Problems The company has two types of distribution chains, the urban chain and the rural chain.

Its business process is divided into three business divisions: nature care, health care and the international division. To optimise the distribution network and improve its delivery mechanism, Marico decided to leverage on the strengths of an ERP system. The company began the implementation of this system sometime in 2000. However, the company faced one big problem. On one hand product promotion calls for a lot of creativity, but on the other a full-fledged ERP system in an organisation requires tremendous amount of discipline. Psychologically, creativity and discipline move in opposite directions and so the management realised that the ERP implementation would reflect a complete paradigm shift in terms of attitude and that issue had to be tackled effectively. Keeping this in mind, the company began a brainstorming session highlighting the benefits of the implementation. Once the company realised the possible return on investment through ERP it decided to go ahead with the plan, and set the ERP ball rolling. Production Problems

Marico was facing production problems in terms of forecast accuracy. It was just 70% prior to implementation of ERP. Distributors were suffering due to stock outs and the loss on sales was estimated to be 30% of Marico SKUs. There were excessive inventory in their SKUs and the error of shipping to remote depots was mounting. Internal Operations Problems

The company faced a lack of clear visibility among various transactions within the same department because the departments used stand alone application systems. Since there was no integration of data, the numbers within the department were conflicting, which led to improper forecasting and production. Rationalization and consolidation of data was done only for the financial statements and not for the sales data. The company used excel based application. The cycle of data gathering, indicative plan, production department final production plan took almost 30 days.

The problems gripped the company in a vicious circle. Poor visibility of data led to erroneous forecast and long planning cycle. Unreliable and unresponsive production and distribution data had consequences like skewed sales, high inventory, high delivery cost and low attention to smaller brands. The company couldnt respond to the changing market dynamics and it led to high inventory and stock outs which in turn affected the forecast accuracy. Legacy Systems Prior to 1995, the companys systems were virtually manual, but since then it has made significant progress towards becoming computerised. The legacy systems were basically inhouse packages based on Foxpro and Ingres which were essentially stand-alone systems catering to the specific needs of various departments. The consolidation of data from various departments used to take place at the end of the month during accounts closing. Since these systems were stand-alone, Marico felt the need for integration. And as it was anyway toying with the idea of refurbishing its IT system it decided to check out the potential of an Enterprise Resource Planning (ERP) system. The business advantages of ERP systems prompted the company to analyse its potential. The management sought to keep pace with the dynamically changing business environment and saw ERP as the means to achieve it.

Though the benefits of ERP were fairly apparent, Marico decided to play it safe by chalking out a detailed plan on paper. In order to facilitate this process, it decided to avail of the services of KPMG Consulting. In a span of about four months the consulting firm prepared an elaborate blueprint, presenting Marico with a clear picture of the cost-benefit analysis of the whole ERP exercise. The vital points highlighted by KPMG were nothing short of an eyeopener in terms of assessing the exact place that we were holding in the market and prioritising the step-by-step moves leading to our long-term goals. The report stressed on the fact that opting for an ERP implementation would put Marico on a higher efficiency plane, but would not in any way give it a competitive edge. Maricos complex distribution chain necessitated detailed planning for an effective Supply Chain Management (SCM) tool. Thats where the idea of an SCM implementation developed. After identifying the rationale behind the need for integration, it was time for the company to scout for the ideal package. Acting as a project-facilitator KPMG recommended various modules of SAP for ERP-SAP R/3, for SCM-SAP APO, and for business warehousing-SAP BW. Marico was looking at integrating its various departments, namely sales and distribution, HR and quality, finance and the legal taxation departments. It finally decided to make a one-time investment of Rs 12 crore and revamp its entire IT infrastructure. Assessing the Potential Being a late entrant in the ERP space had its own advantages for Marico, as it gave the company an opportunity to study existing implementations in the industry. It also helped Marico to carefully address the dos and donts and spot the most common reasons of some of the not-so-effective implementations. The key to any ERP implementation is its usability and the comfort level of employees. So the management decided to systematically cultivate an out-of-the-box thinking in their employees. For an organisation that made an IT investment of such a magnitude after a span of eight to nine years, this meant a major paradigm shift. The IT department had the responsibility of winning the confidence of the management and convincing it of the fruitfulness of the whole exercise. Marico decided to go for a big-bang implementation, where all the modules would go live on the same day. A nine-month plan (June 2000 to March 2001) of accelerated SAP was meticulously chalked out and we were hell-bent on completing the implementation within the stipulated period. Conventional wisdom demanded that SAP should be ideally implemented on UNIX, so it was implemented on an HP UNIX operating system. Siemens

Information Systems (SISL) was chosen as the implementation partner and ASAP (Accelerated SAP) was used as the standard methodology. The SAP roadmap consists of five stages project preparation, business blueprint, realisation, final preparation, go live and support. Marico drew up a blueprint and highlighted what needed to be customised to best suit its requirements. SAP R/3 was tuned with the latest up gradation to 4.6B and went live in April. The APO, which went live in May 2001, had to be delayed for a month as the company required at least one months data to assess the impact.