SUPPLY CHAIN

MANAGEMENT OF
HORLICKS

Submitted to:

Submitted By
16/ FMS/MBA/031
16/FMS/MBA/101

DEPARTMENT OF MANAGEMENT STUDIES

FACULTY OF MANAGEMENT STUDIES

MANAV RACHNA INTERNATIONAL

UNIVERSITY, FARIDABAD
CONTENTS:
1. Introduction

2. Objective of the study

3. Supply Chain of the Horlicks

4. Identification of Supply Chain Management factors

5. Discussion

6. Conclusion

7. References
 1.INTRODUCTION
Horlicks is from the company GlaxoSmithKline.

About the GlaxoSmithKline first:

We have a challenging and inspiring mission: to improve the quality of
human life by enabling people to do more, feel better and live longer.
This mission gives us the purpose to develop innovative medicines and
products that help millions of people around the world.

Headquartered in the UK and with operations based in the US, we are

one of the industry leaders, with an estimated seven per cent of the
world's pharmaceutical market.

As a company with a firm foundation in science, we have a flair for

research and a track record of turning that research into powerful,
marketable drugs. Every hour we spend more than US$562,000 to find
new medicines.

We produce medicines that treat six major disease areas asthma,

virus control, infections, mental health, diabetes and digestive
conditions. In addition, we are a leader in the important area of
vaccines and are developing new treatments for cancer.

1.1 ABOUT HORLICKS

Horlicks is the name of a company and of a malted milk hot

drink, which is claimed to promote sleep when consumed at bedtime. It
is manufactured by GlaxoSmithKline in the United Kingdom, India and
Jamaica
By far, the biggest market for Horlicks is India, where it has
traditionally been marketed as 'The Great Family Nourished.' New
products have been developed specifically for India, such as
alternative flavours and special formulations for young children and
breast-feeding mothers. Claims by GlaxoSmithKline India in 2005 that
Horlicks encourages growth and alertness in children has, however,
caused some controversy. Junior Horlicks 1-2-3 is a large extension that
is specially designed for pre-school children. Horlicks is also available
in biscuit forms. In 2005, Horlicks Lite was also introduced targeting
older consumers and does not contain any cholesterol or added
sucrose. In addition, the company has introduced Cereal Bars under
the name Horlicks NutriBar exclusively for India.

Horlicks is in maturity stage of product life cycle.

Reason for Horlicks in maturity stage are listed below
1. Their sales are at peak level and increasing every year by year
2. Profit is very high
3. Their customers are of middle majority and having a child in
home prefer to a health drink and many prefer Horlicks
4. Their cost per customer is very less as fixed costs are decreased
as number of customers are more
5. Number of competitors are stable, their competitors are boost,
bornvita, complan and pedia sure etc and no new competitors
have entered into this market
6. Their main objective is to maximize the profit and protecting
their own market from competitors.

1.2MARKETING STRATEGIES OF HORLICKS

1. Product:
o Here they can provide many diversified products from
competitors. For example they can offer product with new
innovative flavors like mango, mix fruit different from
 common chocolate and strawberry flavors. Or they can offer
product which can provide more vitamin or nutrition to babies.
Or which can help in dieting as weight decreasing helping
product.
o So go for different and innovative product
2. Price:
o Here Horlicks can go for setting prices according to the price
of competitors mainly Bornvita, complan and pedia sure and
boost as they provide tough competition to Horlicks. For
example if boost sets its price 200 rs then Horlicks should
keep its price between 190 to 210 rupees.
o If Bornvita is providing in the packet of 20rs than they also
keep price of their small packet around it.

3. Distribution channel :
o Here Horlicks should go for intensive distribution channel.
Here they should go for maximum distribution channel for ex.
Three level distribution channel of manufacture-wholesaler-
dealer-retailer-customer. Company should have a distribution
channel by which a consumer can get the product at nearest
store so that customer will not prefer another product.
o For example if Horlicks is not available in nearest area and
customer have to go 2 kilometers to purchase it and if
bornvita and complan and pedia sure is available near to
them then they may purchase the other product
o So go for maximum distribution channels which available near
to your customer.
4. Advertising:
o Here company should be able to express and stress about
how their product differs from competitors and how it is
beneficial for them. For example they should be able to
express that our Horlicks is able to develop brain of child and
is helpful for baby to be a TALLER, STRONGER AND SMATER
boy or girl and also helpful to pregnant women and help to
overcome from daily fatigue .This part refers to advertise in
 mass media like television advertising or newspaper
advertising etc.
5. Sales promotion:
o Her company should be able to generate brand switching
which means motivating to change brand. Here company can
go for switching by showing how their brand is better than
competitors by using various methods of free sampling or
providing your product free with other products.

2. Objective of the study

I choose the Horlicks for the supply chain. Horlicks is the leading health
food drink in India. It occupies 50% share of Health Food Drink market.
(A.C.Neilson report on market). It is popular brand since1930s.

Today, the modern Horlicks stands for trust and its promise of
`pleasurable Nourishment with a delicious range and flavours. But the
core objectives are

1. The Supply Chain of the Horlicks

2. From manufacture to the final customer

3. SUPPLY CHAIN OF HORLICKS

Takes order from direct to the company and distributes it to the
distributers according to their requirement. They take the order by
truck and by other vehicle (road transportation). According to GL
Parnami the total sale of Horlicks in Faridabad is around 50 lakhs
(app.).

3.1Functions of intermediaries:

1. Selling and promoting:

Here they try to promote sales by using various promotional
tools and try to generate more demand and sale more which
benefits company.
2. Buying and assortment building
Here wholesalers purchase various products of Horlicks and
assort them category wise so at the time of sales it is easily
available. For example they buy all Horlicks product and
arrange them in category like women Horlicks , junior
Horlicks when sales are done no problem of assortment are
found.
3. Bulk breaking
Wholesalers purchase in large quantity and save a lot by
purchasing in large quantity as company provides quantity
discount and it ultimately benefits retailers and customers
only.
4. Warehousing
They store the various Horlicks product in their warehouse
and reduce inventory cost of suppliers.
5. Transportation
They can provide quicker delivery to buyer as they are
closer to buyer and retailers
6. Financing
They provide Horlicks customers and retailers on credit
bases and facilitate financing for them.
7. Risk bearing
They reduce some risk by taking the ownership of the goods
and bear the cost of damage, spoilage and obsolescence.
8. Market information
Wholesaler supply information regarding complaints and
feedback to the company taken by them from customers.

a. the structure of the unitary product cost, which imply the

analysis of the cost pools that compose the product cost
information;
b. the methodology adopted to accumulate costs into the
cost pools;
c. the allocation methods followed to trace costs to the
unitary product cost, or to other reporting subjects;
d. the cost control methodologies, that support benchmarking
analysis and lead to corrective actions.
 4. Identification of Supply Chain Management
factors
To understand how a Horlicks supply chain works, it is more important
to identify the factors of affecting supply chain management. This
factors will make the chain either more productive or less.

4.1 Environmental uncertainty for Horlicks

Environmental uncertainty refers to the environmental issues in the
product chain with the manufacturers. Its described this as the
unexpected changes of customer, supplier, competitor, and
technology. The increase of outsourcing activities in the industry now a
days had augmented the awareness of the importance of strategic
supply management, which leads to better relationship among
organizations.

4.2 Company environment internal and external for Horlicks

This sub-factor is related to the companys relationship with suppliers
and their level of trust and commitment. Company environment is also
related to the companys expectations of quality, on time delivery,
competition in the sector, and the level of rivalry among firms. In order
to respond effectively to demand, companies realize that imports are a
good option for obtaining flexibility in response, even though working
with countries from overseas
implies working with uncertainty. Uncertainty negatively affects
company performance. But this can be reduced if a strategic
relationship with critical suppliers is established. Thus, companies need
to implement new strategies that allow them to deal with
environmental uncertainties in the supply chain in order to perform in
a proficient manner.
4.3 Government Support for Horlicks
They gives a big support to the manufacturer to continue the supply
chain in the normal path to make sure the continuity to deliver the
product up to the customer. The level of support that the company
receives from the government when importing raw materials or
products from overseas or using domestic materials. It includes the use
of norms, regulations, policies, and advice for the sector. The thing is
how government can make a series of reforms to encourage exporters
by increasing manufacturing sectors competitiveness in the
international market through logistics competency. The increase of
international trade for acquiring resources from other countries
introduces complicated matters such as language barriers,
transportation, transportation costs, exchange rates, tariffs, and
administrative practices.

4.4 Information technology for Horlicks

This is the era of globalization where telecommunications and

computer technology allow all the factors in the supply chain to
communicate among each other. The use of Horlicks information
technology allows suppliers, manufacturers, distributors, retailers, and
customers to reduce lead time, paperwork, and other unnecessary
activities inside the factory. It is also mentioned that managers will
experience considerable advantages with its use such as the flow of
information in a coordinated manner, access to information and data
interchange, improved customer and supplier relationships, and
inventory management not only at the national level but also
internationally.

4.5 Planning tools for Horlicks

Supply chain management planning tools are basically intended to
integrate the main resources planning activities in a firm or
organization. There are some of the most common planning tools are:
material requirement planning (MRP), manufacturing resources
planning (MRPII), and Enterprise Resource Planning (ERP). A MRP is a
tool that allows an organization to schedule production activities to
meet specific deadlines based on the bill of materials, inventory levels,
and master production schedule. An improvement of MRP tools is MRPII
which integrates manufacturing capabilities and capacities with the
benefits of MRP. An ERP tool allows the organization to integrate all
processing information tasks related to all processes in the value
chain.

4.6 Supply chain relationships for Horlicks

Supply chain relationships is an important role to achieving the firms
goals. The coordination and integration of activities with the proper
suppliers and understanding the needs of customers, and needs
results in greater benefits for companies. Supply chain management is
completely related with relationship management, which includes the
base of suppliers and customers. Strategic supplier partnerships and
customer relationships are main components in the supply chain
management practices, which leading to information sharing, which is
one of the five pillars in achieving a solid supply chain relationship

4.7 Relationships with suppliers for Horlicks

Companies are associated to work with different suppliers in different
manners. It is important that the relationship with suppliers should be
satisfactory for their company needs. In terms of commodity products,
it is common to find an adversarial relationship mainly based on price
negotiation between buyer and supplier. This type of relationship with
suppliers does not effect for the price or cost reduction in the supply
chain. It may be beneficial to network with the supplier, to develop the
partnerships and alliances that will benefit both partners.

4.8 Relationships with customers for Horlicks

The global markets offer a variety of products of different quality and
cost from different countries. As a result, companies are always
competing and trying to reduce costs and improve quality with the
manufacturing cost. Customers look for more choices, better service,
higher quality, and faster delivery of the product through all over the
world. The relationship with customers has become a strategic issue
for todays companies to keep them loyal on their product and
services.
 Supply Chain Distribution of Horlicks

4.2 Supply Chain Network Structure

All firms participate in a supply chain, from the raw materials to the
ultimate consumer of Horlicks. How much of this supply chain needs to
be managed depends on several factors including the complexity of
the product, the number of available suppliers, and the availability of
raw materials. Dimensions to consider include the length of the supply
chain and the number of suppliers and customers at end point at each
level. It would be rare for Horlicks to participate in only one supply
chain. Horlicks manufacturer, the supply chain looks less like a pipeline
or chain than an uprooted tree, where the branches and roots are the
extensive network of customers and suppliers. The question is how
many of these branches and roots need to be managed. The closeness
of the relationship at different points in the supply chain will differ.
Management will need to choose the level of partnership appropriate
for particular supply chain links. Not all links throughout the supply
chain should be closely coordinated and integrated. The most
appropriate relationship is the one that best fits the specific set of
circumstances. Determining which parts of the Horlicks supply chain
deserve management attention must be weighed against firm
capabilities and the importance to the firm. It is important to have an
explicit knowledge and understanding of how the supply chain network
structure is configured. Horlicks suggest that the three primary aspects
of a companys network structure are: (1) the members of the supply
chain for raw materials, (2) the structural dimensions of the network,
and (3) the different types of process links across the supply chain.
Each issue is now addressed.
 Supply Chain Networking system of Horlicks

4.2.1 Inventory management

The location of inventory and number of sites from inventory is supplied by
Horlicks is affected by the total sales and mode of transportation.
Storage
o Here Horlicks decides where they have to store their finished products.
Warehousing
o In this part it involves assembling, dividing and preparing for
transportation, for example caps of bottles are fitted on bottles.
Distribution centers
o Here an integrated system is developed for the flow of products and
acceptance and execution of orders and their deliveries.

4.3 From MANUFACTURER to Customer

GSK (GlaxoSmithKline)
United Kingdom
Agent: C&F and Distributer
Address:
GL Parnami Marketing Company
Gurgon

It takes order from direct to the company and distributes it to the distributers according to
their requirement. They take the order by truck and by other vehicle (road
transportation). According to GL Parnami the total sale of Horlicks in Faridabad is
around 50 lakhs (app.).

How C&F works:

The C& F contact direct to the company and company tie up with particular C&F to
distribute their products.

Distributer:
Distributer goes to the direct to C&F or C&F comes to the distributer and they tell the
amount of product according to the requirement sometimes distributer pick the product
them self or sometime C&F drop the product to the distributer. The distributer forwards
it to the wholesalers.

Addresses of distributer:
1. GSK& Associates
559Sec-16, A
Faridabad.
2. Rajeev sales agency
Old Faridabad.
There is no agent between C&F and Distributer.

4. 3 The Wholesalers

These people again send their product to the retailers. In this retailer contacts to the
wholesaler by phone or direct and deal with them. They bring products by auto or vein or
own vehicle and from retailers consumer consumes the products. Wholesaler sold their
producy around 20,000 lot every month.
Transportation: by auto and personal vehicle
Sale: The new order place after 10 or 15 days.
Addresses:
1. Princ general store

Gopi colony, old Faridabad.

Ph. No. - 91-4077361
2. Rani general store
22 feet road. Sanjay colony
Sec-40, Faridabad.

3. Sonia general store

25 feet road, sec 48
Sanjay colony, Faridabad.

4. Dinesh general store

22 feet road,
Sec- 48, Faridabad.

5. Sharma general store

1517, road 33
Sec. - 48, Faridabad.
 5. Discussion

In this report we sought to assess the various definitions of Horlicks

Supply Chain Management according to various scholars. And how
SCM of Horlicks works its various operations and sub operations
according to need of the business. How Department of Procurement,
Production and Distribution becomes integral part to maintain healthy
Supply Chain Management at Horlicks and Firms. This report helps in
exploring and contributes to advancing our understanding of Supply
Chain Management within Horlicks organization and at global scale.
The era of cheap labor is gone and manufacturing, logistics and
distributions, People have been looking for new ways to reduce costs
and Supply Chain Management offers a great opportunity. The answer
is the key point that, you are thinking not just within your organization
but actually thinking about the different partners along the supply
chain.

6. Conclusion

The objective was to fully understand the basic functionality of SCM in

Horlicks organization, its role and its importance. But from a research
point of view it was imperative to study its history and the various
research articles that have been published throughout life time.
Obviously, we cannot read all of them but through a number of
research articles/journals/case studies we found some that were mainly
focused on the research articles themselves which gave us the
material we needed.
This helped us determine how much has been in the field of SCM of
Horlicks and gave us clear understanding of what they are going after.
The gap between the research methodologies and the area that are
mostly focused in an organization, the strategies and this helped clear
our perception of SCM. Hopefully we will extend these findings further.

7. References
www.gsk-ch.in/MediaReports.aspx
www.google.co.in