IT in FMCG Sector

IT in FMCG Sector

SECTOR OVERVIEW

Evolution of FMCG in IndiaDuring 1950s to 1980s the due to low purchasing power and lack of support from the government his the investments in the FMCG industry were very limited.Hindustan Lever Limited (HLL) was the only MNC company had its manufacturing base in India.Nirmas entry changed the whole Indian FMCG scene. As the company focused on the value for money plank,It set an example for others to Follow.Post 1991, the lowering of the trade barriers encouraged MNCs to come and invest in India to cater to 1bn Indians needs.Today companies like HUL,ITC,P&G, Godrej Consumer, Marico, Henkel, Reckitt Benckiser are focussing hugely on the untapped rural markets .

Current Scenario

The fourth largest sector in the Indian economy , FMCG INDUSTRY has grown at an annual average of about 11% over the last decadeThe market size of the Indian FMCG sector is expected to reach US$ 135 billion by 2020 from US$ 44.9 billion in 2013Two-thirds of the sector's revenue is comes from Food product (43 % market revenue ) and personal care (22% market revenue) The overall fast moving consumer goods (FMCG) market is expected to increase at a compound annual growth rate (CAGR) of 14.7 per cent to touch US$ 110.4 billion in the period 2012-2020Out of this the rural FMCG market anticipated to increase at a CAGR of 17.7 per cent to US$ 100 billion during 2012-2025.

Some of the leading FMCG Players

KEY PERFORMANCE AREAS

Key Performance AreasKPAs are key areas of performance of a business. KPAs analysis enables learning and improvement on critical operations, capabilities and processes across business domains. The scope of KPAs cover all the actionable activities performed within an organization. These activities center on three broad categories referred to as Business Domains. The three business domains are:Demand Management All the actionable activities involved with generating demand for the products and services offered by the organization. Supply Management All the actionable activities directly involved with satisfying demand for the products and services offered by the organization. Support Services All other actionable activities involved with supporting the organization. These services operate within organizations by providing services to internal clients. They operate on business principles and provide internal services at a cost and quality that is acceptable to its clients, when assessed against alternatives.

KPAs Continued.Business DomainKPAsDemand ManagementMarket ResponsivenessSales EffectivenessProduct Development EffectivenessSupply ManagementCustomer ResponsivenessSupplier EffectivenessOperational EfficiencySupport ServicesHuman Resource ResponsivenessInformation Technology ResponsivenessFinance & Regulatory Responsiveness

BEST IN CLASS

P&G IT implementationP&G is considered to have a trailbaizing IT implementations in the field of FMCG Companies.P&G recently announced that it is increasing its analytics workforce fourfold. The company clearly believes that analytics as a core source of competitive advantage in the coming years.

Information Systems used for improving productivity

Web 2.0 for online activities and websites.Blogs for sharing information with others. Custom search engine- Allows employees to share bookmarks and tag content with descriptive words that appear in future searches. It also facilitates social networks of coworkers to find and share information more effectivelyA Complete Collaboration system led by suite of Microsoft products such as Live Meeting, SharePointInnovationNet, a browser-based portal, contains over 5 million research related documents in digital format.Tele Presence Conference Room by CISCO. An excellent way to foster collaboration between employees across not just countries, but continents.

Presentation of data by P&G to decision makersDecision CockpitAn Enterprise Information Management System Developed by Accenture Its primary function is to provide quick information to multi-functional teams around the globeIts a portal based system and the only relevant data are accessible to the managers.(privilege)More than 90% Business Units are using it and the portal has spanned across 80% core processesDecision Cockpit consists of a portion named Efactbook which is basically a scorecard about performance of a division/SKU/BU. (Reports on Self-appraisal)Another component of DC is PeopleConnect which helps the manager to connect with his subordinates.Decision Cockpit is operational 24X7 worldwide and has helped the Co become more agile.

Business Spheres

Hi-tech conference rooms allows company leaders to harness massive amounts of data to make real-time business decisions. operational in 50 offices across the globeLarge screens are fitted on the walls and people from many Centres discuss amongst themselves with embedded analysts from P&Gs Information and Decision Solutions group aiding their deliberations with Spotfire-enabled visuals.Spotfire is an application that builds analytics software to help in Business Intelligence.

Heatmap

Usually used in the meeting of top manager who rely less on exact data and more on processed dataAll the products/brands are clubbed together in this graphical representationRed Color: Low Market Share Green: High Market ShareThe heat map simultaneously shows all the markets in which P&G products compete and their relative share (red indicating low market share and green indicating high market share),. P&G tries to make its graphics and colors Apple simple to ensure that managers can focus on the important business issues wherever they are in the world

Business Sufficiency Models

Primary aim is to focus on exceptions and provide forward looking projections and scenariosOf 2 Types: i) Why Model and ii) What Model

What Model: focus on data such as shipments, sales, and market shareWhat Model: displays sales data down to the nation, territory, product line, and store levels, as well as factors such as advertising and consumer consumption (considering region and country-specific economic data)The two models are common in the following manner:They focus on exceptions, whats doing better and worse than expected(managers can adopt best practices and amend unsuccessful practices)The models are predictive, and delineated via dashboards, charts, and supplemental analytics generated through data visualization and analysis software

SAP in-memory computing at P&GSAP HANA has been deployed at P&GCompletely rethink the transactional systems and analytical systems around them, Depth i.e. much lower levels of granularitySpeed enhanced from several days to seconds to process the dataMobility for managersShort term focus is on financial managementScalability of SAP was a major reason for going for itUser should not have to think about the IT system and rather use it intuitively also provides Single point of access

Channel Partnership between Wal-Mart and Procter & Gamble

Supply-Chain Integration through Information SharingDevelopment of inter-organizational information systems (IOIS)-Transactional, operational and Strategic Technology played a key role in Joint scorecards and measurements, Driving out costs through automation, Sharing data to better understand the consumer and drive sales

Development of Continuous Replenishment Process (CRP)-Reduction of Bull Whip effect and reduction in inventory levels

Referenceshttp://proctorngamble.blogspot.in/p/information-systems-used.htmlhttp://www.cisco.com/en/US/services/ps6887/ps10672/External_CaseStudy_Procter_Nov2009.pdfhttp://www.digital-ecosystems.org/doc/nov17/pg/Procter_and_Gamble.pdfhttp://citebm.business.illinois.edu/IT_cases/Graen-Shaw-PG.pdfhttp://www.cio.com/article/2854239/cio-role/pandgs-filippo-passerini-stands-out-as-a-stellar-example-of-the-strategic-cio.htmlhttp://www.slideshare.net/nightfurryfaysal/mis-case-study-procter-gamblehttp://community.aiim.org/blogs/bryant-duhon/2014/06/04/digitizing-rd-pgs-business-transformation-success-storyhttp://spotfire.tibco.com/blog/?p=18602http://www.networkmagazineindia.com/200301/cover14.shtmlhttp://enterpriseinnovation.net/article/pg-use-technology-move-goods-production-shoppers-cartshttp://www.mckinsey.com/insights/consumer_and_retail/inside_p_and_ampgs_digital_revolutionhttp://www.mckinsey.com/insights/business_technology/winning_with_it_in_consumer_packaged_goods_seven_trends_transforming_the_role_of_the_cio