Sales & Distribution Management

A Report on

Group 4

• Efforts by:– Arun Chopra– Zain Inhonvi– Shreya Muralidhar– Varuna Singh– Apurva Agarwal– Vibhor Tyagi

In the summer of 1888, In the summer of 1888, visitors to the Kolkata visitors to the Kolkata harbour noticed crates full harbour noticed crates full of Sunlight soap bars, of Sunlight soap bars, embossed with the words embossed with the words "Made in England by Lever "Made in England by Lever Brothers". With it began an Brothers". With it began an era of marketing branded era of marketing branded FMCGFMCG

Over 16500 direct employees~ over 1,500 managersOver 2,000 suppliers & associatesAbout 2,900stockistTotal Coverage 6.4 million OutletsDirect Coverage – 2 million outletsNet Sales Rs. 22,116 CroreNet Profit Rs. 2,691 Crore

June 2007

http://www.hul.co.in/Images/HULFactsheetApril2011_tcm114-188694.pdf

CUSTOMER CREDO

Business Verticals

Food Brands

Home Care

Personal Care Brands

Product Flow

Junior most level at the company’s

payroll

Activation Executives

(channel programmes,

incentive programmes,

handling merchandisers)

Sales Force Structure

Recruitment & SelectionApplication for becoming a channel partner is accepted through 2 sources:

1.Internet2.Personal Contact

Existing Channel Partners Field Agents/Managers Others

Cost of ‘recruitment’ is budgeted.

Survey is done to ascertain type of channel partners

needed based on products & respective target

markets.

Channel members evaluated on the above

parameters.

If required, a proper training session is also held for

the selected channel partners.

Motivation

In order to realize the potential of each Channel partner,

it is imperative that the member is motivated to perform.

The following tools are used to motivate the channel

partners:

– Special Discount Schemes

– Season Discounts

– Incentives

Field Force Management

• Working Cycle: 21st till 20th

• To start with the field force member is given a particular

area and his responsibility is to cater to all the retailers in

that area.

• While deciding the area for each member of the field force,

the company makes sure that the operating area of each

field member doesn't overlap with his other colleagues.

• There are various methods used by the company to

incentivize the field force: Monetary and Non

Monetary.

• In HUL, the field force is evaluated using QOC

(Quality of Contribution). It consists of 4

components ‐

– 1. Secondary Sale (Max points = 2.5)

– 2. Eco (Max points = 0.5)

– 3. Focus (Max points = 0.5)

– 4. FCS (Max Points = 0.5)

• Secondary Sale Based on the operating area, each ‐

member is given a specific target in terms of value

(e.g., Rs. 15 lacs) for the operating month (21st – 20th

of next month).

• If he achieves 100% of the target he gets 2.5 points, if

he achieves 95% target he gets 1.5 points. These

points are used to add to the total QOC score as well

as linked to monetary incentive.

• ECO / Width pack Target – This is used for the

penetration/reach of certain products in the existing

market. The following is a typical ECO target assigned

to a field force agent:

• Lux International – 105 outlets x 1 SKU

• Pears Soap 135 outlets x 1 SKU ‐

• Rin 104 outlets x 1SKU ‐

• Breeze Soap 100 outlets x 1 SKU ‐

• The outlets mentioned are within the operating area of the

person and 1 SKU = Rs. 27/ . Based on this the Field person ‐

calculates number of packs he should sell to the retailers. The

concerned agent receives this target around 25th of each

month and has to complete this target within the 5th day of

next month.

• Upon completion he gets additional 0.5 points added to his

QOC score along with monetary incentive associated with it.

However if this is not met within 5th, he looses the

opportunity.

• Focus / Depth Pack target – This is mainly used to increase

the sales volume of certain products. A typical ‘Focus’ target is

given below:

– Lux International – Rs 20,640 / @ Rs 6/ per unit ‐ ‐

– Life Buoy Rs 70,220 / @ Rs 10/ per unit ‐ ‐ ‐

– Wheel Rs 99,000 / @ Rs 10/ per unit ‐ ‐ ‐

– Breeze Soap Rs 27,000 / @ Rs 10 / per unit ‐ ‐ ‐

• This target needs to be achieved within 20th of next month.

Upon achieving the target the field person is awarded 0.5

points which is then added to his overall QOC score.

• Field Capability Score (FCS) ‐ In this component, the field force persons

are required to ensure that the scheduled visit/outlet billing is such that at

least 15 items are demanded per order.

• If this is achieved the retailer gets a discount of 1% on the billed amount

and on the other hand the field person gets an additional score of 0.5

which is added to his QOC score.

• Each scheduled visit per outlet is one per week. For example if there are

100 outlets within the operating area of a field person then the number of

visit per week is 100 and total number of visit per month = 100x4 = 400.

• The sales person is required to achieve 90% success rate to get 0.5 points

for his QOC score and at least 65% for a satisfactory performance.

Non Monetary Methods •The other purpose of the QOC scores is to highlight the performance of the field person among his peers. Based on the QOC various awards are distributed to the field persons at the end of every month. These awards are also known as ‘MOC Star’ awards. MOC stands for Monthly operating Cycle.

•If QOC score > 4.5 – The person is eligible for 7 star award •If QOC score > 4 – The person is eligible for 5 star award •If QOC score > 3.5 – The person is eligible for 3 star award

•In the event of exceptional performance, management representatives from the regional office come to the zonal office to distribute the awards. The photograph of the award winners is displayed in the office as a source of inspiration for other sales person.

Target Setting Mechanism and monitoring

• The regional office monitors the performance of various zones.

• A thorough analysis is done at the end of each month.• Based on that the weak products are identified or those for

which the demand has weakened. This is the basis of setting ECO and FOCUS targets for the field persons.

• Each field person is given a palmtop wherein he can feed the entries on the spot where the transaction is done. This solves basically the two purposes:

– a) The field person is freed from the tedious task of maintaining cumbersome records and can then concentrate on the job

– b) The sold item is immediately updated in the company information system.

Distribution System of HUL

• HUL's products, are distributed through a network of 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers.

• There are 35 C&FAs in the country who feed these redistribution stockists regularly.

• Around 2,000 suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized across 2 million square miles of territory

Channel StructureRedistribution Stockists

•Sales Margin: 4.76% which includes cash discount, unloading

expenses from depot, distribution expenses to retailers,

incentive schemes & other incidental expenses.

•Modes of transport used: Rickshaw, tempo.

•Incentive schemes: Before 2000 holiday packages and tours but

after 2000 no non monetary incentive for RS. ‐

• Software systems and Information System: UNIFY 8.3

(Developed by IBM & CMC). This software needs to be

synchronized daily and the system updates any information/

incentive schemes / sales figures etc to and from the common

shared platform.

• Areas of Operations: Marked for each of the RS.

• Selling Operations: RSs sells the goods to ?‐

– Wholesaler (gets 1.5 % max. discount from RS)

– Retailers (gets 1.0% max. discount from RS)

Wholesaler:

•Gets cash discounts and other schemes promoted by

HUL (gets points under Vijeta Scheme).

Retailers:

•Sales Margin: Depends on the product

– Soap, detergents 8% on MRP ‐

– Cosmetics 10% on MRP ‐

– Food items 8% on MRP ‐

• Each district to have 1 distributor (more than 1 for large districts)– Varanasi- 5– Lucknow- 5 – Mirzapur- 1– Azamgarh – 2

Monthly Turnover • Small Distributor: Rs 15- 20 lakh/month• Large Distributor: Rs 5 -7 Crore / Month

Number of Distributors

Distributors

HUL 1 TSO HUL 2 TSO

Salesmen on dist. Payroll

• Godown (Godown Keeper, Loaders, Unloader)• Accountant• Computer Operator• Salesman• Vehicle

Distributor

• Norm Days ( Safety Stock as per historical sales)

• Order Quantity• Handled through IT, automatic generation of

order if stock falls the required level

• NO CREDIT FOR DISTRIBUTOR FROM THE COMPANY- Distributors has an A/c with the company- If default has happen RTGS before dispatch

Distributor Norms

Rural Distribution Network

Business Potential

(Population < 50000)

NEW DISTRIBUTION CHANNELS

Project Streamline

IT interface

• Unify – The Billing System

Schemes are pushed through it

Tax ( VAT) Integral Part of Sales

Force Geotagging is being

used Field Force is now IT

Enabled!!!

Channel Conflict

• Channel Conflict: Tension/Clash between channel

members as a result of perceived unfairness.

• At HUL, this conflict was indeed present some years

back (after project millennium). This was a case of a

‘horizontal conflict’ between distributors/stockists.

Channel Conflict

• Reason: HUL used to have different

stockists/distributors for different categories in the

same area

• Solution: HUL solved this issue by allowing the same

distributor to cater to all its business segments in a

particular area.

OTHER INITIATIVES

Visibility Programmes

•Give VIM Bar a better display in the retail store eg: make a pyramid of vim bars

• Good displays will be rewarded

Visual Merchandiser Activation Executives

• Manages channel programmes

• Incentive programmes• Handles merchandisers

• Looks after the window display of products

• On 3rd party payroll• Managed by HUL