Dabur sourcing of saffron(e-sourcing & Reverse auctioning)

e - Sourcing , e - Procurement and Reverse Auctioning

Submitted To

Prof. Maninder Singh

Dabur sourcing of Kashmiri Saffron

Presentation Insight

• History of the company

• Range of products

• Products with saffron

• Saffron

• Scenario of production

– World

– India

• Reverse Auctioning

• e – Sourcing

• Benefits to Dabur

• Benefits to Farmers

History

• 1884 - Dabur came into being

• 1936 - became a full-fledged company

• 1986 - Public Limited company

• 1996 - Created 3 separate divisions

–Health Care Products

–Family Products Division

–Dabur Ayurvedic Specialities Ltd.

Dabur Range of Products

Dabur Products with Saffron

• Dabur Vatika Saffron Glow Soap

• Dabur Shilajit

• Dabur Drakshavaleha

Saffron

• The most precious and most expensive spice in the world.

• The Saffron filaments, or threads, are actually the dried stigmas of the saffron flower, "Crocus Sativus Linneaus".

Varieties of Saffron

• Kashmiri Saffron is considered to be the world's best saffron for its distinctive, long and silky threads. The dark red thread of the saffron has an extraordinary aroma, powerful coloring and flavoring properties.

• Iranian Saffron Iran is the single largest producer of saffron, which is called the Iranian or Persian Saffron. Iranian saffron is known for its exquisite, delectable aroma and high coloring capabilities.

• Spanish Saffron Not as strong as Kashmiri saffron also has its own unique aroma, flavor and coloring capabilities.

Kashmiri saffron is awfully tough to obtain, which makes it the most prized saffron amongst all other varieties in the world.

Why is saffron expensive?

• Each flower contains only three stigmas.

• These threads must be picked from each flower by hand, and more than 75,000 of these flowers are needed to produce just one pound of Saffron filaments, making it the world’s most precious spice.

• But, because of saffron's strong coloring power and intense flavor, it can be used sparingly. Saffron is used both for its bright orange-yellow color and for its strong, intense flavor and aroma.

Saffron World Scenario

Country Area (ha) Production (MT) Yield(kg/ha)

Iran 43,408 (88.52) 174.00 (89.31) 3.98

India 3,143 (5.76) 6.86(3.30) 2.23

Greece 1,000 (2.03) 4.30(2.20) 4.30

Azerbaijan 675 (1.37) 3.70 (1.90) 5.48

Spain 600 (1.22) 5.70(2.60) 7.84

Morrocco 500 (1.02) 1.00 (0.50) 2.00

Italy 29.4(0.06) 0.24 (0.12) 6.16

TOTAL 49,037.4 195.40

District% of

Saffron produc

ed

Pulwama 74%

Budgam 16%

Srinagar 7%

Doda 3%

Srinagar

Budgam Pulwana

Doda

Indian Scenario

Reverse Auctioning , e - Sourcing

and e - Procurement

e - Sourcing

• Elimination of the middleman

• Better and easy communication with suppliers

• Widened horizons

e – Sourcing of Dabur povided by Ariba

• e – Sourcing options to Dabur were provided by the hired consultants : ARIBA

Prospects for Dabur

• Better prices for saffron

• Elimination of search and negotiation costs

• Best quality raw materials from global suppliers in a transparent manner

• Minimization of supply risks by increasing the vendor base

• Elimination on the middleman

• Better social image

• It is able to beat inflation by procuring inputs needed in the next four months to two years at a time.

First Phase Challenges faced by Dabur

• Lack of an established, standardized and documented

sourcing process.

• How to enable its suppliers both in rural and urban

parts of India to participate in a transparent, dynamic

and interactive negotiation process.

– lack of technological advancements

• Internet

• Connectivity

– very little computer literacy

• Manage the diverse set of suppliers spread across the

globe

First Phase - Ariba Managed Markets and AribaOn-Demand Sourcing Basic

• Ariba team assisted with data collection in category-specific data collection

templates, supplier research, data analysis.

– Translated into a lotting strategy based on suppliers’ capabilities, manufacturing

locations, and Dabur’s business needs and other strategic sourcing decision-making

criteria, and building and publishing a category-specific total-cost RFQ to the approved

potential suppliers.

• Ariba also assisted Dabur in the initial managed markets by conducting

supplier management post-RFQ publication final price negotiations and

then awarding the business to the successful suppliers.

– Based on the multiple advantages of the initial managed markets, Dabur ramped up its

spend management journey with the implementation of Ariba On-Demand Sourcing

Basic technology along with full-time Ariba Consulting Services. This further helped

Dabur’s buyers to address both their strategic and indirect expenses, which included

maize derivatives, sugar, logistics, and chemicals to name a few.

This first phase of spend management resulted in cost reduction, transparency

and streamlining of the sourcing process.

Saffron First Phase

• Traditional Approach: – Source saffron from several suppliers based in India’s northern-most state of Jammu &

Kashmir. – The market was a virtual oligopoly and every year suppliers would quote equal prices with

Dabur allocating equal quantities to each of them.

• Ariba Sourcing Basic– Helped to bring visibility along with cost reduction, whereby the suppliers and Dabur could

see the best quoted prices for the commodity.– The result was transparency, meritocracy and enhanced efficiency in the system.– Since the rollout in December of 2002, Dabur has conducted 520 sourcing projects via Ariba

Sourcing Basic with average savings of 10 percent across various categories. – Dabur was able to identify a better supplier base in China, South East Asia and Eastern

European countries for various categories such as honey, air fresheners, juices, and packing materials to name just a few through Ariba’s expertise in low-cost country sourcing.

– Ariba has also helped Dabur to avoid onshore inflation while expanding its supply bases and reducing costs.

Second Phase - Ariba On-Demand Sourcing Professional (Category Management)

• Second Phase– Focus on category-specific process standardization,

– Visibility into its expenditures,

– Risk monitoring and mitigation,

– Knowledge management and

– Informed decision making on both budgets and pricing.

• Ariba On-Demand Sourcing Professional in August of 2006. – Enhanced collaboration across

• Departments internally

• Amongst suppliers.

– Decision-making,

– Organizational buy-in, Sourcing visibility,

– Efficiency, Process Standardization,

– Knowledge Capturing and

– Compliance

Prospects for farmers

• Technically equipped to gain better value out of the

saffron cycle

• Better yield – Quality

– Quantity

• Elimination of the middleman

• Better prices for the saffron through negotiations

• International market awareness and presence

• Better and easy communication with company