MIS PROJECT REPORT

SUBMITTED BY: GAUTAM ACHARYA, S- 25 GOPAL YADAV, HARJOT SINGH, JATIN BARUI, MAYANK KAURA, VIJAYA S, V VISWANATHAN, S- 26 S- 27 S- 29 S- 35 S- 72 S- 84

HARI NARAYAN RAJ, S- 85

ANINDA RAY,

S- 86

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CONTENTS
REFERENCES 3 1. FMCG INDUSTRY...................................................................................................... 4 2. INDUSTRY HISTORY ........................................................................................................... 4 2.1.HISTORICALGROWTH. ................................................................................................. 4 2.2. PROJECTED GROTH ESTIMATE ............................................................................. 5 3. INDUSTRY PARAMETERS ................................................................................................. 5 4. CRITICAL SUCCESS FACTORS OF FMCG INDUSTRY .............................................. 6 4.1 THE CRITICAL SUCCESSPYRAMID(CSP) .............................................................. 7 5. BEST IN CLASS COMPANIES ........................................................................................... 8 6. AN ORGANISATIONAL IN THE INDUSTRY .................................................................... 9 7. BUSINESS OPERATION OF ITC ........................................................................................ 9 8. IT-IMPLIMANTATION TRACK RECORD ........................................................................ 13 8.1. IT HIERARCHY .................................................................................................. 13 8.2. WORKING OF IT HIERARCHY ................................................................................... 14 8.3 CLASIFICATION OF IT PROPOSALS ........................................................................ 15 8.4 DEPARTMENT OF ITCS IT DIVISIONS ..................................................................... 15 8.5. HARDWARE AT ITC ...................................................................................................... 15 8.6. VIRTULISATION ................................................................................................ 16 8. 7 ERP AT ITC ..................................................................................................................... 16 8.8. SPECIFIC IT INTIATIVES AT DIVISIONAL LEVEL ................................................. 16 8.9. FIRST MANUFACTURED-FIRST-OUT(FMFO ......................................................... 16 8.8.1. PUSH MIS ....................................................................................................... 17 8.8.2 FASTREACT EVOLUTION ......................................................................................... 17 8.8.3 FREE BORDERS PLM ............................................................................................... 17 8.8.4 PROJECT DHANUSH ................................................................................................. 17 8.8.5 E-CHOUPAL: STRATEGIC THRUST ....................................................................... 18 9. FUTURE SCENARIO BUILDING FOR FMCG INDUSTRY...................................... 20 10. STRATEGIC USE OF IT ......................................................................................... 21 11. IT VISION & IT STRATEGY OF ITC ....................................................................... 23

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REFRENCES

White paper on Competitive Capabilities for the Future by S Padmanabhan & J Krishnamurthy, TCS Technical paper on Future of IT application development, IBM, June 2007 Case Study: Community based Information System, ITC e-choupal, FAO magazine, Nov 2005 ITC website, www.itc.co.in Case study How ITC uses process to stay sharp by Rahul Neel Mani from Reader ROI Case study ITC Lifestyles Proactive Planning Reaps Benefits, from Reader ROI

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1.

FMCG INDUSTRY

The term FMCG means Fast Moving Consumer Goods. The term FMCG refers to those retail goods that are generally replaced or fully used up over a short period of days, weeks, or months, or within one year. FMCG products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries and grocery items. CHARACTERISTICS OF FMCG From the Consumers' Perspective: Frequent purchase Low involvement i.e. little or no effort to choose the item Low price From the Marketers' Perspective: High volumes Low contribution margins Extensive distribution networks High stock turnover 2. INDUSTRY HISTORY The Indian FMCG market has been divided for a long time between the Organized sector and the Unorganized sector. Organized Sector is the giant malls with large department stores, Cineplex's, supermarkets, and pharmacy chain, etc. Unorganized Sector comprise of mom and pop retailers and independent retailers, etc. The fast moving consumer goods(FMCG) industry, which accounts for 2.2 per cent of Indias GDP, is expected to attain a size of INR 1500 billion by FY 2012. 2.1 HISTORICAL GROWTH. The chart below shows in figures the growth rate the FMCG sector has witnessed till now since 2001.

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2.2 PROJECTED GROWTH ESTIMATES

3.

INDUSTRY PARAMETERS Design and Manufacturing Low Capital Intensity Technology

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 Third-party Manufacturing Marketing and Distribution High Initial Launch Cost Limited Mass Media Options Huge Distribution Network Competition Significant Presence of Unorganized Sector Low brand awareness enables local players to market their spurious look-alike brands. A highly scattered market and poor transport infrastructure Lower overheads due to limited geography, family management, focused product lines and minimal expenditure on marketing. 4. Entry barriers are high

CRITICAL SUCCESS FACTORS OF FMCG INDUSTRY

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4.1

THE CRITICL SUCCESS PYRAMID (CSP)

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5.

BEST IN CLASS COMPANIES The following companies are the best in FMCG industry in India. a) ITC Ltd. With a market capitalization of` 137,000 crores. b) Hindustan Unilever Ltd Subsidiary of Unilever Ltd. It has a market capitalization of 61,000 crores. c) Nestle Ltd. Nestle India is a subsidiary of Nestle S.A. of Switzerland. Has a market capitalisation of 35,000 crores. d) Dabur India Ltd Dabur India Ltd is the fourth largest FMCG Company in India with Market Capitalisation of 16,000 crores. e) United Spirits Ltd. - The market capitalisation of the company is 13,000 crores. The company was earlier known as the McDowell & Co. f) Colgate Palmolive (India) Ltd. Has approx. 11,000 crores as the market capitalisation. g) Godrej Consumer Products Ltd. - Has approx 11,000 crores as the market capitalisation. h) TATA Global Beverages Ltd.- Has approx 6,000 crores as its market capitalisation, it is the second largest Tea Company globally.

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6.

AN ORGANISATION IN THE INDUSTRY One of Indias Most Admired Companies

ITC Limited which previously stood for Imperial Tobacco Company one of Indias foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover US $ 4.75 billion. As such ITC is a group which has various diversified business. ITC has been rated by BCG amongst top 10 Consumer Goods companies in the world in terms of Total Shareholder Returns (TSR). It is one of the foremost in the private sector in terms of : Sustained value creation (BT-Stern Stewart survey) Operating profits Cash Profits Ranks No. 4 among Indian listed Private Sector Companies by market cap. In addition to above, ITC is one of Indias most valuable and admired companies in FMCG sector 7. BUSINESS OPERATION OF ITC (a) Traditional business:- Traditional business comprises of following sectors: Cigarettes Hotels Paperboards Packaging Agri-Business- ITC is the largest exporter.

In addition to the traditional business, ITC has now forayed into the following sectors and is increasingly gaining market share:(b) Nascent business Packaging Food & Confectionery, Branded Apparel & products Greeting Cards.

Information Technology Cigarettes

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ITCS CIGARETTES BUSINESS ITC has Market leadership in cigarette business with powerful brands across segments. Extensive FMCG distribution network World-class state-of-technology and products Exciting long term growth potential

BRANDED PACKAGED FOODS ITC has number of branded packaged foods up its sleeve like Aashirvaad Atta, Sunfeast Biscuits, etc. Further a number of innovative products in the pipeline leveraging the capabilities of the ITC R&D Centre. At present it is a market leader in India with various differentiated & innovative products in branded packaged foods.

LIFESTYLE RETAILING ITC entered into the lifestyle retailing with Wills Lifestyle brand which is presently rated amongst the top 5 Luxury brands in the country. Upmarket product range available in exclusive Wills Lifestyle stores (56) and multi-branded outlets/ large format retail stores across the country. Further, it has Strong distribution network in place for the mid-market brand John Players

EDUCATION & STATIONERY PRODUCTS BUSINESS

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Education & stationery products business of ITC is mostly commoditized. Offers opportunity for branding. Classmate brand already the most widely distributed brand in India. Branded Copier Paper Paperkraft footprint being enhanced. SAFETY MATCHES ITC one of the major players with current industry size of Rs. 1250 crores p.a. Product AIM is Indias largest selling Safety Matches brand. ITC has successfully acquired WIMCO Ltd. by Russell Credit and has Key brands like Homelites, Ship, Cheetah Fight etc. INCENSE STICKS (AGARBATTIS) ITC markets its brands with value added products across each price point. ITC product Mangaldeep is the second largest national brand in the country. Fragmented supply base due to reservation policy for small scale industry. PERSONAL CARE PRODUCTS Current market size estimated at over Rs. 29000 crores (growing at 12% p.a.). ITC presence established in Body Wash (Soaps, shower gels) and Hair Care (Shampoos, conditioner) category with Portfolio approach straddling all consumer segments with 4 umbrella brands: Essenza Di Wills (Prestige) Vivel Di Wills and Vivel (Mid) Fiama Di Wills (Premium) Superia (Popular)

OVERALL INSIGHT TO ITC LIMITED

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SEGMENT ANALYSIS SEGMENT DOMINANCE % CONTRIBUTION REVENUE Cigarettes Paper & Package. 70% share Packaging board No. 1 in Asia 1 of the largest exporters from India ITC Group rank No.2 77.0% 7.0% PBIT 87.7% 10.7%

Agri business

4.3%

3.7%

Hotels

4.4%

5.4%

CAGR DURING FY 2010-11

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Category Cigarettes Hotels Paper Agri business FMCG-Other

CAGR 10.9% 22.7% 17.2% 34.3% 60.2%

Growth Parameters Pricing power Inward traffic, occupancy Capacity utilization, value added products E-choupal, choupal sagar Fast track, decent share

ITC has been leveraging its strength through diversification thus creating: 8. Creating multiple divers of growth Unmatched distribution reach, Superior brand-building capabilities, Effective supply chain management and acknowledged service skill in hotelier.

IT -IMPLEMENTATION TRACK RECORD

ITC overall has 11 businesses with all total 200 manufacturing locations and comprising of 20,000 employees. Over the past few years there has been exponential growth in godowns /warehouses. One of the challenge for ITC has been effective deployment of IT to ensure sustained exponential business growth. This IT challenge has been met through Structuring and Planning of IT implementation. The IT deployed by ITC is worth over Rs 300 Crore / year. 8.1 IT HIERARCHY

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(a) GROUP CIO- Overall head of IT dept ITC (b) CMC- Stands for Corporate Management Committee. It is the apex body of ITC which reviews : Annual blueprints all 11 division Tech purchases Risk mitigations

(c) IT STEERING COMMITTEE Each of ITCs 11 business verticals has an it steering committee that works closely with the vertical to ensure: Efficient delivery, Sustainability New technology is in line with overall it plan.

8.2

WORKING OF IT HIERARCHY Part of the structure that keeps ITC's gigantic IT machine moving is that each business unit (BU) creates a multi-function planning taskforce - which includes IT managers - to undertake an annual business planning exercise. The yearly huddle introduces a comprehensive IT plan and roadmap as part of the division's overall business plan. Though ITC isn't a holding company in a literal sense for its group subsidiaries, it acts as one when it comes to budgetary allocations. Each if ITC's 11 business also has its own IT steering committee that works closely with the businesses. The committee, with the group CIO, ensures efficient delivery, sustainability, and also that new technology is in line with an overall IT plan. The yearly blueprints turned out by the 11 divisions are reviewed by a Corporate Management Committee (CMC), the apex body at ITC. Its responsibilities include mitigating the risk of technology purchase. This pyramid-structure of decision-making is replicated in the IT setup across the group. Each of the eleven business units has a separate IT team and an IT head who reports to the unit head. CIO is responsible to ensure that the technology is right, the resources allocated are appropriate and the funding is sufficient. CIO, with the help of separate teams, also looks into issues like technology upgrades and evaluation, annual budget planning and central procurement across the group. The organization also realizes that some projects have a pan organization impact and have to be deployed across all divisions. These large projects are looked into by ITC's CMC. It is headed by ITC's director of finance, who reports to the CMC.

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8.3 CLASSIFICATION OF IT PROPOSALS TYPE TRANSFORMATIONAL ENABLEMENT ENRICHMENT Similar to Vital-Essential-Desirable analysis EACH CATEGORY HAS ACCESS TO DIFFERENT RESOURCES & BUDGETS REMARKS

8.4 DEPARTMENTS OF ITCS IT DIVISION DEMAND-SIDE IT TEAM Teams working with specific business units. Separating the two ensures that demand-side it doesn't suffer because of backend issues. SHARED SERVICES TEAM Work at the corporate level under the group CIO. Shared services team provides end-to-end it management services, including creation and running of data centers, maintaining the VPN, databases, storage, archival, security management, network management, etc.

8.5 HARDWARE AT ITC On an average, 44 processors of computing capacity is employed by the business to host applications or enhance the performance of existing applications The heart of ITC's operations: its datacenter has 650 racks

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8.6

VIRTUALIZATION

The data centre at ITC had 650 racks and still it was so crowded there wasn't enough space for new provisions. It was also pushing the datacenter's cooling and power capacities to their limits. In order to meet these challenges, one elegant solution adopted by ITC was Virtualization. The technology had the added benefit of creating a more centralized, flexible IT infrastructure. Initially the utilization levels of existing servers were assessed. Those with the least usage were virtualized. The virtualization license and additional storage cost ITC just under Rs 30 lakh. But the project, which went live in January 2008, saved ITC Rs 38.08 lakh in its first year. And it created savings of Rs 12.77 lakh from the second year onwards. In the immediate, it freed up costly datacenter space and the power and cooling needed to run 44 processors. Just the cost of running those processors (without accounting for cooling expenses) reduced annual power consumption by 72,270 KW.

8.7

ERP AT ITC

ERP at ITC is Best-Of-Breed, Bolt-On System. Standard ERP For Inventory Management with: Oracle e-Business Suite 11.5.9 Sapphire - R&D Export Management System - Export Documentation Power Apps - Payroll And Attendance

8.8 SPECIFIC IT INITIATIVES AT DIVISIONAL LEVEL 8.8.1 FIRST MANUFACTURED-FIRST-OUT (FMFO) Initiative to barcode produce at the warehouse itself using RFID (Radio Frequency Identification) at item level using RFID Tunnel.
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 Enables implementation FMFO strategy, items manufactured first -shipped out first Tagging output/person/day rose from 300 to 3000

8.8.2

PUSH MIS

An integrated IT system which will gather and push information onto ITCs salesmens laptops. For instance, if a salesman is covering 10 outlets of a region, every evening ITCs systems will push onto his laptop the sales, distribution and requirements of that region and also the target to be met. 8.8.3 FASTREACT EVOLUTION At ITC's Rs 4.5 crore Lifestyle Retailing Business Division (LRBD) status of each order is visible to all stakeholders on a common scoreboard to enable prioritization of work. 8.8.4 FREEBORDERS PLM Wills Lifestyle and John Players the flagship brands of ITC LRBD, has implemented Freeborders Product Lifecycle Management (PLM) solution to streamline all apparel product development activities, from concept to delivery. 8.8.5 PROJECT DHANUSH To track every bale of tobacco leaves from the point of origin to the end product, ITC implemented an ERP system that is updated using handheld terminals from 70 rural locations in Andhra Pradesh and Karnataka.

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8.8.6 E-CHOUPAL: STRATEGIC THRUST E-Choupal is an ITC initiative to connect the farmer directly to the market place by eliminating the middle-man. Complementary benefit has been empowerment of the farmer. The e-Choupals, information centers containing a computer linked to the Internet, represent an approach to seamlessly connect subsistence farmers with large firms, current agricultural research, and global markets. The following activities are undertaken through e-Choupals: Procurement: Cost & Quality Optimization Rural Distribution Financial Services Rural Retail

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9.

FUTURE SCENARIO BUILDING FOR FMCG INDUSTRY

The following are the key areas for FMCG industry to do scenario building in these areas:(i) Supply Chain Evolution:- Supply Chain evolution in the consumer goods industry has increasingly become complex because of the various developments in the market place. In markets where retailers are large and powerful, they tend to drive the channels and hence the supply chain network will require the increased use of technology, more effective distribution and better usage of information. With regards to supply chain, some of the key processes can be optimized for cost by off shoring - Sourcing is one prime example, another is the adoption of new technology such as mobility devices, RFID etc. (ii) Consumer Centric Innovation:- As consumers become more demanding they look for new and innovative products, in attractive packaging, offered to them in more convenient ways to shop at lower prices. The modern retail trade not only broadens consumer choice but also drives industry consolidation. This places enormous pressure on suppliers to maintain margins and retain consumer brand franchise, particularly with the emergence of private label brands in more mature markets. While Innovation is a key driver of consumer goods companies, seldom does one get to see any breakthrough innovation. Typically innovation tends to be incremental enhancements either in the product design or delivery or in the channel formats. Companies need to be constantly aware of this challenge and put mechanisms in place to nurture innovation both within the organization and external to it. (iii) Improving Operational Execution:- Consumer goods companies require excellence in four areas to sustain their leadership brand marketing, sales, innovation and the supply chain. The industry benchmark of performance has increased dramatically over the last decade in each area. The winners of the future will be the ones that not only adopt these best practices and raise the bar more quickly but also those that bring in new practices offer borrowed from other industries.

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10. STRATEGIC USE OF IT

IT landscape of the Consumer Goods Industry that has been described in figure below reveal the key strategy for IT application in the FMCG industry. The red boxes indicate the processes for which firms have to focus in creating specific offerings as they are the ones that yield the maximum ROI to Consumer Goods Companies in the current business scenarios.

The other applications that will strategies the use of IT in the industry are as below:(i) Product Lifecycle Management (PLM) Increased process velocity that ensures that products and promotions reach the end customers faster is one of the key capabilities that the Consumer goods manufacturers need to equip themselves with. This is achieved by PLM solutions. PLM solutions enable strategic aligns firms with the leading Product Lifecycle management vendors and thus making use of variety of services used by Consumer Goods Companies ranging from PLM consulting , Product Evaluation to Implementation and outsourcing. (ii) Sourcing and Procurement IT platform based outsourcing to leverage its alliances with the market leaders in Procurement Products. This will involve offering full service outsourcing program that provides end to end IS,

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ADM and BPO services to enable global outsourcing for CPG companies. The following are the application areas that the sourcing program would encompass: Buying and Marketing Replenishment and Logistics Finance E Commerce Enterprise Collaboration Technology enablers

(iii) Supply Chain Management Software solutions that cater to various challenges faced by Consumer Goods manufacturers in the current environment like: Supply Chain Diagnostics and a Transformation framework aiming at redesigning process and systems across supply chain towards achieving break-through performance Collaborative Planning, Forecasting and Replenishment (CPFR) solutions towards improving supply chain planning process in collaboration with the major retailers Logistics Management towards better supply chain execution with focus on transportation Warehouse Management towards better supply chain execution with focus on DC operations

(iv)

Future IT Technologies like application development with SOA and Web 2.0

Unlike many heralded technology advances, service-oriented architecture (SOA) is fulfilling its promise, often delivering significant ROI within relatively short timeframes. The rewards are not just financial but also SOA allows organizations to cross over traditional line-of-business (LOB) barriers to deliver integrated, customer-facing services. SOA will continue to be widely adopted as the architectural style for new application development investments. SOA enables firms to take disparate capabilities within their applications and transform them into services that can be leveraged for reuse in more customer-centric ways.
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(v) The increasing dependence on global resources and distributed partners will drive a need to adopt standard approaches that are common across industries and geographies. Internally developed methods and specification approaches will no longer be effective. Entity-relationship modeling, Unified Modeling Language (UML) and the Unified Process lifecycle are some examples. 11. IT VISION & IT STRATEGY OF ITC IT Vision of ITC is to enhance role of IT in all its business which will ultimately address customer pain points through innovative solutions thus optimizing cost and increasing efficiency in all businesses leading to maximum returns. To meet this end and be a market leader in all the diverse business segments, ITC has adopted following key IT strategies in respective fields:(i) (ii) (iii) (iv) (v) Data centre Virtualization using cloud computing ERP solutions RFID technology for implementation of First Manufacture First Out strategy in the Lifestyle retail sector Push MIS- An integrated IT system which will gather and push information onto ITCs salesmens laptops.
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(vi)

PLM- Product Lifecycle management solutions for business like Lifestyle retail sector

(vii) Project Dhanush Implementation of ERP system that is updated using handheld terminals from 70 rural locations in Andhra Pradesh and Karnataka for tracking every bale of tobacco leaves in the ITC India Leaf Tobacco Development (ILTD) division. (viii) E-Choupal - an intelligent blend of applications like CRM and supply chain management for farmers in village and as an effective supply sourcing technique for ITC retail.

12. SUMMARY Retailers driving down prices and subsequent costs, place enormous pressure on suppliers to maintain profit margins. This drives the need for continuous internal improvements, including the following: Supply chains must be optimized to produce the required levels of customer service at the lowest possible Cost Assets must be rationalized to work at maximum efficiency Demand driven manufacturing must be used to ensure that the optimum response can be made for both fast and slow moving new products and supported by world-class Sales and Operations Planning processes and systems. Execution capabilities must be flawless and cater for the variations that will occur. This requires FMCG companies to be both agile enough to change rapidly in addressing these new concerns and flexible enough to ensure that they can respond quickly without waste. This lowers costs and reduces total cycle time for all processes, applying particularly to S&OP, planning, new product introduction, and execution processes. In all this IT has been an enabler and been an impetus in taking the FMCG company through the exponential growth and will continue to do so in future. Companies which will leverage the IT to the maximum undoubtedly will be the leaders in the Industry.

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