the market leader in cigarettes in India and has a wide range of popular brands. ITC – India’s largest buyer, processor, consumer & exporter of cigarette tobaccos.

ITC's pursuit of international competitiveness is reflected in its initiatives in the overseas markets.

ITC's cigarettes are produced in its state-of-the-art factories at Bengaluru, Munger, Saharanpur and Kolkata.

Strategy Analysis of ITC cigarettes

The Company has been able to build on its leadership position because

of its single minded focus on value creation for the consumer through

significant investments in product design, innovation, manufacturing

technology, quality, marketing, supply chain management and

distribution.

SUPPLY CHAIN MANAGEMENT

“..Supply Chain Management is

Getting the right things

to the right places at the right

times, for profit ..”

New information and communications

technologies have revolutionized today’s supply

chains, making them extraordinarily better,

faster, and cheaper.

The process from farm to factory

•Tobacco farmers bring their crop to warehouses where the tobacco leaves are weighed and stacked in piles.

•The warehouse then pays the tobacco farmer for the tobacco he brought and the tobacco companies or government co-ops pay the warehouse for the tobacco. 

The Indian Tobacco Division has:

• 3 contract manufacturers (CMs)Reliable Cigarette and Tobacco Industries Private Ltd. (RCTI)Asian Tobacco Company (ATC )Hyderabad Deccan Cigarette Industries (HDC)

• Huge distribution network with 19 marketing branches and 33 Godowns across nation.

• Also caters to the exports mainly in United States and Middle-Eastern countries.

The Manufacturing Process

•Cigarette manufacturing process involves processing of tobacco leaf and stem to different tobacco blends, which is called cut tobacco.

•Cut tobacco is then converted to cigarettes using other raw materials for making cigarettes and packing them in various forms as per the trading requirements.

•ITD receives various grades of Tobacco Leaf and Stem from Indian Leaf Tobacco Division (ILTD) based mainly in Guntur, Andhra Pradesh.

•Tobacco leaf and stem are Processed to form tobacco blends at one of the three Tobacco Processing Units at Bangalore, Saharanpur and Munger.

•Tobacco Processing Unit is called PMD or Primary Manufacturing Division.

•The cut tobacco is then sent to the Secondary Manufacturing Division (SMD) for making and packing cigarettes.

•Rest of the raw material (WMS) required for making or packing cigarettes is provided to all factories from various WMS suppliers, most of which are part of ITC Ltd.

•At SMD, there are two processes: Making and Packing. Making process is the rolling of cigarette sticks.Packing process is packing of these cigarette sticks in the cigarette packets of various pack styles.

•Cigarettes are categorized in different segments based on filter or non-filter type, cigarette length, circumference, pack style, filter length and cigarette placement. Under each segment there are various brands. •Finished Good (Cigarettes) are supplied from the factories to godowns using mainly road and rail transportation.

PMD:- Primary Manufacturing Division

SMD:- Secondary Manufacturing Division

ILTD:- Indian Leaf Tobacco Division

RCTI:- Reliable Cigarette and Tobacco Industries Private Ltd

ATC:- Asian Tobacco Company

HDC:- Hyderabad Deccan Cigarette Industries

WMS:- Rest of the raw material

SUPPLY CHAIN NETWORK OF ITC CIGARETTES

DISTRIBUTION CHANNEL

Existing distribution channels

Can be described by how direct they are to the customer in other words how

many channels it take the goods to reach customer.

Trends and emerging channels

New channels can offer the opportunity to develop a competitive advantage

shorten the channel length.

Channel power structure

For example, in the case of a product having little brand equity, retailers have

negotiating power over manufacturers and can capture more margin.

Factory C & F Agent/ hub

WD

DS Van Retail DS Van Wholesaler DS

Wholesaler dealer

retailer

End Consumer

DISTRIBUTION NETWORK OF ITC LTD

Carry and Forward Agent

The C&F Agent is an important link in the supply chain. He receives a

token amount as service charge from ITC. Both stocks and PoP material is

stored at these godowns. He performs the following functions:

•Receives goods from the factory and updates the SAP (GR)

•Prints out Invoices/Delivery Orders

•The deliveries are made according to the deliver summary which he gets

from the branch everyday

•Physical stock reconciliation is done every evening and a record of it is

kept on a board.

•Maintenance of the godown according to the prescribed norms.

Wholesale Distributor (WD)

The WD is an intermediary between the company and the retailer.

He distributes and services (including merchandising) the town retailers and wholesalers

directly through daily salesman.

He is required to maintain a certain stock level and investment in the company.

He is required to maintain appropriate infrastructure according to the company's requirements.

This included warehouses, human resources, computational resources and distribution structure.

He is responsible for various brand promotions, launches and cycle inputs in his area.

The WD is also required to maintain the Volume/value growth of ITC's products in his

market.

Be Good To

Smokers

They not gonna liv

e

long…!!!

Thank You