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