Dabur India Ltd: Operational Excellence and Competitive Advantage

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 India Ltd is no exception and realized it needed to perform better and make faster decisions in order to outpace its peers in revenue and profitability growth. To meet its goals, Accenture proposed that Dabur improve its supply chain management, sales and distribution capabilities, and use IT as a strategic enabler for its business strategy. This included migration to a nimbler outsourcing model that would generate value through agility and support business initiatives, and maintenance of its SAP ERP system.

Dabur is the fourth-largest consumer packaged goods company in India, offering a wide range of health care, personal care and food products to customers in more than 50 countries. Dabur is also the world’s 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.

Nearly five years ago, Dabur identified the challenges it faced in a highly competitive and commoditized global marketplace and set out to outpace its peers in the industry in both 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 our highly respected business consulting skills and deep industry insights, Accenture brought a solid understanding of what companies need to do to achieve high performance in the consumer products sector. This understanding is based not just on Accenture’s global experience, but also on our ongoing research into the characteristics of high-performance businesses.

Accenture proposed that Dabur improve its supply chain management, sales and distribution capabilities and use IT as a strategic enabler for its business strategy. From an IT perspective, Accenture recommended a two-pronged strategy: migration to a nimbler outsourcing model that would generate 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.
• Developing a new supply chain management capability.
• Optimizing Dabur’s ERP capabilities.
• Leveraging IT for business initiatives.
• Outsourcing IT operations.

In addition to managing the client’s information technologies, Accenture continues to help 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.

With Accenture’s help, Dabur has implemented strategic and operational changes that have led to a much higher level of performance. Dabur is now one of India’s fastest-growing companies. Annual sales are up by 17 percent. Year-over-year profits have increased by 40 percent. The company’s new sales force structure has significantly enhanced channel throughput and productivity.

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 Dabur’s bottom line. Dabur estimates that 6 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.

Accenture’s ongoing management of Dabur’s 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. Equally important, the outsourcing arrangement has freed Dabur’s IT professionals to focus on more strategic issues such as aligning IT initiatives to business goals.

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 Dabur’s ambitions and its new capabilities that will bring these ambitions to life. 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.