Dabur has a large distribution network in India and globally to supply its Ayurvedic and consumer products. It uses a multi-level distribution structure with 3,000 distributors and covers 6 million retail outlets. The network is supported by extensive IT infrastructure including ERP systems. Dabur aims to improve rural penetration and chemist channel growth. It focuses on building relationships with super stockists and providing various support programs to distributors. However, the company faces some issues around data inconsistencies, margins, and distributor problems that it seeks to address through recommendations around rural markets, distribution tweaks, and new plans.

1. Distribution Structure of Dabur

2. About the Company
• India's largest Ayurvedic medicine & natural consumer
products manufacturer
• Product categories include Hair Care, Oral Care, Health Care,
Skin Care, Home Care and Foods
• Covers 6 million retail outlets in India and 120 countries
globally
• Extensive distribution network supported by 3,000-plus
distributors
• 20 world class manufacturing facilities including 12 in India

3. Brands

4. Domestic Distribution Structure

6. Territory Design

7. Manufacturing Plant
C&F Agent (different region)
Stockiest A Stockiest B
Retailers Retailers Retailers Retailers
CHANNELS OF DISTRIBUTION

8. MARGINS
• Higher margins leads to better profitability.
• Factors to determine margins-
a) Competitors,
b) The current economy,
c) Convenience of shopping at your location.
• As a promotional scheme for stockiest, the company tries to give higher margin.
• Retailers enjoy the highest margins.
• For Dabur products, retailers get 10-20% profit margin.

9. Coverage plan followed by distributors
• Hand-held devices to generate data
• IT has also been used to provide information to, and generate feedback from doctors.
Project Double
• Direct access to some 27000 villages with more than 3000 people this fiscal.
• Increased its rural penetration by 2.5 times in 2 years.
Project Core
• Expand its distribution footprint in the chemist channel.
• Targeting 30-35 per cent growth from the chemist channel.
• New products such as Dabur Ratnaprash, a health supplement, and Pudin Hara
Lemon Fizz, an OTC acidity reliever.

10. • Building stronger relationships with its super stockists
• DABUR will now be in a position to make the distributor invest more in IT and
distribution infrastructure.
• Offering super stockist more volumes.
Coverage plan followed by distributors

11. Infrastructure required by distributors
• Warehousing Facilities
• Logistics Services
• Marketing Infrastructure
• IT Infrastructure
• Distribution Extension

12. Payment/Creditor terms given to Distributors
• Modern Retail & E-Comm have lead to decrease in network
strength to 3000.
• Trade receivable and payables shows positive signs to be in
industry.
• Stockist in Depots: 1 day
• Stockist in remote areas: enjoy a high credit line of say 10
days.
• Institutions (like CSD): enjoy a credit line of 15-90 days.
• Factoring (for financing on receivables) used by Dabur.

13. Contd…
• Transparent process
• Peerset data for recievables
Year ITC HUL Nestle Dabur Britannia Industry
Average
2015-16 26.37 32.98 65.58 17.02 96.79 47.75
2014-15 24.90 21.22 99.95 16.37 74.95 47.48
2013-14 21.84 26.36 80.73 22.23 88.67 47.97
2012-13 24.14 38.79 94.74 21.78 63.04 48.50
2011-12 19.75 32.01 66.60 21.11 57.28 39.35

14. Support Provided to Distributors
• Support provided by the means of various project.
• Project Buniyad
• Project LEAD.
• IT system- Drishti
• Project 50/50.
• IT Enabled Order Capture System.
• Merchandising Solutions for Stores
• Astra Project

15. CREDIT FACILITIES GIVEN BY DISTRIBUTORS IN THE MARKET:
Credit Terms
 It refer to the stipulations recognized by the firms for making credit sale of the goods to its buyers.
 A firm opts for determining credit terms in accordance with the established practices in the light of its needs.
 The amount of funds tied up in receivables is directly related to the limits of credit granted to customers.
Credit Standards
 Credit standards refers to the minimum criteria adopted by a firm for the purpose of short listing its customers for
extension of credit during a period of time.
 Credit rating, credit reference, average payments periods are quantitative basis for establishing and enforcing credit
standards.
Collection Policy
 Collection policy refers to the procedures adopted by a firm to collect the amount from its debtors when some amount
becomes due after the expiry of credit period.
 Credit policy of an enterprise shall be reviewed and evaluated periodically.

16.  The percentage of retailers that operate mainly on cash payment is 60 percent.
• Of the above 46 percent operate on 100 percent cash payment
• Those operating on a 90:10 cash: credit ratio constitute of 40 percent.
• 7 percent of the retailers operate on 80: 20 and 70:30 cash: credit ratio respectively.
 Retailers operating mainly on credit term constitute of 32 percent of the
population.
• Of the above 50 percent of retailers operate on 70:30 credit: cash ratio.
• Of the remaining 25 percent each operate on a 90:10 and an 80:20 credit: cash ratio respectively.
 Retailers operating on cash as well as credit terms in a 50:50 ratio constitute 8
percent of the population.

17. Immovable
Products
Dumping
of goods
Payment
terms
Excessive
costs
Dearth of
Promotional
schemes
Unresolved
issues
Discrimination
MAJOR PROBLEMS
FACED BY
DISTRIBUTORS

18. Logistics Network
Dabur has three key strengths –
• It has a very strong brand image.
• Its products portfolio
• Its distribution system that helps its products
reach 47 stocking points, 10,000 stockists and 1.2
million retailers.
Now company is reinventing itself so it can position
IT as the fourth key strength.

19. • Dabur's network has a star topology with six DAMA links from
HECL.
• There are around 40-50 TDMA VSATs, which are used for
connecting the distribution network.
• There are some RF (Radio Frequency) links for connecting the
local offices within the city.
• IDSN connectivity as a backup for its primary connectivity.
• Dabur doesn't have too many leased lines to support its data
network.

20. • Its main revenue comes from outbound logistics: 29
factories, six major warehouses, 47 C&F Agents.
• Company dispatches 100 truckloads of goods every day
from the 29 factories.
• It reach to more than 750 large distributors through the
C&F agents.
• There are IT systems, maintaining details on inventories in
each location
• The outbound billing is also done on these systems.
• Distribution forecast planning to figure out the difference
between the need and the actual inventory status.

21. ERP SYSTEM
• Dabur works on two ERP systems. For the outbound
logistics it runs QAD ERP suite known as MFG/PRO.
• For manufacturing locations, there's BaaN.
• To fit so many locations even some situated in remote
areas into a central processing system, Dabur needed a
VSAT network.
• Thirdware implemented the MFG/PRO solution for
primary sales from manufacturing facilities to the
nationwide network of 45 C&F agents.

22. ACCENTURE TIE UP
• Implementing a new sales and distribution strategy is to
identify key customer segments, customize sales programs
• The Accenture and Dabur team optimized the company’s
internal logistics and distribution processes for mega retail
customers, products and trade promotions, and put
metrics and incentives in place to drives pacific goals.
• The new approach allowed employees to shift their focus
from simple transactions to more strategic procurement
efforts such as cost management.

23. MAJOR POINTS OF CONFLICTS
• Data Inconsistencies
• Logistics cost
• Margins
• Internal Competition
• Strategic differences
• Operational conflicts
• Conflicting Role of channel
members
• Conflict due to change
• Dependency issue

24. Major Problems/Issues Identified
• Consumption in rural markets has been
stagnant and these constitutes a huge chunk of
Dabur’s market.
• Lacking in Debtor Turnover Ratio.
• Distributer’s issues.
• Use of contemporary technologies.
• Company need to ensure that parts of margins
are passed on to consumers as well.

25. Recommendations
• Acquire, Maintain or Relinquish markets in rural India
intelligently.
• Tweaks in distribution and go-to-market
• Newer plans to tap contemporary trends in the
market.
• Key focus areas.

26. Key Focus Areas

27. ThankYou