Channel & Distribution System of Nestle India Ltd

Presented By:

Gopal Kumar

Tapabrata Banerjee

Prateek Tiwari

Pedagogy• Nestlé's Principle• SKUs• Distribution Channel• Order Delivery System• Counter Analysis• Schemes• Terms of Operations• Distributor’s Cost• DB’s ROI Calculation• DIP Training

Nestle’s PrincipleNestlé is based on the principle of

decentralization, which

means each country is responsible for the

efficient running of

its business - including the recruitment of its

staff.

Nestle IndiaMilk Products & Nutrition

Beverages Prepared Dishes & Cooking Aids

Chocolates &Confectionary

Nestle Milk Nescafe Classic MAGGI 2-MINUTE Noodles

Nestle Kitkat

Nestle Slim Milk Nescafe SunrisePremium

MAGGI Imli Pichkoo

Nestle Munch

Nestle Dahi Nescafe Cappuccino MAGGI Sauces Nestle Bar One

Nestle Bhuna Jeera Raita

Nescafe Sunrise MAGGI Healthy Soups

Nestle Milky Bar

Nestea Nestea Iced Tea MAGGI CUPPA MANIA

Nestle Polo

Nestle Milkmaid MAGGI VegetableAtta Noodles

Nestle Eclairs

Nestle Everyday Whitener

MAGGI Pazzta

Distribution Channel

Mother Godwon

Carriage & Forward Agency

Super StockistDistributor

Re-DistributorWhole saler

Retailer

End Customer Retailer

Selection of Channel Partners Capital Investment Varies from region to region C & F Agent :3-5 Crores Super Stockist:60-80 Lakhs Distributor:25-30 Lakhs Relevant experience Prior experience in FMCG sector is preferred to save on training expenses Distributor should not be dealing in Competitor’s product Should handle entire range of Nestle products (Both fast and slow moving

SKU’s Infrastructure Godowns / Storage space with appropriate refrigeration as per product

needs Delivery vehicles Salesmen

Order Delivery SystemDBSRs take the order in morning and delivery

takes place in evening or next day morning by

delivery boy.

Counter AnalysisTypes of Counter• Super Market• Small Grocery Store• Big Grocery Store• Convenience Store• Paan Plus• Chemist

Nestle’s MarginsC & F Super Stockist Distributor Re-Distributor Wholesaler Retailer

1.5% 2-2.8% 5.8% 3.8% 1.5-2% 7-8%

Schemes

Secondary schemes: Promotional schemes to

consumers & Trade Partners

Such as free packs for

Consumers,gifts,bundling,price off etc.

For retailers:Coupon,Bulk discount,Additional

Margin,Free packs

Terms of OperationSales force of distributor is divided into 3 heads namely:

1. Milk Products

2. Chocolates

3. Other products

• All the 3 teams visit the retailers once in a week on different

Days

• Sales force is complimented by a weekly visit to the district

by the sales executive of the company

• Idea is to supplement the lags in the distribution by

wholesaler and in certain specific cases to push extra stock in

the market

Terms of Operation(contd..)Credit Policy

• Distributors are termed as Cash Distributors because

the company charges the distributors before the stock

is delivered

• Company has connected the distributor online and

the transactions happen online

• The distributor sells goods on credit; the period of

credit ranges from 1-2 week

• The wholesaler allows discount of 1% on cash

payment (policy followed by the wholesaler)

Terms of Operation(contd..)Stock Policy

• As per the company regulations the distributor is supposed to

maintain a stock of 3 weeks which in monetary terms equals to

Rs. 30 lakhs for the distributor.

• Stock is formalized by the company; the dealer can negotiate on

3-4 end days, the stock policy is formed for the month

• Distributor to push in slow moving SKU’s clubs them with fast

moving SKU’s for the retailers

• Company DUMPS significantly on the distributors, the distributor

has to mange the supply by the company

Terms of Operation(contd..)Lead period

• Lead periods in providing stocks to the dealers differs from the

SKU and quantity ordered• Some SKU’s like dairy products are delivered correspondingly

with taking order but some are sent from the warehouses• A higher quantity ordered has to be replenished from the

Warehouse

Return Policy

• Company follows a policy of return when the product has past its

expiry date, damaged or has a defect• Replenishment is done with cash and happens at the end of

every six months

Return on Investment

• Company does not give any guarantee to the distributor

Terms of Operation(contd..)

Storage policy

• Distributor maintains Cold Storages and Deep Freezers for thestorage of the products

• Distributor has to bear all expenses pertaining to Infrastructurerequirements

Sales Force

• The remuneration and all other expenses for sales force areborne by the distributor.

Merchandiser’s jobs

• Presentation to potential clients

• Researching Costs, new design ideas, images & graphics.

• To observe the visibility of the product of an outlet in window, banner, poster

DIP TrainingTraining programs for C&F agents which includes

modules on:• Nestle Quality System• Good Warehousing Practices (GWP)• Good Distribution Practices

Major aspects of the training program are;

1. Stacking as per norms

2. Good Warehousing practices

3. Accounting

4. Handling of Bad goods

5. Temperature control for chocolates and dairy products

Thank You