Presentation by Mr. D. Bhatnagar on FMCG Distribution Systems to Citibank Team.

1. Decision Management Team
Conclave - Citibank
Gurgaon 22.09.15

2. Contents
• YFactor – A brief introduction
• India Demographics, the FMCG Market
and Distribution System
• Case study: Distribution Planning, Order
Taking, Monitoring and Control
• Discussion

3. YFactor
A Brief Introduction

4. Who are we?
• Ex-Unilever, Reckitts and PepsiCo senior managers,
providing Business Advisory Services (strategy, products
& brands, distribution, manufacturing, supply chain,
people and process) to FMCG and consumer facing
business, especially Small and Mid Cap Enterprises
(SME’s).
• We are 6 years old and comprise of 9 Directors and
Senior Advisors.

5. The Core Team - Seasoned Consumer Professionals
Debu Bhatnagar
Founder and MD
30 years experience in
General Management,
Sales and Marketing
Hindustan Unilever,
Benckiser, ICI, RPG
Group, Hemas Sri
Lanka, Bajaj Corp
IIT Kanpur, IIM
Calcutta
Dinesh Jain
Senior Advisor
25 years experience in
General Management,
Sales and Marketing
and Start-Ups
Unilever, Remy
Cointreau, Highland
Distillers, ABP and
Zee Turner.
Delhi University, IIFT
Rajiv Khurana
Senior Advisor
20 years experience in
Product / Packaging
Development, Quality
Assurance and Supply
Chain.
Reckitt Benckiser
Punjab University,
Indian Institute of
Packaging and Asian
Packaging Federation

6. Our Services
• Management Advisory – strategy formulation and implementation, strategic plan,
annual operating plan & KPI’s
• Distribution – system design, organization structure and sales training
• India Entry – appropriate corporate structure, market mapping, supply chain
structure, identification and evaluation of potential distributors/channel partners,
staffing and recruitment of key personnel
• Human Resources – Search+, Sales Training, Coaching and Mentoring,
Development Centres
• Supply Chain – identification of contract manufacturers, product/packaging
development, techno-commercial feasibility of manufacturing, sourcing, quality
assurance

7. Distribution in India
Use of Data for Planning,
Monitoring and Control

8. India: Large, Diverse, Complex
• 29 States and 7 Union
Territories
• 22 Official languages
with over 300 dialects
• 1.2 Billion population
growing at 1.3% per
year
Source: Census of India 2011

9. India Demographics
Town Class by
population
Number of
towns / villages
Population
(Million)
% to Total
Metro (5 Million +) 6 85 7.0
100,000+ 462 180 14.9
Other Urban 7,467 112 9.3
Total Urban 7,935 377 31.1
Total Rural 638,596 833 68.9
Grand Total 646,531 1,210 100.0
• Metros – Mumbai, Delhi, Kolkata, Chennai, Hyderabad and Bangalore
account for a large part of the upscale products market size.
• If we consider the top 20 markets, they will account for close to 60 – 70%
of the potential for premium personal care products.
Source: Census of India 2011

10. India FMCG (CPG) Market
Food
43%
Personal Care
22%
Fabric Care
12%
Hair Care
8%
Household Cleaning
4%
OTC
4%
Baby
2%
Others
5%
Valued at $30 Billion growing at 12% CAGR

11. Physical Goods Movement
Factory
Mother
Godown
C&FA
Stockist
Urban
Wholesaler
Urban Retailer
Rural Retailer
Urban Retailer Van Sales
Rural Retailer
Local
Supermarkets
Super Stockist
Rural
Wholesaler
Rural Retailer
CSD Key Accounts
C&FA
Primary
Sales
Secondary
Sales
11

12. E-Commerce, Small but Growing
• India's e-commerce market was
worth about $3.8 billion in 2009, it
went up to $12.6 billion in 2013
• About 70% of this is travel related
(airline tickets, railway tickets,
hotel bookings, online mobile
recharge etc.).
• In 2013, the e-retail segment was
worth US$2.3 billion. FMCG may
account for <5%
• According to Google India, there
were 35 million online shoppers in
India in 2014 Q1 and this is
expected to cross 100 million
mark by end of year 2016

13. Organisation Structure
MD
Sales Head
Regional
Manager
Sales
Manager
ASM
TSI
Regional
Comml Mgr
Key Accounts
Manager
Finance
Head
Financial
Accounting
IT
HR Head
Recruitment
Training
Performance
Management
Marketing
Product
Manager
Supply Chain
13

14. FMCG Sales - ‘Pull’ vs ‘Push’
A Replenishment Model
Offtake
• Product
being
picked up
by
consumers
from a retail
shop
Secondary
Sales
• Distributor
stock being
sold to the
retailer
Primary Sales
• Company
sales to the
distributor

15. Coverage Planning
“There are over 14 Mn retail outlets in
India with only 5% being over 500 sq ft
in size” - KPMG

16. Two Key Drivers
• Category Characteristics
• Pricing

17. Pop Strata Contribution (%)
Town Class by
population
Toilet Soap Shampoo Mid Range
Perfumes
Metro (5 Million +) 10 35 60
100,000+ 18 30 25
Other Urban 17 10 5
Total Urban 45 75 90
Total Rural 55 25 10
Grand Total 100 100 100
Indicative Data

18. Popular – Mid Range - Premium

19. Outlets Stocking (%)
Town Class by
population
Lifebouy Soap Sunsilk Shampoo Surf Excel
Matic
Metro (5 Million +) 85 40 20
100,000+ 85 30 10
Other Urban 90 25 5
Rural 90 10 NIL
Indicative Data

20. Coverage Planning Case
Study
Upper Mass Personal Care
Company

21. Decisions
• Which towns to cover?
– Metros
– 1 Lakh+ Towns
• How many outlets?
– 10% in Metros
– 30% in 1 Lakh+ Towns
• What frequency of coverage?
– Blend of weekly and fortnightly coverage

22. Metro Coverage
6%
10% 60% 40% 35
700 14% 4 2 Total 24
2001 2012 Est Outlets Coverage TSIs
Asola 5,003
Bhati 15,888
Delhi 1,28,77,470
Jona Pur 7,419
Gurgaon 2,28,820
Faridabad 10,55,938
Dharuhera 18,892
Ghaziabad 9,68,256
Noida 3,05,058
NCR 1,54,84,745 2,16,78,643 30,969 3,097 7,433 2,478 9,910 12
Bhiwandi 6,21,427
Greater Mumbai 1,64,34,386
Navi Mumbai 81,855
Taloje 10,839
Vasai 1,74,396
Virar 1,18,928
Mumbai 1,74,41,831 2,44,18,563 34,884 3,488 8,372 2,791 11,163 13
Hyderabad 57,42,036 80,38,850 11,484 1,608 3,859 1,286 5,145 6
Bangalore 57,01,446 79,82,024 11,403 1,596 3,831 1,277 5,108 6
Chennai 65,60,242 91,84,339 13,120 1,837 4,408 1,469 5,878 7
Kolkata 1,32,05,697 1,84,87,976 26,411 1,585 3,803 1,268 5,071 6
Total 6,41,35,997 8,97,90,396 1,28,272 13,211 31,706 10,569 42,275 50
Calls
Population

23. Punjab
25% 25% 75% 35
800 30% 4 2 Total 24
2001 2012 Est Outlets Coverage TSIs TSI HQ
Ludhiana 13,98,467 18,87,930 2,360 708 708 1,062 1,770 2.11 2
Amritsar 10,03,917 13,55,288 1,694 508 508 762 1,271 1.51 2
Chandigarh 9,00,635 12,15,857 1,520 456 456 684 1,140 1.36 1
Jalandhar 7,14,077 9,64,004 1,205 362 362 542 904 1.08 1
Patiala 3,23,884 4,37,243 547 164 164 246 410 0.49 1
Bathinda 2,17,256 2,93,296 367 110 110 165 275 0.33 1
Pathankot 1,68,485 2,27,455 284 85 85 128 213 0.25 1
Hoshiarpur 1,49,668 2,02,052 253 76 76 114 189 0.23
Batala 1,47,872 1,99,627 250 75 75 112 187 0.22
Moga 1,35,279 1,82,627 228 68 68 103 171 0.20
Abohar 1,24,339 1,67,858 210 63 63 94 157 0.19
S.A.S.Nagar (Mohali ) 1,23,484 1,66,703 208 63 63 94 156 0.19
Malerkotla 1,07,009 1,44,462 181 54 54 81 135 0.16
Khanna 1,03,099 1,39,184 174 52 52 78 130 0.16
Phagwara 1,02,253 1,38,042 173 52 52 78 129 0.15
Total 57,19,724 77,21,627 9,652 2,896 2,896 4,343 7,239 8.62 9.00
Calls

25. Permanent Journey Plan
• Chart the towns in each TSI’s territory
• Compute the numbers of days working in each town
(35 calls/day)
• Work out the travel plan (bus/train) to each market and
the cost
• Compute costs of night halts outside the HQ town
• Cost the entire PJP

26. Scale of Operations
• Head Office in Delhi, 3 Regional Offices at
Chennai, Mumbai and Kolkata
• 410 Company Employees
• 325 Front Line Sales Force
• 60,000 sq ft of warehouse space
• 460 Stockists
26

27. Sales Process
Order Taking, Delivery, Reporting
and Control

28. Hand Held System
App based mobile system has
replaced manual order taking,
reporting and control

29. HH System
Operation
29

30. Hand Held System
• Advantages
– Eliminates need for
paperwork
– Perfect stock planning
on ROL basis at the
distributor level. No
stock outs and no
overstocking
– Consistent
implementation of
Pricing, Schemes ,
Incentives
• Sales manpower
effectiveness and
control
– Time and GPS stamp
– Record of all sales made
to each retailer
– Calls made and Calls
Productive
– Brands and Lines per
call monitoring
– Continuous monitoring of
target vs achievement
30

31. Thank You
www.yfactor.in