Impletation Of IT In Marico
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Transcript of Impletation Of IT In Marico
IT SYSTEMS OF MARICO
Ashish Bansal (ROLL NO.03)NMiMS University,Mumbai - India
STRUCTURE OF PRESENTATION
Introduction to Marico
Supply Chain and Nature of Challenges Faced
Initiative Implemented
Results and Sustenance
COPRA: A SPECIAL FOCUS
Other Challenges
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
• Turnover of 1550 Crores (2006-07)
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
FINANCIALS
MARICO’s SUPPLY CHAIN
RawMaterialVendors
DirectDistributors
Plants
RDC
Depots
SuperDistributors
Retailer
Stockists
33 depots,
37 ASM Areas
6 RDCs
Total,
> 1100
Slow Moving SKUs/ low vol
Secondary Sales
Primary Sales
Factory + Subcontractor
Distributor
Retailer
Depot
Super Distributor
Stockist
SALES & DISTRIBUTION AT MARICO
SUPPLY CHAIN
RETAIL FMCG MARKET IN INDIA
• Retail FMCG Market in India is estimated to be Rs. 460bn
• Challenges – local, unbranded players
• Fragmented nature of Retail trade
• Scattered mass population
• Multiple product choices
• Local Kirana - Still the ruler
– However increasing share of Modern Trade%
MARICO’S STRATEGY
• Understanding and anticipating consumer needs
• Developing product and packaging innovations to meet those needs
• Ensuring wide availability of its products on retail shelve
• Creating advertising campaigns to reinforce the value delivered
• Tracking metrics that support product positioning strategies
Nature of
Challenge faced
in
FMCG Supply Chain
MARICO’S PROBLEMS
• Aggressive strategy• 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.
MARICO’S PROBLEMS(CONT)
• 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.
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
KEY ISSUE - PEAK / MIN SALES RATIOKEY BRAND - AN ILLUSTRATION
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
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)
KEY ISSUE - DATA VISIBILITY
AOG
TRACS
FAS-Ingress
CAFAS
MPS
PINS
EXCEL
Lack of Visibility of stocks on a frequent basis even at depot
Departmental System for Transactions, No Integration
INTERNAL OPERATIONS VISIBILITY
MARICO-SUPPLY CHAIN TRANSACTIONS
MARKET PLACE VISIBILITY
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
DISTRIBUTION VISIBILITY
SOLUTION IMPLEMENTED - TO TACKLE VISIBILITY
MIDAS
Minet
APO
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
ORDER PLACEMENT PROCESS
Distributor Marico
Sales Order
How does Billing Happen?
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 AdoptedSolution Adopted
for for
Supply Chain Supply Chain ChallengesChallenges
• 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%
• Increased funding for advertising, brand innovations and expansion
• Greater sales productivity
• Improved win-win situation with the distributors
• Continued double-digit growth in earnings and revenues
Impact and BenefitsImpact and Benefits
Peak / Minimum Trend : Before Vs Peak / Minimum Trend : Before Vs After (Key Brand) (Normalized Data)After (Key Brand) (Normalized Data)
1.0
1.5
2.0
2.5
3.0
1 2 3 4 5 6 7 8 9 10 11 12
Before
After
Peak to Minimum ration down from 3 to 1.3Average sales is same
BLOCK SKEW- KEY BRAND IN % MONTH BLOCK SKEW- KEY BRAND IN % MONTH SALESSALES
0
10
20
30
40
50
60
70
Apr01-Sep01 Oct01-May02 Apr02-Sep02 Oct02-Mar03
1-10th
11th-20th
21st-31st
Block wise Skew trend changes from 10:28:62 to 24: 34 : 43
DEPOT PLUS DISTRIBUTOR AVERAGE DEPOT PLUS DISTRIBUTOR AVERAGE INVENTORY - KEY BRAND IN KLINVENTORY - KEY BRAND IN KL
0
500
1000
1500
2000
2500
3000
3500
4000
Apr01-Sep01 Oct01-May02 Apr02-Sep02 Oct02-Mar03
DepotDistrTotal
Total Inventory is system is reduced by 1000 KL
BENEFITS - IMPROVEMENT IN METRICS
Metric Before After RemarkDistributor stockouts 30 15 Avg. Distr Stk. Out in %Stockouts at Marico 15 5 Average Depot Stk. Out in %Inventory at Marico 29 22 Avg. Inventory in No: of days at MaricoForecast accuracy 76 84 Accuracy at Depot level Freshness Index 98.20% 99.68% % index
Skewness within month 10:28:62 24:34:42 Percentage sale per block of 10 daysService Levels 96% 99% Supply vs Plan %
VMI BENEFITS REALISED …Distributors Service Levels
74.5%
61.3%
75.2% 75.1%
72.5% 72.0%
76.5%
81.8% 81.6%80.6%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06
Month
%
ROLLOUT
MONTH
HOW IT WAS DONE?
STAGE 1: SUPPLY CHAIN MANAGEMENTo Strengthen the internal Supply Chain Foundation- Planning to Fulfillmento Tech Support- highly integrated application systems (ERP)
STAGE 2: DISTRIBUTOR PARTNERSHIPS AND VMIo Resolve forecasting problems, eliminate major inventory and stock out problemso Larger distributors- provide timely sales and inventory information to MARICOo Access MARICO’S systems for pending orders, stock-in-transit etc.o VMI- MARICO would replenish the stocks on the basis of distributor’s online input of stocks to the retailers.
VENDOR MANAGED INVENTORY (VMI)VENDOR MANAGED INVENTORY (VMI)
Places order
Distributor Marico
Replenishment based on order
EARLIER
NOW WITH VMI
Distributor Marico
Replenishment based on norms
MIDAS Mi-net APO SAPOrders are automatically generated
THE IMPLEMENTATION
SYSTEM ANALYSIS
• KPMG Consulting Cost-Benefit Analysis
• KPMG- Cautious role out of ERP system
• MARICO- Big Bang approach
SAP
SAP APO
SAP
PROJECT PLANNING
• Big-Bet Big-Bang policy Work on a few large initiatives at a time Support fully with all the resources and organizational support Roll-out to all offices, plants and depots within 9 months
• High- Powered steering committee headed by the CFO------VINOD KAMAT
• 18-member team formed across all relevant functions—sales, manufacturing, finance & logistics.
• 12 consultants from Siemens Information Systems Limited (SISL) – support for SAP R/3 and SAP APO
• MARICO- first APO project in India-4 consultants from SAP India
IMPLEMENTATION METHODOLOGY
• Accelerated SAP (ASAP)
• Comprehensive package for supporting the planning and implementation of SAP solutions
• SISL & SAP teams met every Saturday to discuss and resolve issues
• Every month, the project team reported progress to the Steering Council- establishes specific milestones
IMPLEMENTATION METHODOLOGY
PROJECT EXECUTION
CHRONOLOGY
MODULE IMPLEMENTATION STARTED
WENT LIVE ON
SAP R/3 June,2000 April,2001
SNP of SAP APO August,2000 May,2001
SAP APO could not be launched in April because it needed at least one month’s data to asses the impact.
STRATEGY-DRIVEN METRICS
mySAP Business Intelligence System configured to provide information on a real time basis, necessary views to users to perform analysis needed.
THE VIRTUOUS CYCLE
• First year achievements Reduced planning cycle time Improved forecasting accuracy Improved delivery reliability
• Second year aided by VMI Ahead of Return on Investment expectations from 3-4 years to 2 years Reduction in working capital Reduction of sales lost because of bottlenecks and inaccurate
forecasting Reduction in losses from poor control and lack of data visibility
OPERATIONAL IMPROVEMENTS
DEMAND PLANNING
DEMAND PLANNING- SAP APO
SUPPLY NETWORK PLANNING
PLANT SNP in SAP APO
DEPOT SNP in SAP APO
DEPOT SNP in SAP APO
VMI IMPLEMENTATION
• Short-term reduction in sales- improved forecasting and planning reduced stocks at its distributors
• Loss in one quarter sales to correct dysfunctions• Reactive to Proactive
Monitor and manage distributor inventory by replenishing on the basis of secondary sales
• Push to Pull methodLessons the BULL-WHIP method caused by many layers of
intermediaries between MARICO and the customersVMI- reduces one layer of distortion between MARICO and its
majority of major distributors
VMI-THE PHILOSOPHY
VMI – FOUR IMPACT SET
No Manual Intervention
•Norms are generated dynamically •No Manual Intervention •Any changes in final order is captured in VMI Score
FourImpact Area Set
Transparency
•How Norms are calculated is shared with all
•Access of blockwise norms given to all distributors as well as everyone in Sales Force
Order Time Closure
•Only VMI Exceptions Discussed•Reduction by at least three hours everyday on Order Closure Time
•15% reduction in Distributor Inventory Days•7% increase in service levels•Hence leading to higher ROIs
Financial Impact
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
SALES BENEFITS OF VMI
• MI-NET AND SAP R/3, Field Sales PersonnelImmediate access to MARICO’S depot stock levelOrder status and distributor performanceTime saved for collecting data for sales reportsFocus on sales, brand development and distributor
relationshipsBolster trust among sales personnel and win distributor
trustDumping has stopped
MARICO IT SYSTEM - OVERVIEW
R3
APO
BIW
MIDAS
MIDAS
SDMIDAS
USERS
MI-Net
SOURCING SPENDS AT MARICO
ENTERPRISE WIDE BUY-IN OF NEW PROCESSES AND SYSTEMS
NATURE OF CHALLENGE -COPRA
NATURE OF CHALLENGE -COPRA
NATURE OF CHALLENGE
NATURE OF CHALLENGE-COPRA
INITIATIVE IMPLEMENTED- COPRA
PHYSICAL BUYING PROCESS CHANGE (PHASE -1)
SUPPLIER I.T PENETRATION (PHASE-2)
E-BUYING : COPRA PORTAL e-marico.com (PHASE -3)
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)
E-BUYING: VENDOR FEEDBACK
BENEFITS: COPRA E-BUYING
Thank You