PURCHASE PROCESS IN FMCG COMPANY

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.

Purchasing Function

The various companies of FMCG buy their raw materials and maintained their inventory by the vendors, which is known as purchasing function.

Changing Role of Purchasing Function

Earlier
1

Current Business Competitive Advantage

Objective

Cost Competitive-ness

Focus

Price & Operational Costs

Value Creation for the firm Supply Market Strategist

Skill

Buying and Operational Control

Now a days - Much Different and More Difficult Role

INTRODUCTION

COMPANY NAME:HINDUSTAN UNILEVER LTD. WEB:WWW.HUL.COM HUL LOGO:

INTRODUCTION OF HUL

It is Indias largest consumer products company and was formed 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

PRODUCTS

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

Coordination
Synchronize the full range of supply chain activities of the supplier and the customer. Integrate their operations where ever feasible, while eliminating duplication . They also shorten their delivery lead times as much as possible to reduce costs and enhance flexibility

Vendor Managed Inventory (VMI)

VMI Systems have helped reduce delivery lead times and improved 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

ABOUT MARICO

Found in 1991, Public Limited Company A leading Indian Group in Consumer Products and Services Renowned Brands like Parachute, Saffola.

Products

Nature of Challenge

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

e-buying in Copra purchase

Expand Sourcing Base

Nature of Challenge - Copra

Traditional Process Bought over phone through long drawn negotiations

Objectives for e-buying

Expand Base, Avoid Brokers Price Discovery IT penetration

Initiative Implemented - Copra Buying

3 Phased Approach - 2003 to 2005

E- Buying (Phase -3)

Maturity

Physical Buying Process Change(Phase-1)

Supplier I.T. Penetration(Phase-2)

Physical Buying Process Change (Phase -1) Change

Sell offer by vendors over phone about quantity and price.

Buying in sessions

How did we overcome

Altered Process Slightly basis Dialogue with Suppliers Suppliers eventually convinced of Marico Commitment to New Process

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,

E-Payment

Tie up with new age banks for e-transfers

1 day payment against cash discount

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

THANKYOU

BY:Ritika Raj Prabin Kr. Singh (PGDM 3RD TRIMESTER)