SIP+Phase+II+Report+_+Harshvardhan+_+11014 (1)

8/7/2019 SIP+Phase+II+Report+_+Harshvardhan+_+11014 (1)

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[ITC LIMITED , ITD MARKETING, BANGALORE AND SIBM , BANGALORE]

To study the Sales and Distribution chain from the Wholesale Distributor point to the

Retailer for BINGO and indentify the inefficiencies and inaccuracy in the processes ,ifany , and suggest methods and processes to rectify them.

Submitted under the partial fulfillment of the MBA degree from SIBM, Bangalore.

This is to certify that the following study or work is my original work and has never been

submitted by any one as for the award of any other Degree/Diploma/Fellowship or other similar

titles or prizes.

Harshvardhan Singh Chauhan

Institute Identification No. 11014

Marketing, Batch of 2010.

SIBM, Bangalore.



Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009 ~ 2 ~

Table of Contents

1. Executive Summary 3

2. Introduction 5

3. Objectives of the study 18

4. Relevant Literature reviewed 19

5. Proposed methodology 21

6. Logical Flow of the Project 23

7. Benefits as a student of management 24

8. Benefits to the organization 25

9. Analysis , Findings and Conclusions 26

10. Bibliography 36

11. Appendix 37




1.Executive Summary

1.1 Synopsis

Since its launch period in March, 2007, BINGO as a brand has been through a lots of ups and

downs. Both Branding and Sales and Distribution aspects of marketing for BINGO have been

explored and matured to a large extent. Though the product itself is considered to be in a

growth stage, with a market share of 16% in the branded snacks food category, it has been

successful to a large extent in creating the required Brand recall for the category.

However, the Sales and Distribution for BINGO despite its extensive market reach has been

abiding with a legion of issues which threaten its growth and profitability as a business category.

The project purports to decipher the Sales and Distribution chain from the Wholesale Distributor

point to the Retailer and indentify the inefficiencies and inaccuracy in the processes, if any , and

suggest methods and processes to rectify them.

After a initial exploratory survey of 8 Wholesale Distributor (WD) points, across 112 routes and

4200+ retail outlets, it was identified that there is a considerable demand – supply mismatch in

the market. More precisely, the retailer did not get the variants he demanded in most cases. The

stock keeping units’ (SKU) mix that the retailer required were not serviced to him by the

Distributor Salesperson (DS) in the exact proportion.

Also, the Destroy and Destruct (DND), SKU’s whose shelf life expired or had air outs and were

incapable of selling, were 4%+ of sales by revenue for BINGO , which is huge as compared to

other food category products of ITC and also by competitive industry standards of 2-2.5%.

Lastly, it was found out that there is a variation in the Estimated Consumer Demand (ECD) and

the SKU mix that was supplied from the Central Hub (CH) to the Wholesale Distributors (WD).




The further course of the project, therefore, focused on setting up processes which would

quantify and establish the impacts of the inefficiencies at various points in the chain and

explore, identify and test appropriate processes which would eliminate or reduce the impact of

inefficiencies.

The scope of the project spanned across Bangalore city. ITC for BINGO operates in Bangalore

via 12 WD’s and has a reach of more than 8000 retail outlets. Apart from this a Convenience

Delivery Model (CDM) is also used to reach a miniscule part of the territory of about 1%.

For the purpose of a Pan-Bangalore reach, to give a most possible accurate picture, the study

was done at 8 WD points, across 112 routes having coverage of 4200+ retail outlets. This gave

the study an approximately 72 % coverage of Bangalore City.




2. Introduction

2.1 Industry Analysis

2.1.1 Indian Food Processing Industry

Food processing industry in India is a sunrise sector that has gained prominence in the recent

years. Availability of raw materials, changing lifestyles and relaxation in policies has given a

considerable push to the industry’s growth. This sector is among the few that serves as a vital

link between the agriculture and industrial segments of the economy. Strengthening this link is

of critical importance to improve the value of agricultural produce; ensure remunerative prices

to farmers and at the same time create favorable demand for Indian agricultural products in the

world market. A thrust to the food processing sector implies significant development of the

agriculture sector and ensures value addition to it.

2.1.2 Ministry of Food Processing Industries

The Ministry was set up in 1998 and the industry segments that come under its purview are:

• Fruit & Vegetable processing (including freezing and dehydration)

• Grain Processing

• Processing of Fish (including canning and freezing)

• Processing and refrigeration of certain agricultural products, dairy products, poultry and

eggs, meat and meat products

• Industries related to bread, oilseeds, meals (edible), breakfast foods, biscuits,

confectionery, savory snacks, malt extract, protein isolate, high protein food, weaning

food and extruded food products (including other ready-to-eat foods)

• Beer, including non-alcoholic beer

• Alcoholic drinks from non-molasses base




• Aerated water and soft drinks

• Specialized packaging for food processing industries.

The Ministry of Food Processing Industries, Government of India, has estimated the size of the

Indian food market at US$ 191 bn (Rs 8,600 bn). The processed food market is projected to be

over US$ 100 bn, of which the primarily processed food market accounts for 60%, while the

value-added processed food market is around 40%.

The average annual growth of the food processing industry has been around 8% between

FY01-FY06. The segments that have driven the growth are the beverages and meat & meat

products and processed fish sectors. The food processing industry in India has a share of 1.5%

in the total GDP of the country, and as part of total manufacturing accounts for 9%. India’s

share in world trade in respect of processed food is about 1.6%.

An extensive and highly fragmented industry, the food processing sector largely comprises of

the following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic

beverages, meat and poultry, marine products, grain processing, packaged/convenience food

and packaged drinks. A large number of players in this industry are small sized companies, and

are largely concentrated in the unorganized segment. This segment accounts for more than

70% of the output in volume terms and 50% in value terms. However, though the organized

sector is comparatively small, it is growing at a much faster pace.




2.1.3 INDIAN SNACKS INDUSTRY

Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is described as

a small quantity of food eaten between meals or in place of a meal. Snack food generally

comprises bakery products, ready-to-eat mixes, chips, namkeen and other light processed

foods According to the ministry of food processing, the snack food industry is worth Rs 100

billion in value and over 4,00,000 tonnes in terms of volume.

Though very large and diverse, the snacks industry is dominated by the unorganized sector.

According to an Apeda survey almost 1,000 snack items and 300 types of savouries are sold

across India. The branded snacks are sold at least 25% higher than the unbranded products.

Savory snacks have been a part of Indian food habit, since almost ages. Though there is no

particular time for snacks, normally they are consumed at teatime. The variety is almost mind-

boggling with specialties from all regions, which have gained national acceptance.

The industry has been growing around 10% for the last three years, while the branded segment

is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to various reasons

like Multiplex culture, snacking at home while watching TV, pubs and bars (where they are

served free). AC Nielsen's retail audit shows that the large sales volumes are due to a marked

preference for ethnic foods, regional bias towards indigenous snacks and good value-for-

money perception. Of course the branded segment is much smaller at Rs 2,200 crore, which is

what makes it so attractive to food companies that are looking at bigger shares. In the branded

snacks market, to get down to basics, Frito Lay commands a share of 45%, followed by

Haldiram’s at 27% and ITC at 16%. The rest is divided between a handful of new entrants,

wannabes and many regional players.

Of the wide range of snacks available, potato chips constitute a sizeable segment of the Indian

snack food industry, according to India Infoline. The potato chip market is generally an

unorganized industry. Nearly all potato chip snack products are manufactured and sold locally.




There is also no uniform standard for packaging, as there is in Europe, the United States and

other more developed regions. Many snack foods are sold loose or packaged in poly-pouches,

which may only be folded, or in some cases, stapled closed. As the Indian economy continues

to grow, and production standards improve, many snack food companies are making significant

investments into plant equipment and packaging machinery.

Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food

manufacturer’s brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is

an example of how American recipes were adjusted to satisfy local tastes. Procter & Gamble's

Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also a baked potato

crisp, unlike many other potato based Indian snack foods that are fried. P&G currently imports

the Pringles product and therefore the product has been priced at a premium and is marketed to

a micro-niche.




2.1.4 Constraints & Drivers of Growth

Growing urbanization, increasing disposable income, emergence of organised food retail,

changing lifestyles and food consumption patterns are the key factors driving growth for

processed foods in India. These are post-liberalisation trends that have given an impetus to the

sector.

Consumption patterns in India have been undergoing a visible shift. Earlier, the share of cereal

products was the highest, followed by milk & milk products, vegetables, edible oil and meat

products. However, in recent years, the growth rates for fruits, vegetables, meat and dairy

products have been higher than cereals and pulses. This shift in turn implies that there is also a

need to diversify the food production base to match the changing consumption preferences.

This shift in consumption follows the pattern observed in developed countries in the evolution

of the global food demand. There is a shift from carbohydrate staples to animal sources and

sugar. Going by this pattern, in future, there will be increasing demand for prepared meals,

snack foods and convenience foods and further on the demand would shift towards functional,

organic and diet foods.

Some of the key constraints identified by the industry include:

• Lack of suitable infrastructure in terms of cold storage, warehousing, etc

• Lack of adequate quality control and testing infrastructure

• Inefficient supply chain and involvement of middlemen

•

High inventory carrying cost

• High taxation

• High packaging cost

• Affordability and cultural preference of fresh food




Highest priority has been accorded by the Government for the development of infrastructure.

The Government has already taken several initiatives on this front which include developing of

food parks, packaging centres, modernised abattoirs, integrated cold chain facilities, irradiation

facilities and value added centres.

The initiative to develop food parks was taken primarily in order to assist the small and medium

enterprises which are unable to invest in capital intensive activities. So far, 22 food parks have

come into operation which provide common facilities like cold storage, food testing and

analysis laboratories, packaging centres, etc

In terms of policy support, the ministry of food processing has taken the following initiatives:

• Formulation of the National Food Processing Policy

• Complete de-licensing, except for alcoholic beverages

• Declared as priority sector for lending in 1999

• 100% FDI on automatic route

• Excise duty waived on fruits & vegetables processing from 2000 – 01

• Income tax holiday for fruits & vegetables processing from 2004 – 05

• Customs duty reduced on freezer van from 20% to 10% from 2005 – 06

• Implementation of Fruit Products Order

• Implementation of Meat Food Products Order

•

Enactment of FSS Bill 2005

• Food Safety & Standards Bill, 2005




Apart from these initiatives, the Centre has requested state Governments to undertake the

following reforms:

• Amendment to the APMC Act

• Lowering of VAT rates

• Declaring the industry as seasonal

• Integrate the promotional structure

Investments

The total inflow of foreign direct investment in the food processing sector has been around Rs

52.7 bn (US$ 1.2 bn) between 1991 to November 2006. During the last five years, FDI

witnessed an inflow of over Rs 24 bn of foreign investment. The highest investment in a single

year was in 2001-02 amounting to Rs 10 bn.

Maharashtra was among the front-runners to receive the highest share of FDI in food

processing during the last five years. The dairy and consumer industrise received FDI worth Rs

2.7 bn each as foreign investment. Nearly 30 per cent of FDI in the food processing sector

comes from EU countries such as Netherlands, Germany, Italy and France. Perfetti, Cadbury,

Godrej-Pilsbury, Nutricia International, Manjini Comaco are some of the successful ventures

from EU countries.




Major Food Processing Companies in India

The entry of multinational companies has increased competition in the food processing

industry. At the same time, these companies are facing tough competition from strong Indian

brands. This level of competition has increased innovations, facilitating a sustained growth of

the sector and also improve global competitiveness. The emerging new growth phase of the

sector is just in its initial stages with the potential for India to emerge as a leading food supplier

to the world.




2.1.5 SWOT Analysis of Indian Snacks Industry

Strengths

• Abundant availability of raw material.

• Vast network of manufacturing facilities all over the country.• Vast domestic market.

• Urbanisation.

Weaknesses

• Low availability of adequate infrastructural facilities.

• Lack of adequate quality control & testing methods as per international standards.

• Inefficient supply chain due to a large number of intermediaries.

• High requirement of working capital.

Opportunities

• Rising income levels and changing consumption patterns.

• Favourable demographic profile and changing lifestyles.

• Integration of development in contemporary technologies such as electronics, material

science, bio-technology etc. offer vast scope for rapid improvement and progress.• Opening of global markets.

Threats

• Affordability and cultural preferences of fresh food.

• High inventory carrying cost.

• High taxation.

• High packaging cost.

• Competition between national and regional players.




2.2 Company Analysis

2.2.1 Establishment

Incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, the

company's name was changed to ITC Limited in 1974. Rated among the 'World's Best Big

Companies' by Forbes magazine, ITC ranks third on all major profit parameters among India's

private sector corporations. ITC employs over 20,000 people at more than 60 locations across

India. It has a turnover of $3 billion.

2.2.2 Growth and Diversification:

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

US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best

Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes

magazine, among India's Most Respected Companies by Business World and among India's

Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most

Valuable (Company) Brands', in a study conducted by Brand Finance and published by the

Economic Times.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded

Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an

outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards,

Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of

Packaged Foods & Confectionery, Branded Apparel and Stationery.




As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration

"a commitment beyond the market". In his own words: "ITC believes that its aspiration to create

enduring value for the nation provides the motive force to sustain growing shareholder value.

ITC practices this philosophy by not only driving each of its businesses towards international

competitiveness but by also consciously contributing to enhancing the competitiveness of the

larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers

of growth anchored on its time-tested core competencies: unmatched distribution reach,

superior brand-building capabilities, effective supply chain management and acknowledged

service skills in hotels business. Over time, the strategic forays into new businesses are

expected to garner a significant share of these emerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the

country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The

Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its

competitiveness by empowering Indian farmers through the power of the Internet. This

transformational strategy, which has already become the subject matter of a case study at

Harvard Business School, is expected to progressively create for ITC a huge rural distribution

infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is

aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including e-

enabled services and business process outsourcing.




ITC's production facilities and hotels have won numerous national and international awards for

quality, productivity, safety and environment management systems. ITC was the first company

in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalizing

environment to consistently reward more than 3, 88,000 shareholders, fulfill the aspirations of

its stakeholders and meet societal expectations.

This over-arching vision of the company is expressively captured in its corporate positioning

statement: "Enduring Value. For the nation. For the Shareholder."




3.Objectives of the study

3.1 Objectives of the study

The project aims to achieve the following objectives during its course of study:

1. To formulate processes to evaluate pan-Bangalore sales loss incurred due to demand –

supply mismatch.

2. To formulate a model and implement it to decrease the sales loss incurred.

3. To formulate processes to identify DND stocks for BINGO.

4. To formulate a model and implement it to decrease the DND stock percentage.

5. To formulate processes to identify the ECD-HUB supply mismatch.

6. To formulate a model to enforce most accurate ECD-HUB alignment in supply.

3.2 Limitations of the study

The study though being done at a Pan-Bangalore level , takes into account the generalizations

and repeatability of processes to be considered for the models to be implemented , to make

them scalable at wider levels of geography.

The study has been done on a 52% coverage area Pan-Bangalore to eliminate the risks of

unnecessary and avoidable generalizations.

The focus on more firsthand data and information also reduces the error rate in case of data

procured from already inefficient sources.




Since, the objectives of the project are implemented and tested across various WD points, it

reduces the chances of erroneous assumptions and wrong premises.

However, one limitation of the project can be the small size of geography covered to infer any

results on a national level. But, even 72% of a territory is far bigger than a good sample space.

Thus this limitation actually becomes the strength of the project.

Lastly some obvious limitations of the study are:

1. A short period of just 1.5 months for implementation of the models. This could be

hugely impacted by seasonal variations and temporary market forces.

2. Issues related to scalability of the models proposed , though being tested at various

points in Bangalore , still can be debatable and might undergo changes in case of a

different geography.

3. Moreover, the chaotic dynamics of some geographies can make the model susceptible

to faulty inferences and thus a modification has to be proposed in that case.




4. Relevant Literature Reviewed

4.1 References

4.1.1 Internet References (websites)

1. ITC PORTAL WEBSITE www.itcportal.com

2. ITC E-CHOUPAL WEBSITE www.echoupal.com

3. ITC AGRI-BUSINESS WEBSITE www.itcabd.com

4. FRITO LAYS’ WEBSITE www.pepsico.com

5. FRITO LAYS’ BLOG www.fritolayindia.blogspot.com

6. BINGO WEBSITE www.bingeonbingo.com

4.1.2 Internet References (articles)

1. ITC LAUNCHES BINGO www.itcportal.com/newsroom/press_releases_14mar07.htm

2. BINGO – ITC HAS FINALLY GOT IT !!

www.rediff.com/money/2007/may/01bspec.htm 3. FRITO LOSES MARKET SHARE TO BINGO

www.moneycontrol.com/india/news/business/frito-lay-loses-snack-mkt-share-to-itcs-bingo/20/35/300325

4. ITC – PEPSICO BATTLE IT OUT IN WAFERS MARKET

www.itcportal.com/newsroom/press06june07-b.htm

4.1.3 Books References

1. Strategic Brand Management , Kevin Lane Keller , Pearson.

2. Sales and Distribution Management , Havaldar and Cavale , Mc Graw Hill.

3. Consumer Behavior , Schiffman and Kanuk , Pearson.

4. Marketing Research , Nargundkar , Mc Graw Hill.




4.1.4 Classified References

1. ITC Intranet

2. Forum ERP Implementation Tool at WD points.

3. SIFY

4. SAP Implementation Tool at Area Sales Manager Kiosks

5. WD record books (manual entry) and electronic media

6. Retailer Bill books and cash files




5. Proposed methodology

5.1 Detailed Methodology

The basic methodology is to formulate processes and identify the right places to implement

them in order to achieve the objectives. Thereafter, these results obtained from the first hand

data combined with a historical data are used to make inferences regarding the objectives to be

fulfilled. The study then would aim at formulating processes to rectify them.

The study starts with an initial one week of ad hoc market exploration which includes :

1. Visiting all WD points across Bangalore.

2. Covering as many routes as possible with the Distributor Salesperson (DS) on his

sales day.

3. Focused group discussion with WD’s , DS and the retailers across routes.

4. To understand the Sales and Distribution chain from WD to Retailer.

5. To understand the various processes involved in the entire chain.

6. To identify the inefficiencies and inaccuracy in the processes.

7. To formulate processes to identify and quantify the inaccuracy in processes.

8. To implement these processes across Bangalore and find the average inaccuracy

level.

9. To formulate models to eliminate or reduce the inaccuracy.

10. To implement the models across Bangalore and record the reductions in inaccuracy.

11. Further refine, improve and confirm on the models by testing them in varied territories.




5.2 Usefulness of the methodology

Sales and Distribution is a dynamic environment. The models successful in a territory might fail

completely in another. Also, the canvas of Sales and Distribution is wide enough to encompass

all aspects, right from production to final consumption. The need was to formulate formal

processes that are well tested and can be replicable to different geographies. Thus, the

methodology adopted keeping in view the constraints is to determine robust models and test

them widely across different territories.




6. Logical flow of project

6.1 Schedule & Road Map followed

WEEK 1 : AD HOC MARKET EXPLORATION AND UNDERSTAND THE ENTIRE CHAIN

WEEK 2 : IDENTIFY PROCESSES INVOLVED AND INACCURACY OBESERVED

WEEK 3 : FORMULATE PROCESS FOR OBJECTIVE 1 AND IMPLEMENT IT






WEEK 9 : CONCLUDE AND PROPOSE RECOMMENDATIONS

WEEK 1 WEEK 2 WEEK 3 WEEK 4 WEEK 5 WEEK 6 WEEK 7 WEEK 8 WEEK

AD HOC EXPLORATION

IDENTIFY INACCURACIES

OBJECTIVE 1

OBJECTIVE 2

OBJECTIVE 3

OBJECTIVE 4

OBJECTIVE 5

OBJECTIVE 6

CONCLUDE

GANTT CHART




7. Benefits as a student of management

The summer internship period at ITC has laid my foundation stone for my further years in the

marketing industry. The nine week extensive experience of Sales and Distribution along with

other aspects of marketing has bridged the gap between my theoretical knowledge and its

applications in the real world.

As a management student, apart from the experience and learning in marketing, I have been

able to understand the ethical corporate functioning and the responsibility of an organization

towards the society.

During my short stint, I have also been able to come in touch with legendry marketers at ITC ,

who have had an indelible impression on my personality.

My major learnings have been regarding:

1. The organizational setup and functioning of corporate.

2. The dynamics of market and the response of companies to it.

3. The role and responsibility of an employee towards the company and the society.

4. The need for ethical business.

5. The need for a sustainable business model.

6. The need for company to be resilient against change and chaos.

7. The basics & intricacies of businesses, apart from their core functions.




8. Benefits to the organization

The Sales and Distribution for the snack food category of Bingo had been plagued with a host of

inefficiencies and challenges which threaten its future growth prospects as a category.

Despite its extensive market reach, snack food itself posed a host of difficulties in thedistribution chain. Also, the presence of a strong competition makes it inevitable to refine

processes and improve the distribution.

1. After a preliminary survey of the market, I found out that there was a considerable demand

supply gap. Thus I had setup a process to evaluate the sales loss occurred through this gap in

the chain. The process and information regarding the sales loss had never been used at ITC

before. Thus, this process setup across 8 WD points gives ITC a deep insight regarding the

market dynamics for their category.

2. I have proposed a process for stock rotation to combat the potential sales loss that occurred.

3. Lastly, I proposed a hybrid distribution model, which has now been implemented at 4 WD

points across Bangalore. This model reduces their K4(logistics + DS salary ) by 40% and also

there has been a recorded sales increase.




9. Analysis, Findings & Conclusions

9.1 Process to calculate sales loss

9.1.1 Loading sheet to evaluate loading/unloading inaccuracy per day.

The process was implemented across 112 routes , 8 WD points across Bangalore

9.1.2 Route efficiency calculation process




The route efficiency sheet calculates the potential sales loss that occurred during that day. This

was implemented across 112 routes , 8 WD points.

9.2 Sales Loss Calculation




9.3 Process to evaluate variation in demand and supply between HUB and WD

The variation between demand and supply was evaluated as below.

Variation for the month of January:




9.4 Process for Stock Transfer to combat Sales Loss

The above process illustrates the transfer of stock that should happen between two WD points

MA Associates and Rushub Enterprises to combat sales loss to each other.

This process is based on the Cover Day reports , which exhibit the pipeline days for the stockon hand. Based on this pipeline prediction we transfer stocks that are far above the reserve

level of 5 days.




9.5 Hybrid Distribution Model

Order Booking Model at M A Associates

Description:

In order booking , unlike ready stock delivery method , we cover the entire route by booking theorders on DAY 1,order booking day (OD) and make the supply on DAY 2,supply day (SD).

Since order booking is fast as the mode of transport is a two wheeler , we have an increased

efficiency of the Distributor Salesman (DS) and therefore we cover two adjacent routes on DAY

1 itself. Likewise, the supply on DAY 2 is made again for both the routes. This cycle of alternate

OD and SD is continued for the entire week, making three days for OD and three days for SD.

Also on the SD, the DS is supposed to carry 40% top up stock apart from the ordered stock,

which he supplies through ready stock method or cash and carry method to all those outlets

which for some reasons could not be covered or even to the same outlets in case they demand

more, while he is traversing the route back end of the day. This provides us bonus sales or

helps to compensate for any loss in sales potential of that route if it had occurred during orderbooking. Thus, on the whole, the above proposed method can be considered as a hybrid model

which exploits and benefits the advantages of both ready stock and order booking method to

achieve optimum results.

The major objectives achieved in order booking method contrary to the ready stock are:

1. Reduced K4 cost (transportation + DS salary).

2. Increased Sales as per the actual potential of the route.

3. Reduced possible Sales Loss due to variant unavailable at WD point, if it had been

delivered by ready stock supply.

4. Reduced possible Sales Loss due to variant stock out, if it had been delivered by ready

stock supply.

5. Increased visibility or presence of the DS on the same route, which has now been

doubled, as there are two visits on the same route per week.

6. Increased efficiency of the DS.

7. Increased Bill Cuts.

8. Increased Line Cuts.

9. Improved credit collection.

ORDER BOOKING SUPPLY

READY STOCK SUPPLY




10. Improved supply chain with a larger coverage and more aggressive distribution.

OBSERVATIONS

1. Reduced K4 cost (transportation + DS salary)

SAVING OF ABOUT RS.8 TO SERVE EVERY OUTLET

2. Increased Sales as per the actual potential of the route.

GROSS SALES LOSS 2880

GROSS ACTUAL SALES 9415

EXPECTED SALES 12295

LOSS% 23.42416

ORDER BOOKING ACHIEVED SALES 12086.31

LOSS % RECOVERED 21.7268

3. Reduced possible Sales Loss due to variant unavailable at WD point, if it had been

delivered by ready stock supply.

LOSS % RECOVERED 21.7268

4. Reduced possible Sales Loss due to variant stock out, if it had been delivered by ready

stock supply.

NO STOCK OUT

5. Increased visibility or presence of the DS on the same route, which has now been

doubled, as there are two visits on the same route per week.

6. Increased efficiency of the DS.

LESS TIME SPENT IN BILLING.

LESS TIME SPENT IN SERVICING.

READY STOCK ORDER BOOKING

FOR 2 DAYS PER WEEK FOR 2 DAYS

PER

WEEK

DS SALARY 400 1200 DS SALARY 400 120

AUTO CHARGE 900 2700 AUTO CHARGE 450 135

TWO WHEELER CHARGE 100 30

OUTLETS/ROUTE 72 OUTLETS/ROUTE 88

COST TO SERVICE AN OUTLET 18.0555556 10.7954545




7. Increased Bill Cuts.

EARLIER AVG . BILL CUT 10 BILLS/ROUTE

BILL CUTS IN ORDER BOOKING 14 BILLS/ROUTE

8. Increased Line Cuts.

EARLIER AVG . LINES CUT 3.31 LINE CUTS/BILL

LINES CUTS IN ORDER BOOKING 6.1 LINE CUTS/BILL

9. Improved credit collection.

AVG. DAILY CREDIT COLLECTION 254.76/DAY

ORDER BOOKING CREDIT COLLECTION 1468/DAY

10. Improved supply chain with a larger coverage and more aggressive distribution.

AVG DAILY OUTLETS COVERED 36/ROUTE

AVD DAILY OUTLETS COVERED 44/ROUTE , 3 SERVED TWICE , 5 NEW ONES.

9.6 Results of the new model deployed




9.7 Conclusion

1. The sales loss calculated was 35.5% pan Bangalore.

2. The process for ECD determination should be followed as per the process suggested.

3. The process for stock transfer should be followed bimonthly.

4. The new hybrid model suggested increase the sales, bill cuts , line cuts and credit collection

and hence should be used across Bangalore. This model has already been deployed at three

more WD points.




10. Bibliography

10.1 References

10.1.1 Internet References (websites)

7. ITC PORTAL WEBSITE www.itcportal.com

8. ITC E-CHOUPAL WEBSITE www.echoupal.com

9. ITC AGRI-BUSINESS WEBSITE www.itcabd.com

10. FRITO LAYS’ WEBSITE www.pepsico.com

11. FRITO LAYS’ BLOG www.fritolayindia.blogspot.com

12. BINGO WEBSITE www.bingeonbingo.com

10.2.2 Internet References (articles)

5. ITC LAUNCHES BINGO www.itcportal.com/newsroom/press_releases_14mar07.htm

6. BINGO – ITC HAS FINALLY GOT IT !!

www.rediff.com/money/2007/may/01bspec.htm 7. FRITO LOSES MARKET SHARE TO BINGO

www.moneycontrol.com/india/news/business/frito-lay-loses-snack-mkt-share-to-itcs-bingo/20/35/300325

8. ITC – PEPSICO BATTLE IT OUT IN WAFERS MARKET

www.itcportal.com/newsroom/press06june07-b.htm

10.2.3 Books References

5. Strategic Brand Management , Kevin Lane Keller , Pearson.

6. Sales and Distribution Management , Havaldar and Cavale , Mc Graw Hill.

7. Consumer Behavior , Schiffman and Kanuk , Pearson.

8. Marketing Research , Nargundkar , Mc Graw Hill.




10.2.4 Classified References

7. ITC Intranet

8. Forum ERP Implementation Tool at WD points.

9. SIFY

10. SAP Implementation Tool at Area Sales Manager Kiosks

11. WD record books (manual entry) and electronic media

12. Retailer Bill books and cash files



11. Appendix

1. Calculation for Sales Loss

2. Calculation for ECD-HUB variation

3. Calculation for Stock Transfer

4. Hybrid Model implementation details and figures for three weeks.

SIP+Phase+II+Report+_+Harshvardhan+_+11014 (1)

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