MARICO

GROUP NO. 5
MIHIR SIKKA DEEKSHA MALHOTRA MAKUSHLA SANTIMANO MOHAMMAD SAHLE ABHIJIT NAIK DENNY JOSEPH

COMPANY PROFILE:

Found in 1991, Public Limited Company

A leading Indian Group in Consumer Products and Services

Distribution width and penetration is acknowledged as one of the best in the industry. Distribution network covers almost every Indian town.

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

FINANCIALS

MARICOs SUPPLY CHAIN

Slow Moving SKUs/ low vol 6 RDCs

RDC

Raw Material Vendors

Primary Sales Plants Depots Direct Distributors

Secondary Sales Retailer

33 depots, 37 ASM Areas

Super Distributors

Stockists

Total, > 1100

SALES & DISTRIBUTION AT MARICO

Factory + Subcontractor

Depot

Distributor

Super Distributor

Stockist

Retailer

SUPPLY CHAIN

MARICOS 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

Problems in Supply Chain

MARICOS 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 Maricos highly regarded distribution network and exposed shortcomings in its forecasting, planning, and supply chain processes.

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
Maldistribution of goods- higher delivery costs

KEY ISSUE - PEAK / MIN SALES RATIO

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)

MARICO-SUPPLY CHAIN TRANSACTIONS

ORDER PLACEMENT PROCESS

How does Billing Happen? Sales Order Distributor Marico

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 Adopted for Supply Chain Challenges

Fully integrated system consisting of

Enterprise Resource Planning (ERP) business

Big Bet- Big Bang Approach in 2000-2001.

All resources and management commitment to redesign the process.

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.

Groundwork for major Implementation Deadlines- 9 months All started a few months apart. SAP R3- went live in April, 2001 SAP APO in May, 2001 developments
Technology supported partnerships with major distributors Vendor Managed Inventory (VMI) Online exchange of distributor sales and other information.

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

VMI-THE PHILOSOPHY

Improve distributors performance and increase ROI Reduce Supply ChainDistortions

Higher sales for MARICOS products

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 method

Lessons the BULL-WHIP method caused by many layers of intermediaries between MARICO and the customers VMI- reduces one layer of distortion between MARICO and its majority of major distributors

Using mySAP SCM and SAP R/3 ERP modules in the first 2 years

Visibility and tools provide by SCM & ERP yielded:

Reduced Sales Skew and balanced distribution levels

Decreased SKU stock outs by 50%

Reduced Excess Inventory at Distributors by 50%

Reduced Maricos 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

Peak / Minimum Trend : Before Vs After (KeyBrand) (Normalized Data)

3.0

2.5

2.0

Before After

1.5

1.0 1 2 3 4 5 6 7 8 9 10 11 12

Peak to Minimum ration down from 3 to 1.3 Average sales is same

BENEFITS improved metrics

CONT.

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

CONT

Data is centrally available to everyone within the organization.

Drop in distributor transaction processing cost.

Reduction in communication costs in inventory and order status follow ups.

Improved sales force productivity. Improvement in forecast accuracy.

Reduction in skewed sales.

Reduction in planning cycle time. Reduction in late deliveries.

MARICOS EXTENDED SUPPLY CHAIN SYSTEM

STOCKY MIDAS has helped Marico by providing them with the critical downstream

information it needs to compete in todays connected economy. The software has helped
Marico to streamline its supply chain and build closer relationships with its customers, thereby, making its supply chain more responsive, efficient and profitable.

THANK YOU!!!!!!!!