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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 2660 Crores (2009-10)
12 Brands, Turnover Rs 1550 Crores 100 SKUs, 1500 Suppliers 7 Factories, 15 Contract Manufacturers 30 Depots, 1000 Distributor 25 lac Retail Outlets (Reach) Reaching 13 Crore consumers
Determinants of Supplier’s power: The industry is mostly dependent on the local players for supplies of raw materials.External Analysis of Marico Porter’s Five forces: Threat of substitute products: In FMCG sector the products are highly substitutable. Industry rivalry: Intense competition . Threat of new entrants: The established companies have huge base of loyal customers which acts as an entry barrier for new entrants. Determinants of buyer’s power: Highly substitutable products and highly price sensitive market.
.Networking environment Citrix Presentation Server™ running on one HP ProLiant DL 360G4P server and one HCL Global Line server Citrix® GoToAssist® Microsoft® Windows Server® 2003 Connectivity through VSATs. leased circuits and Internet VPNs HCL/Zenith desktops and Toshiba laptops. VPNs.
37 ASM Areas Super Distributors Stockists Total.MARICO’s SUPPLY CHAIN Slow Moving SKUs/ low vol RDC 6 RDCs Raw Material Vendors Primary Sales Plants Depots Direct Distributors Secondary Sales Retailer 33 depots. > 1100 .
MARICO-SUPPLY CHAIN TRANSACTIONS .
planning.MARICO’S PROBLEMS More brands and more products incur costs: This entails more sales and markets to track. exposing many process inefficiencies. more SKUs to track. more pallets and truckloads to configure and route. more forecasts to make. The SKU/distribution point combinations run in millions. The resulting growth strained Marico’s highly regarded distribution network and exposed shortcomings in its forecasting. and supply chain processes. The distribution network became more costly and complex. more production to plan. .
.) Forecast accuracy was at 70%. Excess inventory The costs of errors in shipments to remote depots were mounting.MARICO’S PROBLEMS(Contd.. Distributors were suffering stock-outs and loss of sales on 30% of Marico SKUs.
Peak / Min Sales Ratio . No secondary sales data. 000 population.SUPPLY CHAIN Penetrate areas with less than 20.CHALLENGES.across months Skew of Sales with in a month Data Visibility Order placement process Distribution network complexity .
6 2.0 1.4 1.AN ILLUSTRATION 3.8 2.0 1 2 3 4 5 6 7 8 9 10 11 12 Month Peak / Minimum Sales ratio Variation across the year as high as 3:1 (Key Brand) .8 1.6 1.KEY ISSUE .0 2.2 1.2 2.4 2.PEAK / MIN SALES RATIO KEY BRAND .
DATA VISIBILITY EXCEL TRACS AOG CAFAS FAS-Ingress PINS MPS Lack of Visibility of stocks on a frequent basis even at depot Departmental System for Transactions.KEY ISSUE . No Integration .
INTERNAL OPERATIONS VISIBILITY 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 .
Distributor’s sales to Retailers MARICO operated with a PUSH METHOD Severe skewing of sales Synchronization between MARICO and distributors.MARKET PLACE VISIBILITY Reliability on PRIMARY DATA.suboptimal visibility Nest best option.different bucketed time horizons .
higher delivery costs .DISTRIBUTION VISIBILITY 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.hire temporary spaces and demurrage charges Stock-outs Maldistribution of goods.
THE VICIOUS CYCLE .
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. a Supply Chain Management (SCM) suite. .The Approach Fully integrated system consisting of Enterprise Resource Planning (ERP) business application SAP R/3.
SOLUTION IMPLEMENTED . BW MIDAS for Distributors Minet :.Stock visibility of depot and distributor real time .TO TACKLE VISIBILITY ERP Minet APO BIW ERP. APO.The face of all the above to users in the field Outcome .
MARICO’S EXTENDED SUPPLY CHAIN SYSTEM .
SAP SAP R/3 Integrated Systems- mySAP SCM & SAP APO Demand Forecasting and Planning. Quality Management. mySAP Business Intelligence Supply Chain performance management activities. Best. Supply Network Planning (SNP). Business Intelligence tools and Analytics.Practice Models. Cost Accounting. Sales & Distribution . Finance. Data Warehousing functionality. Materials Management. Administrative resources. Deployment and Cockpit modules Production Planning.
. quality management. materials management. SAP APO.) SAP R/3 integrated business systems. cost accounting. a system that provides data warehousing functionality. and administrative resources . deployment. best-practice models.SAP(Contd. and sales and distribution A key component of mySAP SCM. supply network planning (SNP). including its demand forecasting and planning. production planning. business intelligence tools and analytics. including finance. and supply chain cockpit modules mySAP Business Intelligence for supply chain performance management activities.
no promotions and minimize artificially induced demand surges 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 .SAP APO Not used for Sourcing and Manufacturing • few commodity raw materials • no manufacturing capacity constraints • no sales seasonality.
DEMAND PLANNING.SAP APO Actual pack-mix sales of previous three months Pack-mix allocation factors Detailed demand plan at the SKU level Production Capacity Vs Raw Material Availability and provide feedback (1st week) Minor modifications using Primary and Secondary data for every region now available Check Pack-Mix allocation to reflect the current market trends Release final demand plan to the supply chain group at the Head Office .
Responsive Production and Distribution Planning Process Depot and Plant Heuristics Production and Dispatch related decisions for the planning period of a month .SUPPLY NETWORK PLANNING SNP module in SAP APO Reliable.
PLANT SNP in SAP APO Run unconstrained Plant Heuristics using Indicative Demand Planning Data Firm Demand in Place Run Constrained Plant Heuristic in SNP Firm Production Plan prepared for Factories and Contract Manufacturing Plants Provide broad feasibility related feedback to the sales force .
tradeoff between Transportation Costs and Inventory Carrying costs Provide broad feasibility related feedback to the sales force .DEPOT SNP in SAP APO Using a Truck Builder Module-coordinate multiple SKU’s and depots Shipments are sent in full truck-loads Depot inventories simultaneously remain within the inventory norms Plans in blocks of 10 days.
DEPOT SNP in SAP APO Built prioritization rules Assign relative priority of depots and SKU’s in the TRUCK BUILDER MODULE Depot heuristics run thrice a month (primary sales data vary from forecast) .
OVERVIEW R3 MIDAS BIW MI-Net MIDAS APO SD MIDAS USERS .MARICO IT SYSTEM .
MARICO IT SYSTEMS Distribution Automation Software package.MIDAS (MARICO INDUSTRIES DISTRIBUTION AUTOMATION SOFTWARE) 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 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. finance and materials management The company has also installed the Advance Planner & Optimizer (APO).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. . which works right from demand forecasting to materials management and production planning. through MiNet. This backend is linked to the outside world comprising scores of business associates for Marico. Marico has installed the SAP R3 transaction handling modules for sales.
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.
VENDOR MANAGED INVENTORY (VMI) Places order EARLIER Distributor Replenishment based on order Marico Replenishment based on norms Distributor Marico NOW WITH VMI MIDAS Mi-net APO SAP Orders are automatically generated .
Field Sales Personnel Immediate access to MARICO’S depot stock level Order status and distributor performance Time saved for collecting data for sales reports Focus on sales.SALES BENEFITS OF VMI MI-NET AND SAP R/3. brand development and distributor relationships Bolster trust among sales personnel and win distributor trust Dumping has stopped .
Using mySAP SCM and SAP R/3 ERP modules will: Visibility and tools provide by SCM & ERP will: .
Thank You .
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