By: Anshul Agarwal-01 Ashish Bansal-03 Vikram Bothra-06 Rahul Rathi-21 Gaurav Surana-30
Introduction to Marico
Supply Chain and Nature of Challenges Faced
Results and Sustenance
• Found in 1991, Public Limited Company • A leading Indian Group in Consumer Products and Services • Renowned Brands like Parachute, Saffola,Kaya Skin Clinics • CAGR of 21% in turnover, 30% in profits - over last 5 years • Turnover of 1910 Crores (2007-08)
12 Brands, Turnover Rs 1550 Crores
100 SKUs, 1500 Suppliers 7 Factories, 15 Contract Manufacturers Reaching 13 Crore consumers
30 Depots, 1000 Distributor
25 lac Retail Outlets (Reach)
MARICO-SUPPLY CHAIN TRANSACTIONS
Nature of Challenge faced in
• More production to plan.MARICO’S PROBLEMS
• Nature of FMCG market : Aggressive strategy • More brands and more products incur costs: This entails more sales and markets to track. • More SKUs to track.
. • The resulting growth strained Marico’s highly regarded distribution network and exposed shortcomings in its forecasting. and supply chain processes. planning. The SKU/distribution point combinations run in millions. • More pallets and truckloads to configure and route. exposing many process inefficiencies. • The distribution network became more costly and complex. • More forecasts to make.
• Excess inventory
• The costs of errors in shipments to remote depots were mounting.MARICO’S PROBLEMS(CONT)
• Forecast accuracy was at 70%. • Distributors were suffering stock-outs and loss of sales on 30% of Marico SKUs.
• Penetrate areas with less than 20. 000 population.CHALLENGES.across months • Skew of Sales with in a month • Order placement process • Distribution network complexity
. • Peak / Min Sales Ratio . • No secondary sales data.
INTERNAL OPERATIONS PROBLEMS
Lack of visibility among transaction systems Stand alone applications systems Non-Integration: Departments working with conflicting numbers And coordination problems in supply chain planning and execution
Rationalization and Consolidation of data for monthly financial statements
Excel spreadsheet based application Only one planner qualified Data Gathering-Indicative Plan-Production Department-Final Production Plan took 30 days
MARKET PLACE PROBLEMS
Reliability on PRIMARY DATA.suboptimal visibility Next best option.Distributor’s sales to Retailers
MARICO operated with a PUSH METHOD
Severe skewing of sales Synchronization between MARICO and distributorsdifferent bucketed time horizons
hire temporary spaces and demurrage charges Stock-outs Maldistribution of goods.higher delivery costs
PC-supported legacy systems – use of relational database libraries Struggling to meet increased logistics needs Poor visibility into depot stocks-no prioritization rules in place in configuring for optimal truck loads Excess stock.
ORDER PLACEMENT PROCESS
How does Billing Happen?
Sales Order Distributor Marico
Non Clarity/Non Uniform Norms
Very High Order Closure Time at Depot No Scientific way of Defining Norms Too much of manual interventions Strong need to make it system generated and not person dependent
THE VICIOUS CYCLE
Solution Adopted for Supply Chain Challenges
April 2001 MIDAS for Distributors . BW .SOLUTION IMPLEMENTED
ERP.The face of all the above to users in the field (April 2002) Outcome .Stock visibility of depot and distributor real time
.Nov 2001 Minet :. APO.
finance and materials management • The company has also installed the Advance Planner & Optimizer (APO). which works right from demand forecasting to materials management and production planning. Marico has installed the SAP R3 transaction handling modules for sales.
.HOW MiNET WORKS?
• MiNet is a portal that links 800 distributors and 110 super distributors of Marico spread across the country to the company • MiNet also enables the company to get daily updates at the stockist level • At the backend. Marico claims to be the first APO installation for SAP in India • The company has in place a Business Information Warehouse (BIW) which is the repository of every bit of information relevant to the company. a supply chain module. through MiNet. This backend is linked to the outside world comprising scores of business associates for Marico.
He doesn’t have to be online all the time
.THE ―MIDAS‖ TOUCH
• The company has also put in place a software called the Marico Industries Distributor Application Software (MIDAS) which is akin to an ERP (enterprise resource planning) software to capture ―secondary sales‖ data • MIDAS has been created by Marico in conjunction with Chennai-based firm Botree • Every morning the distributor logs on to MiNet and uploads information from MIDAS and we pass on the information regarding invoices. running schemes etc to the distributor • This means that the distributor can keep feeding his data on MIDAS and then dial in periodically and feed the information on MiNet.
.MARICO IT SYSTEM .
MARICO IT SYSTEMS
• Distribution Automation Software package.MIDAS (MARICO INDUSTRIES DISTRIBUTION AUTOMATION SOFTWARE)
Received distributor stock and sales data in offline mode through floppy transfers But for VMI.real time data needed • Internet based system MI-NET in which distributors could log in and supply data online • Application which could automatically transfer data from distributor’s PC to MARICO’s central servers
MARICO IT SYSTEMS
• MI-NET directly linked to SAP R/3
Stock in Transit Depot Stocks Pending Orders Statement of Accounts Promotion Schemes to distributors
MARICO IT SYSTEMS
• Potential Primary developed using mySAP Business Intelligence
Average sale of the previous three months Develops and reports brands and regional sales potential that should be targeted by the sales group Cumulative actual sales to date—mySAP provides daily updates through Primary Potential Proactive work rather than Postmortem analysis
MARICO’S EXTENDED SUPPLY CHAIN SYSTEM
All resources and management commitment to redesign the process. a Supply Chain Management (SCM) suite.Big Bang Approach in 2000-2001.
.Fully integrated system consisting of
• Enterprise Resource Planning (ERP) business application • SAP R/3. • The Advanced Planning and Optimization (SAP APO) component of my SAP Supply Chain Management (my SAP SCM) • My SAP Business Intelligence Solution for Supply Chain Performance Management.
• Technology supported partnerships with major distributors • Vendor Managed Inventory (VMI) • Online exchange of distributor sales and other information. 2001 SAP APO in May.went live in April.9 months All started a few months apart.
Groundwork for major developments SAP R3.
30 days to 10 days
Improved planning and operations of the distribution network
.Using mySAP SCM and SAP R/3 ERP modules in the first 2 years
Visibility and tools provide by SCM & ERP yielded:
Improved visibility of internal operations
Improved visibility of the market placeVMI
Improved forecasting accuracy from 70% to 80%
Reduced Planning Production Cycle Time.
Reduced Sales Skew and balanced distribution levels Decreased SKU stock outs by 50% Reduced Excess Inventory at Distributors by 50% Reduced Marico’s Average Total Inventory by 25% Reduced Supply Chain exception-handling costs by more than 60%
brand innovations and expansion Greater sales productivity Improved win-win situation with the distributors Continued double-digit growth in earnings and revenues
.Increased funding for advertising.
Impact and Benefits
VENDOR MANAGED INVENTORY (VMI)
Distributor Replenishment based on order
Replenishment based on norms Distributor Marico
NOW WITH VMI
MIDAS Mi-net APO SAP Orders are automatically generated
SAP R/3 Integrated SystemsmySAP SCM & SAP APO
Demand Forecasting and Planning.
Administrative resources.Practice Models. Deployment and Cockpit modules
mySAP Business Intelligence
Supply Chain performance management activities.
Materials Management .
Production Planning. Data Warehousing functionality. Supply Network Planning (SNP).
Sales & Distribution
. Business Intelligence tools and Analytics.
Quality Management .
• few commodity raw materials • no manufacturing capacity constraints • no sales seasonality.no promotions and minimize artificially induced demand surges
Not used for Sourcing and Manufacturing
Demand forecasting and Supply Chain Planning
• Improve internal Collaborative forecasting between manufacturing sites and warehouses. • Assigned and accountable ownership.distribution from warehouses to distributors met service levels
THE LAST MILE…WHAT IT IS NEXT?
• Marico is now working on the last mile—capturing data at the tertiary or retailer end • The company plans to arm its distributor sales representatives with handheld devices with a customised application that will allow them to record the stock position at the retailers’ end on a weekly basis and then feed it into MiNet at the distributor office • Consumer complaints can also be fed in and acted upon in record time • But the most important aspect of capturing this data for the company lies in the market data generated and the potential to link the entire supply chain to consumer offtake