purchase process in fmcg company

7/31/2019 Purchase Process in Fmcg Company

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PURCHASE PROCESS IN

FMCG COMPANY


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WHAT IS FMCG

Fast-moving consumer goods (FMCG) or consumer packaged

goods (CPG) are products that are

sold quickly and at relatively low cost. Typical purchasing of these goods

occurs at grocery stores,

supermarkets, hypermarkets etc.


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Purchasing Function

The various companies of FMCG buytheir raw materials and maintained

their inventory by the vendors, which

is known as purchasing function.


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Changing Role of Purchasing Function

1 Objective CostCompetitive-ness

BusinessCompetitiveAdvantage

Now a days - Much Different and More Difficult

Role

2 Price & OperationalCosts

ValueCreation forthe firm

Focus

Skill3 Buying andOperational Control

Supply MarketStrategist

Earlier Current


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INTRODUCTION

COMPANY NAME:HINDUSTAN UNILEVER LTD.

WEB:WWW.HUL.COM

HUL LOGO:


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INTRODUCTION OF HUL

It is Indias largest consumer products company and wasformed in 1933 as Lever Brothers India Ltd.

Having 6 type of product categories i.e. Home, personal

care products, Food& beverages, nutrition, water, health

hygiene and beauty


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PRODUCTS


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An illustrative example of Perfume purchase at HLL

Globally 4 vendors selected.

These vendors are assigned to different business

categories - 2 vendors to each category.

The Guardian and the challenger.

Both the vendors allocated to a business category work

closely with the business group, they understand the

products/ customer likes & dislikes

( do own market research), invest in research and

relevant technology


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Coordination

Synchronize the full range of supply chain activities ofthe supplier and the customer.

Integrate their operations where ever feasible, while

eliminating duplication .

They also shorten their delivery lead times as much aspossible to reduce costs and enhance flexibility


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Vendor Managed Inventory (VMI)

VMI Systems have helped reduce delivery lead times andimproved flexibility.

One supplier allocated to one unit

Unit shares plans, stocks and weekly production with supplier

Supplier plans replenishment based on the available information

Benefits Achieved in some of the packaging materials :

Reduction in lead times by 2 weeks, reduction in stock

levels by 2 weeks


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ABOUT MARICO

Found in 1991, Public Limited Company

A leading Indian Group in Consumer Products and

Services

Renowned Brands like Parachute, Saffola.


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Products


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Unorganized market, suppliers not IT savvy and

Illiterate

20 Lakhs Coconuts equivalent Copra purchased

everyday

2 Coconuts purchased from every coconut tree

Largest Buyer in India - 25% of terminal market

Nature of Challenge


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Nature of Challenge

e-buying in Copra purchase

Expand Sourcing Base


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Nature of Challenge - Copra

Traditional Process

Bought over phone through long drawn negotiations


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Objectives for e-buying

Expand Base, Avoid Brokers

Price Discovery

IT penetration


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Initiative Implemented - Copra Buying

3 Phased Approach - 2003 to 2005

E- Buying (Phase -3)

Physical Buying ProcessChange(Phase-1)

Supplier I.T.Penetration(Phase-2)

Maturity


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Physical Buying Process Change

(Phase -1)

Change

Buying in sessions

Sell offer by vendors over phone about quantity andprice.


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How did we overcome

Altered Process Slightly basis Dialogue with Suppliers

Suppliers eventually convinced of Marico Commitment to

New Process


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Supplier I.T. Penetration(Phase-2)

Process :Opening email ids for each vendors ( Rediff )

Training on e-mail usage at vendors end .Tie-up

between vendors and cyber cafes

E-mails : Goods Receipt Information

Advance Payment information,


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E-Payment

Tie up with new age banks for e-transfers 1 day payment against cash discount


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E-buying: Copra Portal e-marico.com

(Phase -3)

Copra e- Portal e-marico.com launched in 2005

Portal designed in Tamil and Malayalam

Rigorous onsite education and training

Bidding in Portal, along with E-mail Information

Result: -

Absolutely paper less transactions from Bid to Payment

100 % vendors on Portal


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THANKYOU

BY:Ritika Raj

Prabin Kr. Singh

(PGDM 3RD TRIMESTER)

purchase process in fmcg company

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