IP-APPM's supply chain strategy
Inbound supply chain: Power and wood form the major part of the raw material. Most of the power used at the mills is self-generated and 100% of our coal procurement is domestic. Most of the wood used is sourced in and around Andhra Pradesh and Telangana, within a radius of 350sq/mt. IP has divided our supply base in two, the woods procured within 100km usually go directly to the mills and beyond 100km, is brought into a depot.
Outbound supply chain: Larger challenges for IP is the outbound supply chain. For example, nearly 70% of IP's sales is outside Andhra Pradesh and Telangana and caters to customers’ right up to North India. Swaminathan says, "customer fragmentation is a challenge". To add to this, Rajahmundry is not on any direct trunk route and the backhaul facilities are very limited and a lot of transhipments to manage. For the last three years, IP is focusing on expanding the wood depot, the last mile supply chain optimisation in terms of improving customer service. "We are waiting to see how the GST tax structure pans out and we probably have to restructure," adds Swaminathan.
IP’s supply chain agenda: In terms of supply chain strategy IP's focus is on optimising the supply chain cost. The company has implemented this by rationalising and working on the turnaround time (TAT) at ports and just in time (JIT) deliveries to the mill.
Our other focus is on reducing the carbon footprint and developing a more “sustainable” supply chain. In a day, over 200 trucks move around locations to collect wood and to the mill. The aim is to make these trucks efficient, reduce the holding time etc.