A sliding economy and rising inflation rate have forced companies to cut costs. They plan to do this by resorting to video conferencing, value engineering of products, manpower review, reducing travel expenses and better management of supply chain. They are also giving value offers to consumers.
Speaking to HT, HK Press, executive director and president, Godrej Consumer Products Ltd said, “We are using reverse auction process to strike good deals with suppliers.” In reverse auction, certain pre-qualified suppliers are asked to participate in an online auction process to arrive at the best deal.
“We are also implementing value engineering to study every aspect of our products to reduce costs,” Press said. The company also plans to review its head count to optimise the number.
The slowdown has brought supply chain management under sharper focus. Companies are planning to keep minimum stock-keeping units (SKU) for cost-effective operations.
Ranju Kumar Mohan, vice president, marketing, laundry and home care, Henkel India said, “We are looking at introducing value packs, rationalising our SKUs and using research and development to work out better formulations.” Henkel is also contemplating video conferencing and having own guesthouses to cut cost.
Clubbing products to offer value for money is another step companies have taken to survive inflation. For example, one of Henkel’s value deals offers Henko, Pril and Bref packs together at a discounted price. Similarly, Wipro offers Santoor soaps free with honey.
Dabur India Ltd Chief Operating Officer (Consumer Care) VS Sitaram said, “We are considering various cost cutting exercises like formulating products differently, studying use of substitute packaging materials etc.”
Value retailers like Big Bazaar are also doling out attractive deals for consumers. Sadashiv Nayak, CEO, Food Bazaar said, “Despite rise in input prices, we have tried to hold the prices of our store brands, which occupy 40 per cent of the shelf space.”
When left with no option, companies have hiked prices of their products. Dabur hiked prices for some of its products and even Godrej is considering hiking the price of its premium soap Cinthol.