Access through Technology

PRESENTED BY VINOD KAMATH Chief- SUPPLYCHAIN & IT

Marico Limited

About Marico
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 13% in turnover, 15% in profits - over last 5 years

12 Brands, Turnover Rs 1150 Crores 100 SKUs, 1500 Suppliers 7 Factories, 15 Contract Manufacturers 30 Depots, 1000 Distributor 20 lac Retail Outlets (Reach) Reaching 13 Crore consumers

Sourcing Spends at Marico

Material and Service Spends Material and Service Spends Direct Material Services Indirect Material Direct Material Spends Copra Edible Oils Others 640 640 540 60 40 540 300 130 110 Crores Crores Crores Crores Crores Crores Crores Crores Crores

Copra buying is approx. 50% of Marico purchase portfolio

Nature of Challenge faced

Nature of Challenge - Copra

Ambajipeta Goa

Mangalore Kasargod Kannur

Tiptur Mysore

Buying Locations

Kangeyam Calicut Malappuram Thrissur Pollachi Dindigul

Tanjore Vedaranyam

Large Geographical Spread

Nature of Challenge - Copra

Coconut Oil franchise - 50% of Marico Turnover Unorganized market, suppliers not IT savvy and Illiterate 20 Lakh Coconuts equivalent Copra purchased everyday 2 Coconuts purchased from every coconut tree Largest Buyer in India - 25% of terminal market

Nature of Challenge
Institutionalize e-buying in Copra purchase Expand Sourcing Base

Nature of Challenge - Copra

Traditional Process
Bought over phone through long drawn negotiations

Limitations of Process
Most of Buyer time spent on unproductive work Span of coverage of suppliers limited, Broker usage high Price Discovery and Buying Efficiency not Good

Objectives for e-buying

Expand Base, Avoid Brokers Price Discovery IT penetration

Initiative Implemented

Initiative Implemented - Copra Buying

3 Phased Approach - 2003 to 2005

E- buying (Phase -3)

Maturity

uy ing Pr (P oc ha es se sC -1) ha ng e

p Su n t io tra ene T. P r I. -2) plie ase (Ph

Ph ys ic a lB

Physical Buying Process Change (Phase -1)

Change
Buying in sessions ( 3 x 1 hr ) Sell-Offers by vendors over phone Qty & Price Marico would only Accept or Reject Quote, No Negotiation !!!!

Hurdles
Vendor quoting price - First time in commodity market! Huge resistance from trade: 1 month no-supply strike by North Kerala

How did we overcome

Altered Process Slightly basis Dialogue with Suppliers Suppliers eventually convinced of Marico Commitment to New Process

Result
Buying Process Changed on its Head, Advantage Marico

Supplier I.T. Penetration (Phase -2)

Process
Opening email ids for each vendors ( Rediff ) Training on e-mail usage at vendors end Tie-up between vendors and cyber cafes

E-mails
Goods Receipt Information Advance Payment information, PO numbers Debit Notes, Credit Note Shipping notification for ALL dispatches

E-Payment
Tie up with new age banks for e-transfers 1 day payment against cash discount

Result
Suppliers IT learning curve improved

E-buying: Copra Portal e-marico.com (Phase -3)

Copra e- Portal e-marico.com launched in 2005
Portal designed in Tamil and Malayalam Rigorous onsite education and training Bidding in Portal, along with E-mail Information

Result
Absolutely paper less transactions from Bid to Payment 100 % vendors on Portal
(Own Computers 45%, cyber caf 55%)

Copra Portal e-marico.com Snap Shot Supplier View

Copra Portal e-marico.com Snap Shot Buyer View

E-buying: Copra Portal e-marico.com (Phase -3) Hurdles Faced

Small vendors / Vendors on move Cartel formation
Cyber caf operator shares quotes/results Collusion of suppliers at cafes

Solution - Offer through SMS

Quotes through SMS (7575) Result of offer communicated thro SMS Elimination of Cyber Cafes for offers, De-cartelisation

E-buying: Vendor Feedback

To do business with Marico, I dont need to depend on brokers I am now able to monitor truck connection at Marico A big relief I am able to manage my cash flow efficiently I can reconcile my account load to load ON THE SAME DAY

You have changed the way copra business is done

Benefits - Copra E-buying

Vendor Base increase, Reduce Broker usage Early Payment discount savings Commercial advantage of e-bidding- Buying efficiency improvement
Description Vendor Base % Buying through Brokers Number of Brokers Used Early Payment Discount savings Buying Efficiency Managerial Time in Buying Transaction Pre 95 50% 8 6 Lacs pa Post 155 30% 3 30 Lacs pa

Rs 1072 per mt Rs 1475 per mt 6 Hours Less than 30 Min

Pre - 2002-03; Post 2005-06 Buying Efficiency - Mark et Benchmark Price - Actual Buying Price

Copra Collection Centers

15 Collection Centers Across Kerala To Expand into Tamil Nadu Buying Directly from Farmers

Thank You