preeti report

8/11/2019 Preeti Report

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CHAPTER 1

INTRODUCTION

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in

the economy. A well-established distribution network, intense competition between theorganized and unorganized segments characterizes the sector. FMCG Sector is expected to

grow by over 60% by 2010. That will translate into an annual growth of 10% over a 5-year

period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in

2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene,

and the chocolates and confectionery categories are estimated to be the fastest growing

segments,

With the presence of 12.2% of the world population in the villages of India, the Indian rural

FMCG market is something no one can overlook. Increased focus on farm sector will boost

rural incomes, hence providing better growth prospects to the FMCG companies. Better

infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit

from growing demand in the market. Because of the low per capita consumption for almost

all the products in the country, FMCG companies have immense possibilities for growth. And

if the companies are able to change the mindset of the consumers, i.e. if they are able to take

the consumers to branded products and offer new generation products, they would be able to

generate higher growth in the near future. It is expected that the rural income will rise in

2007, boosting purchasing power in the countryside. However, the demand in urban areas

would be the key growth driver over the long term. Also, increase in the urban population,

along with increase in income levels and the availability of new categories, would help the

urban areas maintain their position in terms of consumption. At present, urban India accounts

for 66% of total FMCG consumption, with rural India accounting for the remaining 34%.

However, rural India accounts for more than 40% consumption in major FMCG categories

such as personal care, fabric care, and hot beverages. In urban areas, home and personal care

category, including skin care, household care and feminine hygiene, will keep growing at

relatively attractive rates. Within the foods segment, it is estimated that processed foods,

bakery, and dairy are long-term growth categories in both rural and urban areas.


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Distribution process consists of all the activities undertaken by manufacturer, either alone or

in sync with other channel members in order to make the product available to consumers.

Distribution can mainly be divided into two major components:

Distribution network comprising of distribution channels

Logistics or physical distribution

Efficient distribution and logistics are prerequisites for smooth transit of goods. Selling is the

end process of distribution as this leads to change in ownership of product. Distribution is the

most vital element for the success of FMCG companies. Efficient distribution network

ensures brand is delivered in right quantity, right place and right time in good condition and

at competitive rates.

Objective of distribution network of FMCG companies:

Availability of Brand: Distribution network ensures that the product is on the shelf or in

outlet when consumers want to buy.

Quality of product: Companies ensure that not only the product is available at right time but

also in right condition and quality like freshness, package etc.

Optimum price: Effective distribution also ensures that the cost of product is competitive

when it reaches final consumer.Types of distribution channels:

Direct Distribution: In this case: Companies have direct control over the goods distribution

either to retailers or exclusive distributors.

Fig 1: Direct Distribution

Advantages of direct distribution:

A simplistic and direct distribution line

Efficient communication between the distributors and suppliers.Indirect Distribution: This type of distribution occurs when intermediaries are involved in the

distribution process.

Types of Channel Members

A typical distribution channel consists of the following members:

Agents/Brokers: These are channel partners that match demands of manufacturer with

wholesalers or in organized market with customers. They are very important for exports and

international marketing.


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Wholesalers: These are someone who primarily sells to other retailers. They typically buy in

bulk and are very important in rural India.

Retailer: Retailers are most visible face of the distribution system. India has the largest

number of retailers in the world.

Factors affecting Distribution network

Type of product:

Type of customers

Market considerations

Internal considerations

Legal considerations

Challenges and solutions in FMCG Distribution Networks

Value Chain De-verticalization to handle the huge distribution network requirements

India has approximately 6 million retail outlets with around 2 million in over 5000 towns and

4 million in 600,000+ villages. Although super markets have made in-roads into India, their

presence is limited to modernized urban areas. This poses a huge challenge for logistics and

distribution, especially for new players.

A solution to this problem is Value Chain De-verticalization which involves achieving

organizational separation through outsourcing the supply chain activity to a 3rd party. This

will often involve selling existing Operation assets and activities to a financial buyer, 3rd

party manufacturer/distributor or a joint venture with other FMCG companies. This

essentially makes the company in question asset light while the supply company becomes

asset heavy.

How De-verticalization unfolds to reduce barriers of entry

This allows the management of the FMCG Company to focus solely on customer and

consumer management which is its main growth driver. On the other hand, the 3rd party

providers can build their assets and networks in a robust way which they will lend out to theFMCG companies which outsource the supply chain activities to them. Managing supply

chain activities being their core activity, they are able to put 100% focus on this and hence

achieve efficiency and responsiveness which will help all its clients.

To cite examples, a few FMCG companies like Sara Lee and Nike have already treaded this

path and have been quite successful. However, there is a lot of scope for a huge chunk of

FMCG companies to follow this.Intermediary reduction for reducing supply chain costs


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With time, organized retail chains are setting up systems for inventory management and

quick servicing. This is in turn providing opportunity for the companies or suppliers to reduce

distribution cost by reducing intermediaries like wholesalers and distributors. The FMCG

companies can use this to their advantage and supply directly to the warehouse of the retailers

thereby reducing costs immensely. A part of this benefit can be passed over to the customer

making the companies more competitive while the other part can be shared between the

company and the retailer. Thus this helps in increasing the efficiency of an FMCG company.

Driving channel width for increasing sales

The share of FMCG sales done through grocers had decreased from 50% in the early 90s to

around 35% in the late 90s. This is due to the increase in contribution from other outlets like

chemist outlets and paan shops. FMCG companies need to promote this increase in channel

width by redesigning their SKUs (e,g, sachets) and hardware (e.g. mini dispensers). This in

turn will give them benefit through increased sales by higher accessibility of their products

thus increasing the responsiveness of the distribution network.

Increasing visibility of secondary sales through web connectivity with redistributors

A typical distribution network will consist of goods passing to Clearing & Forwarding Agent

(CFA), then to Redistributors (RD) and finally to Retailers. While it is convenient to connect

with and track sales of the CFAs which are less in number (typically one or two in every

state), it is immensely difficult to track the sales that is happening from the RDs. This is due

to the huge number of RDs present in a distribution network.

To enable this, FMCG companies can use the web to connect with the RDs and major

retailers to obtain their sales data. This will help them in achieving better visibility and hence

better forecasting of sales at different points of the distribution network. This leads to a

substantial increase in efficiency for the company.

Differentiating by using the internet as a distribution channel

The future of most products probably lies in using the internet as a point of sale and reachingout to the customers directly. FMCG companies will be no exception to this and will soon

have to join the bandwagon which will give them a massive boost of responsiveness to

consumer demand.

We will now examine the distribution networks of three largest FMCG players in India:

HUL, Marico and ITC. We will further see the issues they face in their distribution network

and how they have/can solve them to gain better customer service levels.


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boutiques. The firms sales force and advertising decisions depend on how much training and

motivation the dealers need.

OBJECTIVES OF THE STUDY:

1.To study the nature of work related to distribution of products from companies to theRetailers and wholesalers.

2. To understand the entire distribution activities carried out by Sairam distributors.

3. To identify any loop holes in between the distribution system

PERIOD OF THE STUDY: 30 days


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CHAPTER 2

COMPANY PROFILE:

Sai ram distributors basically a distributor of ITC business particularly FMGC sector related

to food products.

ITC's Branded Packaged Foods business is one of the fastest growing foods businesses in

India, driven by the market standing and consumer franchise of its seven popular brands -

Aashirvaad, Sunfeast, Bingo!, Kitchens of India, mint-o, Candyman and Yippee! The Foods

business is today represented in 4 categories in the market - Staples, Snack Foods, Ready To

Eat Foods and Confectionery.

It is ITC's policy that its food products should provide nutritious, tasty, hygienic and

convenient options to the consuming public.

ITC will offer food products across multiple categories, price points, delivery formats and

segments as dictated by the needs of the consumer.

ITC's portfolio of food products will be continuously improved and modified to -

1. offer new products that meet the aspiration of the changing consumer,

2. offer food products with affordable and appropriate nutrition,

3. offer food products with micronutrient fortification,

4. drive reduction of sodium, sugar and fat in Products,

5. offer trans-fat free products,

6. offer functional food products with focus on India specific metabolic disorders,

7. follow a strict code for making product functional claims,

8. follow the highest standards in nutrition labelling and reporting,

9. follow responsible marketing and consumer communications practices,

10.create and sustain R&D focus in development of new products and processes,

11.follow the highest standards of hygiene and manufacturing practices in all delivery

formats,

12.collaborate with experts and institutions and


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13.ensure widespread accessibility to healthy products through appropriate pricing and

wide distribution.

VISION:

Sustain ITC's position as one of India's most valuable corporations through world class

performance, creating growing value for the Indian economy and the Company's stakeholders

MISSION:

To enhance the wealth generating capability of the enterprise in a globalising environment,

delivering superior and sustainable stakeholder value

Board of Directors

Chairman

Y C Deveshwar

Executive Directors

Nakul Anand

P V Dhobale K N Grant

Non-Executive Directors

A Baijal A V Girija Kumar S H Khan

R E Lerwill S B Mainak S B Mathur

P B Ramanujam S S H Rehman Anthony Ruys

Meera Shankar K Vaidyanath
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CHAPTER 3

FUNCTIONS AND ACTIVITIES OF THE SRI RAM DISTRIBUTORS

Sairam distributor generally has exclusive rights of distributing all products or a set ofproducts as ITC distributor is also appointed to serve a particular clientele base likehotels,

canteens, restaurants etc. Traditionally a distributor is treated like a trader in the distribution

channel. But now many organizations have started seeing distributors playing much bigger

role. Following are some of the functions a distributor plays in modern FMCG channel.

Basic role of Sri ram distributor is to purchase/stock products in bulk from the manufacture

and sell/distribute them to retailers in smaller quantity.

Distributor takes orders from the retailers and institutions and ensures timely and qualitydelivery of products.

Distributor maintains stock of the products to absorb the supply fluctuation from

manufacturer.

Distributor provides required financing for allowing credit to the retail market.

Distributor is the person who will provide ground level data on demand estimation for the

products.

Distributor expands the retail universe (by opening new outlets) as well as the retail

penetration of various products.

Distributor takes up field level marketing activities like H2H promotions, in shop

promotions etc.

Distributor helps in minimizing consumer complaints and resolving them.

This basically clarifies the broad role of the Sairam distributor in modern FMCG channel.

We will see the functions and daily routine of a typical distributor in the next part to finally

derive the criteria for selection of a good FMCG distributor.

Roles and Responsibilities:

To invest in the company of which Stockistship he acquires. He should also invest in

ensuring adequate manpower and infrastructure(Godown, sales staff, vehicle for timely and

adequate supply of companys products to his customers in his area) which goes a long way

in development of the business. His lack of investment in any of the factors mentioned will

affect the sales negatively.

To maintain 15days stocks (of months sales target)during entire month. Maintaining
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sufficient stocks will ensure that stock outs of companys different SKUs are minimum and it

will also enable him to supply full orders of his customers.

To keep and maintain stocks of companys products in safe and hygienic conditions. It is

necessary that the Stockist must have fire safety measures in his godown. He must also

ensure to keep his godown pest free by using pest control devices and services. Many

Stockists consider this a wastage of money. But having safety and hygiene in his godown not

only helps in safety of products of company but it also builds up his reputation and thus many

good companies may be willing to do business with him.

To place orders to super stockist or CFA (if the company is operating thru super stockist/CFA

network) or directly to company as per demands of market. He must maintain sufficient

stocks in his go down always to avoid sales loss due to stock shortage.

To make timely payments to SS or CFA or directly to Company against his old pending bills.

Company's lose 5 to 10% of their sales due to poor or late payments by Stockists. So a

Stockist with growth mind-set must always have sufficient funds at his disposal always to

ensure timely payments to SS/CFA or direct to company.

For continuous business growth in today's competitive market place he should maintain

cordial relations in the market. His regular market visits will help him make progress on this

front.In an age with more competition and more or less similar products, cordial and

productive relationships will go a long way in sales growth.

To visit his market on regular basis. These market visits will help him know about the

competitors practices in market. These visits will also make him aware of problems ofretailers and wholesalers in market relating to pending schemes of company or damage or un-

saleable stocks of company's products lying with them and this knowledge will help Stockists

solve problems of his customers. These visits will also help him develop good relations with

retailers and wholesalers in market.

For continuous business growth He must minimize and resolve complaints of his

customer(retailer and wholesaler) in his area. His regular market visits will take care of this.


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To ensure timely and full order supplies to the customers i.e. retailers and wholesalers in his

area of operation to avoid sales losses due to late or insufficient supplies.

To extend credit to his customers as per market norms. In today's competitive market with

more and more companies entering market every day, extension of credit has become a must

for survival in market and to fuel growth. Retailers and wholesalers prefer buying on credit,

so they will prefer buying from a Stockist who gives credit to them.

It is his duty to provide product wise stock status to the company staff as and when they ask

for it.

He must maintain month wise purchase record of all of his customers, ready with him all the

time and provide the same to company as and when asked and required by company officials

from time to time. Availability of this purchase data with him will help him plan growth of

sales of companys products.

To have full contact details of all of his customers and provide the same to company.

To help in execution of Below The Line (BTL) activities in the market with or without help

or support from company staff. Below the line activities include:

(1) On shop promotion

(2) Canopy activity in his area.

(3) Door to door or home to home activity.

(4) Insertion of leaflets into newspapers etc.

Execution of these BTL activities will go a long way in increasing awareness and sales of

companysproducts.

To increase his turnover and sales he should make all efforts to promote and sell all of

companys products to all his customers.

To take all steps to increase the width and depth of distribution of companys products in his

area. Increasing Width of distribution means to sell companys products to more no of

retailers and wholesalers in his area and increasing depth of distribution means to sell more of

companys products to his existing customers.


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To pass on schemes, as being run and operated by company from time to time, to his

customers. He should not try to increase his profit by not passing on scheme of company to

his customer. Companies plan schemes and inputs to grow the sales of their products so

passing on schemes to his customers by the Stockists will help Stockist increase his sales and

thus his turnover and thus his profit in the long run.

To provide timely information to company on competitor practices and activities to help

company plan its sales strategy to safeguard and/or increase the sale of its products.

To abstain from selling companys products to his customers on prices which are more than

the company price list.

It is the moral responsibility to Not to sell or trade companys products in the area of other

Stockist of company.

Again on ethical grounds he should not be a Stockist of competitors products.

ITC one of the leading FMCG in the country which operates in Foods, Personal Care,Cigarettes and Cigars, Branded Apparel, Education and Stationery Products, Incense Sticks

and Safety Matches,Hotels,Paperboards & Specialty Papers, Packaging, Agri-Business and

Information Technology, Category, has come a long way from the when it started. The

biggest harbinger in the ITC growth story has been Cigarettes, The category in which ITC

still is the major player in the country.

ITCs highly popular portfolio of brands includes Silk Cut, Insignia, Lucky Strike, Classic,

Bristol, Gold Flake, Players, India Kings, Scissors, Capstan, Berkeley, Flake, Duke & Royal,Navy Cut. The Company has been able to maintain its Market leadership through complete

focus on ceaseless value creation for consumers through substantial investments in creating &

bringing innovative product designs to market, ensuring consistent & superior quality, state-

of-the-art manufacturing technology, & superior marketing and distribution.

However the effect of cigarettes as a category has not been limited to making ITC a Cash

Surplus company. What Cigarette as a category did was it laid the foundation for the

Marketing channel of ITC, which arguably is considered the Best in the country? In the early

days cigarette consumption was confined to the urban centers in the country however ITC
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saw an immense potential for growth in semi urban and rural India. Thus began the expansion

of the channel, ITC gained inroads into the remotest of the places of the country eventually

leading up to the E-chaupal model. Cigarettes owing to the Inelastic nature of demand

provided ITC with a lot of bargaining power to further push their other products and hence

turned out to be very instrumental in establishing The ITC Marketing Channel.

Channel Design

MANUFACTURING UNIT

CUSTOMER

HAWKERS

RETAILERS

HAWKERS

WHOLESALERS

DISTRIBUTORS

WAREHOUSE

Data/Information Flow in the ITC Distribution Channel

Information flow plays an important role in communicating strategies from the top

management to the ground staff who are responsible for the ultimate implementation of these

strategies. In case of FMCG business these information flow can be in the form of gaining

more market share strategy (taken by the top management) to lowering product prices to

achieve the said strategy at the lower level.

The Information flow in ITC generally follows a hierarchical structure where it percolates

down from the top management to the area executives through several layers. Most of this

information flow is in the form of changes in strategy that ultimately changes to volume ofsales and other review metrics.

The following figure shows the information flow as it happens in the ITC organization:

If we look at the information flow particularly in the cigarette business we find the way

information flows from the top to bottom of the organizational pyramid. It starts with the

General Manager for the particular business vertical which in this case is the Cigarette

business. This information is typically in the form of strategy measures that the top

management takes. An example can be a strategy communication from thegeneral manager to improve the market share in the cigarette business. In such a case the next


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line managers who would typically be the product managers would translate this strategy into

implementable product strategies (e.g. new product development or cutting prices based on

the particulars of the strategy). In case of simpler strategy like improving sales, zonal

managers would be communicated this strategy. From the zonal managers this information

will flow to the branch managers who typically manage specific branches within a zone. This

information next flows along to the assistant manager and from there to area managers who

deal with the wholesalers in implementing these changes. In the organizational hierarchy the

information flows to the area executives who interact directly with the retailers.

After this initial information flow there is data flow in the reverse direction as well to help the

managers to evaluate the attainment of strategy objectives. These are mainly in the form of

sales report that are produced in a weekly, monthly and yearly basis.

Example of sales position report:

These reports are generated on a weekly basis

These reports are generated by the managers at the distributor level

Reports are submitted to the Areas sales manager or Asst. Manager

Typical contents of the report include Opening stock, closing stock, ordered stocks, received

stock and damaged stock.

Document regarding the flow of information

A sales position report is generated weekly by the manager (cigarettes) at the distributor

level. This report is submitted either to the area sales manager or the assistant manager.

The report contains the following:

Opening stock : It is the stock of an item (cigarettes) present at the beginning of the week .

The stock which is left at the end of the week becomes the opening stock for the following

week. The distributor takes the order every week whereas the retailers take the order after

every two week. At the point of delivery distributors need to pay cash and collect stock, no

credit is given on cigarettes.

Received stock : It is the stock which each distributor obtains at the beginning of the week

from the godown( Area manager) and further distributes it to the wholesalers (maximum 1

month credit) and hawkers( 1 day credit).

Sale of the stock : This includes the total sale done by the distributors and the retailers from

the stock in a week.


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Damaged stock : Cigarettes have a shelf life of 3-6 month as they are highly hygroscopic. All

damaged or unsold stock is bought by the company and sent to the factories where the

tobacco is extracted, processed and new cigarettes are produced.

Closing stock: The stock which is left at the end of the week .

Channel member management

Monetary and non-monetary methods of rewarding: According to the HR policy of ITC there

are no monetary or non-monetary rewards given to the channel members i.e. the distributors

and the retailers. No benefits, no freebies or paid vacations etc are provided to the channel

members. Very rarely cash gifts are given which is related to the performance. No credit is

given to the distributors for the purchase of stock (cigarettes). Even the retailers do not get

any credit from the wholesalers and have to pay cash. The wholesalers however get a

maximum of one month credit from the distributor.

Target setting mechanism: There is a certain target which is set for the distributors. For the

retailers there are no targets set. The target for the distributors is in terms of M-S, where 1 M-

S is equivalent to 12000 sticks and 1 case is equivalent to 12 M-S. The distributors are given

a target of 200 M-S per week.

Monitoring Mechanisms : The distributors are monitored by the Area Sales Manager and the

retailers are monitored on by the Area Executives. The parameters on the basis of which the

distributors are monitored are the following:

(a) Visibility of the products

(b) Availability of the products

(c) Maintenance of the existing.

Training and HR Inputs : The distributors are not given any training or HR inputs by ITC.

Management of Field Force

Monetary Method of Rewarding: As per the HR policy of ITC Ltd the field force is

monetarily rewarded on the basis of the number of bills drawn on the distributors.Non-Monetary Method of Rewarding: The field force of ITC Ltd is given unlimited medical

benefits in terms of non-monetary methods of rewarding.

Target setting Mechanism: The field force is given targets in terms of the number of bills

generated by an individual.

Monitoring Mechanism: The members of the field force reports to their immediate supervisor

and this follows throughout the hierarchy.

Training and HR Inputs: The sales men of the distributors are under the payroll of ITC ltd. Incase of mass recruitment the new sales force is given training by the HR department of ITC


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Ltd. As per the HR norms, ITC Ltd provides training to its own employees of the distribution

network at regular intervals.

Transportation and Logistics:

Company sourced 3rd party truck

Company sourced 3rd party truck

Distributor Sourced third party Vehicles

Distributor Sourced third party Vehicles

Third party owned trucks are used to transport the cigarettes from the production plant to the

company depot/warehouse. Similarly, third party owned trucks are also used to transport the

goods from the warehouse to the distributors. All these transportation costs are borne by the

company. From the distributorsplace, the cigarettes are distributed to the wholesalers & the

retailers (panwalas) through the user delivery vans, rickshaw, cycles, motorcycles, autos. All

these transportation costs are borne by the distributor. ITC Cigarettes have consolidated their

inventory by deploying SAP module of Information technology in their warehouses. The

stock positions are automatically updated in the database as & when goods are sold from the

warehouse. Accordingly, replenishment orders are generated to the company when the stock

level goes below the benchmark level which takes into account the order lead time as well.

This way ITC cigarette reduces its inventory holding costs by deploying proper inventory

management.


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CONCLUSION

As FMCG companies get more directly involved at the front end of the value chain, the role of

distributors is shifting from selling goods in a particular territory to being mere financial

investors. In India, companies have long relied on distributors because they understand the local

market. But with improved data availability, companies are getting closer to customers. They

have started to reduce the number of small distributors in favour of big ones to cut costs. FMCG

companies typically give distributors a margin of four to six per cent of secondary sales, and

reducing the number of distributors helps cut costs. Large distributors are well equipped to handle

some key functions of small ones - lending to retailers, environment management and demand

management. In some areas, companies have taken on a greater role. Earlier, distributors

appointed salesmen directly, and the companies had little or no say. Increasingly, companies areoutsourcing this entire process to temp staffing outfits.

The distribution network that played an important role in driving, or hampering, the growth of

these companies.

Selling capability is the function of distributors, said an official from a logistics company.

Distributors perform one of the most important supply chain functions: the distributor has to

ensure the utilisation of space at the retailers shelf; it has to make sure the retailer does not run

out of inventory at any time, said the official.

In a standard supply chain, the official said, a manufacturer produces and markets its products

while the logistics firms transport, store and deliver the product to the retail outlets while

distributors take orders and manage sales on behalf of the manufacturer.

By contrast, most companies try to integrate this function into their existing operations, expecting

the third party to only provide storage, the official said. This sometimes leads to problems.


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ANALYSIS OF ITCS DISTRIBUTION NETWORK

ITC is one of India's foremost private sectors companies with a market capitalization of

nearly 100000 crores and a turnover of over 18000 crores. ITC is rated among Asia's 'Fab 50'

and the World's Most Reputable Companies by Forbes magazine, among India's Most

Respected Companies by Business World and among India's Most Valuable Companies by

Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in

a study conducted by Brand Finance and published by the Economic Times. ITC has a

diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-

Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel,

Greeting Cards, Safety Matches and other FMCG products.ITC has More than 1000 SKUs

with warehousing space of more than 4 million Sqft spread out across 55+ locations .Also

Production is carried out across 45+ plants.

ITCs Logistic network overview

Cigarettes:

ITC has a unprecedented market leadership in this segment with a market share of around 70

% .The Dominance of ITC is evenly distributed across all segments and in all geographic

locations as wel as price.ITC has an extensive distribution network supprted with state of theart technology as well as products which give it a exciting long term potential in this sector.

Foods

The Foods business is today represented in 4 categories in the market. These are:

Ready To Eat Foods

Staples

Confectionery

Snack FoodsIn the ready to eat segment ITC has a market share of 48 % and with a majority of the pie

being held by MTR as well.

CONFECTIONERY Confectionary market in India is about Rs.2500 crore. It is loosely

divided into seven categories: 1. Hard boiled candies 2. Toffies 3. Eclairs 4. Chewing gum 5.

Bubble gum 6. Mints 7. lozenges ITC has currently in market with its two brands Mint -o

and Candyman.


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STAPLES ITC entered the staples market in 2002 with wheat flour under the Aashirvaad

brand. In 2003, ITC extended the Aashirvaad brand to edible salt. By early 2006, ITC had a

40% market share in the Rs. 6 billion packaged flour business

BISCUITS: Indian biscuit market is estimated to be around 5000 crore. Biscuit industry in

India in the organized sector produces around 60% of the total production, the balance 40%

being contributed by the unorganized bakeries

In the NON-FOOD segment ITC follows the same model, just that the production centres for

the same are: Kolkata, Bangalore, Haridwar and Nainital.

e-CHOUPAL

The e-choupal initiative was designed by ITC to the challenges faced by the Indian

agricultural scene characterized by fragmented farms, weak infrastructure and a lot of

intermediation by 3rd parties leading to deprivation of the farmers of their dues. The e-

choupal benefits the farmers in terms customized knowledge(for land management as well as

risk mitigation) Real time information(for commodity prices, weather information and farm

inputs).The company benefits in terms of finding a channel into the untapped rural markets,

leasing this channel to 3rd parties(Farm producers) and for direct marketing activities.

e-choupal brought down the chain costs by half and the majority of this benefit was passed on

to the farmers in terms of savings in the labour and handling losses. All in all while the

farmers benefits through enhanced productivity and gate prices ,ITC benefits by having paid

lower procurement costs reducing the non value adding activities in the chain, adding features

such as insurance and credit facilities for rural masses and using it as a medium for strategic

sourcing support for its various divisions.

The Distribution system comprising of village traders,Ghanis,wholesalers,Mandis

,cooperatives, traders has been replaced by the e-choupal as the centre of all information.

E choupal serves 4 million people spread over 10 states thorugh 6500 kiosks.It has around 35

hubs at the present and souces its supplies- soyabean, coffee, wheat, rice, pulses, shrimp fromaround 40000 villages .It intends to take this facility to 15 states in the future covering 10

million farmers and 100000 villages in the coming years.

Issues in the Distribution system

With the inflow of retailers like walmart,ITC would be in a new arena altogether.With its

competitiors like HUL having prior experience of working in company specific channels with

shared ERP tools,ITC would have to device new distribution channel to account for suchretail players.


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The Distribution process mainly consists of three departments:

Distribution Department: It appoints distributors and establishes a distribution

network, processes approved sale orders and prepares invoices, arranges logistics

and ship products, co-ordinates with distributors for collections and monitors

distribution stocks and their set-up.

Finance Department: It checks credit limits and approves sales orders in

compliance with the credit policy followed by the firm, records collections from

distributors, periodically reconciles outstanding balances from distributors, obtains

balance confirmation from distributors and follows up outstanding balances.

Shipping or Warehousing Department: It dispatches goods as per approved by

order, ensures that stocks are dispatched on a FIFO basis, ensures physical control

over load out area and updates warehouse stock records in a timely manner.


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DISTRIBUTION ACTIVITIES OF SAIRAM DISTRIBUTORS PVT LTD

Warehousing

Sairam range of warehouse solutions is amongst the most diverse in India. It encompasses

dedicated, shared-user, automated and multi-temperature operations. We deal with all typesof FMCG products of ITC. A unique combination of engineering, IT, human resources and

supply chain skills enables us to provide functionally excellent solutions that are Fit To

Purpose. By working in close partnership with our customers, we identify the optimum

operational model based on variables such as product type, customer geography and

technologyrequirements. Our trained, certified, experienced, motivated and empowered unit

managers and teams deliver operationally excellent service standards.

Transportation

Sairam has responded adeptly to modern supply chain challenges with a comprehensive

range of transport services, which cater to local, regional and national requirements. We add

value and build in flexibility through advanced solution design and supply chain modelling

where required. We effectively leverage technology to optimize routes, track consignments

and maximize driver and vehicle efficiency. Systems integration ensures total visibility whilst

transport is managed across multiple depots and state lines.


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The team of experienced drivers ensures that the integrity of the products is maintained. They

are trained and motivated to ensure they make accurate and timely deliveries.

Sairam offers organizations various standardized options in their logistics solutions through

collaborative services across the entire spectrum in the supply chain. Whether it is flexibility,

pay-as-you-go warehousing space, shared transport to optimize capacity or a co-packing

facility, our width of experience makes us the ideal shared-user partner for all businesses-

small, medium or large.

The in-depth understanding of each project's unique characteristics coupled with ability to

challenge and re-engineer existing solutions, enables us to differentiate our service offerings

and bring additional value to our clients.

Basic role of Sri ram distributor is to purchase/stock products in bulk from the manufacture

and sell/distribute them to retailers in smaller quantity.

Distributor takes orders from the retailers and institutions and ensures timely and quality

delivery of products.

Distributor maintains stock of the products to absorb the supply fluctuation from

manufacturer.

Distributor provides required financing for allowing credit to the retail market.

Distributor is the person who will provide ground level data on demand estimation for the

products.

Distributor expands the retail universe (by opening new outlets) as well as the retail

penetration of various products.

Distributor takes up field level marketing activities like H2H promotions, in shop

promotions etc.

Distributor helps in minimizing consumer complaints and resolving them.

This basically clarifies the broad role of the Sairam distributor in modern FMCG channel.

We will see the functions and daily routine of a typical distributor in the next part to finally

derive the criteria for selection of a good FMCG distributor.

preeti report

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