Nominee

Tweaking the supply chain

Marico uses technology to automate the process of buying copra. Apart from structuring the procurement process, this initiative has helped spread IT awareness in rural India

Four years back, the buying of copra at Marico was a cumbersome process owing to the large volumes of paperwork and the telephone being the chief mode of cummunication. The company found that the buyer wasted a lot of unproductive time on transactional issues.

Marico was looking to make the procurement process of copra structured and transparent and also wanted to provide real-time transaction information to the vendors. This led them to design a supplier portal

First, it helped in bringing about a transaction process change. Three years back, Marico would train vendors to use e-mails for all copra-related transactions that created ground for migrating to a portal at a later stage. Soon they started sending all data related to transactions through e-mail viz. quality details, payment details, debit / credit card notes and account statements.

Marico helped groups of vendors tie up with a local cyber café to transact. Many vendors were also influenced to invest in a computer and an Internet connection.

In order to move to a portal on real-time basis Marico’s approach was to have the portal designed in Tamil and Malayalam. Key suppliers were involved in developing the design for the portal. Rigorous on site education and training was carried out at the supplier’s location.

This implementation has also brought about significant changes in the buying process. Instead of Marico quoting the price, they asked the suppliers to quote. They decided that they would buy for a restricted time period during the day and that they would not bargain. They would either accept or reject the quote. This was a major change for the copra traders as initially, only the buyers would bid in the agri-commodity market.

According to Marico, the basic premise in our country is that the farmer has to get the best price. And they were proposing a change where the sellers could quote and Marico would decide on the quality as well as the price. In a way they compelled suppliers to sell to them.

An in-house IT team designed supplier portal. The process of quoting and generating POs (purchase orders) through the portal integrates the entire process of copra procurement from quotes and to payment in a paperless form.The process was initiated by sending emails to the vendors to introduce them to work on computers for their transactional needs.

Vinod Kamath, Chief, Supply Chain and Information Technology, Marico says, “We developed the portal in the vendors’ mother tongue to meet the transactional needs.” It was then enhanced allowing the vendors to bid over the portal. To give further impetus, Marico started to reject bids that came to them through any other medium thus enforcing the use of the portal.

Lessons learnt

Marico learnt that seeking quotes through the portal was easy as the vendors were convinced of ease of transaction. A change in the manual process and restructuring the same is important.

For a project of this nature it is not possible to visualise the exact end when one initiates the process of change. Hence it is critical to take small steps at a time and keep preserving. An evolutionary approach as opposed to a revolutionary approach is a sound strategy for implementing projects of such nature.

People do not welcome change often. The deployment was not a cakewalk and Kamath explains why. He says, “A new process of quotation (selling quoting price instead of the buyer) was a major cause of friction between Marico and the vendors. To add to that, the low levels of literacy also posed as a hurdle. Consequently, convincing the farmers to invest in hardware was a problem.”

Roadmap

Marico plans to provide the buyer with PDAs and make the portal available through the .Net Compact Framework so that the buyers need not be in office to take their buying decisions or conducting the sessions on the move would be made possible.