Limited a leading Indian
firm in consumer products and services in the global beauty and
Coconut oil is an important product for the company. It has
widespread distribution network both for procurement of raw
material and distribution, the major producing states are Tamil
Nadu, Kerala, Andhra Pradesh, and Karnataka.
Copra (dried kernel of coconut) procurement was a critical
activity. Marico Limited procured copra from Mumbai based traders
(little control over costs and quality). The supply chain for
copra consisted of farmers, who either converted coconut to copra
or sold it to Copra Converters.
The Copra Converters, in turn, sold it to a broker, who
coordinated the supply across several Copra Converters to arrange
for transportation and helped them to sell in the terminal markets
The broker got a
commission both from the Copra Converters and the traders. It
gave boost to its supply chain by opening buying offices in
Kerala, started Direct Procurement from vendors by supplying
them copra drying machines. Established linkages with traders
in terminal markets where traders brought full truckloads to
factories (Eliminated the transaction fee, reduced multiple
loading and unloading costs).
Companies also set up their own Collection Centers (CC). This
has resulted Procurement Quantity Assurance and better prices
to farmers. This has reduced management’s time for purchasing,
vendor development (by allowing it to develop profiles of
quality assurance and
deepen its reach to traders, copra converters and farmers.
In other words, traders/Copra Converters/farmers could
directly deal with Marico Limited, the end customer.
In India retailers can now
buy direct from farmers rather than operate through the
government-controlled APMC wholesale markets. New models of rural
retail are emerging, such as the Hariyali Kisaan Bazaar, which
combines a “bottom of the pyramid” approach to both the input and
output sides of the farm-to-consumer value chain. Corporations are
making considerable profits by designing new supply chain business
models and products.