Intro about marico…

• FMCG company providing health and beauty products.

• Sales revenue : 4686.52 crores.

• Net profit : 29% growth in net profit(160 crores)

• Head quarters : Mumbai (india).

• Leadership positions in : coconut oil, hair oils, premium refined edible oils, niche fabric care etc.

• Strategy : expand even more into small locales through even more brands

• Every month over 70 million consumer packs from Marico reach approximately 130 million consumers in about 23 million households.

• Wide spread distribution network with over 2.5 million outlets in India and overseas.

Why should Marico concentrate on SCM?

1995: focused on

brand developmen

t

For survival-increased efforts to

develop new brands

This expansion strategy created supply chain

problems

Strong distribution network in India....

plants

depots

distributer

retailer

customer

Super distribut

er

stockist

retailer

customer

Urban are

aRural area

Marico’s copra supply chain..

maricoMumbai based

brokers

Terminal market brokers

Supplier

network in

trmnl mrkt

Problems with copra supply chain..

• Increased cost of procurement due to presence of many intermediaries.

• Quality of copra brought from market is different from that of the ones which reached there.

• Quantity is also varying.

• Price and payment terms are dictated by brokers.

• Frequent supply disruptions.

Remedial actions..Disintermediation and IT…

• Disintermediation: buying office set up in Kozhikode(kerala) bypassing two layers of primary brokers in Mumbai and kerala.

• factories were also set up in goa and puduchery.

• New factories near to sourcing locations and markets.

Making it work..

farmers

Copra converter

s

Interior traders

Traders- terminal markets

marico

marico

• To further eliminate layers Marico started its own collection centers.

• Small farmers can sell directly to Marico unlike the large traders who wait for right price and quantity.

The IT push…..

• Marico’s copra suppliers are connected through web portal- Marico connect.

• Web based auctions: this challenge was met by

1. opening Rediff email ids for each vendor

2. training them to use rediff ids and tie-ups between vendors & cybercafes.

3. fast track payments.

4. enabled placing of bids through SMS.

Conclusion…

• Marico faced increased cost of procurement and frequent supply disruptions due to many levels in supply channel.

• Disintermediation and IT assisted process improvement led to reduced costs, procurement lead time and helped for operating efficiently.