FMCG giant Marico’s digital initiatives help them save ₹ 35 crore

Marico, one of India’s most prolific FMCG companies is best known for its products like Parachute oil, Saffola, Revive, and Livon. Spanning over 25 countries and raking in over Rs 5,900 crore annually, Marico’s operations bank on a smart, agile supply chain model and advanced analytics that points out precisely what the customer wants.

The torchbearer of this digital drive, Mukesh Kripalani, Chief of Business Process Transformation and IT at Marico, in an interview with IDG, throws light on what were the business challenges at Marico, and how IT helped overcome them. Edited excerpts:

What is the need of the hour in the FMCG space, and what were the technological roadblocks you faced at Marico?

FMCG companies have to reach out to consumers and understand their needs, then ensure that the products reach them through the right channels, and all this must be done in a manner that is effective, efficient and productive.

The biggest challenge is that a consumer tries out different products at different points in time. So capturing that group, creating awareness and making sure that they are loyal to the brand is what FMCG companies are striving to do.

In an ecosystem of digital media, social media influences, Research Online Purchase Offline (ROPO) is a big driver. So organizations have to ensure that customers aren’t being influenced by fake blogs.

Additionally, we see a lot of consumer volatility and the demand changes suddenly. When the new product is available on the logistics side, changes have to be made faster.

At Marico, we found the data collection part taking a long time and that proved to be a challenge. We also faced a challenge in geo-tagging, and that had to undergo three iterations, as we found it to be clustered.

Earlier we used to forecast only on a monthly basis. Changes were difficult to execute, so we started forecasting for 10 days because we got data at a higher frequency.

Tell us about how Marico deployed advanced analytics and what benefits did that bring to the table?

We deployed a newly enabled forecasting system which has increased the forecasting accuracy by over 10 percent. The new demand-sensing model improved the response to intra-month forecast changes, thereby lowering the possibility of stock-outs.

Project EDGE, a new initiative aimed at improving the efficiency and effectiveness of current trade and marketing spends, led to savings worth Rs 35 crore.

We went for a columnar database with Extract, Transform, and Load (ETL) tools. And on top of this, we integrated a visual dashboard. We used data warehousing with Pentaho on top of it, and Tableau as the front-end interface. This proved to be a far superior setup because everything was rendered visually. You could zero down on the data that was actually giving you insights.

Supply chain and sales route optimization has proven to be an issue of concern, as well as an opportunity for innovation. What innovations did you roll out at Marico to address this area?

Our team ran a sales assortment mixed analytics, which helped predict which Stock Keeping Unit (SKU) would sell in a particular channel, at a particular outlet, in similar geographies. We were able to predict a good precision rate and observed a 16 percent increase in the growth rate.

We saw a 15 percent increase on sales route optimization. By geo-tagging, we were able to optimize the route for a salesman on the beat, and observed a marked improvement in productivity.

With algorithmic remapping, a single salesman was able to cover more outlets over the same distance, thereby bringing down the workforce deployed on the field.

Which technologies are going to lead the next wave of disruption in the FMCG sector? And what’s your takeaway for CIOs in this space to stay ahead of the curve?

Gone are the days where you can say that after implementing a brand new system, you are set for the next 10 years. The IT has to be driven by a change mindset. Beyond analytics, artificial intelligence is the next big thing and robotics process automation will see more traction in the future.

We’re now working on programmatic buying, where we analyze the buying habits of a particular customer, and based on the characteristics of that product, we target other promotions to them.

With respect to IoT in plant operations, we are working on how to improve yield and decrease maintenance time. A lot of sensors are already existing, so now the information is available at a regular frequency to help improve the yield further.