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A SUMMER INTERNSHIP REPORT ON „EFFECTIVE IMPLEMENTATION OF SDS‟ AND „SEAMLESS OPERATIONS OF CHANNEL FINANCE‟ SUBMITTED BY VIDYUT PERTI PGDM ROLL NO. 131 BIMTECH 09-11 UNDER THE GUIDANCE OF CORPORATE GUIDE ACADEMIC GUIDE Mr. ANIL SAYAL Dr. ANSHUL VERMA BRANCH CONTROLLER ASSOCIATE PROFESSOR DELHI BRANCH FINANCE NESTLE INDIA LTD. BIMTECH
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internship report
Transcript of nestle
A SUMMER INTERNSHIP REPORT
ON
„EFFECTIVE IMPLEMENTATION OF SDS‟
AND
„SEAMLESS OPERATIONS OF CHANNEL
FINANCE‟
SUBMITTED BY
VIDYUT PERTI
PGDM
ROLL NO. 131
BIMTECH 09-11
UNDER THE GUIDANCE OF
CORPORATE GUIDE ACADEMIC GUIDE
Mr. ANIL SAYAL Dr. ANSHUL VERMA
BRANCH CONTROLLER ASSOCIATE PROFESSOR
DELHI BRANCH FINANCE
NESTLE INDIA LTD. BIMTECH
2
Birla Institute of Management Technology
Summer Project Certificate
This is to certify that Vidyut Perti, Roll No. 131 , a student of Post Graduate Diploma in
Management has worked on the Summer Project titled “Effective Implementation of SDS and
Seamless Operations of Channel Finance” at Nestle India Ltd. after trimester III in partial
fulfilment of the requirement for the programme. This is his original work to the best of my
knowledge.
Date: Signature
Seal: (Dr. Anshul Verma)
3
ACKNOWLEDGEMENT
A Summer Training project is a synthesis of knowledge and experience of experts in their
related fields. However, no project is possible without the guidelines and help that is
extended by the experts to the student with the sole benevolent purpose of intellectual
development.
First and foremost I would like to express my gratitude and thank Mr. Anil Sayal, Branch
Controller, Delhi Branch who was my Mentor, for guiding me throughout the entire
training period.
I owe enormous intellectual debt towards my teacher and mentor Dr. Anshul Verma
whose suggestions and guidance were invaluable and helped me throughout my project
I am also thankful to Mr. Rohit Talwar (Assistant Manager Accounts) and Mr Pankaj
Kumar Jaiswal (Assistant Branch Controller) for guiding me and for providing fruitful
insights on subject. This Report would not have complete without the inputs and the words of
advice from them for which I shall always remain grateful to him.
I would also like to thank all members of the Finance & Control Department who have
directly or indirectly helped in providing the information and amenities which have helped in
development of this report, without such help this report would not have been possible.
This project has given me the opportunity to work with one of the most Respected companies
in the world. I am Thankful to Nestlé India Limited for providing me with this opportunity
(Vidyut Perti)
4
TABLE OF CONTENTS
INDEX TO CHAPTERS
CHAPTER 1- INTRODUCTION...........................................................................................8
1.1 ABOUT NESTLE..............................................................................................9
1.2 NESTLE INDIA................................................................................................9
1.3 NESTLE DELHI BRANCH...........................................................................11
1.4 TYPES OF CHANNELS................................................................................14
CHAPTER 2 – OBJECTIVES..............................................................................................16
CHAPTER 3 – METHODOLOGY......................................................................................18
CHAPTER 4 – CLAIMS MANAGEMENT........................................................................20
4.1 WHAT ARE CLAIMS.................................................................................21
4.2 GROUPING OF CLAIMS..........................................................................21
4.2.1 SECTION II CLAIMS................................................................................23
4.2.2 LUMPSUM CLAIMS................................................................................26
4.3 KEY ACCOUNTS.....................................................................................33
4.4 BAD GOODS.............................................................................................34
CHAPTER 5 – SAR DISTRIBUTOR SOLUTION (SDS).................................................36
5.1 INTRODUCTION TO SDS....................................................................37
5.2 ADVANTAGES......................................................................................38
5.3 LANDSCAPE..........................................................................................39
5.4 CONSOLE...............................................................................................40
5.5 DESKTOP ANALYSER.........................................................................41
5.6 KEY PROCESSES & FUNCTIONALITIES..........................................41
CHAPTER 6 – PROCEDURES FOR SETTING OF BUDGETS & RECEIVING
CLAIMS IN THE SAR DISTRIBUTOR SOLUTION........................46
6.1 TEMPORARY PRICE PROMOTIONS................................................47
6.2 DISPLAY CLAIMS...............................................................................47
6.3 BAD GOODS.........................................................................................48
6.4 SAMPLING............................................................................................49
6.5 REDISTRIBUTOR COMMISSION & FREIGHTS..............................50
6.6 MANUAL CLAIMS...............................................................................51
CHAPTER 7 – CHANNEL FINANCE................................................................................52
5
7.1 INTRODUCTION TO CHANNEL FINANCE....................................53
7.2 RTGS......................................................................................................53
7.3 ADVANTAGES OF CHANNEL FINANCE.......................................54
CHAPTER 8 – FINDINGS & ANALYSIS..........................................................................56
8.1 PROBLEMS..........................................................................................57
8.2 CHANGES & IMPACTS......................................................................58
8.2.1 TEMPORARY PRICE PROMOTIONS (TPP)...................................58
8.2.2 DISPLAY CLAIMS............................................................................59
8.2.3 SAMPLING CLAIMS........................................................................60
8.2.4 REDISTRIBUTOR COMMISSION & FREIGHT.............................60
8.2.5 BAD GOODS....................................................................................61
8.3 ANALYSIS OF CLAIMS RECEIVED................................................62
CHAPTER 9 – CONCLUSION............................................................................................67
INDEX TO TABLES
T 1.1 - AREA WISE SALES CONTRIBUTION TO DELHI SALES....................................11
T 1.2 - STAR PROGRAM.......................................................................................................30
T 1.3 - MAGIC STICK PROGRAM.......................................................................................31
T 1.4 - CHOCOLATE DOMINANCE PROGRAM................................................................31
T 1.5 - DIFFERENCE BETWEEN DIRECT & INDIRECT PARTIES.................................34
T 1.6 - NET PROCEED FROM SALES (NPS).......................................................................62
T 1.7 - TOTAL CLAIMS.........................................................................................................63
T 1.8 - PERFORMANCE OF TRADE SPENDS (PTS)..........................................................64
T 1.9 - BAD GOODS.............................................................................................................. 64
INDEX TO GRAPHS
G 1.1 - NET PROCEED FROM SALES (NPS)......................................................................11
6
INDEX TO FIGURES
F 1.1 - DISTRIBUTION MODEL...........................................................................................12
F 1.2 - TYPES OF CHANNELS..............................................................................................14
F 1.3 - TYPES OF DISPLAY PROGRAMS...........................................................................29
F 1.4 - LANDSCAPE OF SAR DISTRIBUTOR SOLUTION (SDS)....................................39
F 1.5 - SCREEN SHOT OF SAR DISTRIBUTOR SOLUTION (SDS).................................42
INDEX TO ANNEXURE
ANNEXURE 1 – PRODUCTS OF NESTLE INDIA..............................................................69
ANNEXURE 2 – MANUAL LUMPSUM CLAIM FORMAT...............................................71
ANNEXURE 3 – MANUAL FOOD SERVICES/VENDING CLAIMS FORMAT..............72
ANNEXURE 4 – MANUAL SECTION II CLAIMS FORMAT............................................73
ANNEXURE 5 – RETURN REQUEST FORM......................................................................74
ANNEXURE 6 – MANUAL FOR CDs FOR USAGE OF SDS.............................................75
ANNEXURE 7 - MANUAL FOR DOCUMENTATION FOR OPENING OF A CHANNEL
FINANCE ACCOUNT................................................................................75
ANNEXURE 8 – AUDIT REPORT FOR ATUL ENTERPRISES.........................................76
7
EXECUTIVE SUMMARY
My Summer Internship at Nestlé, Delhi Branch Office included 2 main projects.
The Project „Effective implementation of SDS‟ looks after the newly implemented Sales
Automation project – SDS( SAR Distributor Solution). As SDS was implemented in
November 2009, it is a relatively new system. The basis of the project being understanding
the operations of the system at the Distributor level and finding out the various bottlenecks so
as to convey them to management to help streamline the process. It included visiting various
Distributors in different areas in Delhi and NCR. It also included preparing a manual to help
Distributors operate SDS. A major part of the project included understanding the „Claims
Management System‟ at Nestlé. Claims management is a process by which the distributors of
Nestle claims the various discounts, promotions, schemes, commissions etc. provided to them
by the company. The project included understanding the manual process undertaken so far for
passing these claims and how effectively has SDS been in improving the process.
The results of this study were mainly that SDS is a New Automation System. Even though
Nestle has achieved 100% implementation, there are a number of Distributors who are facing
problems which have been listed and are in need for a manual which has been prepared.
The second project is „Seamless Operations of Channel Finance‟. Channel Finance(CF) is
an innovative mode of payment for distributors. More and more MNC‟s are using asking
there distributors to open Channel Finance accounts. Nestlé Delhi branch has an agreement
with HDFC Bank to open up Channel Finance A/Cs for its distributors. It currently takes 1.5
months to open a CF A/C. My project included understanding the entire process of Account
opening and preparing a Manual for distributors to help speed up the process
The results of this study were that, Channel Finance has been useful to small distributors who
sometimes face a cash crunch. For the big Distributors, it does not make much of a difference
as they have a strong Liquid position. However Distributors do face a problem for
documentation, for which an employee of Nestle has to visit them each and every time. This
wastes time and increases costs. With the manual, it helps the Distributors and if they face
any problem, they can call the Branch and easily solve their problems.
I had also gone for an Audit at one of the Chilled Distributors. The Audit report prepared can
be seen in Annexure 8.
8
CHAPTER 1
INTRODUCTION
9
ABOUT NESTLÉ
Nestle SA, Switzerland is amongst the world‟s largest food and beverages companies,
founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the
Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and
Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866 by
Henri Nestlé. The company is progressively evolved from a respected, trustworthy food and
beverage company to a respected, trustworthy food, beverage, nutrition, health and wellness
company. This objective is encapsulated in “Good Food, Good Life”. The principle activities
of the group encompass: beverages, milk products, nutrition and ice cream; prepared dishes
and cooking aids; chocolate, confectionery and biscuits; water; and pet care. It has 511
factories in 86 countries and employs nearly 283,000 individuals around the world
NESTLÉ INDIA
Nestlé India comes under the Nestlé SAR region which includes India, Bangladesh and Sri
Lanka. Nestle India Limited is the Indian arm of Nestle SA, which holds a 51% stake in the
company. It is one of the leading branded processed food companies in the country with a
large market share in products like instant coffee, weaning foods, instant foods, milk
products, etc. It also has a significant share in the chocolates and other semi-processed foods
market. Nestlé's leading brands include Cerelac, Nescafe, Maggie, Kitkat, Munch and
Milkmaid.
Nestlé‟s relationship with India dates back to 1912, when it began trading as The Nestlé
Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished
products in the Indian market.
After India‟s independence in 1947, the economic policies of the Indian Government
emphasized the need for local production. Nestlé responded to India‟s aspirations by forming
a company in India and set up its first factory in 1961 at Moga, Punjab, where the
Government wanted Nestlé to develop the milk economy. Nestlé India‟s first production
facility, set up in 1961 at Moga (Punjab), was followed soon after by its second plant, set up
at Choladi (Tamil Nadu), in 1967. Consequently, Nestlé India set up factories in Nanjangud
(Karnataka), in 1989, and Samalkha (Haryana), in 1993. This was succeeded by the
commissioning of two more factories - at Ponda and Bicholim, Goa, in 1995 and 1997
respectively. The seventh factory was set up at Pantnagar, Uttarakhand, in 2006.
Nestlé has been a partner in India's growth for over nine decades now and has built a very
special relationship of trust and commitment with the people of India. The Company's
activities in India have facilitated direct and indirect employment and provides livelihood to
about one million people including farmers, suppliers of packaging materials, services and
other goods.
10
The Company continuously focuses its efforts to better understand the changing lifestyles of
India and anticipate consumer needs in order to provide Taste, Nutrition, Health and
Wellness through its product offerings. The culture of innovation and renovation within the
Company and access to the Nestlé Group's proprietary technology/Brands expertise and the
extensive centralized Research and Development facilities gives it a distinct advantage in
these efforts. It helps the Company to create value that can be sustained over the long term by
offering consumers a wide variety of high quality, safe food products at affordable prices.
Nestlé India manufactures products of truly international quality under internationally famous
brand names such as NESCAFÉ, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE,
MILKMAID and NESTEA and in recent years the Company has also introduced products of
daily consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Fresh 'n'
Natural Dahi and NESTLÉ Jeera Raita.
The 4 branch offices in the country help facilitate the sales and marketing of its products.
They are in Delhi, Mumbai, Chennai and Kolkata. The Nestlé India head office is located in
Gurgaon, Haryana.
Nestle has divided its product offering into 4 major categories:
1. Beverages like coffee, tea and health drinks contribute to about 30% of Nestle s
turnover
2. Infant food/ milk products – Milk based products such as EveryDay, Milkmaid &
Fresh 'n' Natural Dahi and baby food such as Cerelac, Lactogen & NAN contributes
to 43% of Nestle's turnover.
3. Chocolates & Confectionery – Nestle comes 2nd
in this segment in India. This
category contributes 14% to Nestle s turnover. It includes mostly the following brands
- Kitkat, Milky Bar ,Bar-One, Munch Polo etc
4. Prepared Dishes & Cooking Aids - Ready to cook food/ cooking aides are sold
under the umbrella brand name Maggie. This category accounts for about 14% of
Nestle s turnover. Maggie is the market leader in the noodles (45% market share) and
the ketchup (43% market share) categories.
The various products produced by Nestle under Different Heads can be seen in
Annexure 1
11
NESTLÉ DELHI BRANCH
The Delhi Branch looks after the following regions – Delhi+NCR, Rajasthan, Haryana, U.P,
Jammu & Kashmir, Uttaranchal, Himachal Pradesh, Punjab & also Nepal. It covers 31% of
the total area and reaches 30% of the population. Nestle calculates its Growth by looking at
its Net proceeds from Sales(NPS) and Real Internal Growth(RIG).NPS is calculated by
reducing the claims received from the Gross Sales. The RIG is calculated by calculating
present year sales on the basis of previous years prices, i.e they do not include into count
external factors such as Inflation.
T 1.1 - Area wise Sales Contribution to Delhi Sales
Region % Contribution
Delhi+NCR 31%
Western UP 14%
Eastern UP 14%
Chandigarh 25%
Rajasthan 16%
Source- Nestle
G 1.1 – NET PROCEEDS FROM SALES FOR DELHI BRANCH (INR MiO)
The entire business of Nestle is conducted through Cash Distributors known as CD. The CD
is the main party of contact between the company and the Retailer. There are around 450 CDs
0
2000
4000
6000
8000
10000
12000
14000
16000
05 06 07 08 09
NPS(INR MiO)
12
under the Delhi Branch. Another important party is the Re-Distributor known as RD. A RD is
a distributor in small rural areas where it is not viable to set up a separate CD. An RD looks
after a smaller area mostly which are in the rural areas. A RD is set up under a CD.
The role of a CD is:
Accomplish the Company Business Plan
Shares Leadership of the company
Provides support in Distribution
Maintain effective contact with the market
Co-ordinate with the Sales Officer
The Role a RD is:
Vital distribution link
Sell in areas which cannot be reached by a CD
Shouldn‟t be in the same town as a CD
The following is the distribution model of Nestle:
F 1.1 – Distribution Model of Nestle
Factories
Distribution Centres
CD
Retailer
Consumer
RD
Retailer
Consumer
DirectParties
Consumer
13
In the above figure Direct Parties are huge Retailers to which the company supplies goods
itself, for ex. Bharti Wal Mart, Reliance.
There are 3 main groups of CDs:
i. Trade Parties- This CD handles all those products which come in retail packs and are
meant for the end consumer to buy directly from the retailers
ii. Nestle Professional (NP) - This includes CD who looks after the Food Services (FS),
Vending & Alternate Trade Channels (ATC). FS includes all the Nescafe and Maggi
Stalls that we see in different Institutions. Vending products are those which are
packed in bulk for the various Vending machines that we see for ex. The Nescafe
Vending Machines. ATC includes packings meant for events, gatherings ex.
Weddings. There are CDs specially established for the sale of these packs or a CD can
look after both Trade Products and NP products
iii. Chilled Dairy-This includes CDs who handle only the milk products of Nestle. There
are only 6 exclusive Chilled dairy CDs and that only so far in Delhi as the other areas
face problems of logistics
14
Types of Channels
Nestle has divided its market into 10 Channels as shown below:
F 1.2- Types of Channels
Apart from the above, there are Parties which are categorised under Key Accounts. Key
Account parties include the Huge retailers that have entered the Market recently. They can be
either Direct Parties or supplied through by the a CD. However the schemes and discounts
provided to these parties are different than those given to normal retailers. Some the Key
Account Parties are Aditya Birla Retail Limited, KB's Fair Price, Reliance Fresh Limited
Each CD has a Sales Officer (SO) who is an employee of Nestle. A SO is the link between a
CD and the company. A SO reports to an Area Sales manager (ASM) who looks after a
particular area. This area may be a city and a few towns in the same district. The ASM in
turns reports to the Regional Sales Manager. There are 6 RSMs.
The Delhi Branch office has 5 Departments: Supply, HR, Accounts, Information System and
Administration. The accounts and administration department are under the Finance & Control
Division of the firm. In the Branch, a Branch Controller heads its activities. The basic duties
of the Accounts Departments are:
Handling the various claims of CDs
Receiving payments for the orders of CDs
15
Releasing orders after receiving payment
Handling the claims of the employees
16
CHAPTER 2
OBJECTIVES
17
OBJECTIVES
1. To understand the Claims Management Process
2. To understand the Operation Aspects of SDS, its advantages and shortcomings
3. To prepare a SDS manual for Distributors
4. To understand the workings of Channel Finance
5. To prepare a Manual for Opening of a Channel Finance Account for Distributor
18
CHAPTER 3
METHODOLOGY
19
EFFECTIVE IMPLEMENTATION OF SDS
The following Methodology was used:
1. Understand about Claims Management, their various types, the manual processes
from the employees of the Finance & Control Department. This was done by sitting
next to the employees while they process claims and ask them question when things
were not clear
2. Understanding what is SDS from Mr. Nirmesh Gupta and Mr. Raman Ghosain.
3. Had to visit the following Distributors for understanding the Operational Working of
SDS from them:
a. Advance Agencies, Gurgaon
b. CPL Trading Company Private Limited, Delhi
c. Siddharth Enterprises, Delhi
d. Suntime Traders, Delhi
4. Used SDS at the CD points. Also asked questions related to SDS usage
5. Gave a Presentation to Mr. Pankaj Jaiswal, Mr Rohit Talwar and Mr. Raman Ghosain
6. Prepared the manual
7. Collected Raw Data which included the Claim Data sheet of February & March 2009
& 2010. Also collected the GPS and NPS figures from SAP
8. Conducted an analysis to see the various claim spends made by the company Pre and
Post implementation of SDS to see the impact
SEAMLESS OPERATIONS OF CHANNEL FINANCE
The following Methodology was used:
1. Understanding the meaning and use of Channel Finance from Mr. Rohit Talwar
2. Understanding the process of Order Release from Ms. Sandhya
3. Understanding the process of opening Channel Finance Accounts from Mr. Amit
Parashar
4. Undertook to visit the following CDs to understand the importance of the Channel
Finance Documentation
a. Kala Singh Kuljit Singh, Rithala
b. M.K Traders, Amritsar
c. Mukund lal ude chand, Bhatinda
d. K.R Agencies, Rewari
5. Prepared a Manual
20
CHAPTER 4
CLAIMS MANAGEMENT
21
An important part of the project „Effective Implementation of SDS‟ involves understanding
the claims Management system. The entire SDS is based upon streamlining the claims
procedure and making it simpler for the CD to ask for reimbursement of claims and for the
company to provide the schemes and budgets for various products and activities. Therefore it
is pertinent to understand in detail Claims Management
WHAT ARE CLAIMS?
Seeing the distribution structure of nestle, we observe that the products from factories go to
the Distribution centre‟s and from here they are picked up and sold to the CD‟s. After the
invoicing the title of goods is transferred from nestle to the customer. Now nestle reimburses
its customers (CD and RD) for a lot of activities and expenses incurred by the CD‟s in
promotional and selling activities (i.e. making the product available to the end consumer for
consumption).These expenses are claimed by the CD & RD through various types of claims.
For ex. The following are types of claims
Buy 3 kg of Ice Tea and get a discount of 4%
Buy 12 pieces of Dahi and get 1 piece more
The Merchandise that is shown in the Shops, CD claims the amount of the Boards
Providing incentives to the Salesman
Providing discounts to the RDs
Claims for Bad Goods returned by the Retailer
GROUPING OF CLAIMS
All claims can be classified under the following different heads:
1. SECTION II CLAIMS
a. ZCR Claims
ZCR Claims require a detailed product wise (with product code) break up of expenses. The
expenses claimed under this head include:
RD Commission
Staff Sales Discount
Dented Discount
Price Difference
Branch Special Activity
22
Dhamaka
Home Economics
Branch Media
b. FB75 Claims
FB75 claims are claims that do not require a product dimension. They are booked to pre-specified
account codes (G/L) and cost centres directly.
Ideally, these should be expenses that cannot be directly linked to any one product sold by the
distributor. These would be expenses reimbursed to the distributor for carry out the business in
general. These include the follow expenses:
RD Freight
Van Operation Expenses
PS / DS Subsidy
Merchandiser Subsidy
Cycle Boy Incentive
Training Expenses
Visicooler Maintenance
The above heads under ZCR and FB75 were popularly known as “Section II” claims. Claims under
each of the subheading require different types of supporting documents and authorization letters. The
details are mentioned further in this document.
2. Lumpsum Claims
A Lumpsum claim format is used when the CD has to claim expenses incurred while running certain
temporary product promotions (TPP) as when directed by the company. In addition to this the CD can
use this format to claim reimbursement for expense incurred on account of payment to authorized
retail outlets for providing dedicated display shelves (PPP) for Nestle products. Please refer the sales
manual for further details. The format for the Lumpsum claim statement is attached as Annexure II.
Ongoing / FS Claims
Ongoing / Food Services discount are claims made by the CD on account of expenses incurred by the
CD for discount to Food Service outlets or product promotions which are more permanent in nature.
Subsidies given to cycle boy (sting operations) are also claimed under Ongoing/ FS claims
The format for Ongoing / FS / ATC claims is attached as per Annexure – III
Now to understand in brief the meaning & procedure followed in each type of claims. The procedures
given below is the basic manual procedures that were followed before the implementation of SDS. As
the software is new, not all the claims can be claimed through SDS, therefore the manual process is
needed to be understood, so as to understand the advantages brought about by SDS:
23
BRIEF SUMMARY OF SECTION II CLAIMS
1. RD Commission & RD Freight –
This is commission allowed to the CD on account of goods sold by the CD to the RD for the
company. The freight incurred by the CD on account of supplying goods to the RD can be
claimed as per the approval from the office. This claim is usually reimbursed per case of
finished product shipped to the RD. This claim should be in line with the claim for RD
commission claimed by the CD.
The purpose for providing these discounts to RDs is so as to keep the RD interested in
Supplying Nestle Products in rural areas. The format of all Section II claims is in Annexure
4
The following is the procedure for making and checking claims:
Approved RD list already available with the branch.
RD discount should be given after the scheme discount – be it TPP or Ongoing
Discount
While the commission paid by the CD to the RD will be 4% (for all products where
the CD commission is 5.8% or higher), Nestle shall reimburse 1% to the CD. For
products where the CD commission is 4.8% or lower, the RD is allowed a
commission of 3%. Here again the company will reimburse 1% to the CD.
CD submit‟s the signed and stamped copy of the Invoice raised on the RD as
supporting for the claim and send it to Nestle
CD also submit‟s a RD discount summary report which contains the Number of cases
billed to various RDs. No. of cases multiplied by the pre-approved freight rate per
case would be the RD freight claim.
CD to give consolidated amount basis claims cycle in the specified format.
The Accounts department the check the Claim Top Sheet with the various supporting
provided by the CD
2. Staff Sales Discount-
This is the discount given by the CD to Nestle Staff. The procedure is as given below:
The total amount needs to be mentioned on the ZCR/FB75 claim format (Section II).
A pack wise summary of goods sold to Nestle staff needs to be attached.
Supporting bills (carbon copies and not photocopies) duly signed by the sales officer also
need to be attached with the claim and submitted to Nestle
24
3. Dented Discount
This is the discount given by the CD to the retail outlets for purchase of Dented Products.
Sometimes while the goods are In transit from the Distribution Centre(DC) to the CD or at
the CD godown they might get dented. However it can be sold only if the product inside the
package has not been affected. For these products, the CD claims on account of dented
discount, the following procedure is followed:
SO looks at the product & approves of the discount
After that an authorisation from the concerned Area Sales Manager (ASM) is required
Supporting bills for the dented products are to be sent to the Branch along with the SO
folio stating the discount amount
The following are the norms to be followed for providing the discount-
o Up to 10% to be passed basis Sales Officer‟s authorizations
o Up to 15% to be passed basis ASM‟s authorizations
o Beyond this, a sanction from the Branch Controller is required
4. Price Difference
These are claims on account of changes in price of a product. The claims should be supported
by a SO Folio – certifying the holding of the CD at the time the change in price was made
effective. This needs to be counter signed by the concerned ASM
5. Branch Spl Activity / Dhamaka / Home Eco. / Branch Media / Branding
For all of the above claims, the claim amount should be supported by bills as well as an SO
folio verifying the expense. The folio needs to be counter signed by ASM. These special
activities are to be conducted only after an approval.
The SO has to ensure that the above activities should be within the sanctioned budget. Any
expense in excess of the budget will not be passed by the Branch
6. Van Expenses
CD can claim their expenses for covering outstation markets through their expense statements
under the head FB-75 duly authorized by Regional Sales Manager. This claim should be
supported with a monitor sheet wherein the following details should be mentioned:
Freight Sanctioned
Name of the market
Distance in KMs
Date
25
Cash Memo numbers
Quantity in cases
Total Amount
If freight is to be reimbursed then the same should be approved by the branch
controller in the specified format
This statement has to be duly signed by the sales officer before being sent to the office.
Unsigned statements will not be processed.
7. Pilot Salesman / Merchandiser Subsidy/Cycle Boy Coverage
A Pilot Salesman (PS) is Salesman who is employed by the RD. It is he who gets the orders
from the various retailers.. A Merchandiser subsidy is related to all the Merchandise i.e
Boards, Hoardings of Nestle at Retail Outlets. Nestle appoints a 3rd
party to prepare these
Merchandise and they deal with the CD. The CD then claims a subsidy on the price of the
Merchandise bought from the Company. A cycle boy is a normal salesman in smaller areas
where even DS don‟t go. They are usually paid on a commission basis by the CD.
A PS subsidy involves that apart from their commission, a part of their salary is paid by
Nestle. In a Merchandiser Subsidy, the CD can claim 69% of the value of the merchandise
from Nestle, the rest has to be borne by the CD.
Subsidy for appointment of PS/Merchandiser can be made along with the section II claim.
While the total amount needs to be mentioned under the FB75 section of the claim format, it
needs to be supported by the DMP Format (Distributor Market Participation) with complete
details and duly signed by both the CD and SO.
8. Training Expenses / Visi Cooler Maintenance
Training is needed to be provided to DS/PS/Cycle Boys. The usual training period is 1 week.
Expenses such as Food, Transportation or sometimes wrong orders taken involving certain
loss to the CD can be claimed. Training Expenses for DS/PS/Cycle Boys can be claimed from
the company provided they are pre-authorized by Branch Training Exec and are well
supported by all relevant bills.
Visicoolers are small Fridges provided by Nestle to keep their products such as Chocolate &
Dahi. Their maintenance expenses can be claimed on SO Folio and should be supported by
relevant bills.
9. D.S Incentives
A Direct Salesman (DS) is employed by the CD. He has the same role as a PS. DS have
incentives based on the amount of sale they make per month. These Incentives can be
claimed by the CD in accordance to the directives issued by the company from time to time.
The same must be claimed in the D.S Incentive format.
26
LUMPSUM CLAIMS
Lumpsum claims are the most important types of claims. They are also the most common
claims to be claimed by the CD and passed by the company. They have a product dimension
to them. All expenses under this head can be traced to a unique SKU / Brand. According all
claims under this section should have product wise breakup.
Lumpsum claims are generally of 2 types viz Display Claims & TPP
Temporary Price Promotions (TPP)
TPP claims are on account of discount schemes run by the company from time to time. The
schemes are run for a short duration (< 1 month) and the expense can be claimed by the CD
basis the sales for that month. This is the procedure that was used prior to the implementation
of SDS. Now the claims for TPP are made entirely through SDS. A comparison would be
made later showing the Key change impacts between the 2 methods. These claims require
budgets to be prepared and the CD can claim only as much discount as whatever he has spent
or the budget limit whichever is less.
Before that it important to understand the role of The Branch Channel Category & Sales
Development (BCCSD):
Optimum Utilisation of VISA‟s – VISA‟s over here mean Budgets. It is this
department which decides provides the Budget for the various promotions and
schemes to the CDs
SWOT analysis for the Market – They undertake a SWOT analysis regularly at
different areas for the purpose of understanding the market better which would help in
sales
Channel Opportunities in Regions – They continuously strive to develop more
Business Partners with Nestle for ex. Getting more CDs, RDs, wholesalers
The following is the entire procedure from the preparation of budgets to submitting
the claims by the CD:
1. BCCSD to receive category wise budget for the quarter from Head Office and give
RSM wise in SAP for the quarter to Branch Control.
2. Branch Control to enter Plan Split into SAP.
3. BCCSD to create RSM wise trade activity in SAP to run schemes in market for the
next month.
4. BCCSD to issue ASMs wise VISAs for the schemes to be run in the next month by
25th of the previous month.
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5. ASMs to split the VISA amount among distributors considering the sale requirements.
6. ASMs to prepare the input plan for each distributor. ASMs to ensure that the Input
Plan conveyed is exactly in line with the BCCSD VISA. The number of BCCSD
VISA should also be mentioned in the ASM Visa. Also, VISAs must be issued up to
the overall budgetary cap.
7. ASMs to communicate the absolute amount, schemes to be run and input plans to the
distributor in hard copy signed by him/her for the next month before the end of the
previous month. It must be serially numbered.
8. ASMs to forward VISA amount for each distributor to respective DC locations for
providing Off Invoice Discount (OID) up to the extent of 80% of the budget amount
to the distributor.
9. Distributor must have the hard copy of input plan available and displayed at the CD
point.
10. Distributors to run the scheme in the market as per the input plan given by the ASMs.
11. Sales officers to ensure that the scheme is operated as per the input plan and VISA
given by the ASM.
12. In case of any change during the month, it must be communicated to the distributor
following the same procedure and mention clearly that the latter VISA supersedes the
initial VISA. ASMs must take written approval from BCCSD for additional budgets
or any deviation in Input plans.
13. After completion of the month, distributors to generate SKU wise TPP statement
checked by Sales Officer and send it to the branch control for claims by 10th
of the
next month.
14. Sales Officer should sample check TPP register against cash memos and countersign
such records on a routine basis.
15. Branch Control to check the correctness of TPP register on sample basis and pass the
credit note in SAP after adjusting the OID discounts from actual authorized spends.
16. Branch Control to make accrual for the scheme expenses in SAP before month end on
the basis of estimated expenses from BCCSD.
17. In case of Nestle Professional (NP) party specific schemes or contracted rates, Nestle
Professional Manager to provide listing of such schemes/contracted rates to Branch
Control.
18. Branch Control to approve such schemes on the basis of written approval from Nestle
Professional Manager.
Apart from the normal TPP, Trade schemes also include Food Service (FS), Vending,
Ongoing, Alternate Trade Channels (ATC) and Key Accounts.
Ongoing discounts are discounts meant to be given to Wholesalers by the CD.
The process of FS, Vending & ATC discounts are provided in the same way as TPP
schemes are
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OFF INVOICE DISCOUNT
In the above, in Point No. 8, Off Invoice Discount is mentioned. Off Invoice Discount (OID)
is given by the branch administration department to a CD while Invoicing. OID is meant for
advance funding to the CD. These may be given as one of the various discounts monitored by
the branch office such as Temporary Price Promotion (TPP), Ongoing Wholesale Discount,
Food Services Discount (FS) etc. The rationale behind advance funding or OID is to:
Avoid cash flow problems for distributors
Accrue tax related savings
A detailed procedure is outlined below:
1. A VISA is to be given by the Branch Marketing Operations giving ASM wise budget
allocation. This is established in the month previous to the month in which the scheme
will be run. VISA clearly states the scheme start and end dates of redistribution and
invoicing cycle to CDs and the scheme details.
2. Accounts to intimate to the Order Management Centre (OMC) applicable rates and
validate OID given as per the VISA.
3. ASM, after discussion with the SO, is to give a CD wise OID allocation in the
prescribed format to the OMC at the beginning of the month.
4. The OMC is to ensure that the OID given to the CD does not exceed budget
allocation.
5. The Scheme utilization reports which are to be generated monthly by the distributors
are sent to the branch in the prescribed format. This needs to be verified and counter
signed by the SO. The statement gives details of the scheme, the OID received and the
actual utilization during the period. If the total balance (Utilization less OID) is due to
the CD, the same will be given through a Credit Note. Similarly, if at the end of the
month money is due from the CD, it will be recovered through a debit note.
6. A maximum OID that can be given is 80% of the Invoice, SKU wise
7. An OID will be given is only after VAT factorisation
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DISPLAY CLAIMS
Display claims deals with expenses undertaken by the CD for undertaken promotional display
activities showcasing the various products of Nestle at Retail Outlets. The retailers can be
compensated for the display shelves provided for Nestle products. The CD is allowed to
compensate the approved list of outlets to the extent sanctioned by the branch. This amount
that was given to the retailers can be claimed by the CD as a Display claim.
F 1.3 – Different Types Programs under Display
The Display claims in Nestle mostly come under „Nestle Corporate Visibility Program‟
(NCVP) head. There are 3 main programs under NCVP described as below:
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1. STAR PROGRAM
The objective is to have dedicated space for Nestle Products within the shop, showcasing
Nestle Products & New from Nestle to the Shopper with the purpose of increasing Sales. The
priority channels targeted here are Large Grocers and Tier III Supermarkets. This program
would operate in areas where there are currently CDs undertaken Merchandise. The Pay out
for the retail outlets would be on a Quarterly basis. The Star program would be removed if for
continuously 2 Quarters the sales of the Retail Outlet is below its slab. The Star Program is
classified into Platinum, Gold, Diamond and Silver.
T 1.2 – Summary of the Star Program
STAR PROGRAM Monthly Turnover in
Rs.
Brands &
Products
Maximum
Pay Out
in Rs.
Classification
Pay Out
(Quarterly) Minimum Maximum
2.50% 5000 7449 *F&B(-C&C-
NUT-GHEE) SILVER
2.75% 7500 14999 F&B-C&C-
NUT-GHEE GOLD
3.00% 15000 79999 F&B-C&C-
NUT-GHEE DIAMOND
3% 80000 F&B-C&C-
NUT-GHEE 9000 PLATINUM
*Food & Beverages excluding Chocolate & Confectionary, Nutrition and Ghee
2. MAGIC STICK PROGRAM
The objective is to have a dedicated space for nestle product specific SKU‟s within the shop
on a hanger called Magic Stick for a clear visibility to the shopper with the sole purpose of
inducing trials & increasing sales. The priority channels for this program are Small Groceries.
The payout is fixed at Rs. 300 per quarter. The SO has to provide the Sales data for each
outlet monthly. A SO also has to make visits at outlets to see if the Displays are put correctly
and are clearly visible.
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T 1.3 – Summary of the Magic Stick Program
MAGIC STICK Minimum Turnover
Brands &
Products
Pay Out (Rs.)
300/- per Quarter 1500
*Only F&B (-
Ghee-NUT.)
*Food & Beverages excluding Ghee and Nutrition
3. CHOCOLATE DOMINANCE PROGRAM
The objective is to have a dedicated space for only Nestle Chocolates within the shop,
showcasing Nestle Chocolates & Confectionery to the Shopper with the purpose of increasing
Sales through Visibility Program. The priority channels here are Bakeries & Large Grocers.
The payout here would be made on a monthly basis. There are 2 classifications here are Gold
and Silver.
T 1.4 – Summary of the Chocolate Dominance Program
CHOCOLATE
DOMINANCE
PROGRAM
Monthly Turnover in Rs.
Brands
&
Products
Maximum
Pay Out in
Rs.
Classification
Pay Out Minimum Maximum
4% 2000 4999 *C&C SILVER
5% 5000 C&C 2500 GOLD
CHOCOLATE & CONFECTIONARY
PROCESS FOR PROVIDING VISAs & CLAIMS
The below procedure is the same for all the 3 Programs – Star, Magic Stick and Chocolate
Dominance.
1. There is a periodic activity of the selection of outlets which adhere the to company
specified norms/parameters prior to market level negotiations by the field force.
2. After the feedback from the field, a manual VISA is issued by the BCCSD team
containing ASM wise split of Quarterly Budget
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3. Finalization of Dealer list is done by the field. Inclusions/Exclusions/ Modifications/
Exceptions, if any, need to be approved by the management.
4. After the Dealer list is finalized, a contractual agreement signed by the Retailer is
carried, a copy of the same is given to the branch for control purposes
5. Branches then prepare Coupons to be given to the Retail Outlets indicating the Pay
Out amount. They are signed & Stamped by the Branch Controller
6. A centralized manual database is created indicating the Sales amount of Retailers and
the amount of Payouts that they should get ensuring Budgetary control
7. Distributors on Quarterly basis make the payment to respective dealers in line with
contract. For proof of payment, Counter foils of Coupons which were issued against
market level disbursement are signed by the retailer.
8. Post payout to Dealers, distributor Claims through assigned Document (Sec II)
supported by reimbursement details duly acknowledged by the third
parties/authorized Coupons.
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KEY ACCOUNTS
With the increase in urbanization of 1125 million Indians, food spending per capita has
surged from INR 299 in 2007 to INR 350 2009 with a significant potential for growth. To tap
this opportunity created by sustained development witnessed by the Indian economy over the
last few years, increase in the consumption and provide shoppers a more sophisticated
shopping experience, leading player have set up retail chain across India. This includes sector
pioneers such as Big Bazaar, resourceful Reliance and Aditya Birla and foreign giant like
Walmart and Carrefour.
To address the specific needs of evolving Modern Trade channel and ensuring better service,
Nestlé India set up a Key Accounts team to look after these Modern Retailers
There are different types of customers which come under Key Accounts-
International Accounts – accounts which have global presence like Wal-Mart, Tesco,
and Carrefour etc. Their strength is technical expertise, international experience and
global tie up.
National Accounts – accounts which have national presence like „Big Bazaar‟, „More‟
and „Reliance Fresh‟ etc. Their strength is deep understanding of Indian markets,
project management and implementation skills and customized solutions for different
kinds of shoppers.
Regional Accounts - Accounts which have regional presence like DMart, Sabka
Bazaar etc. Their strength is catering to local needs and loyal customer base.
Organised Wholesalers – accounts which sell to wholesalers and retailers on a B2B
model like METRO, Wal-Mart, Cash & Carry. Their strength is low cost operations,
dual customer base i.e. retailers and shoppers and manufacturers perceive them as
enablers of distribution.
As mentioned before there are certain parties which are called Direct Parties which come
under Key Accounts. Apart from Direct parties there are 2 more kinds of services being
provided
Direct – supplies made directly from Nestlé‟s DC to Key Accounts DC.
Indirect – supplies made by Nestlé‟s CD to Key Accounts.
Hybrid - In case of some Key Accounts supplies are made direct to some locations or
categories and indirect for other locations and categories.
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T 1.5 – Difference between Direct & Indirect parties
Basis Direct Indirect
Logistics &
Infrastructure Responsibility of Nestlé. Responsibility of CD.
Cost to Serve Lower due to saving of CD
commission.
High due to CD
commission.
Servicing Better due to better focus. Servicing through CD may
have some defaults.
Confidentiality Ensures confidentiality. Does not ensure
confidentiality.
BAD GOODS
At certain times there are goods which are returned from the market to the CD. It may be due
to certain reasons such as expiry or breakage. These goods which are returned are referred to
as Bad Goods. The format of Bad goods is given in Annexure 5. Bad goods claims are made
by the Distributor due to the following reasons:
1) Expired Stocks from Market
2) Damaged Stock from Market
3) Expired Stock at CD
4) Damages in Transit
5) Shortages in Transit
6) Technical Defect
For Expired / Damaged stocks from Market or CD (for 1, 2 & 3)
Bad Goods returned to the company from the CD or the market must be accompanied by
an “Exchange of Goods Advice (EOGA)”. This advice is to be filled in complete by the
Direct Salesman (DS) while replacing the bad goods lying with the retailer. The retailer is
required to sign and stamp the advice. Similarly for products expired at CD point EOGA
needs to be prepared, signed and stamped by the CD as well.
The claim form for bad goods due to above reasons must be supported by a product sheet
which is essentially a summary of EOGAs that are supporting the bad goods claim.
For Damaged/shortages in transit (for 4 & 5)
Claims for Damages / Shortages in transit should be accompanied with transporters
certificate, a copy of the Goods Received and SO Folio requesting credit (or supply) for
goods received Damaged / Short by the CD.
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For Technical Defect (for 6)
Claims for technical defects either from market or CD has to be accompanied by SO folio
and necessary approval received from the Head Office/Factory quality assurance. The
quality assurance is needed from the Head Office as Nestle takes the aspect of quality of
goods very seriously
For each of the above types of goods return (1 to 5), a separate Transfer Memo (Return
Request Form – Bad Goods Related) must be raised. The Transfer Memo must clearly
mention on the reason code for which the goods are being returned.
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CHAPTER 5
SAR DISTRIBUTOR
SOLUTION
37
INTRODUCTION TO SDS
Nestle believes that while its products must be available to as many people who may prefer to
buy them, the freshness and quality of the stocks is important and the distribution system
needs to continuously improve to ensure this despite a larger reach. The retail trade in India is
predominantly fragmented General Trade where the distributors play a major role in the route
to market. In order to use this network more efficiently and be able to better track the
movement of stocks through this pipeline, Nestle has decided to connect the Distributors
through a uniform, robust and integrated Distribution Management System and have started
the process of Advanced Sales Automation. This will increase transparency, accuracy, speed,
enable enhanced efficiencies in trade spends and ultimately, execution in the market. It will
also help the frontline sales force from some of their administrative burden and enable them
to focus more on their core function. It will improve productivity and internal controls
The SDS (South Asia region distributor solution) is a recent and contemporary Sales
Automation project at Nestle India Limited. It is a standard operating procedure being
implemented at nestle India limited on a continental level. SDS has been installed and
implemented at both the distributor point and at the nestle offices. Also as SDS is directly
connected to nestle servers and thus Nestle has access to the operations being undertaken by
the distributor. This means that there is a continuous updation of information. This hence
leads to efficiency in terms of reduced time lag between formulation of plans and their final
implementation.
SDS has been implemented with the objective to ensure timeliness, accuracy and
transparency, efficiency in TPP (temporary product promotions) schemes and claims.
It is an ERP solution, built on a centralized database and normally utilizes a common
computing platform; it consolidates all business operations into a uniform and enterprise wide
system environment. It is an integrated computer-based system used to manage internal and
external resources including tangible assets, financial resources, materials, and human
resources.
Nestle India Ltd. has a wide distribution channel comprising of around 1800 distributors
through which it ensures that its products are fresh and easily available to its consumers. In
its quest to make its products available throughout the territory, it has a well planned
distribution structure as seen before comprising of Order Management Centers, Factories, and
Distribution Centers, Redistributors, Customers, Retailers and Consumers.
SDS caters to this issue by standardizing and simplifying the claims management process.
Before SDS, there was a software named “Nesprint” was used by Nestle India limited. It was
a distributor management solution. It was a standalone system installed by the company at
38
distributor point for billing purposes and had to be operated manually and nestle people had
no connectivity with the system installed at the distributor point. This led to a possibility or
chance of manipulation in bills and claims as nestle had no control over the Nesprint system
installed at distributor point apart from providing technical support. Claims generated from
Nesprint were printed and send to nestle at the end of month and a lot of times a lot of
adjustments and manipulations were made by the distributors.
Thus, a solution to NESPRINT: SDS (South Asia region distributor solution)
The following are the advantages of using SDS over the manual system that was previously
used:
1. It is a Distributors ERP. It automates their entire business
All the details of a distributor are entered into SDS at the beginning of the Automation
Process. From then on all the transactions that take place via the Distribution Centre or
Retailer is done through SDS. This gives a Distributor a clear picture of its transactions any
time he wants to see them
2. Enables Corporate control over the Distributors Inventory
With SDS, Nestle can check the distributors sales, inventory, various kinds of reports,
whether the schemes are being cut or not etc.
3. Improves the Sales Force Efficiency
It improves sales force efficiency from both Nestle and the Distributors point of view. The
SO can manage his operations more efficiently at the CD point. Manual reports need not be
prepared by him anymore. Everything is automated, so he can get whatever information he
wants at that moment only.
The Direct Salesman (DS) employed by the CD, his Sales Routes are now chalked out in
SDS, so by looking into the system the CD and Nestle knows where all are the DS going.
Apart from that earlier after getting the orders from Retailers, it used to take them a long time
to feed in the orders into the system. Now it is done faster.
4. Better informed Sales force
The SO can get information about the present stocks, the closing stocks as this is very
important while writing a new order. He would know for which product would be needed and
how many units of the product would be needed.
5. Informed Decision making at all levels
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The schemes and discounts are automatically uploaded in SDS by Nestle. Therefore the CD
can see for which products, channels, outlets, whether they are Trade, Food service or
Vending schemes, are the schemes and discounts for. This way the CD can target its sales by
inducing a retailer with the various schemes and discounts.
Nestle can keep a check on various CDs as they have the option of logging on the CD‟s SDS
and looking at what all they are doing.
6. Prevents Manipulation
Earlier there used to be a lot of manipulation going on in terms of whether the CD is
providing proper schemes and discounts to Retailers or not, whether they were claiming false
Bad Goods claims etc. Through Implementation of SDS these practices have tremendously
reduced.
7. The entire system is online
The most important advantage that SDS has over its previous systems is that SDS is online.
Through this, all the information that is uploaded by the company for, schemes, promotions
etc. Flows into SDS. Also, all the information that is saved at the CD point flows into the
Nestle system.
LANDSCAPE OF SDS
F 1.4 - Diagrammatic representation of SDS showing its working and connection with other
systems
The above diagram shows the 2 other systems involved so that SDS can work effectively
40
CONSOLE
The console is an Interface for Nestle. Just as SDS is installed at the CD point, the Console is
installed at the Branch Sales Automation office. It is through the console that all the
information flows into SDS.
As shown in the diagram the following flows down through the Console into SDS:
Promotions- This includes all the Schemes, Discounts, Promotions on different
Standard Key Units (SKU). An SKU is defined as each product has different
packaging and different weights for ex a Bar One can be 55 pieces of 8 grams each, or
it can be of 28 pieces of 32 grams each. 2-3 people at the Branch office enter these
promotions every month. The CD can see the new schemes at the beginning of each
month
Master Data – This includes new products introduced by Nestle or new SKU. Apart
from that If a CD has to include a new Wholesaler, RD or a retailer he will pass the
information to the sales Automation Office, after it is approved it is entered into their
system and the CD can start billing them
Updates – As the system is newly implemented, constant updates are provided by the
company. Currently there are many aspect of SDS that are not being used. Whenever
a new application is started or if changes are brought about in the current application
being used, the CD is informed about them
Invoices – This is a very important aspect. Earlier when the CD used to give an order
to the company, they used to receive a physical invoice from the Distribution Centre
(DC). They then had to physically enter the increase in stocks and the various
schemes on them into the system. Now the invoice flows through the console from the
Distribution Centre (DC). Therefore after they have checked the goods received, the
CD saves and confirms the invoice, everything is automatically updated into SDS.
Pricing & taxation – The CD does not have to keep a check on the prices of goods
and does not have to enter them manually into the system. The prices of various SKUs
flow into the SDS. Apart from the various VAT rates, Sales Tax rates are also updated
automatically
As shown in the diagram the following flows up from SDS into the Console:
Claims From Distributors – Ideally all the various types claims discussed in the
Chapter „Claims Management‟ are to flow through into the Console and no more
annual reports are to be sent to the Branch. All the CD has to do is to Save & Confirm
the various schemes and discounts cut for the Outlets. However as of now only
Claims Regarding Temporary Price Promotions (TPP) and Bad Goods claims flow
into the Console.
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Sales Details – The Branch can check on the sales made by the CD. Various types of
sales Report can be seen. For eg. Retailer wise, DS wise, Product Wise, Brand wise
etc. These reports are generated automatically
Inventories – The Branch can also see how much stock does the CD holding
currently
Promotions Monitor – The Branch can check whether the various promotions and
schemes being given, are they being passed down to the other parties. Through this
they can also check for any false claims being made.
DESK TOP ANALYZER
The Desk top analyse is a local system installed at the CD point. It is connected with the
SDS. It is basically a Report Generator. One can see reports in SDS, however the types of
reports or already defined and cannot be changed. It is basically a Pivot Table List. Through
the Desk top Analyser the CD can take reports of any mostly any type. It consists of 3
elements or cubes:
Sales
Stocks
Schemes
The Pivot Table list consists of 39 Fields for ex. Batch code, Sales, Month, Product Code,
Date etc. Therefore for instance the CD can take out under the Sales Cube the Sales of some
of the following reports:
Brand/Channel
Salesman wise Sales by Value, Volume & Quantity
Brand wise sales by volume, value & quantity
Product wise sales by volume, value & quantity
Outlet wise sales
Brand/SKU/month wise sales
Promotion Utilisation sales etc.
KEY PROCESSES & FUNCTIONALITIES
As a part of the project „Effective Implementation of SDS‟ was to prepare a Manual for
Distributors showing them the various steps In using the present options available in SDS.
Explained below are the modules of SDS and the key function under them and why they are
used. However before a CD starts using SDS, there is an important function called „Sync‟.
When the CD opens SDS, there is a sync process that takes place. This syncing helps the flow
of information from the Console to SDS. Therefore if there are new schemes, or a invoice to
flow through, it all happens when the system is synced. For this the Internet Connection is a
must.
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F 1.5 – A screenshot of the background display of SDS
As can be seen above, there are 12 modules available in SDS. They are as following:
1. Company Management
2. Inventory Management
3. Customer Management
4. Product Management
5. Sales Force Management
6. Route Management
7. Logistics Management
8. Financial Management
9. Stocky Management
10. Claim Management
11. Planning
12. Reports
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1. COMPANY MANAGEMENT
Under Company Management the only function used here is „Purchase Receipt‟. The
Purchase Receipt is the invoice that the CD receives when he makes an order with the
company. Earlier on, the CD used to receive only a physical invoice. Now, usually on the day
the CD receives the goods, he receives the soft copy of the invoice through the Purchase
Receipt Master.
The advantage that a CD has by receiving the Invoice through SDS is that once it is Save &
Confirmed, the stocks in the system get updated and the schemes and discounts for each SKU
are also automatically updated
A screen shot of the Purchase Receipt Master can be seen the SDS Manual on Page no.7
2. INVENTORY MANAGEMENT
This module handles the Inventory details for the CD. The important functions used here are:
Batch Transfer – Each SKU produced has a Batch Code to it. The basic reason for
having the Batch Transfer function is due changes in the tax rates or surcharges. For
ex. If the CD has a current stock 2 cases of MAGGI Tomato Ketchup Bottle 24x500g
which has VAT of 12.5 %. Now the VAT rates for these products increase to 14%.
But in SDS they are still at 12.5%. Therefore when the CD purchases a new batch of
the above product, they would include a VAT rate of 14%. Through Batch Master the
CD can transfer his old stock into the new batch. Therefore now all his current stock
would reflect a VAT rate of 14%. A screen shot of the Purchase Receipt Master can
be seen the SDS Manual on Page no.31
Salvage – This function is used by the SO for confirmation of Bad Goods received.
The Bad goods received by the CD is entered in the Sales Return Module which is
explained below. The CD can only enter the Bad Goods received. At the end of the
month, the SO physically checks the Bad Goods with the Bad Goods information
entered in the system. After that he saves & confirms in the Salvage Module after
which the claim is made.
3. CUSTOMER MANAGEMENT
This is the most important module for the CD. It includes the following important function:
Billing – The CD uses this when he has to prepare a bill for its Outlets. It is prepared
one day before the actual delivery of goods. The CD has to select the retailer, the DS,
the route at which the outlet is & select the SKUs ordered. After that a temporary Bill
is generated. The CD can see various other details such as the scheme being cut, the
current stock of the product, the tax rate and amount, Batch details etc. A screen shot
of the Purchase Receipt Master can be seen the SDS Manual on Page no.10
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Delivery Process – Over here, the CD selects the Delivery Boy, DS again, Sales
route. It is here that the Bill is confirmed and a Tax Invoice can be printed
Sales Return – This is a very important function. Over here the CD enters all the
goods returned from the market. The Goods returned can be Saleable or Unsalable i.e
Bad goods. A screen shot can be seen in the SDS manual, Page No. 29
Scheme Master – In this Master, the CD can see all the information regarding a
particular SKU and the schemes being provided for it. A screen shot can be seen in
the SDS manual, Page No. 33
Retailer Master – Through this function, the CD can see the details of all the Retail
Outlets. The CD can add new Retailers through this Master. A screen shot can be seen
in the SDS manual, Page No. 58
Collection Register – In this function, the CD can add the Cash/Cheque received
from its Retail outlets. It will also display the pending amounts which can be seen
through this register or when the particular party is billed next time in the Billing
Master. A screen shot can be seen in the SDS manual, Page No. 62
4. PRODUCT MANAGEMENT
Under Product Management, the only function used is the Product Master. The „Product
Master‟ gives information about all the available products at Nestle. They can also check the
Batch information. A screen shot can be seen in the SDS manual, Page No. 65
5. SALES FORCE MANAGEMENT
Under this Module the CD might find 2 functions that might be useful – „Salesman Master‟
and „Delivery Boy Master‟. The CD can see information about its DS and Delivery boys.
They can also add new DS and delivery boys. A screen shot can be seen in the SDS manual,
Page No. 68
6. ROUTE MANAGEMENT
As the name suggests, this module deals with the various Routes the DS uses. The various
routes used by all the DS can be seen here and new routes can be added also. A screen shot
can be seen in the SDS manual, Page No. 73
7. LOGISTICS MANAGEMENT
Under this Module the most important and used function is „Vehicle Allocation‟. This
function is used after the Bill is saved under Billing Master in „Company Management‟. Over
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here, the DS, the sales route and delivery route are selected and the vehicle to be used is
selected. Also at the time Billing, the Bill numbers are not permanent as changes may be
made in the Bill, these pending bill numbers are allocated permanent bill numbers in this
function. A screen shot can be seen in the SDS manual, Page No. 17
8. FINANCIAL MANAGEMENT
This module deals with all the accounting part of the business. However this application has
not been started in SDS yet.
9. STOCKY MANAGEMENT
Under this Module a CD can see the information about themselves. This module also shows
the Financial Calendar used.
10. CLAIM MANAGEMENT
The 2 important functions used here are:
Customised Claim Top Sheet – Under this function, the CD can the schemes &
Discounts cut on various SKUs sold. Ideally all the claims discussed in the Claims
Management Chapter can be seen here; however as of now only TPP, Ongoing claims
can be seen as of now.
Manual Claims – Under these claims all the Section II claims are entered here. The
CD then sends the Manual claims report along with supporting to the Branch
11. REPORTS
Custom Reports – There are a total of 156 different types of reports that can be
generated and printed. However the most important reports for the CD are
o Bill wise Sales Report
o Product wise Report
o Customised Claim Top Sheet Report
o Customised Claim Top Sheet Summary
o Scheme Utilisation Report
o Closing Stock Report
Bill Print – After the „Delivery Process Master‟, the CD can print the Bill. The sales
return details can also be printed here.
46
CHAPTER 6
PROCEDURES FOR
SETTING OF BUDGETS
AND RECEIVING CLAIMS
IN SDS
47
In the Claims Management Chapter, the old and manual procedures to make claims were
explained. The following will discuss the ideal procedures, for the CD to do while making
claims through SDS. After that an analysis will be made to discuss the differences and
advantages for making claims through SDS.
TEMPORARY PRICE PROMOTIONS
1. The BCCSD will issue all the budgets to ASM‟s for the schemes to be run in the next
month by the last week of the previous month. For ex. For the month of July, the
BCCSD will issue the budget by June 24th
or 25th.
2. The ASMs will then sign a hard copy of budget splits which is the same as in the soft
copy and to be sent to Branch Control within a week of receipt of soft copy by the
Branch Control.
3. The ASMs will then forward Budget amount for each distributor to respective DC
locations for providing Off Invoice Discount (OID) up to the extent of 80% of the
budget amount to the distributor.
4. The Branch control will then define the schemes to be run in next month and upload
the budget for each distributor in CONSOLE by around 28th
of the previous month.
5. The CD will then get an update of all the schemes to be run in the month, absolute
budget and from SDS.
6. After completion of the month, distributors are to generate a Claim Top Sheet (No
need of TPP register), get it approved by Sales Officer and send it to the branch
control for claim. This Claim Top Sheet will include all the Trade claims.
7. The Branch Control is to check the correctness of TPP claim sheet from CONSOLE
whether both the amounts match or not. And pass the credit note in SAP after
adjusting the OID discounts from actual authorized spends.
DISPLAY CLAIMS
1. After feedback from the field, the number of outlets that will be brought under Product
Display program, the BCSSD will issue the Budgets for the same.
2. Thereafter branch promotional person in Branch Control enters this visa in console. This
Visa will be essentially created specific display related activities (category wise).
3. Same visa will be defined for all RSM zone. Thereafter, distributor wise budget will be
uploaded in Console.
4. Creation of Display related scheme in the console centrally at the branch by the Branch
Control team basis manual VISA. The Schemes will have various slabs (i.e Silver, Gold,
Diamond etc.) with Turnover, Payout % and Maximum payout. The Schemes as before
will be created quarterly.
5. Post download of the scheme to SDS; it will automatically pick the retailers on the basis
of their turnover of the previous quarter. Apart from this, CD/SO has the option that they
may include/exclude the retailers.
48
6. All these additional retailers included/excluded will come to the Visibility Manager for
approval.
7. After the end of the period of scheme, on the basis of their turnover of the current
quarter, the slabs will be picked by SDS for the above retailers which have been added.
8. For the current retailer under the Display schemes, after the end of the period of scheme,
on the basis of their turnover, SDS will decide their payouts
9. Visibility amount will be given in the bills raised after the end of the period of scheme
and it could be given only up to a date pre-specified in the scheme (upto two months
from the date of end of the scheme).
10. For claiming the CD has to Go Customized Claim Top sheet under „Claim management‟.
They should select the Display claims category and press Save & Confirm. The claim
them flows into the console
11. All the above bills wherein the Visibility amount has been adjusted will come as monthly
claim.
BAD GOODS
For Expired / Damaged stocks from Market or CD
Following is the process of recording expired/damaged stock returns from the market in
SDS:-
1. The Direct Salesman (DS) at the time of order booking, along with taking order for
fresh stocks to be delivered, would also note the details of products to be taken back
from the outlet. However he would not pick up the Bad Goods.
2. The DS on return to the CD point would generate an outlet wise sales return order for
the expired/damaged stocks to be collected. This document is called “Delivery Return
Challan (DRC)”. This is printed in „Bill Print‟ under the „Reports‟ Module.
3. The delivery boy will take the printout of the DRC and collect the expired/damaged
stocks in the market as per the same. Any difference in the quantity collected with the
DRC quantity (both higher and lower) need to be mentioned in the DRC at the time of
collection
4. The delivery boy should collect the sign and stamp of the outlet acknowledging the
actual quantity handed over. The DRC without the sign and stamp of the retailer are
invalid.
5. After collecting the Bad Goods from the market, the DRC has to be confirmed in SDS
which will then be converted into un-saleable sales return and credit note will be
generated for the value of the return at trade price (incl. VAT) payable to the retailer.
Stock could then be visible in un-saleable stock location.
6. The credit note to the retailer for bad goods should be paid by adjusting in the
subsequent invoices only. No cash payment to be made to the retailer by the CD.
For Damaged/shortages in transit
49
In this case transit refers to goods getting damaged or short while coming from the
Distribution Centre (DC). In case of Damage/shortage in transit by the CD, it should be
received as saleable stock during company invoice download and then CD should transfer
this stock from saleable condition to un-saleable condition using a stock journal.
Claims for Damages / Shortages in transit should be accompanied by a copy of the Lorry
Receipt (LR) signed by the driver of the vehicle agreeing for the shortage/damage.
For Technical Defect
In case of technical defects in transit, CD should transfer this stock from saleable
condition to un-saleable condition using a „Stock Journal‟ under the „Inventory
Management‟ module.
Claims for technical defects have to be accompanied by necessary approval received from
Head Office/Factory for quality assurance stating that there was a technical defect
Without this a CD would not be able to claim this.
For each of the above types of bad goods, the SO has to confirm the Bad Goods under the
„Salvage Process; under the „Inventory Management‟ module in SDS. Under the salvage
process the SO will destroy the bad goods and post the quantity destroyed and quantity to be
claimed by the CD.
Post the Salvage Process, while loading the claims, these salvages will be picked as part of
the monthly claim. This salvage claim would contain the quantity and the value calculated at
the trade price (incl. VAT).
SAMPLING
Nestle also undergoes Sampling activities either done by the CD or through 3rd
parties.
Following kinds of free stocks are being handled at CD
1. Stock (Nestle Product) received through Zero value invoicing and issued for Sampling
2. Stock (Non Nestle Product i.e. Coffee Mug etc.) received through Zero value invoicing
and issued for Sampling
3. Sampling out of CD stock
In the above Zero value invoicing refers to those goods which are used for sampling however
they have a Zero value when the CD receives the invoice i.e. the CD does not pay for these
goods.
Following is the procedure for handling and claiming zero value items in SDS:-
50
Stock (Nestle Products) received through Zero value invoicing and issued for sampling
–
All the zero value invoiced Nestle products are entered manually as receipt in the
„Sample Management Module‟. The screen shot can be seen in the SDS module page
no. 53
All Issues of these free stocks should also be through this module
No claim can be raised on the company on issue of this stock as they are invoiced at
zero value to the CD
Stock (Non Nestle Products) received through Zero value invoicing and issued for
Sampling –
All the zero value invoiced for Non Nestle products should be handled outside system
No claims can be raised on the company on issue of this stock
Sampling out of CD Stock –
Issue of stocks for Sampling has to be done through „Sample Management‟. If zero value
stock is un-available in the system, system will issue stock from the saleable stock. Claim for
these stocks will be raised on the company at CD Purchase price of the respective product.
In the remark column of the sample issue, CD has to mention:
- Date and description of the Sampling activity
- Batch code of the products issued
- VISA (Budget) No. Format of the VISA is attached herewith.
RD COMMISSION & FREIGHT
The RD claims are a part of the Section II claims. However in SDS once the rates & the RD
commission are entered into SDS, the claims are automatically generated once billing to RDs
are done.
Following is the proposed procedure to be followed in SDS:
Whenever a new SKU is being created in the Console, RD Commission and RD
Claim % has to be defined.
Whenever a new RD is being created in SDS, it will come for approval in the
Console. The same has to be approved by concerned ASM and RSM.
Post creation of the CD in SDS, the Branch control uploads the RD freight as rate per
case in console which is pre-approved at CD level.
51
At the month end, along with other claims, CD has to load the RD claim as well. In
the same load both the RD Commission claim (basis the RD claim % defined while
creating an SKU) and RD freight claim (basis the rate per case defined as mentioned
above) will be created.
This claim has to be approved by SO after scrutinizing the signed and stamped RD
bills maintained by the CD.
Post SO approval, claim will come in console for processing.
MANUAL CLAIMS
As discussed before, manual claims in SDS refers to the section II claims discussed in the
Claims Management Chapter. The following are the types of Section II claims:
RD Commission & RD Freight
Staff Sales Discount
Dented Discount
Price Difference
Branch Spl Activity / Dhamaka / Home Eco. / Branch Media / Branding
Van Expenses
Pilot Salesman / Merchandiser Subsidy/Cycle Boy Coverage
Training Expenses / Visi Cooler Maintenance
D.S Incentives
For the above apart from the RD commission & RD freight, the rest of the claims are
manually entered in „Manual Claims‟ under the „Claim Management‟ Module. After they are
entered, the CD can see all the claims under „Claim Top Sheet‟ under „Claims Management‟.
For all the manual claims entered, the CD has to send the supporting documents showing the
expenses undertaken such as Bills, workings for the claims etc. To the Branch office.
52
CHAPTER 7
CHANNEL FINANCE
53
INTRODUCTION TO CHANNEL FINANCE
Channel Finance Scheme for collections has been implemented to facilitate efficient and
faster collection from distributors.
Channel Finance is a mode of payment used by Nestle to receive payments from their CDs.
More and more FMCG companies are using. Earlier and still in many companies, that of
payment in Cash or Cheque/DD. Nestle has a strict policy of no Cash Transactions. Therefore
in the beginning, all the payments were made by Cheques or DDs. As the Banking Industry
involved so did the mode of Payments. Then came Real Time Gross Settlement (RTGS).
However this mode also faced sum problems. RTGS was meant for anyone to use. There was
no special arrangement for Nestle. Soon banks started to provide nice service to Corporate
Clients. One of these services was Channel Finance.
ABOUT CHANNEL FINANCE
Nestle India has a tie up with HDFC & ICICI Bank for opening up of channel finance A/Cs.
Under these facilities, the CD has to have a Channel Finance with any one of these Banks.
Payments can be made into this A/C like any other A/C and through any mode, for ex. Cash,
Cheque, RTGS etc. Nestle can see in its login with the respective banks whether payments
have been received or not. At the end of the Day, the Accounts Manager „sweeps‟ all the
funds from the Channel Finance A/C of Nestle into the Accounts of Nestle. In this facility,
the CD only has the option of depositing Money, and Nestle has the authority to Debit the
Account.
Before understanding the process of Channel Finance, RTGS should be explained first.
RTGS
Real Time Gross Settlement (RTGS) is a system managed by RBI through which the transfer of
payment is carried out electronically between banks. Leading banks (89 banks & about 18000
branches) are members of RTGS system and are providing transfer of funds through RTGS to its
account holders.
This process involves giving RTGS fund transfer application by the Customer at his
bank's branch to remit the amount by debiting their bank account & crediting
beneficiary‟s bank account. Successful execution of RTGS transfer by the Remitting
bank at Bank‟s system generates a Unique Transaction Reference number (referred as UTR No.)
Under this mode, the money is transferred from the Bank Account of the Remitter (Customer) to the
Bank Account of the Beneficiary (Nestle India Limited) on the same day. Normally, it can be carried
out during stipulated RBI business day which are till 3.00 p.m on all working days & upto 12.30 p.m
on Saturday. In case the recipient branch is holiday on the day of receipt, then the funds will be
credited on the next working day with the value date of the previous working day
54
PREREQUISITES FOR A CD TO OPEN A CHANNEL FINANCE A/C
For a CD to get a O/D limit, he must be a distributor with Nestle for at least 2 yrs
Nestle should contribute 60% if the firms Turnover
They must have an account with HDFC
ADVANTAGES OF CHANNEL FINANCE
For CD
The CD is getting an O/D limit without any Security Deposit;
They just have to make an annual payment of Rs. 1000 to use this Account
At the time of Invoicing, if there are not enough funds in the CDs Account, the O/D
limit is used automatically. Therefore because of delay in payments, the CDs business
does not suffer
A nominal interest rate of 12% is being offered (HDFC Bank)
For Nestle
Identification of Payments – Earlier most of the payments were made through RTGS.
It was difficult for the Accounts Dept. To track which UTR no. Is of which CD.
Through Channel Finance, identification is very simple
Transfer of Funds – Earlier transferring of funds from the different A/Cs to Nestles
A/C use to take 2-3 hours. Now it takes around 10 minutes
Business Flows for the CD as well as Nestle, as Nestle is getting its money on time
VARIOUS FUNCTION INVOLVED FOR RELEASE OF PAYMENTS
1. Estimate Order File – Every morning the Branch receives a Estimate order File from
the Order Management Centre (OMC). This excel sheet contains the estimated
amount of money that they will receive for each region. This is made on the the basis
of the orders.
2. Matching - When the money is received, the Accounts department enter this amount
in to SAP.
3. Order Release Form – The Branch receives an Order Release Form throughout the
day. This sheet contains the List of orders made by CDs along with their amounts.
The Accounts Department has to then check whether the CD has done the payment
either through Channel Finance, DD, or RTGS. If the amount paid by the CD is less
than the order amount, then Accounts will pass the order till the amount paid. This is
then sent to OMC. OMC then passes these orders onto the Distribution Centre.
Over here parties under Channel Finance are at an advantage. Even if they have not
made the payment, the Accounts Department will use their O/D limit to finance the
55
order. However before the next invoicing, the CD has to pay the outstanding amount
along with interest.
4. Sweeping – This process is done at the end of the day. This process transfers all the
funds from the Channel Finance A/C to Nestle‟s A/C
56
CHAPTER 8
FINDINGS & ANALYSIS
57
FINDINGS ON THE PROJECT „EFFECTIVE IMPLEMENTATION OF SDS‟
After understanding the operational workings of SDS, meetings with the CDs and while
preparing the Manual, the following problems have come up:
1. Not fully functional – There are still a number of function not working in SDS. The
Financial Management Module still has not been started. This would be a huge help
for CDs who now use other softwares for accounting
2. Invoice not Reaching on Time – The Purchase Receipt which is to flow from the
Console into SDs before the physical receipt of goods, does not flow sometimes. Due
to this the CD cannot save & confirm the Purchase receipt which in turn delays the
entire Billing Process. The stocks are not updated into the system
3. Invoice Date & goods Received Date are different – In the Purchase Receipt
master, these 2 dates are different. Sometimes the Retailers might complain to the
Company that they are not receiving their goods on time, even though the invoice date
shows that the CD has received the goods earlier. This may cause problems for the
CD
4. Schemes are not Uploaded – Sometimes the new schemes are not uploaded onto the
scheme master. Even though, the CD receives a physical copy of the schemes for that
particular month, till the schemes are not uploaded on SDS, the Retailers cannot
receive the schemes
5. SDS stops working – A few CDs have faced a problem that SDS stopped working,
and due to that their entire system crashed
6. No Confirmation after „Save & Confirm‟ – The SO & CD after they press Save &
Confirm on the various masters, they do not receive a confirmation whether the
information has flowed to the Console or not. There have been a number of instances
where, the SO and CD have saved & confirmed however the console has not receives
such information
7. Time in Claim Settlement – At the time of implementing SDS, the major benefit for
CDs was that, it was said that the claim settlement would take only a week compared
to a month. However this still has not been implemented. The claim settlement still
takes 1.5 months as before.
8. Budget Constraints – Selling is an art. However due to SDS it has become part
science. When a CD requires additional budget for schemes, discounts and
58
promotions, it take 4-5 days for it to be approved and uploaded to SDS. This time
should be reduced as the CD would loose that particular selling opportunity.
9. Company Demands Reports – The console has the option of taking out various
kinds of reports just as in the Desk Top Analyser. However they are not used and
Nestle still asks for reports to be send by the CD
10. Closing Stock Report – In this report, there are no separate columns for the Price and
the VAT. They are added together in the same column.
11. Unwanted Back Up – Every time the CD „syncs‟ SDS with the Console a Back Up is
creates. This back up takes up unwanted space on the CD‟s Hard disk. They then have
to be manually deleted at the end of the day
12. VAT related issues – There are certain VAT related issues with SDS
13. Dedicated Helpline – There are no dedicated help lines to solve the SDS problems.
Uniliever have the same type of software and also a team to answer the distributors
problems. Nestle should develop such a helpline.
IMPORTANT CHANGES & IMPACTS AFTER IMPLEMENTATION
OF SDS
TEMPORARY PRICE PROMOTIONS
1. Better monitoring of TPP schemes and allocated budget: SDS will not allow
billing more than the budgeted amount allocated to a particular distributor and also
any variation in the TPP scheme will not get invoiced by the distributor. This will
ensure better monitoring of TPP schemes and allocated budget.
2. No need of manual TPP register checking: Implementation of SDS will eliminate
the need of comprehensive manual TPP register to be sent to the Branch control. It
will further reduce the manual checking efforts made to check TPP register by Branch
Control.
3. No need of Hard Copy Input Plan: Implementation of SDS will eliminate the need
of input plan to be sent to the distributor. CD can get an update of all the schemes to
be run in the month, absolute budget and input plan from SDS.
59
4. Increased Accuracy and transparency: Implementation of SDS will result into
Increased Accuracy and transparency due to automated checks and procedures.
5. Better Monitoring of Party Specific Schemes and schemes other than TPP:
Branch Control to approve such schemes entered by distributor in SDS on the basis of
written approval.
6. CD wise Better OID control: Implementation of SDS will result into CD wise better
OID control as ASMs will have to give OID split in soft copy for each distributor to
branch control.
7. Better RDBN control: Implementation of SDS will make available correct reporting
of physical holding by the distributor and will result into better RDBN controlling.
8. Increased Market Exposure for Sales Officers: With the implementation of SDS,
Sales officers would be able to spend more time in market area rather than at CD
point.
9. Better Product and Price Management: Currently product & price masters are
defined by the distributors manually. It can negatively affect data standards & data
hygiene. In SDS product & price master will be maintained centrally & down loaded
to the distributor system. It will enable standardized data across all distributors.
10. Better Planning and Transparency in Invoicing: Currently the distributors do not
have visibility of the invoice till they receive the stock. After receipt of stock &
invoice manual entry is done. In SDS the invoice gets downloaded giving visibility of
the stock in transit.
DISPLAY
1. Shift in focus of control from manual to system driven.
a. Budgetary control in the system. Total payout cannot exceed budget (at CD
level) pre defined in the system console.
b. Any exceptions in retail outlets will need approval in the SDS
c. Retail outlets will be selected and approved via workflow in the system.
d. Payout will happens automatically by adjusting the specified amount on the
first bill of the next month.
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2. Claim request will flow electronically via console. Necessity of Manual claims
documents i.e. signed and stamped coupons for processing claims is not required.
3. Preservation of physical copies of claims for governmental regulatories /statutory
requirements is subject to legal consultations/advices.
4. Increase in white collar productivity by maximizing potentials of electronically
automated system.
5. The System helps on analyzing affectivity of the spends.
SAMPLING
1. All the Zero Value Invoiced Nestle product will be handled through SDS. It would
provide the complete trace of the stock.
2. Every activity should have a Budget issued to the field by BCCSD indicating the CD
from whom stock will be drawn & what stock will be drawn.
3. Complete trace back of the Sample stock will be available in the system, particularly
the zero value stocks issued by the company.
4. Claim for sampling of CD stock will have all the relevant detail i.e. Date and
description of sampling, Sampling Agency‟s name, batch code etc.
5. Issue to be made only for the quantity exactly to be consumed in the activity as any
excess issue cannot be reversed or taken back by the CD as reversal in SDS.
6. In current setup, all the Zero value invoicing needs to entered manually in Sample
Receipt. If the CD doesn‟t do this and issue the same stock through Sample Issue, a
claim would be generated.
RD COMMISSION & FREIGHT
1. There is no need to manually maintain and update list of RDs by the Branch Control
because each new RD is being approved by ASM & RSM. The required list of RDs
can be taken from Console on real time basis.
2. The Signed and Stamped RD bills are not required to be submitted along with the
claim since in SDS RD Commission is strictly passed to only those outlets which are
61
mapped under RD channel and these outlets are pre-approved by ASM/RSM in SDS.
Similarly RD freight rates are pre approved & can‟t be changed in SDS.
3. However these signed and stamped bills should be maintained at CD point and these
acknowledgements need to be randomly verified by Branch Control during field
visits.
4. All the new RDs are being approved by ASM, RSM and Branch Control and only
post approval billing can happen.
5. Claim % and RD freight is approved in console and it can‟t be changed in SDS.
BAD GOODS
1. The existing manual EOGA document will be replaced by SDS generated Delivery
Return Challan (DRC) which will have necessary details like the retailer details, SKU
details, reasons for return etc except Batch Code.
2. There is no need to prepare EOGA summary manually as the same is available in
SDS and the same can be accessed online in console.
3. Similarly there is no need to attach EOGA summary to branch office along with Bad
Goods claim because reason code wise, retailer wise trail of bad goods will be
available in SDS/Console for cross checks.
4. Tracking of bad goods at retailer level, SKU level, reason code wise etc become
easier, real time and more effective for both CD & Nestle.
5. Credit to the retailer for bad goods to be given only through the bill and other modes
of reimbursement like cash payment, stock replacement etc will be discontinued.
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ANALYSIS OF CLAIMS RECEIVED
As a part of understanding Claims Better, and see whether there is any difference Pre & post
implementation of SDS, I undertook an analysis of the Gross Proceeds from Sales (GPS), Net
Proceeds from (NPS), Performance Trade Spends (PTS), Gross Price Reduction (GPR) and
Bad Goods for the duration February & March 2009 and February & March 2010.
Firstly to understand what the various terms above mean:
GPS – It signifies the turnover of the CD, the actual sales
NPS – This is the figure we get after we reduce GPR from GPS
GPR – It includes FS/Vending, Ongoing & ATC claims
PTS – It includes Trade & Display claims
The purpose was to see the changes in the claims made in different regions, as by January
2010 most of the CDs were using SDS.
In the tables below are a comparison of figures for February & March 2009 & 2010
T 1.6 – NPS (Figures in Crores)
February March
ASM Zone 09 10 % Change
for February 09 10
% Change for March
Delhi 19.00 23.36 18.66% 17.63 21.70 18.75%
Haryana 3.75 5.24 28.32% 3.44 4.95 30.48%
HP 4.28 5.49 22.01% 3.88 5.67 31.54%
J&K 4.57 5.79 21.12% 5.33 5.69 6.29%
Punjab 13.77 16.56 16.81% 12.16 15.32 20.60%
Rajasthan 8.25 10.11 18.45% 7.16 9.02 20.60%
UP 19.86 24.91 20.29% 17.81 22.18 19.72%
Uttaranchal 4.81 6.06 20.71% 4.40 5.26 16.46%
TOTAL 102.98 121.95 15.56% 90.26 107.22 15.82%
FEBRUARY:
As can be seen above the Turnover has increase by 15.56%. The maximum growth takes
place in Haryana. In absolute terms, UP has the highest NPS, that of Rs. 24.91 crore in 2010.
MARCH:
63
The NPS for March has increased by 15.82% from 2009 to 2010. The maximum growth takes
place in HP, with Haryana after that. In absolute terms, UP has the highest NPS with Rs.
22.18 crore.
The growth rate has been steady for both the months.
T 1.7 - TOTAL CLAIMS (Figures in Crores)
February March
ASM Zone 09 10 % Change for
February 09 10
% Change for March
Delhi 0.37 0.51 27.10% 0.30 0.51 40.18%
Haryana 0.09 0.09 0.88% 0.03 0.03 10.54%
HP 0.05 0.13 57.96% 0.06 0.06 6.46%
J&K 0.09 0.16 40.99% 0.06 0.06 -2.09%
Punjab 0.38 0.32 -18.84% 0.21 0.18 -18.41%
Rajasthan 0.18 0.23 20.98% 0.08 0.08 0.77%
UP 0.40 0.23 -77.64% 0.23 0.21 -12.76%
Uttaranchal 0.08 0.13 41.75% 0.03 0.03 -3.94%
TOTAL 2.06 2.85 27.77% 1.27 1.52 16.93%
FEBRUARY:
The claims raised by the CDs have increased by 27.77%. The maximum increase happened in
Himachal Pradesh. This happens even though its NPS increased by only 22.01%. However as
we can see above the claims raised by the CD in Punjab & UP reduced by 18.84% and 77.64
respectively. The reason for this may due to the implementation of SDS. Through SDS, false
claims cannot be raised, therefore this might indicate the amount of False claims being raised
in these 2 states.
MARCH
The claims raised by the CD have increased by 16.93%. There is a fall in claims between the
2 months. This phenomenon can be seen in both the years. The reason can be due to less NPS
as can be seen in T 1.10. Also during the winter months, the Sales of Chocolate and
confectionaries are more. There are a number of Schemes and discounts provided for these
items
64
T 1.8 - PTS (Figures in Crores)
February March
ASM Zone 09 10 % Change for
February 09 10
% Change for March
Delhi 0.27 0.51 46.70% 0.64 0.47 -36.76%
Haryana 0.07 0.09 24.61% 0.02 0.02 28.36%
HP 0.04 0.13 69.48% 0.03 0.03 5.13%
J&K 0.07 0.16 55.72% 0.03 0.03 0.00%
Punjab 0.24 0.32 25.69% 0.10 0.08 -31.11%
Rajasthan 0.14 0.23 37.76% 0.05 0.06 14.43%
UP 0.26 0.23 -14.51% 0.14 0.14 2.24%
Uttaranchal 0.05 0.13 65.40% 0.01 0.01 3.68%
TOTAL 1.19 2.85 58.31% 1.05 1.09 4.06%
FEBRUARY:
Performance of Trade Spends (PTS) include Trade & Display claims. The claims are shown
as expenses in the P&L A/C. These are the important claims raised by the CD. There has
been a growth 58.31% increase. They increase with the increase in GPS.
MARCH:
There has been a drop in PTS claims for Delhi and Punjab for March. The increase has been
marginal in March as compared to February. There has been a huge drop in PTS claims from
Feb 2010 to March 2010.
T 1.9 - Bad Goods as a Percentage of NPS
February March
ASM Zone 09 10 09 10
Delhi 0.32% 0.07% 0.20% 0.38%
Haryana 0.15% 0.11% 0.23% 0.17%
HP 0.13% 0.14% 0.12% 0.12%
J&K 0.26% 0.22% 0.12% 0.20%
Punjab 0.13% 0.06% 0.17% 0.15%
Rajasthan 0.11% 0.06% 0.12% 0.09%
UP 0.28% 0.03% 0.14% 0.20%
Uttaranchal 0.15% 0.10% 0.14% 0.15%
AVERAGE 0.19% 0.10% 0.16% 0.18%
65
FEBRUARY
Nestle has to keep a check on the Bad Goods coming. There are certain bad Goods Norms
which are followed by Nestle. They usually vary around .19% of the NPS. As it can be seen
above in 2009, Delhi, J&K, UP had huge Bad Goods. When compared to 2010, only J&K
exceeded the Bad Good norms. This decrease in Bad Goods can be attributed to SDS.
Through SDS, the process of claiming Bad Goods becomes stringent.
MARCH
In March 2009 only Haryana exceeded the Bad Good Norms. Whereas in 2010 Delhi
exceeded the norms. The increase in Bad goods of Delhi from February to March 2010 may
be due to the unsold stock during the winter such as Beverages or processed foods.
66
CHAPTER 9
CONCLUSION
67
SDS
With SDS being implemented it has helped both the CD & Nestle. Despite some of the
problems being faced by it, Nestle requires a system of this kind to keep everything on Track.
With A Huge company like Nestle, a system like SDS will help it grow more.
Claims processing through SDS have resulted in better and efficient handling of claims
saving time, money, resources and energy for everyone. It has reduced the workload for the
accounts and control department. The accounts receivables department now has access to the
distributor point data and that too on a real time basis. This results in faster processing of
claims. Also the number of false and invalid claims has reduced significantly. Most
importantly, as such a huge company it is difficult keeping track of everything, with SDS,
there will be total transparency Thus SDS is an invaluable and multi tasking tool.
CHANNEL FINANCE
Channel Finance is an extremely important mode of payment. With a huge company like
Nestle, it has deals to deal with a huge number of accounting transactions. Channel Financing
helps reduce the administrative work.
However while opening Channel Finance Accounts, the time taken for opening an A/C can
be reduced. Also the documentation should be reduced. This can happen if Nestle & HDFC
can work out a procedure effectively
68
BIBLIOGRAPHY
www.nestle.in Nestle Intranet
www.fmcginfo.com
www.inbics.co.kr
www.indianfoodindustry.net
Nestle journal-Creating Shared Value
Other internal sources of Nestle
Personal interviews and interactions from various department heads
69
APPENDIX
ANNEXURE 1
Milk Products & Nutrition
NESTLÉ
EVERYDAY
Dairy Whitener
NESTLÉ Fresh
'n' Natural
Dahi
NESTLÉ
MILKMAID
NESTLÉ
EVERYDAY
Ghee
NESTLÉ Fresh
'n' Natural Slim
Dahi
NESTLÉ
NIDO
NESTLÉ Milk NESTLÉ Jeera
Raita
NESTLÉ
Slim Milk
NESTLÉ
NESVITA PRO-
HEART MILK
NESTLÉ
MILKMAID
Fruit yoghurt
NESTLÉ
NESVITA
Dahi
Prepared Dishes & Cooking Aids
MAGGI 2-
MINUTE Noodles
MAGGI
Masala-ae-
Magic
MAGGI
MAGIC
Cubes
MAGGI
Vegetable Atta
Noodles
MAGGI Sauces
MAGGI
Bhuna
Masala
MAGGI CUPPA
MANIA
MAGGI
Pichkoo
MAGGI
Coconut
Milk Powder
MAGGI Healthy
Soups
MAGGI Pizza
Mazza
MAGGI
Pazzta
MAGGI
Sanjeevni Cup
Soup
Beverages
NESCAFÉ
CLASSIC
NESCAFÉ
CAPPUCCINO
NESTEA ICED
TEA WITH
GREEN TEA
NESTEA
Instant Hot Tea
Mixes
NESCAFÉ
SUNRISE
Premium
NESCAFÉ
SUNRISE
Special
NESTEA ICED
TEA
NESCAFÉ
3in1
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Chocolates & Confectionery
NESTLÉ KIT
KAT
NESTLÉ
MILKYBAR
NESTLÉ Milk
Chocolate
NESTLÉ
Eclairs
NESTLÉ KIT
KAT CHUNKY
NESTLÉ
MILKYBAR
CHOO
NESTLÉ MUNCH
POP CHOC
NESTLÉ
MUNCH
NESTLÉ BAR-
ONE POLO
71
ANNEXURE 2
72
ANNEXURE 3
73
ANNEXURE 4
74
ANNEXURE 5
75
ANNEXURE 6
MANUAL FOR CDs FOR USAGE OF SDS
ANNEXURE 7
MANUAL FOR DOCUMENTATION FOR OPENING OF A
CHANNEL FINANCE ACCOUNT
76
ANNEXURE 8 - AUDIT REPORT
CD Name : Atul Enterprises, IP Extension, Delhi.
Sales Officer : Ritesh Anand
Audited By : Vidyut Perti (Under the Guidance of Mr. Jindal Haria)
Date : 14th May, 2010
----------------------------------------------------------------------------------------------
Warehouse:-
The warehouse/godown cooler was not on. The temperature was considerably higher than 8
degrees Celsius and the temperature indicator was not working.
The proprietor reasoned that it was because the last vehicle had just left and the vehicle
needed to be loaded with goods.
Market Visit:
We connected with one of the salesmen – Kanhaiyaji whose route included Mayur Vihar
Phase 1 and 2.
There was Presence of pre-signed and stamped EOGAs (Exchange of Goods Advice) ,without
rest of the details being filled out.
77
Almost all the outlets we visited complained of old stock. As supporting to this complaint, we
found old stocks in the delivery van as well as the godown.
Stock with Mfg Date 04/05/2010 in the van
78
Stock of mfg date 11th
may in Godown
Bad Goods:
We visited the following Outlets for verification of EOGA (The sample was selected out of
Jan EOGAs – absence or difference in signatures in EOGAs of the same store, improbable
number of bad goods etc)
1) Annapurna Stores (Mayur Vihar – Phase2)
The proprietor was shown all EOGAs in the name of his store. He verified that the signatures
on all the EOGAs were not his.
As seen below, there are 2 EOGAs for the same retailer on the same day, indicating at least 1
is a fraudulent claim.
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Date EOGA
No Retailer
No of
Pieces
Returned
Dealer
Amt Issue
1/2/2010 185819 Annapurna General Store 6 164 No DS Sign
5/1/2010 185817 Annapurna General Store 16 341 Diff Coloured
Ink,No DS sign
21/1/2010 2770 Annapurna General Store 3 82
25/1/2010 185847 Annapurna General Store 6 137 No DS Sign
22/1/2010 185818 Annapurna General Store 10 232 No DS Sign
18/1/2010 2773 Annapurna General Store 3 82 No DS Sign
21/1/2010 2778 Annapurna General Store 6 137 No DS Sign
Probable Adverse Impact: INR 1,174
2) Gulshan Provision Stores
80
The EOGAs had different signatures. The proprietor could identify only one signature out of
3 shown.
Date EOGA
No Retailer
No of
Pieces
Returned
Dealer
Amt Issue
3/1/2010 2878 Gulsan Pro Store 5 96 Diff Coloured Ink
26/1/2010 2895 Gulsan Pro Store 9 150 No DS Sign
19/1/2010 2883 Gulsan Pro Store 14 314 Diff Coloured
Ink,No DS sign
Probable Adverse Impact: INR 560
3) Jain Provision Stores
The proprietor acknowledged his signatures. EOGAs in this store‟s name had no problems.
4) Snack Point
The proprietor acknowledged his signatures. EOGAs in this store‟s name had no problems.
5) Richa Sweets
Signatures refused on all EOGAs. He accepted that sometimes there are bad goods from his
stores, but they haven‟t exceeded 5. But the EOGAs were showing exaggerated number of
bad goods.
Date EOGA
No Retailer
No of
Pieces
Returned
Dealer
Amt Issue
30/1/2010 2846 Richa Sweets 16 437 Too Many BG
4/1/2010 2761 Richa Sweets 18 437 False BG
12/1/2010 2844 Richa Sweets 22 600 Diff Colored
Ink, False BG
28/1/2010 2849 Richa Sweets 17 437 False BG
Probable Adverse Impact: INR 1,911
6) M B Enterprises
81
Large number of bad goods through periodic EOGAs. Though the proprietor accepted that his
bad good returns were often high, he appeared surprised at the numbers. But also
acknowledged his signatures.
This retail partner is a wholeseller with monthly turnover of about Rs 1 lac.
Salesman‟s Rapport:
Salesman Kanhaiya enjoyed tremendous rapport with the retailers whom he serviced. All
praised his service and efficiency.
CONCLUSION
EOGAs
Out of the selected sample, 26% of EOGAs could not be verified. At a business level, this is
an impact of INR in Jan2010.
All figures in INR except %
Sales in Jan „10 567,769
EOGAs in Jan „10 31,847
% EOGAs Unverified (based on
sample) 26%
Probable Adverse Impact (Jan 10) –
based on sample set 8,280
Extrapolation for the year 2010
All figures in INR except %
Sales '10 (Based on Jan 10 Turn Over) 11,355,380
EOGA '10 (Based on Jan 10 EOGA) 636,940
% of EOGA not approved by retailer 26%
Probable adverse Impact '10 due to incorrect claims 165,604
82
Warehouse
The warehousing practices still need to be improved.
Inventory
FEFO is not being followed leading to presence of old stock in the system. This is also
impacting market image with retail partners.
RECOMMENDATIONS
There have been substantial efforts by the Accounts team to point out the fact that there are
significant portion of unjustifiable EOGAs in the system. Unless EOGAs are kept in check,
they will have a tendency to balloon.
1) Dahi is a difficult business and EOGAs will be generated at higher percentage as
compared to other businesses of Nestle. However they need to be kept in check.
2) A directive must be sounded to the CEPs that they will be debited for unsubstantiated
EOGA claims (based on a random sample of EOGAs appropriated to monthly
turnover)
3) This must be done for a couple of months in continuation and then similar study
should be carried out again to understand the changes in EOGA levels and claims.
4) As an alternative, the distributor can be debited for a month. This will indicate the
seriousness with which Nestle is looking at the veracity of EOGA claims and instill
discipline.
