MARICO SUPPLY CHAIN:

A CASE STUDY

By Group 5

Prajil P K - S053
Sandeep Punia – S061
Sanjay Sharma – S062
Satpal Singh – S067
 MARICO SUPPLY CHAIN: STRATEGIC
PERSPECTIVE

Market Firm
• Resource allocation by price • Resource allocation by
mechanism manager/ entrepreneur
• Marketing costs • Cost due to errors in
Judgement
– Transactions Increase
– Spatial Distribution
– Heterogeneity
MARICO SUPPLY CHAIN: STRUCTURE

• Seven factories
• 15 contract manufacturers
• 31 depots
• 1000 distributors
• 2500 stockists
• 1.6 mn retailers
• 35 mn consumers
 MARCIO SUPPLY CHAIN: CHALLENGES

• 1.6 mn retailers with more than 95% in unorganisaed sector

(Kirana stores)

• Wide geographic spread of market in country

• Penetrate more in rural markets by covering beyond a

community level of 20,000
 MARCIO SUPPLY CHAIN: CYCLE

• Existing challenges a logistical nightmare even for largest

manufacturer
• Marico also facing a Herculean logistical task
• Business strategy of growth through new brands and product
lines added to existing problems
• Increase in no of brands from 3 to 9 and more made the supply
chain unstable due to major shortcomings in forecasting,
planning and operations
• Forecasting and sales targets became increasingly inaccurate
• Distribution errors multiplied resulting in higher costs
• Vicious cycle of poor supply chain began
MARCIO SUPPLY CHAIN: VICIOUS
CYCLE
SHORTCOMINGS IN FORECASTING AND
PLANNING

• Main reasons include:-

– Poor visibility into internal operations

– Poor visibility into market place

 INTERNAL OPERATIONS

• Poor visibility due to lack of integration among transactions

• Initially operations conducted with paper based manual system
• Stand alone application programs introduced in 1995
• Lack of integration resulted in working with conflicting
numbers
• Monthly rationalisation and consolidation did not help in day-
to-day supply chain planning
 DATA VISIBILITY

• Stand alone systems at HQs and Depots not integrated

• Planning done in Excel resulting in lack of data visibility and
inconsistent management reports
• Results:
– Inaccurate forecast
– Long planning cycle
– No transparency of warehouse stock
– Delayed response to customer needs
 DATA VISIBILITY

• Data gathered from sales and marketing

• Turned into initial indicative plan by lone planner
• Reviewed by production department and turned into final
production plan
• Process took 30 days
• Changed market realities during 30 days process time could
not be incorporated into the plan
• Sales department circumvented system to influence actual
production and distribution decisions
• Integrity of system compromised leading to further supply
chain problems
 MARKETPLACE VISIBILITY

• Consumer goods firms in India reply on primary sales data

(manufacturer to distributor)
• Current offtake ideal for FMCG but not possible due to
fragmented retail market and long cycle time
• Next best option is distributor to retailer sales
• Marico operated with ‘PUSH’ method in supply chain
• Supply chain planning was driver by sales force san demand
they observed in their territory
• Monthly distribution level was skewed with 53% in last 10 days
• Marico passed the production and inventory problems created
by poor forecast to distributors
 MARKETPLACE VISIBILITY

• Manufacturing and distribution followed different time horizon

for planning resulting in lack of synchronisation

• Results:-
– Unhappy distributors

– High stocks in channel during some period and low service

level at other times

– Expiry of goods in channel resulting in financial loss and

poor customer satisfaction
 DISTRIBUTION
• Marico shipped goods in full truck loads to minimise transportation
costs
• Poor visibility of stocks of various SKUs at depots and lack of
prioritisation rule
• Random decisions made without considering depot space
constraints
• High costs incurred due to truck demurrages and hiring of
additional storage space
• Other depots faced stock outs
• Resulted in erosion of sales and poor customer satisfaction
• Sales people spent time searching stocks rather than building
brands
• Marketers dependence on three big brands continued
 BREAKING THE VICIOUS CYCLE
• Better and faster sales information needed

• Forecast need to be based on secondary sales data rather than

‘PUSH’ method

• Provide data visibility throughout the firm

• Transform relationship and communication with major

distributors

• Ultimately Marico needed buy-in throughout the enterprise and its

supply chain partners and system and tools to support
redesigned processes and provide data visibility
THANK YOU