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PRESENTED BY
VINOD KAMATH Chief- SUPPLYCHAIN & IT
Marico Limited
Access through Technology
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 640 Crores
Material and Service Spends 640 CroresDirect Material 540 Crores
Services 60 CroresIndirect Material 40 Crores
Direct Material Spends 540 CroresCopra 300 Crores
Edible Oils 130 CroresOthers 110 Crores
Copra buying is approx. 50% of Marico purchase portfolio
Nature of
Challenge faced
Nature of Challenge - Copra
Ambajipeta
Buying Locations
Tanjore
Pollachi
Dindigul
Kasargod
Kannur
Mysore
Calicut
Malappuram
Thrissur
Tiptur
Kangeyam
Mangalore
Goa
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 Coconut’s 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)Ph
ysic
al B
uyin
g Pr
oces
s Ch
ange
(Pha
se -1
)Supplier I.T. Penetration
(Phase -2)Maturity
Physical Buying Process Change (Phase -1)
ChangeBuying in sessions ( 3 x 1 hr ) Sell-Offers by vendors over phone – Qty & PriceMarico 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 overcomeAltered Process Slightly basis Dialogue with SuppliersSuppliers eventually convinced of Marico Commitment to New Process
ResultBuying Process Changed on its Head, Advantage Marico
ResultSuppliers IT learning curve improved
ProcessOpening email ids for each vendors ( Rediff )Training on e-mail usage at vendors endTie-up between vendors and cyber cafes
E-mailsGoods Receipt InformationAdvance Payment information, PO numbersDebit Notes, Credit Note Shipping notification for ALL dispatches
E-PaymentTie up with new age banks for e-transfers1 day payment against cash discount
Supplier I.T. Penetration(Phase -2)
Copra e- Portal “e-marico.com” launched in 2005Portal designed in Tamil and MalayalamRigorous onsite education and trainingBidding in Portal, along with E-mail Information
E-buying: Copra Portal “e-marico.com”(Phase -3)
Result
Absolutely paper less transactions from Bid to Payment
100 % vendors on Portal
(Own Computers 45%, cyber café 55%)
Copra Portal “e-marico.com” Snap ShotSupplier View
Copra Portal “e-marico.com” Snap ShotBuyer View
Hurdles FacedSmall vendors / Vendors on moveCartel formation
Cyber café operator shares quotes/resultsCollusion of suppliers at cafes
E-buying: Copra Portal “e-marico.com”(Phase -3)
Solution - Offer through SMSQuotes through SMS (7575)
Result of offer communicated thro’ SMS
Elimination of Cyber Cafes for offers, De-cartelisation
• To do business with Marico, I don’t 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
E-buying: Vendor Feedback
Benefits - Copra E-buying
Vendor Base increase, Reduce Broker usage
Early Payment discount savings
Commercial advantage of e-bidding- Buying efficiency improvement
Description Pre Post
Vendor Base 95 155
% Buying through Brokers 50% 30%
Number of Brokers Used 8 3
Early Payment Discount savings 6 Lacs pa 30 Lacs pa
Buying Efficiency Rs 1072 per mt Rs 1475 per mt
Managerial Time in Buying Transaction 6 Hours Less than 30 Min
Pre - 2002-03; Post 2005-06Buying Efficiency - Market Benchmark Price - Actual Buying Price
Copra Collection Centers
• 15 Collection Centers Across Kerala
• To Expand into Tamil Nadu
• Buying Directly from Farmers
Thank You