Final Report_2010C03.docx

7/31/2019 Final Report_2010C03.docx

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TO STUDY THE OPERATIONS OF SUPERSTOCKISTS IN BUNDELKHAND REGION

By

Harshdeep Singh

Under the Guidance of

Prof. Pratima Sheorey

Marketing

In (Partial) Fulfillmentof the Requirements for the Degree ofMasters of Business Administration.

SYMBIOSIS CENTRE FOR MANAGEMENT AND HUMAN RESOURCE DEVELOPMENT,SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY)

June, 2011

Symbiosis Centre for Management & Human Resource Development Symbiosis InfoTech Campus | Plot No. P-15, |

Rajiv Gandhi InfoTech Park Hinjewadi | Pune411 057 | India Phone : +91 020 22934303/5


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To study the operations of the Superstockists in Bundelkhand region

2

CERTIFICATE

This is to certify that Mr. Harshdeep Singh has successfully completed the summer internship project titled

To study the operations of superstockists in Bundelkhand region, in the Marketing department of Perfetti

Van Melle India Pvt Ltd. (It is an independent research work done under my supervision during April11-

June11. It is being submitted to the Symbiosis Centre for Management and Human Resource Development,

Constituent of Symbiosis International University (SIU) in partial fulfilment for the award of the Degree of

Master of Business Administration.

Signature of Project Guide Signature of Faculty GuideDesignation Designation

Company Stamp Institute Stamp


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3ACKNOWLEDGEMENT

All words fall short to express a sense of deep gratitude for my highly esteemed supervisors and guides, Mr.

Sandeep Chatterjee for guiding me and providing direction during the course of my internship at Perfetti Van

Melle India Pvt. Ltd. I am highly indebted to them for their advice and support at crucial junctures. This project

would not have been possible without their benevolent guidance, enlightening discussion and encouragement.

I would also like to thank Ms. Pratima Sheorey for her constant guidance.

I would also like to express my sincere gratitude to the entire team of Sales & Marketing of Perfetti Van Melle

India for providing being there at every step.


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4Table of contents

Contents

Abstract ................................................................................................................................................................................... 6

Company Overview ................................................................................................................................................................. 7

Research Methodology ........................................................................................................................................................... 9

Project measurables .............................................................................................................................................................. 10

Billing efficiency (B.E.)........................................................................................................................................................ 10

Range selling ........................................................................................................................................................................ 12

Visit to the SS ....................................................................................................................................................................... 12

PJP plan between DSE and PSR........................................................................................................................................... 13

New town openings .............................................................................................................................................................. 15

Competition .......................................................................................................................................................................... 16

HVP sales.............................................................................................................................................................................. 18

Scheme passing from SS to Sub ........................................................................................................................................... 19

Miscellaneous observations .................................................................................................................................................. 19

Recommendations................................................................................................................................................................. 19

References............................................................................................................................................................................. 24


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5List of Figures

Figure 1 Billing Efficiency P1 ................................................................................................................................................. 10

Figure 2 Billing Efficiency P2-P3 ........................................................................................................................................... 11

Figure 3 Claim Bill ................................................................................................................................................................. 13Figure 4 MSSR ....................................................................................................................................................................... 13

Figure 5 Sales_P1 SS_April .................................................................................................................................................... 14

Figure 6 Sales_P2-P3 SS_April ............................................................................................................................................... 14

Figure 7 Competition Product comparison ........................................................................................................................... 17

Figure 8 Margin Comparison ................................................................................................................................................ 17

Figure 9 Freight Comparison ................................................................................................................................................. 18

Figure 10 HVP Sale_P1_April ................................................................................................................................................ 18

Figure 11 HVP Sale_P2-P3_April ........................................................................................................................................... 18

Figure 12 Mapping model_Cost &Benefit analysis ............................................................................................................... 20

Figure 13 Classification model_P1 ........................................................................................................................................ 22

Figure 14 Classification model_P2-P3 ................................................................................................................................... 23


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6

Abstract

This project deals with the study of the operations of superstockists (SS) in Bundelkhand region. It basically

includes the study of billing efficiency at the SS end, range selling at the retailers end, record maintenance at

the SS and the substockists end, PJP plan finalisation between the DSE( Distribution sales executive) and the

PSR(Pilot sales rep), opportunities in new town openings, check the growth from each substockist, selling of

hvp products and competition benchmarking. To achieve the objective of the project, qualitative research was

carried out around towns in Agra, Aligarh, Jhansi and Etawah. Required data was collected with the help of my

ASM Mr. R S Arora, DSE and PSR at various places. After the data collection phase, the loopholes in the

system were recognised and keeping in mind each SRO, solutions were recommended for the same.


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7

Company Overview

Perfetti Van Melle is a European global manufacturer of confectionery and

gum. It was formed by the 2001 merger of Perfetti of Italy with Van Melle of

the Netherlands, having its corporate headquarters in Lainate, Italy and in

Breda, Netherlands.

Perfetti Van Melle bills itself as the third largest confectionery manufacturer in the world after Cadbury plc and

Wrigley. It employs 14,000 people via 30 subsidiary companies and distributes its products in over 130

countries. The company owns a major subsidiary in several large markets around the world.

Perfetti Van Melle India, a subsidiary of the global conglomerate, started operations in 1994. It leads the Indian

sugar confectionery market with more than 1/4th of the value share of the market. With a basket of 13 main

brands, the company strives to leverage the international brand portfolio, while adopting flavours and blends to

the local tastes.

Perfetti Van Melle India (PVM India) Pvt. Ltd. is a US$170 million multinational with three factories, 38

depots and four branch offices in India. In India, it is a market leader in confectionery products such as gums,

candies and chewies; and globally, the group is ranked among the top five confectionery groups. PVM India is

the manufacturer of world-class brands such as Alpenliebe, Center Fresh, Chlor-mint, Cofitos, Center Shock,

Mentos and Happydent White. The company is known for its innovation in products, advertisement and trade.

Since its inception in India, PVM India has been selling products for Rs.0.50/ Re. 1.0 only (despite inflationarytrends and price rises of other products in the market). Its critical unit price point of US $ 0.01 has remained the

same for more than a decade.

Perfetti Van Melle operates with the largest distribution network among any confectionery company in India.

They have 4 branches offices in Delhi, Mumbai, Kolkata and Bangalore to manage sales in these regions. They

are the market leaders in all the categories that they exist. Some of the renowned brands from the Perfetti Van

Melle product portfolio are:

Alpenliebe Alpenliebe Creamfills Alpenliebe Lollipop Big Babol Center Fresh Center Fruit Center Shock Chlormint Cofitos Fruit-tella Happydent White


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8 Protex Happydent Marbles Mentos

Perfetti Van Melle has been rated the fastest growing FMCG MNC and among the fastest growing FMCGs inIndia by the AC Nielson 2002 survey.

Perfetti Van Melle has changed the way confectionery was marketed in the country. They have made

innovations not only in their products but also in their packaging, communication and distribution.


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9

Research Methodology

a.

Tools usedInterviews: Various substockists, superstockists and PSRs were interviewed in an unstructured way

during this stint of 8 weeks to identify the working of the system, loopholes and to see how the whole

chain could be improved.

b. Sampling methodSince the aim during the stint was to cover various towns present under Bundelkhand and understand

the differences in the approach of billing, selling etc, a mix of towns were selected to ensure variety in

range selling, hvp products sales, distributor growth from each region etc. Such a sample ensured an

understanding of all the areas so that an adequate action could be taken where all necessary.

c. Statistical techniqueThe requirement of the project is also to compare the BE, range selling and selling of HVP products in

various towns. Hence, tables and graphs have been used to explain the trends in various situations.


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10Project measurables

1. To look into the opportunities in new town openings.2. To look into the billing efficiency (frequency) at the superstockists end.3. To check whether range selling is taking place.4. To check whether growth from each substockist (organic and inorganic) is taking place.5. To check record maintenance at substockist end.6. To check the monthly plan done by the PSR (value wise, range wise).7. To profile the existing substockists visited.8. To appoint new substockists wherever not done.9. To check the sale of hvp (high value packs) in the area10.To check what is the competition doing in the same arena.11.To check whether the passing of schemes from SS to substockists and from substockists to wholesale is

getting done properly.

Billing efficiency (B.E.)

It is calculated as the ratio of the no of towns billed in an area and the total no of towns in which Perfetti is

available. B.E. solves the following purposes:

1. How many times a town is getting billed2. Whether a town is getting billed or not3. Measure of the performance of the company4. Also gives an idea about the product supplyThe billing frequency of the P1 products in different areas of Bundelkhand is as follows:

No of billings Agra Aligarh Jhansi Etawah

0 2 3 3 2

1 12 19 9 17

2 14 14 8 0

3 5 6 8 0

>3 3 0 0 0

Total 36 42 28 19

Billing efficiency 0.944444 0.928571 0.892857 0.894737

%of towns with 0.611111 0.47619 0.571429 0

multiple billing

Figure 1 Billing Efficiency P1


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11For P2-P3 products, it is as follows:

No of billings Agra Aligarh Jhansi

0 0 4 2

1 15 4 13

2 9 6 33 0 4 3

>3 0 0 0

Total 24 18 21

Billing efficiency 1 0.777778 0.904762

%of towns with 0.375 0.555556 0.285714

multiple billing

Figure 2 Billing Efficiency P2-P3

Ideally, B.E. should be close to 100% for excellent results but since there are many issues that interfere, it goes

down to 90% or even lesser than that. Some of the important reasons leading to low B.E. are:

1. StockoutsStockout is a situation when the company is not able to meet the current demand. It has both positive

and negative effects. As far as the B.E. is concerned, the effect is negative as the smaller towns where

the demand is also less do not order many brands; they order only the products in high demand. The

company in such cases is not able to supply the products as they want the distributor to take some

luggage. Luggage means taking stock in ratio. For eg. To purchase one carton of centerfresh, the

substockist has to purchase at least 2 cartons of other varieties. This is possible in bigger towns where

the financial strength of the substockist is high but not in smaller ones. Hence, they dont get billed.

2. DispatchingThe company gives a fixed freight charges to the SS to deliver stock to the substockists. It varies from

place to place. For eg, it is Rs. 14 per carton in areas under Agra and Rs. 18 per carton for Jhansi. Now,

if the SS has to send his vehicle to deliver stock to a route containing some towns and there are one or

two towns which are somewhat isolated and small, the SS avoids going to such places because of two

reasons:

a. Small value orderb. Transportation expenses are more than what is reimbursed by the company

In such cases, the billing efficiency gets reduced.

3. Low financial strength of SSIf there is a case where the SS is not able to pay anything extra than what the company is providing,

then he thinks he is better off not going to the town which will make him pay that extra amount. This is

again one of the reasons of low billing. Hence it is the responsibility of the people higher in hierarchy to

see during the appointing of the SS that is he financially capable to handle crisis situations or not.


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12Range selling

Range selling means selling of all the brands of the company. It is very important for the company to ensure

that all its products are getting sold in every region of the coverage. Now it becomes difficult to implement the

same especially in smaller areas where the demand is very less and hence, they only want the products in high

demand. Talking about UP, range selling remains a problem. It is not getting implemented properly in areas like

Agra, Aligarh etc. Main selling products of the company include centerfresh, centerfruit, and Alpenliebe

original in some cases.

A mix of variety being sold in Agra includes:

1. Centerfresh2. Centerfruit3. Alpenliebe( original, cream mango, banana)4. Mentos (orange,mint)5. Mangofillz

A mix of variety being sold in Aligarh includes:

1. Centerfresh2. Centerfruit3. Alpenliebe( original, cream mango, banana)4. Mentos (orange,mint)5. Mangofillz6. Creamfillz7. Marbles8. Fruitella

One of the ways to ensure range selling as seen during the stint is to handle stockout properly. Though stockout

is not a good thing to happen, but it has given the company to sell the products which are not in very high

demand. In many cases, the substockists are made to buy a fixed no of cartons of other variety along with the

carton of centerfresh and centerfruit. It is justified if he passes the same to the retailer. Hence, the retailer has to

take luggage along and ensure that he gives a good shelf space to all the products he purchases. This is one of

the best opportunities to sell the variety as the famous saying goes: Jo dikhta hai , wohi bikta hai.

Visit to the SSFollowing records were checked during a visit to the SS:

Invoice bill Claim sheet MSSR


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13Shown below is the claim bill submitted by the SS to the company:

Sr no Particulars of claim Claim amount Remarks

1 Secondary freight claims

2 Secondary scheme claims

3 P.S.R . Expenses claims4 P.S.R . Salary claims

5 P.S.R Incentive claims

Total

Figure 3 Claim Bill

Normally, the company takes around 60 days to reimburse the claims filed by the SS.

The MSSR looks like follows:

Brand Opening receipts Total Stock sold Stock at Value Value last

stock(A) this month(B)stock(C=A+B) this month(D)month end(D-C) of stock month

Alpenliebe 200

Alpenliebe 300

Alpenliebe 1000

Alpenliebe 1500

Creamfillz

Mangofillz

Happy dent white

Happy dent wave

Protex

Creamfillz extra

Centerfruit

Figure 4 MSSR

All the records are properly maintained and no issues were present.

Talking about the taxes that get levied during the making of invoice, it is:

1. 4% in candies2. 12.5% in chewing gumsAll the SS are connected through SAP to the management. Hence, the ASM or even the BSM can have

a look at the daily sales at each SS point whenever he wants to, by logging in the SAP software.

PJP plan between DSE and PSR

Every month, the DSE intimates the PSR about his value and brand target that he is supposed to achieve to get

the required incentive. Each month, the brand in the brand target keeps on changing depending upon the data

available to the company about the revenues collected from each brand and also the stock available. The only

issue that has been seen so far is the non availability of any written document with the PSR showing such

details.


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14

Sales of Super stockists for the last 4 months in P1 products are given below:

Month,Area(P1) Agra Aligarh Jhansi EtawahJanuary 26.57 11.5 27 12.68

February 21.22 13.5 20 11.23

March 25.2 18 14 11.306

April 19.17 12 12 9.372

%growth from Feb to April -0.09661 -0.11111 -0.4 -0.16545

Note: all figures in lacs

Figure 5 Sales_P1 SS_April

For P2-P3 products, the sales are as follows:

Month,Area(P2-P3) Agra Aligarh Jhansi

January Not available 4.5 9.73

February 1.94 2.86 6.64

March 4.68 3.3 9.3

April 6.05 3.63 7.32

%growth from Feb to April 0.269231 0.10241

Note: all figures in lacs

Figure 6 Sales_P2-P3 SS_April

As can be seen from the above data, the general trend shows a fall in sales from Jan to April. The major reason

is stockout of the products in huge demand like centerfresh, centerfruit.

There is a concept of luggage that we use during stockout where we apply the condition to the SS and the

substockists that if they want to purchase one carton of centerfresh, he needs to purchase atleast 3 cartons of

other variety. Now this can be worked out in bigger towns where the financial capability of the substockist is

good. But in small areas where the population is very less and no of outlets are also less, they want only those

products which are in high demand and hence dont accept the luggage. They finally dont get billed and hence

the sales go down. In many cases, the PSR also has a role to play under such situations. If he has maintained

good relations with the substockists and the retailers, they dont mind taking some extra luggage as they know

that the same PSR will supply him good stock during nice supply.

Another plan is made between the two of them that is called the itinerary plan which talks about the various

towns which the PSR will visit on a particular date in that month. It is basically done to have some level of

accountability about the presence of PSR so that the DSE can further plan accordingly his visits.

Observation

It has been seen that the PSR is not able to follow that itinerary plan during the month as he is so muchdependent on the presence of the sub to visit the town. If the sub is not available, then he has to change his plan

accordingly, making the itinerary redundant. Hence, the itinerary is getting more of a sort of formality these

days.


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15New town openings

One of the most important part of the project deals with the new town openings. The company wants to track

those areas where its products are not available and ensure they get opened at the earliest so that overall

distribution of products can be improved.

Before going for any new town opening, we need to consider some of the important issues:

1. PopulationBefore opening any new town, we need to see whether investing money to appoint a substockist there

will create enough demand for the products leading to high sales or not. There has to be a minimum

population that the town should have for it to get included in the list of new town openings. These

decisions are taken at the higher level. At our level, we get a list of new town openings which we have

to open keeping in mind various parameters.

2. FeasibilityWe need to make sure that the SS should be able to deliver the stock easily to that area as if there are

feasibility issues, then the delivery will not take place leading to low billing, hence not solving the

purpose of opening a town. Here by feasibility, I mean transportation, road infrastructure etc. There

have been cases during the 8 weeks stint that some towns were opened just for the sake of it and they

did not get billed for the last 3 months. It does not solve any purpose.

3. Freight costThe company provides some freight reimbursements to the SS to supply to the sub. If that money is less

than the actual transportation cost of the SS, the problems start to occur. He will then start avoiding to

supply to those areas or will start cribbing to the PSR who himself is not in a position to change therules of the company.

There has to be criteria for finding good substockists.

Following are some of the factors to keep in account:

1. Reliability in the marketThe sub should be reliable enough in delivering the stock at the right time at the retailers end otherwise

he starts losing reliability value. And then starts the problem of payment. The retailers will start cribbing

to pay back the money to the sub and the relation starts to sour.

2. Influence on the retailerThe most important thing that exists in this whole framework is the relationship between different

parties. When I say influence, I mean the power one has over the retailer. There would arise many

situations when the sub will have to influence retailer to take the stock and mind you, by real time

experience I can say that this can happen successfully only if the sub has a strong power in the market.

3. Financial strengthThe sub has to be a strong party financially. That would happen if he is also doing business of other

companies as well. He should have the strength to keep some inventory.

4. Delivery on timeThe best way to find potential subs is to visit the retailers and ask them about the good subs. They will

tell you about those who supply them stock on time.


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16

5. Relationship building with the retailerThere are many situations during which the relation building comes into picture. For eg. Duringshortage of products, there will be luggage to be carried by the retailer. And this may happen only if the

links are strong between the two parties.

Profile of

substockists.xlsx

Observation

During the visit to new towns, it was realised that some areas were located in such a manner that appointing asub would not solve any purpose there. Raja ka tal, near Firozabad is one such area. Retailers from this area get

the stuff from Firozabad and the no of confectionery outlets are so less that the net profit margin in that area

may not be satisfactory.

Competition

With rising no of companies in the confectionery market fighting for the shelf space, profits, revenues, it

becomes an important part of the study to see which companies are there in competition and what products they

are coming up with. In rural, especially in UP, the unorganised sector is huge. And in times of acute shortages,

they earn loads of revenues because of giving high margins to retailers and also low cost per unit. Some of the

examples are:

1. Amar candy2. Canter cool

But after surveying the market, I feel that it would be sufficient to know about the products of following

companies:

1. ITC2. Cadbury3. Wrigley


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17Cost to Cost to Type of schemes

retailer customer to retailer(e.g.)

ITC Candyman Mango delite 85 110 5 units free per jar

ITC Candyman Eclairs Alp eclairs, Choco eclairs 85 110 5 units free per jar

ITC Candyman Natkhat mango Alpenliebe cream mango 85 110 5 units free per jar

ITC Candyman Toffichoo 85 110 5 units free per jar

Wrigley Boomer duet Big Babol 100 115 5 units free per jar

Wrigley Solano Alpenliebe original 130 150 5 units free per jar

Wrigley Doublemint Happy dent 5 units free per jar

Cadbury Bubaloo Decision gum Centerfruit watermelon 95 122 5 units free per jar

Cadbury Bubaloo Strawberry Centerfruit strawberry 95 122 5 units free per jar

Cadbury Bubaloo Coolmint Centerfresh 95 122 5 units free per jar

Company Product Competition to

Figure 7 Competition Product comparison

The type of schemes given to the retailers varies from company to company but the most common example has

been provided in the table.

Important points:

1. Cadbury Bubaloo came up with a good strategy to compete with centerfresh and centerfruit. But in thestarting, it was tough for them to enter the market because of our products of good quality. But when we

faced shortage, they smelt the opportunity to enter aggressively and they succeeded.2. As far as the eclairs is concerned, in rural, the sales of our company is not very good as we have come

up with Re 1 eclairs as compared to the companies like Nestle, Parle who have come up with 50 Paise

clairs. Though we have not compromised on quality, still this cannot be understood by the people in

rural areas.

3. We need to be very cautious regarding the supply of Alpenliebe original as we have Wrigleys Solanoas the competitor. Hence, shelf spacing and regular market work is very necessary.

4. Though Nestle and Dabur are also selling eclairs in huge numbers in rural, but it cant be termed as acompetition to Perfetti as Alpenliebe eclairs and Chocoliebe eclairs are not able to fit into the rural

market because of their price range.

The margins provided to the substockists by various companies are given below:

Company Margin to substockists

Cadbury 4.50%

Nestle 2.80%

Dabur 3.25%

Wrigley 5%

Lays 3.50%

Figure 8 Margin Comparison

The amount of freight reimbursed by different companies to SS for supply of stock to substockist are as

follows:


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18Company Freight

Perfetti Rs. 14 per carton

Dabur 1.5% of stock value

Nestle Rs. 15 per carton

Marico 1.5% of stock value

Wrigley Rs. 20 per cartonCadbury 1% of stock value

Lays 2.5% of stock value

Figure 9 Freight Comparison

HVP sales

HVP are those which come in either sticks or boxes. For eg. 6 Rs. Centerfresh stick or 10 Rs. Happydent pack.

The main aim of starting the hvp is to eliminate the need to buy the product again and again. Talking about the

sales of HVP in rural, it is abysmal. The reason is quite obvious; people in rural do not have so much money to

spend that they can buy a pack at the same time. They believe in buying for the moment.

Following table shows the sale of HVP for P1 products:

HVP packs

Agra Aligarh Jhansi Etawah

Centerfresh stick 9144 4536 3048

Alpenliebe stick 7560 5088 1272 2544

Mentos stick 5088 1272

BB Stick

Happydent fliptop 1740 3408

Happydentwave Rs 5 5040

Centerfruit stick

Xylit Re 5

Happy dent wave blister

P1

Figure 10 HVP Sale_P1_April

For P2-P3 it is:

HVP packs(P2-P3) Agra Aligarh Jhansi

Centerfresh stick

Alpenliebe stick

Mentos stick 1284

BB Stick

Marbles

Happydent 2520

Happydentwave Rs 5 1260

Centerfruit stick 3816 3852

Xylit Re 10 1728

Figure 11 HVP Sale_P2-P3_April

As can be seen in the table, the trend is very clear. The sale is not high. In some cases, there was also a shortage

problem of centerfresh and centerfruit stick.


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19Observation

The centerfresh stick of 5 pieces cost Rs. 6 to the customer. This 1 re increase becomes a big dissatisfier in rural

because they have this perception in mind that it is better to buy 5 individual gums for Rs. 5 instead of buying a

stick for Rs. 6.

Scheme passing from SS to Sub

There are certain schemes that the company decided for the substockists that are supposed to be implemented at

the SS end while preparing the invoice for each sub. Some of the schemes include:

1. Rs. 42 off per carton2. Rs 18 off per carton

The proper way of executing these schemes is to subtract the total discount from the invoice when the billingtakes place for that sub at the SS end.

Observation

During the market beats, the invoice at the sub end was checked and was seen that in many cases, the subtracted

amount was less than the amount to be subtracted. This is an error happening at the SS end but causing loss to

the sub.

Miscellaneous observations

1. Company does not have a product catalogue and the rate list. It becomes very important to have these 2things during a new town visit as there has to be a proper way to show the products to the subs as it is

not possible to carry big jars every time.

2. After having a conversation with various PSRs, it was realised that they dont have a writte n proof oftheir employment with the company.

3. In many areas including Aligarh, there is no availability of substockists appointment form to note downtheir details like competition turnover, salesman, outlets catered to, etc.

Recommendations1. Mapping (Traditional modes of transport)

As mentioned in the report, there is a problem of distributing stock to smaller towns giving small orders

because of various reasons cited out before.

One of the ways to remove that is mapping the areas as done below.


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20

As seen above in the map, we have our SS at Aligarh and a sub at Khair. The route from SS point to

Khair is direct and no issues have been faced. But the new town opening list for P2-P3 includes Bajna

and Naujhil to be opened. These two are small towns from which the billing cant be expected to be

more than Rs. 20000 (value decided after a talk with PSR and sub). Hence if we appoint a sub in these 2

towns, the SS may have a lot of issues delivering the stock at those places as he may be in a loss

considering the limited freight amount company provides; what we can do in this case is to have a milk

run system from Khair to Bajna to Naujhil by contacting a transportation company at Khair. He cansend his tempo or any other mode to these two areas and deliver the stock. The SS in this case can pay

him the money and get it reimbursed from the company. The benefit here is that the transportation

company can send the stock by traditional modes like tanga, jugad, rickshaw etc which would be his

own headache. He can save his cost there.

A cost analysis to explain the benefits has been shown below:

Currentsale

New

town

Valueperbilling

Noofbillings

Totalbilling

Totalsale

reigh

tchargespertour

Totalfreightcost

costasa%ageofsale

363000 Bajna 10000 2 20000 403000 400 800 2

Naujhil 10000 2 20000

40000

Figure 12 Mapping model_Cost &Benefit analysis

As seen in the sheet above which explains the cost and benefit analysis of the mapping model, the total sales

(actual figures) of P2-P3 of SS in Aligarh in the month of April was Rs. 363000. Now if we open 2 new towns,

Bajna and Naujhil, and considering the billing per order as a reasonable Rs. 10,000; and the no of billings as 2,

the total increase in the billing would be Rs. 40000 as shown. Now consider the freight amount, taking a figure


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21as Rs.400 for one trip which is actually more than what could be required, the total freight charges come out to

be Rs. 800. Subtracting the freight cost from the total billing, we get a amount of Rs. 39200 which is not bad to

start with. Since it is a new model, it can be piloted in this area and can then be used for other areas. Some other

but important benefits of this model are:

1. 100% B.E.B.E. is an important characteristic that could be used to explain the success of the distribution

system of the company. In our case, after implementing the mapping model, B.E. becomes 100%

which cannot be further improved. It will ensure that the billing is taking place across the towns and

then we can work for increasing the billing frequency (no of billings per month). This would further

increase the sales of the company.

2. Overall product coverageFor any FMCG company, the coverage is important. And here, we are dealing with candies and

chewing gums which can be easily sold anywhere. Hence the extensiveness of the distribution

network becomes important. This model will ensure that our products reach everywhere so that the

PSR could visit those towns and do the markets beat to ensure the delivery of stock to the retailers.

This will also ensure shelf space for Perfetti which can help the company gain a competitive

advantage.

3. Happy SSA satisfied and happy SS means smooth working and improvement in relations with the PSRs and

the subs. This would also relieve the unnecessary pressure from the SS to deliver the stock to the

smaller towns. He could now use this time and resources to service other important towns.

4. Happy substockistsThis would mean that the subs in smaller towns will now get stock on time. Hence, the relations

with the PSR become smooth and they get motivated to work for the company now.

2. Distribution efficiency (D.E.)One of the major aims of the company is to ensure range selling. This can be done by making use of a

terminology known as Distribution efficiency (D.E.). It basically means that how many out of the total

available combinations is the PSR able to sell. For eg, if the brands in P1 are 10 and towns under Agra are 20,

total available combinations is 200.

To ensure that the range selling is taking place, we need to set a constraint on D.E. as 50% so that the PSR has

to sell atleast 100 combinations. In this way he will be flexible across towns but in all, the range selling will

take place.

3. Substockist growthIt is important to know the growth substockist wise. Hence one of the ways to do that is to classify all the subs

into 3 categories:

A. GoodB. AverageC. Poor


22/24


22While classifying them, the criteria to classify needs to be genuine. After going on market visits and

understanding various terminologies, I think 3 things can be used to classify them:

1. No of billings per month2. Total billing value

Below shown excel sheet gives the details of the various subs visited during the stint across Bundelkhand

region. Their sale figures in April, no of billings in April and sale value per billing has been shown. The

classification into 2 categories has been done according to the sale value per billing.

The threshold values to divide them have been decided after looking at discussing it with the PSRs and looking

at the demand of P1 and P2-P3.

For P1, it is shown below

Distribution

Place

SalesinApril

Noofbillings

a

levalueperbilling

Category

P1 Farah 70320 3 23440 C

P1 Vindaban 101899 4 25475 B

P1 Pinahut 39062 2 19531 C

P1 Aurangabad 47348 3 15783 C

P1 Chhaata 126478 4 31620 BP1 Chirgaon 115000 3 38333 B

P1 Mauranipur 110000 3 36667 B

P1 Etmadpur 167700 4 41925 A

P1 Gursaraye 80000 3 26667 B

P1 Badegaon 41777 1 41777 A

P1 Sirsakalar 53429 1 53429 A

P1 Madhavgarh 62321 1 62321 A

P1 Mehrauni 38859 1 38859 B

P1 Babina 24578 1 24578 C

P1 Pali 39402 2 19701 C

P1 Karhal 150919 3 50306 A

P1 Bhogaon 130371 2 65186 A

P1 Jaswantnagar 117280 2 58640 A

P1 Kurawli 86101 1 86101 A

P1 Kushmara 59295 2 29648 B

P1 Barnahal 36720 1 36720 B

A >40000 38

B 25000-40000 38

C


23/24


23For P2-P3, it is shown as:

D

istribution

Place

Sa

lesinApril

No

ofbillings

alevalue

perbilling

Category

P2-P3 Atrauli 25000 2 12500 C

P2-P3 Chharrah 63000 4 15750 C

P2-P3 Iglas 18000 1 18000 B

P2-P3 Tibai 44000 2 22000 B

P2-P3 Murbar 36000 3 12000 C

P2-P3 Chandau 30000 2 15000 C

P2-P3 Farah 20000 1 20000 BP2-P3 Kheragarh 25000 1 25000 A

P2-P3 Mehrauni 17319 1 17319 C

P2-P3 Sikandra rao 52234 2 26117 A

P2-P3 Jalaun 69467 3 23156 B

P2-P3 kalti 60289 2 30145 A

P2-P3 Mehraunipur 31502 2 15751 C

P2-P3 Gursaraye 97935 4 24484 B

P2-P3 Sadabad 44000 2 22000 B

P2-P3 Govardhan 45000 3 15000 C

P2-P3 Konch 73382 2 36691 A

A >25000 41

B 18000- 25000 35

C


24/24


24References

1. http://www.uponline.in2. http://www.wikipedia.org
http://www.uponline.in/http://www.uponline.in/http://www.uponline.in/

Documents

Final Report_2010C03.docx