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Impletation Of IT In Marico

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I have shown, the importance of implementation of IT system in
industry w.r.t. to Supply Chain.

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Impletation Of IT In Marico

  1. 1. IT SYSTEMS OF MARICO Ashish Bansal (ROLL NO.03) NMiMS University,Mumbai - India
  2. 3. STRUCTURE OF PRESENTATION Introduction to Marico Supply Chain and Nature of Challenges Faced Initiative Implemented Results and Sustenance COPRA: A SPECIAL FOCUS Other Challenges
  3. 4. ABOUT MARICO <ul><li>Found in 1991, Public Limited Company </li></ul><ul><li>A leading Indian Group in Consumer Products and Services </li></ul><ul><li>Renowned Brands like Parachute, Saffola,Kaya Skin Clinics </li></ul><ul><li>CAGR of 13% in turnover, 15% in profits - over last 5 years </li></ul><ul><li>Turnover of 1550 Crores (2006-07) </li></ul><ul><li>12 Brands, Turnover Rs 1150 Crores </li></ul><ul><li>100 SKUs, 1500 Suppliers </li></ul><ul><li>7 Factories, 15 Contract Manufacturers </li></ul><ul><li>30 Depots, 1000 Distributor </li></ul><ul><li>20 lac Retail Outlets (Reach) </li></ul>Reaching 13 Crore consumers
  4. 6. FINANCIALS
  5. 7. MARICO’s SUPPLY CHAIN Raw Material Vendors Direct Distributors Plants RDC Depots Super Distributors Retailer Stockists 33 depots, 37 ASM Areas 6 RDCs Total, > 1100 Slow Moving SKUs/ low vol Secondary Sales Primary Sales
  6. 8. SALES & DISTRIBUTION AT MARICO Factory + Subcontractor Distributor Retailer Depot Super Distributor Stockist
  7. 9. SUPPLY CHAIN
  8. 10. RETAIL FMCG MARKET IN INDIA <ul><li>Retail FMCG Market in India is estimated to be Rs. 460bn </li></ul><ul><li>Challenges – local, unbranded players </li></ul><ul><li>Fragmented nature of Retail trade </li></ul><ul><li>Scattered mass population </li></ul><ul><li>Multiple product choices </li></ul><ul><li>Local Kirana - Still the ruler </li></ul><ul><ul><li>However increasing share of Modern Trade% </li></ul></ul>
  9. 11. MARICO’S STRATEGY <ul><li>Understanding and anticipating consumer needs </li></ul><ul><li>Developing product and packaging innovations to meet those needs </li></ul><ul><li>Ensuring wide availability of its products on retail shelve </li></ul><ul><li>Creating advertising campaigns to reinforce the value </li></ul><ul><li>delivered </li></ul><ul><li>Tracking metrics that support product positioning strategies </li></ul>
  10. 12. Nature of Challenge faced in FMCG Supply Chain
  11. 13. MARICO’S PROBLEMS <ul><li>Aggressive strategy </li></ul><ul><li>More brands and more products incur costs: This entails more sales and markets to track, </li></ul><ul><li>More forecasts to make, </li></ul><ul><li>More production to plan, </li></ul><ul><li>More SKUs to track, </li></ul><ul><li>More pallets and truckloads to configure and route. The SKU/distribution point combinations run in millions. </li></ul><ul><li>The distribution network became more costly and complex, exposing many process inefficiencies. </li></ul><ul><li>The resulting growth strained Marico’s highly regarded distribution network and exposed shortcomings in its forecasting, planning, and supply chain processes. </li></ul>
  12. 14. MARICO’S PROBLEMS(CONT ) <ul><li>Forecast accuracy was at 70%. </li></ul><ul><li>Distributors were suffering stock-outs and loss of sales on 30% of Marico SKUs. </li></ul><ul><li>Excess inventory </li></ul><ul><li>The costs of errors in shipments to remote depots were mounting. </li></ul>
  13. 15. CHALLENGES- SUPPLY CHAIN <ul><li>Penetrate areas with less than 20, 000 population. </li></ul><ul><li>No secondary sales data. </li></ul><ul><li>Peak / Min Sales Ratio - across months </li></ul><ul><li>Skew of Sales with in a month </li></ul><ul><li>Data Visibility </li></ul><ul><li>Order placement process </li></ul><ul><li>Distribution network complexity </li></ul>
  14. 16. KEY ISSUE - PEAK / MIN SALES RATIO KEY BRAND - AN ILLUSTRATION Peak / Minimum Sales ratio Variation across the year as high as 3:1 (Key Brand)
  15. 17. KEY ISSUE - DATA VISIBILITY Lack of Visibility of stocks on a frequent basis even at depot Departmental System for Transactions, No Integration AOG TRACS FAS-Ingress CAFAS MPS PINS EXCEL
  16. 18. INTERNAL OPERATIONS VISIBILITY
  17. 19. <ul><li>MARICO-SUPPLY CHAIN TRANSACTIONS </li></ul>
  18. 20. MARKET PLACE VISIBILITY
  19. 21. KEY ISSUE - SKEW IN SALES WITHIN MONTH Sales Skew as 10 : 28 : 62 within the month Maximum Sales towards end of month 0 10 20 30 40 50 60 70 1st-10th 11th-20th 21st-31st
  20. 22. DISTRIBUTION VISIBILITY
  21. 23. SOLUTION IMPLEMENTED - TO TACKLE VISIBILITY Minet BIW ERP ERP, APO, BW - April 2001 MIDAS for Distributors - Nov 2001 Minet :- The face of all the above to users in the field (April 2002) Outcome - Stock visibility of depot and distributor real time MIDAS APO
  22. 24. ORDER PLACEMENT PROCESS <ul><li>Non Clarity/Non Uniform Norms </li></ul><ul><li>Very High Order Closure Time at Depot </li></ul><ul><li>No Scientific way of Defining Norms </li></ul><ul><li>Too much of manual interventions </li></ul><ul><li>Strong need to make it system generated and not person dependent </li></ul>Distributor Marico Sales Order How does Billing Happen?
  23. 25. THE VICIOUS CYCLE
  24. 26. Solution Adopted for Supply Chain Challenges
  25. 30. <ul><li>Reduced Sales Skew and balanced distribution levels </li></ul><ul><li>Decreased SKU stock outs by 50% </li></ul><ul><li>Reduced Excess Inventory at Distributors by 50% </li></ul><ul><li>Reduced Marico’s Average Total Inventory by 25% </li></ul><ul><li>Reduced Supply Chain exception-handling costs by more than 60% </li></ul>
  26. 31. <ul><li>Increased funding for advertising, brand innovations and expansion </li></ul><ul><li>Greater sales productivity </li></ul><ul><li>Improved win-win situation with the distributors </li></ul><ul><li>Continued double-digit growth in earnings and revenues </li></ul>
  27. 32. Impact and Benefits
  28. 33. Peak / Minimum Trend : Before Vs After (Key Brand) (Normalized Data) Peak to Minimum ration down from 3 to 1.3 Average sales is same
  29. 34. BLOCK SKEW- KEY BRAND IN % MONTH SALES Block wise Skew trend changes from 10:28:62 to 24: 34 : 43
  30. 35. DEPOT PLUS DISTRIBUTOR AVERAGE INVENTORY - KEY BRAND IN KL Total Inventory is system is reduced by 1000 KL
  31. 36. BENEFITS - IMPROVEMENT IN METRICS
  32. 37. VMI BENEFITS REALISED …
  33. 38. HOW IT WAS DONE? <ul><li>STAGE 1: SUPPLY CHAIN MANAGEMENT </li></ul><ul><ul><li>Strengthen the internal Supply Chain Foundation- Planning to Fulfillment </li></ul></ul><ul><ul><li>Tech Support- highly integrated application systems (ERP) </li></ul></ul><ul><ul><li>STAGE 2: DISTRIBUTOR PARTNERSHIPS AND VMI </li></ul></ul><ul><ul><li>Resolve forecasting problems, eliminate major inventory and stock out problems </li></ul></ul><ul><ul><li>Larger distributors- provide timely sales and inventory information to MARICO </li></ul></ul><ul><ul><li>Access MARICO’S systems for pending orders, stock-in-transit etc. </li></ul></ul><ul><ul><li>VMI- MARICO would replenish the stocks on the basis of distributor’s online input of stocks to the retailers. </li></ul></ul>
  34. 39. <ul><li>VENDOR MANAGED INVENTORY (VMI) </li></ul>EARLIER NOW WITH VMI Places order Distributor Marico Replenishment based on order Distributor Marico Replenishment based on norms MIDAS Mi-net APO SAP Orders are automatically generated
  35. 40. THE IMPLEMENTATION
  36. 41. SYSTEM ANALYSIS <ul><li>KPMG Consulting Cost-Benefit Analysis </li></ul><ul><li>KPMG- Cautious role out of ERP system </li></ul><ul><li>MARICO- Big Bang approach </li></ul>
  37. 42. SAP
  38. 43. SAP APO
  39. 44. SAP
  40. 45. PROJECT PLANNING <ul><li>Big-Bet Big-Bang policy </li></ul><ul><ul><li>Work on a few large initiatives at a time </li></ul></ul><ul><ul><li>Support fully with all the resources and organizational support </li></ul></ul><ul><ul><li>Roll-out to all offices, plants and depots within 9 months </li></ul></ul><ul><li>High- Powered steering committee headed by the CFO------VINOD KAMAT </li></ul><ul><li>18-member team formed across all relevant functions—sales, manufacturing, finance & logistics. </li></ul><ul><li>12 consultants from Siemens Information Systems Limited (SISL) – support for SAP R/3 and SAP APO </li></ul><ul><li>MARICO- first APO project in India-4 consultants from SAP India </li></ul>
  41. 46. IMPLEMENTATION METHODOLOGY <ul><li>Accelerated SAP (ASAP) </li></ul><ul><li>Comprehensive package for supporting the planning and implementation of SAP solutions </li></ul><ul><li>SISL & SAP teams met every Saturday to discuss and resolve issues </li></ul><ul><li>Every month, the project team reported progress to the Steering Council- establishes specific milestones </li></ul>
  42. 47. IMPLEMENTATION METHODOLOGY
  43. 48. PROJECT EXECUTION
  44. 49. CHRONOLOGY SAP APO could not be launched in April because it needed at least one month’s data to asses the impact. MODULE IMPLEMENTATION STARTED WENT LIVE ON SAP R/3 June,2000 April,2001 SNP of SAP APO August,2000 May,2001
  45. 50. STRATEGY-DRIVEN METRICS mySAP Business Intelligence System configured to provide information on a real time basis, necessary views to users to perform analysis needed.
  46. 51. THE VIRTUOUS CYCLE <ul><li>First year achievements </li></ul><ul><ul><li>Reduced planning cycle time </li></ul></ul><ul><ul><li>Improved forecasting accuracy </li></ul></ul><ul><ul><li>Improved delivery reliability </li></ul></ul><ul><li>Second year aided by VMI </li></ul><ul><ul><li>Ahead of Return on Investment expectations from 3-4 years to 2 years </li></ul></ul><ul><ul><li>Reduction in working capital </li></ul></ul><ul><ul><li>Reduction of sales lost because of bottlenecks and inaccurate forecasting </li></ul></ul><ul><ul><li>Reduction in losses from poor control and lack of data visibility </li></ul></ul>
  47. 52. OPERATIONAL IMPROVEMENTS
  48. 53. DEMAND PLANNING
  49. 54. DEMAND PLANNING- SAP APO
  50. 55. SUPPLY NETWORK PLANNING
  51. 56. PLANT SNP in SAP APO
  52. 57. DEPOT SNP in SAP APO
  53. 58. DEPOT SNP in SAP APO
  54. 59. VMI IMPLEMENTATION <ul><li>Short-term reduction in sales- improved forecasting and planning reduced stocks at its distributors </li></ul><ul><li>Loss in one quarter sales to correct dysfunctions </li></ul><ul><li>Reactive to Proactive </li></ul><ul><ul><ul><li>Monitor and manage distributor inventory by replenishing on the basis of secondary sales </li></ul></ul></ul><ul><li>Push to Pull method </li></ul><ul><ul><li>Lessons the BULL-WHIP method caused by many layers of intermediaries between MARICO and the customers </li></ul></ul><ul><ul><li>VMI- reduces one layer of distortion between MARICO and its majority of major distributors </li></ul></ul>
  55. 60. VMI-THE PHILOSOPHY
  56. 61. VMI – FOUR IMPACT SET No Manual Intervention <ul><li>Norms are generated dynamically </li></ul><ul><li>No Manual Intervention </li></ul><ul><li>Any changes in final order is captured in VMI Score </li></ul>Four Impact Area Set Transparency <ul><li>How Norms are calculated is shared with all </li></ul><ul><li>Access of blockwise norms given to all distributors as well as everyone in Sales Force </li></ul>Order Time Closure <ul><li>Only VMI Exceptions Discussed </li></ul><ul><li>Reduction by at least three hours everyday on Order Closure Time </li></ul><ul><li>15% reduction in Distributor Inventory Days </li></ul><ul><li>7% increase in service levels </li></ul><ul><li>Hence leading to higher ROIs </li></ul>Financial Impact
  57. 62. MARICO IT SYSTEMS <ul><li>Distribution Automation Software package- MIDAS ( MARICO INDUSTRIES DISTRIBUTION AUTOMATION SOFTWARE) </li></ul><ul><ul><li>Received distributor stock and sales data in offline mode through floppy transfers </li></ul></ul><ul><ul><li>But for VMI- real time data needed </li></ul></ul><ul><ul><li>Internet based system MI-NET in which distributors could log in and supply data online </li></ul></ul><ul><ul><li>Application which could automatically transfer data from distributor’s PC to MARICO’s central servers </li></ul></ul>
  58. 63. MARICO IT SYSTEMS <ul><ul><li>MI-NET directly linked to SAP R/3 </li></ul></ul><ul><ul><ul><li>Stock in Transit </li></ul></ul></ul><ul><ul><ul><li>Depot Stocks </li></ul></ul></ul><ul><ul><ul><li>Pending Orders </li></ul></ul></ul><ul><ul><ul><li>Statement of Accounts </li></ul></ul></ul><ul><ul><ul><li>Promotion Schemes to distributors </li></ul></ul></ul>
  59. 64. MARICO IT SYSTEMS <ul><ul><li>Potential Primary developed using mySAP Business Intelligence </li></ul></ul><ul><ul><li>Average sale of the previous three months </li></ul></ul><ul><ul><li>Develops and reports brands and regional sales potential that should be targeted by the sales group </li></ul></ul><ul><ul><li>Cumulative actual sales to date—mySAP provides daily updates through Primary Potential </li></ul></ul><ul><ul><li>Proactive work rather than Postmortem analysis </li></ul></ul>
  60. 65. MARICO’S EXTENDED SUPPLY CHAIN SYSTEM
  61. 66. SALES BENEFITS OF VMI <ul><li>MI-NET AND SAP R/3, Field Sales Personnel </li></ul><ul><ul><li>Immediate access to MARICO’S depot stock level </li></ul></ul><ul><ul><li>Order status and distributor performance </li></ul></ul><ul><ul><li>Time saved for collecting data for sales reports </li></ul></ul><ul><ul><li>Focus on sales, brand development and distributor relationships </li></ul></ul><ul><ul><li>Bolster trust among sales personnel and win distributor trust </li></ul></ul><ul><ul><li>Dumping has stopped </li></ul></ul>
  62. 67. MARICO IT SYSTEM - OVERVIEW R3 APO BIW MIDAS MIDAS SD MIDAS USERS MI-Net
  63. 68. SOURCING SPENDS AT MARICO
  64. 69. <ul><li>ENTERPRISE WIDE BUY-IN OF NEW PROCESSES AND SYSTEMS </li></ul>
  65. 70. NATURE OF CHALLENGE -COPRA
  66. 71. NATURE OF CHALLENGE -COPRA
  67. 72. NATURE OF CHALLENGE
  68. 73. NATURE OF CHALLENGE-COPRA
  69. 74. INITIATIVE IMPLEMENTED- COPRA
  70. 75. PHYSICAL BUYING PROCESS CHANGE (PHASE -1)
  71. 76. SUPPLIER I.T PENETRATION (PHASE-2)
  72. 77. E-BUYING : COPRA PORTAL e-marico.com (PHASE -3)
  73. 78. COPRA PORTAL: e-marico.com SNAP SHOT SUPPLIER VIEW
  74. 79. COPRA PORTAL: e-marico.com SNAP SHOT BUYER VIEW
  75. 80. E-BUYING COPRA PORTAL “e-marico.com” (PHASE -3)
  76. 81. E-BUYING: VENDOR FEEDBACK
  77. 82. BENEFITS: COPRA E-BUYING
  78. 83. Thank You

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