An Analytical Study on Operations and
Supply Chain Management in ITC
Limited
1. Title of the Project
A Comprehensive Study on Operations and Supply Chain Management Practices at ITC
Limited
2. Abstract
ITC Limited, a diversified Indian conglomerate, has established a robust supply chain
network spanning FMCG, agribusiness, and hospitality. This study explores how ITC
optimizes its operations through backward integration, technology adoption, and
sustainability practices. With data from annual reports, case studies, and industry
benchmarks, this report analyzes ITC’s strategic supply chain framework, evaluates key
performance indicators, and suggests improvements aligned with global standards.
3. Introduction of the Study
ITC Limited, founded in 1910, began as a tobacco company but now operates across FMCG,
agribusiness, paperboards, packaging, and hotels. With over 60 manufacturing units, a
presence in over 6 million retail outlets, and flagship initiatives like e-Choupal, ITC has
emerged as a leader in operational efficiency and supply chain integration. The objective is
to study ITC’s practices and understand how they contribute to cost-effectiveness, quality
management, and sustainable sourcing.
4. Objective(s) of the Study
- Analyze ITC’s end-to-end supply chain for FMCG and Agri-business sectors.
- Study operational challenges in procurement, production, and logistics.
- Identify how ITC leverages digital technologies in SCM.
- Evaluate performance metrics: inventory turnover, logistics cost, lead times.
- Recommend improvements aligned with best practices in global supply chains.
5. Literature Review / Background Study
- Supply Chain Fundamentals: Chopra & Meindl emphasize responsiveness and cost-
efficiency.
- Agri Supply Chains: Indian Journal of Agricultural Economics highlights the complexity of
Indian agri logistics.
- ITC’s e-Choupal Case: C.K. Prahalad showcased it in The Fortune at the Bottom of the
Pyramid.
- SCM Trends: McKinsey & Co. (2023) report on digital twin models and blockchain for
traceability.
- Sustainability: Harvard Business Review (2021) stresses closed-loop systems; ITC adopts
similar practices in paperboard recycling.
6. Research Methodology
- Type of Research: Descriptive, analytical.
- Data Source: Secondary (Annual Reports 2018–2024, Business Standard, Statista, ITC CSR
reports).
- Tools Used:
- Supply Chain Flow Diagrams
- Porter’s Value Chain Analysis
- KPI Benchmarking
- SWOT Analysis
- TCO (Total Cost of Ownership) Framework
7.1 Supply Chain Overview
- Procurement: Direct farmer sourcing via e-Choupal (covers 4 million farmers in 35,000
villages).
- Manufacturing: 65+ factories; Lean systems in place (e.g., modular production lines in
FMCG).
- Distribution: Warehousing hubs linked to 6,000+ wholesalers and retailers.
7.2 Key Metrics
| KPI | ITC FMCG Avg (2023) | Industry Avg (FMCG India) |
|----------------------------------|----------------------|----------------------------|
| Inventory Turnover | 5.8x | 4.2x |
| Lead Time (Procurement to Shelf)| 12 days | 18 days |
| Logistics Cost (% of Sales) | 6.3% | 8.1% |
| Fill Rate | 97% | 91% |
7.3 Technology Use
- SAP S/4HANA for real-time inventory and procurement.
- IoT-enabled warehouses for temperature-sensitive goods.
- AI Demand Forecasting for brands like Aashirvaad and Bingo.
7.4 Sustainability
- 41% of total energy consumed is from renewable sources.
- "Zero Carbon" operations in paperboards & specialty papers.
- Reverse logistics in packaging to promote recycling.
8. Results & Discussions
**Strengths**
- High integration via e-Choupal reduces procurement cost by 8–12%.
- Just-in-Time principles reduce buffer stock in urban FMCG centers.
- Robust IT systems create real-time visibility across the chain.
**Weaknesses**
- Heavy reliance on seasonal agri-inputs exposes it to climate risks.
- Complex regulations in agri-export affect supply chain agility.
**Opportunities**
- Expand e-Choupal into newer product verticals (e.g., spices, medicinal herbs).
- Leverage AI and ML across all logistics operations.
- Outsource non-core logistics to 3PLs for cost efficiency.
**Threats**
- Rise of D2C brands could bypass traditional distribution.
- Geopolitical and regulatory risks in agri-export/import channels.
9. Recommendations & Conclusion
**Recommendations**
1. Adopt Blockchain: For traceability in agri-sourcing.
2. Collaborate with Startups: In agri-tech and logistics (e.g., Ninjacart).
3. Expand Cold Chain Logistics: Especially for ITC's frozen food and dairy verticals.
4. Flexible Supply Chains: Develop alternate supplier networks for resilience.
**Conclusion**
ITC’s supply chain is an industry benchmark in leveraging rural integration, tech innovation,
and sustainability. The company must now focus on resilience, digitization, and customer-
centric logistics models to stay ahead in a dynamic market.
10. Bibliography & References
1. ITC Annual Reports 2018–2024
2. C.K. Prahalad, The Fortune at the Bottom of the Pyramid
3. Chopra, S., & Meindl, P. (2021). Supply Chain Management
4. McKinsey (2023), Global Supply Chain Survey
5. India Supply Chain Council (2022)
6. ITC Sustainability Report 2023
7. Business Standard articles on ITC's supply chain
8. https://www.itcportal.com/
