The document outlines Marico's supply chain challenges, including inefficiencies in forecasting and distribution, which have been exacerbated by the complexity of managing numerous brands and SKUs. In response, Marico implemented an integrated system using SAP solutions to enhance visibility and streamline processes, resulting in improved stock management and distribution performance. Key outcomes include better demand forecasting, real-time stock visibility, and automation of order generation, ultimately positioning Marico for future growth in the FMCG sector.

1. By:
Neha Sikarwar, Boby Sebestian, Rahul Bedi, Vipul Bajaj and Souvik Roy

2. OUTLINE
Introduction to Marico
Supply Chain and Nature of Challenges Faced
Initiative Implemented
Results and Sustenance
Future Ahead

3. 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 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
Reaching 13 Crore
 30 Depots, 1000 Distributor consumers
 25 lac Retail Outlets (Reach)

5. External Analysis of Marico
 Porter’s Five forces:
 Threat of substitute products: In FMCG sector the
products are highly substitutable.
 Threat of new entrants: The established companies have
huge base of loyal customers which acts as an entry
barrier for new entrants.
 Determinants of Supplier’s power: The industry is mostly
dependent on the local players for supplies of raw
materials.
 Determinants of buyer’s power: Highly substitutable
products and highly price sensitive market.
 Industry rivalry: Intense competition

6. 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, VPNs, leased circuits
and Internet VPNs
 HCL/Zenith desktops and Toshiba laptops.

8. MARICO’s SUPPLY CHAIN
Slow
Moving 6 RDCs
RDC
SKUs/
low vol
Primary Secondary
Raw Sales Sales
Direct
Material Plants Depots Retailer
Distributors
Vendors
33 depots,
37 ASM Areas
Super
Stockists
Distributors
Total,
> 1100

9. MARICO-SUPPLY CHAIN TRANSACTIONS

10. MARICO’S PROBLEMS
 More brands and more products incur costs: This entails more
sales and markets to track, more forecasts to make, more
production to plan, more SKUs to track, more pallets and
truckloads to configure and route.
 The SKU/distribution point combinations run in millions.
 The distribution network became more costly and
complex, exposing many process inefficiencies.
 The resulting growth strained Marico’s highly regarded
distribution network and exposed shortcomings in its
forecasting, planning, and supply chain processes.

11. MARICO’S PROBLEMS(Contd..)
 Forecast accuracy was at 70%.
 Distributors were suffering stock-outs and loss of sales on
30% of Marico SKUs.
 Excess inventory
 The costs of errors in shipments to remote depots were
mounting.

12. CHALLENGES- SUPPLY CHAIN
 Penetrate areas with less than 20, 000 population.
 No secondary sales data.
 Peak / Min Sales Ratio - across months
 Skew of Sales with in a month
 Data Visibility
 Order placement process
 Distribution network complexity

13. KEY ISSUE - PEAK / MIN SALES RATIO KEY BRAND - AN
ILLUSTRATION
3.0
2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
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)

14. KEY ISSUE - DATA VISIBILITY
EXCEL
TRACS PINS
AOG
CAFAS
MPS
FAS-Ingress
Lack of Visibility of stocks on a frequent basis even at depot
Departmental System for Transactions, No Integration

15. 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

16. MARKET PLACE VISIBILITY
Reliability on PRIMARY DATA- suboptimal visibility
Nest best option- Distributor’s sales to Retailers
MARICO operated with a PUSH METHOD
Severe skewing of sales
Synchronization between MARICO and distributors- different
bucketed time horizons

17. 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- higher delivery costs

18. THE VICIOUS CYCLE

19. The Approach
 Fully integrated system consisting of
 Enterprise Resource Planning (ERP) business application
 SAP R/3, a Supply Chain Management (SCM) suite.
 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.

20. SOLUTION IMPLEMENTED - TO TACKLE VISIBILITY
APO
ERP
Minet
BIW
ERP, APO, BW
MIDAS for Distributors
Minet :- The face of all the above to users in the field
Outcome - Stock visibility of depot and distributor real time

22. MARICO’S EXTENDED SUPPLY CHAIN SYSTEM

23. SAP SAP R/3
Integrated
Systems-
mySAP SCM &
SAP APO
mySAP
Business
Intelligence
Demand Supply Chain
performance
Finance, Forecasting management
and Planning, activities,
Supply
Data
Cost Network
Warehousing
Accounting, Planning functionality,
(SNP),
Deployment Business
Materials Intelligence
and Cockpit tools and
Management, modules Analytics,
Production Best- Practice
Planning, Models,
Quality Administrative
Management, resources.
Sales &
Distribution

24. SAP(Contd..)
 SAP R/3 integrated business systems, including
finance, cost accounting, materials
management, production planning, quality
management, and sales and distribution
 A key component of mySAP SCM, SAP APO, including its
demand forecasting and planning, supply network
planning (SNP), deployment, and supply chain cockpit
modules
 mySAP Business Intelligence for supply chain performance
management activities, a system that provides data
warehousing functionality, business intelligence tools and
analytics, best-practice models, and administrative
resources

25. SAP APO
• few commodity raw materials
• no manufacturing capacity constraints
Not used for • no sales seasonality- no promotions and minimize
Sourcing and
Manufacturing artificially induced demand surges
• Improve internal Collaborative forecasting
between manufacturing sites and warehouses.
Demand forecasting • Assigned and accountable ownership- distribution
and Supply Chain from warehouses to distributors met service levels
Planning

26. 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

27. SUPPLY NETWORK PLANNING
SNP module in SAP APO
Reliable, Responsive Production
and Distribution Planning Process
Depot and Plant Heuristics
Production and Dispatch related
decisions for the planning period
of a month

28. 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

29. 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- tradeoff between Transportation Costs and Inventory Carrying costs
Provide broad feasibility related feedback to the sales force

30. 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)

31. MARICO IT SYSTEM - OVERVIEW
R3 MIDAS
MI-Net MIDAS
BIW
SD
APO MIDAS
USERS

32. 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

33. MARICO IT SYSTEMS
• MI-NET directly linked to SAP R/3
 Stockin Transit
 Depot Stocks
 Pending Orders
 Statement of Accounts
 Promotion Schemes to distributors

34. 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

35. 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 has installed the SAP R3 transaction
handling modules for sales, finance and materials management
 The company has also installed the Advance Planner & Optimizer
(APO), a supply chain module, which works right from demand
forecasting to materials management and production planning.
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. This backend is linked to the outside world
comprising scores of business associates for Marico, through MiNet.

36. 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. He doesn’t have to be online all the time

37. VENDOR MANAGED INVENTORY (VMI)
Places order
Marico
EARLIER Distributor
Replenishment
based on order
Replenishment based on
norms
Distributor Marico
NOW
WITH
VMI
MIDAS Mi-net APO SAP
Orders are automatically generated

38. SALES BENEFITS OF VMI
 MI-NET AND SAP R/3, 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, brand development and distributor
relationships
 Bolster trust among sales personnel and win distributor
trust
 Dumping has stopped

39. Using mySAP SCM Visibility and tools
and SAP R/3 ERP provide by SCM &
modules will: ERP will:

40. Thank You