Fast Moving Consumer Goods (FMCG) or Consumer Packaged Goods(CPG) are the products that have a very quick sale at relatively very low price. The main profit of these companies are not based on the margin, it is mainly based upon the volume of the sales. The products in the market are updated very fast due to high competition. The main products of these type of companies are :- Personal Care Household Utilities Food and health beverages Paper Products Tobacco Products Bakery Products Vegetables and Fruits Financial and Accounting Management Information System Used in FMCG:- These Systems tracks the financial events and helps to sum up the whole financial information These kind of systems computerise the Financial management (PFM) processes They are helpful to prepare the financial reports , budget decision, fiduciary responsibilities The main task fulfilled by these systems is the integration of the data The scope for this IS extends from General Ledger, Debt control, Auditing process, Revenue collection, Payroll. The FMCG Company that has been analysed for Finance and accounts is HUL (Hindustan Unilever Limited) HUL Hindustan Unilever Limited is India’s largest and one of the world’s leading FMCG Company with yearly turnover of approx Rs.18, 000 crores in India, it is a subsidiary of Unilever which has a stake of 52% in HUL and an annual turnover of 40Billion Euros and has a market in more than 100 countries. The company is also on the list of Forbes Fortune 500 companies. The following are the product line of the company:- Personal Wash 1)Liril 2)Lifebuoy 3)Haman 4)Dove 5)Lux 6)Pears 7)Breeze Fabric Wash Rin Supreme Surf Excel Wheel Hair Care Clinic Sun silk Naturals Oral Care Pepsodent Cosmetics Lakme Fair and Lovely Pond’s Vaseline Aviance Deodrants Axe Rexona Beverages Brooke Bond Brooke Bond Bru Lipton Foods 1) Knorr 2) Kissan Business Cycle SAP HUL turned to SAP treasury to meet all its needs. To integrate the treasury process from planning and decision making of Hindustan lever to the management of financial transactions and positions , SAP treasury linked overall Sap R/3 system implementation at Hindustan lever and also for the transfer of records to financial accounting. The two big advantages over which the SAP treasury was chosen were portability and integration. To achieve the vision of establishing a global treasury information system, portablility was required. The new SAP treasury management system availed a good return on initial investment and streamlined the treasury operations in the US. SAP Treasury v/s the Earlier Systems The corporations these days are measured on the accuracy and timeliness of information on the cash position, determining which is the most important operational duty that the treasury has. SAP Treasury enabled Hindustan lever to get huge improvements in the timeliness and accuracy of this information. It wasn’t feasible to generate automatically the basic daily cash position. Data from three different systems were taken manually and put into a spreadsheet to get cash position each day, which resulted as time consuming and cumbersome and it prolonged their month-end closing process. To compress the month-end close, SAP Treasury approved treasury personnel to execute more value- added tasks in the corporation. The SAP treasury solution has hastened the daily cash processing, freeing the staff time for analysis. The quality of information has enhanced drastically with daily posting and reconciliation. Every day for Hindustan lever the SAP Treasury accumulate lock boxes and prior day bank statements. The opening ledger balances of the cash positions are updated by the detailed bank account statements and are by design posted to the SAP R/3 General Ledger as component of an automated reconciliation of prior day activity. In combination of the liquidity forecast of the cash inflows and the outflows. The SAP treasury provides wide-ranging information to identify the current or future liquidity shortage or excess. All this information enhances the cash manager to focus more on analysis rather than transactions. SAP treasury strongly integrates between cash management and treasury management. Due to SAP treasury the cash manager don’t have to spend time on making journal entries and month end closing, everything in done on real-time , day to day basis.. The SAP Treasury is used to make analysis on Currency risk and Hedging transactions; it also consists of Market Risk Management. SAP Treasury is supplemented with 2 Complimentary Sotware patners :- Inbound electronic Banking solution from Cerg Finance Outbound electronic Banking solution from Citibank SAP Treasury includes within 3 vital components:- Cash Management (For analysis of liquidity and E-banking) Market Risk Management(For interest exposure and asses currency) Transaction Management(for managing transaction portfolios in securities foreign exchange etc.) SAP Treasury System Characteristics Conclusion FMCG is a characteristically protective sector – with a very inelastic demand. The sectors revenue never dip drastically when ther is rise or contraction of income, nor the sales rise drastically when the prices falls. There is very big a time lag between the reduction/increase of incomes and the impact on FMCG sales because of the `daily necessity’ character of these products; it takes a long time for customers to reduce or stop the consumption of these products. Rate of Return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. ROR for Colgate Palmolive is +25% by implementing the SAP Treasury. Discounted Payback Period: Duration of time required to recover the initial cash seepage from the discounted future cash inflows. This is the advance where the present values of cash inflows are cumulated until they equal the total initial investment. For the Above SAP Treasury System, it was estimated to be 3.3 years. The changing global scenario and business demands lead to the adoption of newer technologies to make sense of data and automate business processes. Management Information Systems are needed to provide a competitive advantage, operational excellence, to survive and improve customer intimacy. Linking of the SAP Treasury System with the Reuters provides them with up to date information on Commodity prices which can help the Colgate Palmolive Company to hedge in times of volatility in the prices of raw material to be used as ingredients in the product segment. The employees are now more efficient in their roles as Finance Officers as they no more have to do the tedious job of data entry but rather make informed analysis and decisions. FMCG sector is recession proof. Human Beings as customers will never stop bathing, brushing their teeth, creaming themselves, thus the effect of recession was the least on this sector. The Real winners have been those companies who have synergized their business with Information Systems and supplemented their market share by taking advantage of the volatile situation in those times. Integration of various departments in any Company, FMCG or otherwise is what will provide them with the competitive advantage to survive and make new market innovations to drive better growth.
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