MIS Live Project Report on Marico

Submitted by: Group 2 Neha Sikarwar Roll no. 12 Souvik Roy Roll no. 14 Boby Sebestian Roll no. 16 Rahul Bedi Roll no. 18 Vipul Bajaj Roll no. 20 1

Contents
Contents ........................................................................................................................................................ 2 Abstract ......................................................................................................................................................... 3 Chapter- 1 ..................................................................................................................................................... 4 About the Company: ................................................................................................................................. 5 SWOT analysis: .......................................................................................................................................... 7 Porters five forces analysis: ..................................................................................................................... 7 IT infrastructure of Marico:....................................................................................................................... 7 Chapter -2 ..................................................................................................................................................... 9 Maricos Supply Chain............................................................................................................................. 10 Maricos Supply Chain Transactions: ...................................................................................................... 11 Information Requirement of Managers at Marico ................................................................................. 12 Chapter -3 ................................................................................................................................................... 13 Value Chain Model .................................................................................................................................. 14 Primary Activities of MARICO ............................................................................................................. 14 Support Activities of MARICO ............................................................................................................. 15 Chapter -4 ................................................................................................................................................... 17 Problems Faced ....................................................................................................................................... 18 Solution Implemented for improving visibility ....................................................................................... 20 Marico Supply Chain Management Architecture ................................................................................... 21 SAP .......................................................................................................................................................... 22 Demand Planning using SAP APO: ...................................................................................................... 24 Plant SNP in SAP APO: ......................................................................................................................... 24 Depot SNP in SAP APO: ....................................................................................................................... 24 Vendor Managed Inventory (VMI): ......................................................................................................... 25 Marico IT system ..................................................................................................................................... 25 MiNet .................................................................................................................................................. 25 MIDAS ................................................................................................................................................. 26 Marico Portal: Suppliers view snapshot: ........................................................................................... 27 Marico Portal: Buyers view snapshot: ............................................................................................... 28 References .................................................................................................................................................. 29

Abstract
The purpose of the project was to visit an organization and study the Information Technology Infrastructure of the same. We had to study the information requirements of the managers at strategic planning, management control and operational control levels of any one of the Departments of the business organization and write the requirements as well as information systems used by the managers. We had to design Strategic MIS framework for the Department keeping in view Porters Competitive Forces and Value Chain Models. We had to identify the challenges faced while implementation of information systems in the organization including ERP and as a Chief Information Officer / Manager how we solved the problems faced during the implementation of information systems.

Chapter- 1

Introduction

About the Company:

Marico is one of India's leading Consumer Products & Services companies in the global beauty and wellness space. From its foundations, Marico has worked outside the box, to bring innovation to its customers through the careful creation of continuous and sustainable change. Today, 1 out of 4 Indians uses a Marico product. From cooking oil with 'LoSorb Technology', to rice that keeps you active, personalized skinscription services and hair oil that comes with a battery-powered head massage. Marico is present in more than 25 countries across Asia and the African continent. The company recorded a turnover of Rs. 31.3 billion (~USD 695 Million) in 2010-11. Their vast portfolio of enduring brands such as Parachute Advanced, Saffola, Hair & Care, Nihar, Mediker, Revive and Manjal are leading household names today. Marico's international portfolio includes brands like Fiance, Haircode, Camelia, Aromatic, Caivil, Hercules, BlackChic, Code 10 and Ingwe. They are also present in the Skin Care Solutions segment through Kaya Skin Clinics in India, Middle East and Bangladesh and Derma Rx in Singapore. Our consumers transcend countries and customs. Their extensive distribution network in India has a direct reach of 750,000 outlets and a total reach of 3.3 million outlets. Parachute (brand): Parachute is the flagship brand of Marico and consists of a line of edible coconut-oil based hair products. Before the 1991 economic liberalization in India the government classified vegetable oils as an essential commodity and as being in short supply, and thus ineligible for export. This meant that Parachute products could not be exported to foreign markets.[1] In the late 1990s Marico made its first serious entry into foreign markets by setting up a manufacturing plant in Bangladesh. Parachute's market share rose to 70% within ten years and it had become one of the most recognized and trusted brands in that country. Kaya Skin Clinic: Marico has always been an innovation-centric company. Hence when in 2002, a New York-based company asked the CMD Harsh Mariwala if he would be interested in selling laser hair removal machines, he saw a business idea around the concept. After conducting extensive research, Marico identified an unmet need for non-invasive Cosmetic Dermatology services in India. The Marico team travelled to the US and UK scouting for international trends and best practices and came across a host of standalone shops offering advisory services as well as solutions. This prompted the company to set up Kaya Skin Clinic, a range of skincare clinics. The company decided to bring in a scientific approach by roping in dermatologists who first tested the skin and then recommended a service. Hence, they started a prototype clinic in the Marico Head Office in Mumbai. Subsequently in December 2002, Marico launched the first Kaya Skin Clinic in Bandra, Mumbai. Over the past 9 years we have increased our reach to 81 clinics across the country, in the metro as well tier 2 cities. We also have 17 clinics in the Middle East and 2 clinics in Bangladesh in Dhaka. In May 2010, Kaya acquired the aesthetics business of the Singapore based Derma Rx Asia Pacific Pte. Ltd. (Derma Rx). The journey till now has been interesting and path breaking and Kaya now has over 600,000 customers International Brands: Marico's International Business Group reaches out to more than 25 countries across the Asian, African and North American continents. Marico brands are present in various categories: Edible Oils and Foods, Hair Nourishment, Male Grooming and Ethnic Care. 5

Marico has a range of brand offerings across these categories which provide value and consumer benefit across segments. The company in recent years has been known for its foreign acquisitions in countries such as South Africa, Egypt and Singapore. Marico's International Business Group (IBG) saw a 5 years topline CAGR of over 44% in the year ending 2011, with an organic CAGR of above 36% during the same period. Today, IBG has an annual turnover of over USD 160 million. (2010-11). Other brands: Maricos brands and their extensions occupy leadership positions with significant market shares in a number of health and beauty areas. Saffola is essentially blended refined edible oil which is claimed to be beneficial for Heart health. It is marketed under the names of New Saffola, Tasty and Active. All of them contain blended vegetable oils in various proportions. The main types of oils which are blended include Rice Bran oil, Kardi oil or Safflower oil, Corn oil and Soya oil. Management: They have a flat organizational structure, with just five levels between the Managing Director and the shop floor operator. In addition to being a producer of consumer products the organization also operates Harsh Mariwala is the Chairman and MD of this organization. The company has 3 divisions the Consumer Products Group (CPB), The International Business Group and Kaya Skin Clinic. CPB is headed by Saugata Gupta. Kaya Skin Clinic is headed by Ajay Pahwa.

SWOT analysis:
Strengths: Understanding of Indian Consumer behavior in the hair oil segment Rural market reach. Large distribution network all over India Weakness: Not strong within the shampoo segment having hardly any share. Not having any antidandruff hair oil whose market potential is worth 25% of the total oil market in India Opportunities: Need to concentrate within the various other market potential zones like hair shampoo, hair colorants etc. Threats: Competition from the diverse players present in the market can cause loss of market share.

Porters five forces analysis:

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 Suppliers power: The industry is mostly dependent on the local players for supplies of raw materials. Determinants of buyers power: Products are highly substitutable and the market is highly price sensitive. Industry rivalry: Intense competition

IT infrastructure of Marico:
Information Technology (IT) is becoming increasingly relevant for the Fast Moving Consumer Goods (FMCG) industry of which Marico is a constituent. Widespread supply chain network of manufacturing locations on one hand and dealers and retailers on the other makes timely availability of real time information very crucial for planning & decision making. Marico was the first in India to go live on SAP R/3 suite of products comprising SAP R/3, APO and BIW that too within a record 9-month implementation period. With a proactive realization of how IT can add value to business, Marico has been continuously upgrading its IT infrastructure. From distributed and unconnected IT systems, Marico has migrated to a 7

centralized and integrated IT architecture, riding a successful change management process. IT infrastructure: Marico's IT infrastructure comprises: SAP suite of R/3, Business Warehouse and APO - a Supply Chain solution Mi-Net, an internet enabled B2B platform for the sales force MIDAS, a transaction processing software for Marico's distributors. A state of the art connectivity network comprising VSATs, VPNs, Leased Circuits and Internet VPNs connecting all the factories, regional offices, depots and some subcontractors of Marico to the centralized data center in Mumbai Citrix solutions that help Marico in reduce traffic on the network Storage technologies like SAN and NAS that help Marico reduce the storage costs Firewall and other such Security products to ensure sufficient security for the information systems In addition, HCL Comnet manages Marico's network and security infrastructure, integrates their systems, link procurement and management, and manages trouble shooting and vendor management in order to drive efficiency and productivity in its IT Infrastructure.

Chapter -2

Department in focus Operations In depth analysis of Maricos SCM

Maricos Supply Chain

10

Maricos Supply Chain Transactions:

11

Information Requirement of Managers at Marico

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.

12

Chapter -3

MIS Framework based on Porters Value Chain Model

13

Value Chain Model

The value chain categorizes the activities of an organization. The "primary activities" include: inbound logistics operations (production), , marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and the costs and are identified for each value activity.

Primary Activities of MARICO

Inbound logistics

14

These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. MARICO purchase their raw material from all around the world. In order to maximize their availability of raw material MARICO maintain good relationship with their suppliers. MARICO used JIT (Just in Time) approach for handling of raw material

Operations These are the activities related to the production of products and services. This area can be split into more departments in certain companies. For example, the operations in case of a hotel would include reception, room service etc. This is where goods are manufactured. Operations could include organizing the parts to make final FMCG Product. MARICO are known for their reliability which comes from efficient operations.

Outbound Logistics These are all the activities concerned with distributing the final product and/or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. MARICO manage their Distributor and Super Distributor in different rural and urban area. MARICO make their product easily assessable

Marketing and Sales This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firms products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products. MARICO gives TV ads and magazine for marketing. This area focuses strongly upon marketing communications and the promotions mix.

Support Activities of MARICO

Procurement This function is responsible for purchasing the materials that are necessary for the companys operations.

15

An efficient procurement department should be able to obtain the highest quality goods at the lowest prices. This function is responsible for all purchasing of goods, services and materials. The aims to secure the lowest possible price for purchases of the highest possible quality. MARICO will be responsible for outsourcing and e-Purchasing (using IT and web-based technologies to achieve procurement aims).

16

Chapter -4

Challenges faced and Solutions

17

Problems Faced
Due to inefficient information system, Marico was facing many problems like: 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 within a month Data Visibility Order placement process Distribution network complexity

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

Market Place Visibility: Reliability on PRIMARY DATA- suboptimal visibility Nest best option- Distributors sales to Retailers MARICO operated with a PUSH METHOD Severe skewing of sales Synchronization between MARICO and distributors- different bucketed time horizons

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 18

Maldistribution of goods- higher delivery costs

The Vicious Cycle:

19

Solution Implemented for improving visibility

20

Marico Supply Chain Management Architecture

21

Maricos Extended Supply Chain System:

SAP

22

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

23

Demand Planning using SAP APO:

Steps: 1. 2. 3. 4. 5. 6. 7.

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

Plant SNP in SAP APO:

Steps: 1. 2. 3. 4. 5.

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

Depot SNP in SAP APO:

Steps: 1. 2. 3. 4. 5. 6. 7. 8.

Using a Truck Builder Module-coordinate multiple SKUs 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 Built prioritization rules Assign relative priority of depots and SKUs in the TRUCK BUILDER MODULE Depot heuristics run thrice a month (primary sales data vary from forecast)

24

Vendor Managed Inventory (VMI):

Marico IT system
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 distributors PC to MARICOs central servers MI-NET directly linked to SAP R/3 o Stock in Transit o Depot Stocks o Pending Orders o Statement of Accounts o Promotion Schemes to distributors

MiNet

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 25

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.

MIDAS

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 doesnt have to be online all the time

Marico IT system diagram:

26

Marico Portal: Suppliers view snapshot:

27

Marico Portal: Buyers view snapshot:

28

References
1. 2. 3. 4. 5. www.marico.com www.wikipedia.org www.mar.web-werks.com www.scribd.com Personal Communication

29