Hindustan Lever, the country's largest multinational, has started to decentralise functions across all product categories in an effort to improve response time and stave-off competition from regional players.
The move has already been implemented in beverages and is now being extended to other Lever categories. Under this, functions like manufacturing, distribution and logistics are being delegated to the branch and factory level, while only corporate functions like marketing and branding are being retained at the corporate level.
The company has renamed its five branches as regional operating centres (ROC). Lever has four main branches, Mumbai, Delhi, Calcutta and Chennai. These ROCs will be responsible for handling these functions in their respective regions.
A Lever spokesperson said the decentralising had worked well in beverages and the company plans to extend it to all categories. Lever has 12 categories many of which are huge businesses like toilet soaps, detergents, beverages, and dental care. No time frame has been fixed for the process to be completed, and it is gradually going ahead.
Lever sources said the delegation was necessary as certain functions like distribution, logistics can be performed effectively only at the local level.
"The local branch managers know what to do and how best to do it. Some functions will continue to handled centrally, but in others, local managers know better," sources add.
Lever had started implementing this restructuring a couple of years back in beverages. Based in Bangalore, beverages comprise the tea and coffee business.
The company had decided that manufacturing, distribution and logistics of the business should be delegated to the branch level. This was important as in both tea and coffee, regional competition was strong and taste preferences varied.
The regional managers would be aware of such variations. They would be able to change production schedules accordingly and work out the logistics. According to Lever sources, the delegation had worked well in the tea business where regional taste preferences were stronger.
By empowering local managers, Lever ensured quicker and hassle-free product dispatches to places they were in demand. The move also coincided with the installation of a country-wide very small aperture terminal communications network which cut down delivery time to shops from nearly two weeks to one day.
Lever sources explained the decentralisation would be centred around the three functions of manufacturing, logistics and distribution. In some categories, it may not be able to delegate everything.
For example, buying of raw material in soaps would continue to be controlled centrally. Marketing and branding would also controlled from one centre. In case of beverages, the centre was Bangalore while in others it would be either Bangalore, Chennai or Mumbai.
Hindustan Lever services nearly one million outlets across the country and has 110 brands in 12 product categories. The company is strong in several of these categories like soaps, detergents, beverages, specialty chemicals, dental care, hair-care and skin-care.
