Optimization of Supply of ITC Prawns from Nellore to Domestic Market Presentation

Optimization of
Distribution Network
of ITC Prawns from
Nellore to Domestic
Mkt
Shekhar Jyoti Das, 17-PGDM-ABPM-35
Under the Guidance of –
Dr. S John Manoraj
Associate Professor – IIPM, Bangalore

Flow of Presentation
2 21-Nov-18 Shekhar Jyoti Das
ITC-ABD :An
Overview
Objectives
Research
Methodology
Literature
Review
Data Analysis
Results
Discussions
Suggestions
Learning
Outcome

Objectives
• To detail out the existing distribution model of other competitors:
• A detailed summary about the logistics, warehousing & terms of business of the
companies having frozen prawns in their product category
Objective 1
• To study & optimize the existing distribution model for supply to ITC Hotels
• Evaluation of all modes of transport (bus, train, reefer vehicle) used for supply to ITC Hotels
Objective 2
• To devise a strategy for ITC
• Analysis of the operational models being used by frozen food companies for distribution in
the country
• Suggesting the appropriate model to be followed by ITCABD by giving proper justificationObjective 3

ITC ABD : An Overview
• ITCABD is currently in the business of procuring and processing shrimps for exports and domestic market.
• ITCAgri Business has processing units located in Andhra Pradesh andWest Bengal, which are major catchment
areas.
• In 2017 ITC launched ITC Master Chef Prawns whose current distribution set up is available only in major cities
like Delhi, Bangalore, Mumbai, etc.
• Shrimp is a very perishable product which needs to be stored and transported at a temperature of -18°C to -
25°C.
• The HoReCa & Retail markets in India are very Price Sensitive & Service Dependent so high distribution costs &
late delivery in the distribution network cannot be acceptable

Products Portfolio
 All these products are individually quick frozen or Block
frozen at -35°C for 90 minutes.
 ITC operate three processing facilities located along the
coastal belt of Andhra Pradesh and one processing
facility in Kolkata.
 accredited by Best Aquaculture Practices (“BAP”),
Aquaculture Stewardship Council (“ASC”), British
Retail Consortium (“BRC”), HACCP & FSSAI.
 The Maximum Shelf Life of the Product is up to 2Years.

Research Methodology
• Research design - Descriptive
• Research tools - Questionnaire survey
• Sampling technique - Segmentation & Stratified Random Sampling
• Source of data - Primary & Secondary
• Sample Size of Respondents - 100
• Area – Hyderabad, Bangalore, Kolkata, Delhi & Mumbai
• Period of study - 3rd May to 12th July

Literature Review

HoReCa
• distribution channel in food HOtel, REstaurant and Catering.
• organized” HORECA channel and the “non-organized” channel.The first is the one
established, for example,
• Hotel, restaurant chains, airline catering,
• small bars, restaurants, some hotels,
• Price sensitive and Service quality demanding

CWLP
Some Indian CWLPs are Snowman Logistics, Cold Care, Crystal Group.This companies act as CWLPs for
a wide variety of clients
• Normally undertakes the following activities:
1. Receiving the goods from the factories or premises of the principal or his agents;
2. Warehousing these goods;
3. Receiving dispatch orders from the principal;
4. Arranging dispatch of goods as per the directions of the principal by engaging transport on his own
or through the authorized transporters of the principal;
5. Maintaining records of the receipt and dispatch of goods and the stock available at the warehouse;
ServiceTax is payable on above services.

Super Stockists
• Super Stockist is the person who keeps the stock on behalf of the
company. Gets fix margin for keeping it. It’s like a warehouse for company.
Its job is to bill the product as per the money received from the distributor,
supply it to to distributor using a transporter.

Distributor
• A person who on behalf of the company distribute the products in market to retail outlet in the
designate area for him.
• He provides schemes to retailers, consumer promotions to retailers on behalf of company.
• He hires sales man who goes to market, take orders, supply is done next day on specific routes

Comparison
CWLP Super Stockists Distributors
Huge warehouses and reefer vehicles in multiple locations
May or may not have warehouses/reefer vehicles in
only particular city or town
Has freezers, rented/built small cold rooms
Caters to many states and Union Territories Caters to multiple cities or towns Caters to only a town/village
The Relation between a CWLP & Company is that of a
Business relationship
While the relation between Super Stockists &
Company is that of a Buyer Seller Relationship
Must make advance payment
No Advance Payment takes place
But Super Stockists must make advance payments to
procure the product from supplier
Contract system Receives fixed margin Receives fixed margin
No distribution agents under it
Has team of distribution agents/distributors under
itself
Has a team of one to four delivery boys

General Distribution Process
Factory Warehouse Distributor
End
Customer

Profile of Respondents Hyderabad Bangalore Kolkata Mumbai Delhi
Distributor 5 5 5 5 5
CWLP 5 5 5 5 5
Super Stockists 5 5 5 5 5
Hoteliers 5 5 5 5 5
Total Number of Respondents 20 20 20 20 20

Quantity of Prawns
Handled on an
annual basis
Hyderabad Bangalore Kolkata Delhi Mumbai
30-35Ton 3 3 4 4 4
25-30Ton 1 1 1 0 1
20-25Ton 1 1 0 1 0
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Quantity of Prawns handled by Distributors
30-35Ton 25-30Ton 20-25Ton
Inference: Most Distributors handle around 30-35t
prawns in an year

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Hyderabad Bangalore Kolkata Mumbai Delhi
Margin Received by Distributor
5-10% 10-15%
Expected Margin Hyderabad Bangalore Kolkata Mumbai Delhi
5-10% 4 3 2 2 4
10-15% 1 2 3 3 1
Inference: Most Distributors receive margin of 8-10%
on frozen prawns

0
1
2
3
4
5
6
Credit Policy incase of Distributors
On Credit Advance
Credit Policy Followed by
Distributors
On Credit 1 0 0 0 1
Advance 4 5 5 5 4
Inference: Most Distributors receive supplies by
advance payment

Quantity of Prawns
Handled on an annual
basis
300-350Ton 4 4 5 4 5
250-300Ton 0 1 0 1 0
200-250Ton 1 0 0 0 00
1
2
3
4
5
6
Qty of Prawns handled by Super Stockists
300-350Ton 250-300Ton 200-250Ton
Inference: Most Super Stockists handle around 300-350T
annually

0
1
2
3
4
5
6
Expected Margin by Super Stockists
20-25% 25-30%
Margin Hyderabad Bangalore Kolkata Mumbai Delhi
20-25% 5 4 5 4 5
25-30% 1 1
Inference: Most Super Stockists receive margin of 20-25%

Credit Policy Followed by
Super Stockists
On Credit 2 1 0 0 2
Advance 3 4 5 5 3
Inference: Most Super Stockists receive supplies by
advance payment
0
1
2
3
4
5
6
Credit Policy Followed in case of Super Stockists
On Credit Advance

Quantity of Prawns
Handled on an
annual basis
Hyderabad Delhi Mumbai Kolkata Bangalore
2000Ton 4 4 4 5 5
1500Ton 1 1 0 0 0
1000Ton 0 0 1 0 0
0
1
2
3
4
5
6
Hyderabad Delhi Mumbai Kolkata Bangalore
Qty Handled by CWLP
2000Ton 1500Ton 1000Ton
Inference: Most Cold Chain Companies handle around 2000T
prawns every year

Quantity of Prawns
Consumed in Hotels &
Cafes on an monthly basis
800-1600Kgs 1 1 1 1 1
400-800Kgs 3 3 4 4 3
200-400Kgs 1 1 0 0 1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Qty of Prawns consumed in Hotels & Cafes
800-1600Kgs 400-800Kgs 200-400Kgs
Inference: Most 400-800 Kgs Prawns are consumed in hotels & cafes
across India (Involves from both organized & unorganized segment)

Number of
Respondents by
Company
IFB 7 6 8 6 9
Sumeru 4 4 4 4 3
0
1
2
3
4
5
6
7
8
9
10
Qty of Respondents by Company
IFB Sumeru
Inference: Mostly IFB is the dominant player in the
frozen prawns market across India in HoReCa

IFB Respondents Profile Hyderabad Bangalore Kolkata Mumbai Delhi
Distributors 4 4 6 3 5
Super Stockists 1 1 1
Cold Chain Companies 0 1 1 1
Hoteliers 2 1 2 1 2
Total 7 6 8 6 9
0
1
2
3
4
5
6
7
IFB Respondents Profile
Distributors Super Stockists CNF Hoteliers

IFB Distribution Model
 CWLP assigned to each Geographical Region in the form of North,
South, East & West
 Partnered with Snowman as its CWLP
 In Kolkata IFB is having its own processing plant
 Appointed a Super Stockists that has a good infrastructure setup of
Warehouses & ReeferVehicles in other cities ofWest Bengal & North-
East, Delhi &
 Minimize theirWarehousing Cost but since IFB always looks for pushing
more volumes so their logistics cost increases as from only one Central
Warehouse

Hyderabad
 Padmaja Marketing (Super Stockists) in Hyderabad to cater to the
customers in Hyderabad.
 Padmaja also caters to distributors located inVizag &Vijayawada
which are the self-appointed distributors of Padmaja.
 High Cold Chain Logistics cost for Hyderabad, due to the distance
from Bangalore Warehouse
Total cold chain
costs as a % of SP
Super Stockists + Distributors
margins as % of SP
Cold Chain Logistics
as % of SP
Hyderabad 30 25 5
0 5 10 15 20 25 30 35
Total cold chain costs as a % of SP
margins as % of SP
Cold Chain Logistics as % of SP
Hyderabad
IFB Kolkata Snowman (Bangalore)
Padmaja Marketing
(Hyderabad)
Distributor
(Vizag,Vijayawada)

Bangalore
 CWLP directly supplies to the distributors & customers in the
city.
 In Mysore & other cities, company appointed super stockists to
whom the CWLP supply the product.
 Mysore & other tier 2 cities in Karnataka are not so huge so
distributors are sufficient enough to cater to those markets.
Total cold chain
costs as a % of
SP
Distributors margins as % of SP
as % of SP
Bangalore 17 15 2 0 5 10 15 20
Bangalore
IFB Kolkata SnowmanWarehouse
Distributors
(Bangalore)
Distributors
(Mysore, Mangalore)

Kolkata
• Own logistics for distribution, and has the least proportion of Cold
Chain Logistics in Kolkata. Also IFB uses the cold storage facility at its
production facility itself
• . It distributes the products directly by engaging distributors. It has a
relatively distribution margin of 15% in Kolkata
• For other markets such as Guwahati, Siliguri, Dimapur & Shillong, IFB
appointed Atrayee Enterprises (Rajabazzar) as its Super Stockist
• Atrayee Enterprises also Super Stockists for other frozen prawn
companies such as Al-Kabeer, Sumeru, Gadre Marine, Amalgamated
Frozen Foods &West Coast.
IFB Plant Kolkata
Attrayee Enterprises
(Super Stockists)
Guwahati
Dimapur
Shillong
Siliguri
Distributors
(Kolkata)
Total cold chain costs
as a % of SP
Distributors & Super Stockists
margins as % of SP
as % of SP
Kolkata 16 15 1
NE 26 25 1
0 5 10 15 20 25 30
Distributors & Super Stockists
margins as % of SP
Kolkata & NE
NE Kolkata

Delhi
• CWLP which is Snowman in Noida. From the Snowman’s
warehouses in Noida IFB supplies its products to company
appointed distributors in Delhi & NCR.
• Low logistics cost
• While for other North Indian Cities with Huge Population and
market such as Chandigarh & Jaipur it has Puri & Sons as Super
Stockists in Delhi for Punjab, Haryana & Uttar Pradesh.
• Puri & Sons are also the super Stockists for Sumeru which is a big
rival company of IFB.
Total cold chain
costs as a % of SP
Distributors & Super
Stockists margins as % of SP
Cold Chain
Logistics as % of
SP
Delhi 17 15 2
Tier 2
Cities
27 25 2
IFB
(Kolkata)
Snowman
(Delhi)
Distributors
(Delhi)
Puri & Sons
(Super Stockists)
(Chandigarh, Jaipur)
0 5 10 15 20 25 30
Distributors & Super Stockists margins…
Delhi & Tier 2 Cities
Tier 2 Cities Delhi

Mumbai
• Snowman Warehouse inTaloja which is in Navi
Mumbai
• supplies the product to the IFB appointed distributors
located all over the Mumbai City.
• Whereas for catering to Pune,Aurangabad & Nagpur
IFB distributors has been appointed
Total cold chain
costs as a % of SP
Distributors margins as % of
SP
Cold Chain
Logistics as % of
SP
Mumbai 17 15 2
IFB Plant
(Kolkata)
Snowman
Taloja
Distributors
(Mumbai)
Distributors
(Pune,Aurangabad, Nagpur)
0 2 4 6 8 10 12 14 16 18
Mumbai

Sumeru Respondents Profile Hyderabad Kolkata Delhi Mumbai Bangalore
Distributors 2 2 2 2 2
Super Stockists 1 1
Cold chain companies 1 1
Hoteliers 2 1 1 1 1
Total 4 4 4 4 3
0
0.5
1
1.5
2
2.5
Hyderabad Kolkata Delhi Mumbai Bangalore
Sumeru Respondents Profile
Distributors Super Stockists C&F Agents Hoteliers

Sumeru
Sumeru Plant
(Cochin)
Super Stockists
Kolkata
Delhi
Hyderabad
Other Tier 2
Cities
Schedulers
Logistics
Mumbai
Bengaluru
 Sumeru is having its factory in Cochin
 For Delhi, Mumbai & Bengaluru Sumeru has tied up
with Schedulers Logistics since it has got very strong
infrastructure for operations in this locations.
 While for Hyderabad, & other tier 2 Cities the
company has appointed various Super Stockists to
supply to its customers
 Direct Supply to the Super Stockists increases logistics
cost

Hyderabad
Sumeru(Cochin)
Schedulers
Warehouse
(Tumkur)
Shriram Distributors
Super Stockists
(Hyderabad)
Distributors
(Warrangal, Karim
Nagar)
Total Cold Chain Costs as
% of SP
Super Stockists + Distributors Margin as
% of MRP
Cold Chain Logistics as % of
MRP
Hyderabad 29.9 27.1 2.9
0 5 10 15 20 25 30 35
Total Cold Chain Costs as % of SP
Super Stockists + Distributors Margin as % of
MRP
Cold Chain Logistics as % of MRP
Hyderabad

Bangalore
Sumeru
(Cochin)
Schedulers
(Tumkur)
Linganand
Enterprises
(Super Stockists)
Distributors
(Mysore, Mangalore,
Coimbatore)
Distributors
(Bangalore)
Total Cold Chain Costs as %
of SP
Super Stockists + Distributors Margin as %
of MRP
MRP
Bangalore 25.8 23.87 1.87
Has the least cold chain logistics cost, this is due to the
availability of SchedulersWarehouse, inTumkur, near
Bangalore.
Has various distributors in other tier 2 cities which are
supplied from Bangalore
0 5 10 15 20 25 30
MRP
Bangalore

Kolkata
• Partnered with Attrayee Enterprises
as its Super Stockists for supplying in
Kolkata and other cities
• has relatively high cold chain logistics
cost, this is due to the distance factor.
Total Cold
Chain Costs as
% of SP
Super Stockists +
Distributors Margin as %
of MRP
Cold Chain
Logistics as % of
MRP
Kolkata 27.5 22.8 4.7
Sumeru
(Cochin)
Attrayee Enterprises
(Super Stockists)
Distributors
(Kolkata
Distributors
(Guwahati, Shillong, Dimapur)
0 5 10 15 20 25 30
MRP
Kolkata

Delhi
Total Cold Chain Costs as
% of SP
Super Stockists + Distributors Margin as
% of MRP
MRP
Delhi 30.12 23.9 6.16
Sumeru
(Cochin)
Puri & Sons
(Delhi)
Distributors
(Chandigarh,
Jaipur)
Distributors
(Delhi)
 Partnered with Puri & Sons (Super Stockists)
as for Delhi-NCR, upcountry distribution to
Chandigarh & Jaipur.
 High logistics costs and high margin as well
0 5 10 15 20 25 30 35
MRP
Delhi

Mumbai
• Has a warehouse in
Panvel, Mumbai with
Schedulers logistics
• Has partnered with Gen
Next Marketing as Super
Stockists for distribution
activities in Mumbai and
other cities
Total Cold Chain Costs
as % of SP
Margin as % of MRP
Cold Chain Logistics as
% of MRP
Mumbai 27.7 23.6 2
Sumeru
(Cochin)
Schedulers
(Mumbai)
Gen Next
Marketing
(Super
Stockists)
Distributors
(Pune,
Aurangabad,
Nagpur)
Distributors
(Mumbai)
0 5 10 15 20 25 30
MRP
Mumbai

IFB
Models
Followed
Sumeru
Models Followed
Total Cold Chain
Costs as % of SP
Super Stockists +
of MRP
Cold Chain
Logistics as % of
MRP
Total Cold Chain
Costs as % of SP
Super Stockists +
of MRP
Cold Chain
Logistics as % of
MRP
Hyderabad 30 25 5
Super Stockists-
Distributor
30 27 3
Super Stockists-
Distributor
Bangalore 25 23 2
CWLP-Super
Stockists -
Distributor
24 23 1.
CWLP-Super
Stockists-
Distributor
Kolkata 24 23 1
CWLP-Super
Stockists-
Distributor
30.12 23.9 6.16
Super Stockists-
Distributor
Delhi 25 23 2
CWLP – Super
Stockists-
Distributor
29.7 25 4.7
Super Stockists-
Distributor
Mumbai 25 23 2
CWLP-Super
Stockists-
Distributor
24 23 1
CWLP-Super
Stockists-
Distributor
High Logistics Cost

KeyTakeaways
• Different lines of approach to distribution:
• In larger cities, have more distributors and in smaller cities they have Super Stockists since in small cities company’s market reach is less
• Cost of Cold Chain Logistics varies from just 1% to over 7% of MRP.This is due to the different distribution models adopted, as well as the
distance factor.
• Cost of Cold Storage for a standard pallet varies is in a narrow price band of Rs 2 to Rs 2.6 per kg per month across the country
• These players have greater reach and usually have more distributors.Their strategy involves, rolling out incentive and discount schemes
customized to distributors & Super Stockists, based on the volumes of the product sold.
• IFB has CWLP-Super Stockists model for the market coverage of their products, hence they have higher distribution costs as a % of MRP.
• Consequently they have lesser cold-chain logistics cost
• Whereas Sumeru has Super Stockists-Distributors and consequently has higher logistics cost but distribution costs are saved on CWLP
Charges

Study and Analysis of different modes of supply to
ITC Hotels
• ITC ABD prefers to deliver the prawns to ITC Hotels directly rather than outsourcing to any external person.
• Company relies on direct delivery from Anjaneya Sea Foods, Nellore to ITC Hotels bus, train or reefer vehicle
• SKUs for ITC Hotels are different along with product requirement and also the hotels only procure when required for thus
delivery orders can arrive any time
• Quantity is very minimum in a one time delivery which may happen just once or twice in a week

Cities Hyderabad Bangalore Kolkata
Gurgaon
Delhi
Mumbai
ITC Hotels Kakatiya Kohenur Windsor Galleria Sonar Grand Bharat Maurya
Grand
Central
Maratha
Quantity of
Prawns
Consumed in ITC
Hotels
Per Month
(In Kgs)
100 80 150 100 800 48 735 86 100
Total 180 250 800 783 186

Cities Bangalore Hyderabad Kolkata Gurgaon & Delhi Mumbai
ITC Hotels ITC Windsor ITC Gardenia ITC Kohenur ITC
Kakatiya
ITC Sonar
ITC Grand
Bharat
ITC Maurya
ITC
Maratha
ITC Grand
Central
Replenishment Stock Ordered
Every Month (In Kgs)
200 300 200 300 900 400 900 200 200
Frequency of Order Once in a Week Once in a Week
Once in a
Week
Once in a
Week
Once in a
Week
Once in a Week

Quantity Considered
(1 Box = 40 Kg)
Nellore to Hyderabad Nellore to Bangalore Nellore to Kolkata Nellore to Delhi Nellore to Mumbai
Preferred Mode of Transport
Duration
(In Hrs)
Costs
Incurred
(In Rs)
Duration
(In Hrs)
Costs Incurred
(In Rs)
Duration
(In Hrs)
Costs
Incurred
(In Rs)
Duration
(In Hrs)
Costs
Incurred
(In Rs)
Duration
(In Hrs)
Costs
Incurred
(In Rs)
Bus 8 150 8 150
Not
Available
Not Available
Not
Available
Not Available
Not
Available
Not Available
Train 10 70 10 70 25 194 33 238
Not
Available
Not Available
Reefer Vehicle (Part Load) Min
Charges for 750Kgs
48 (2 Days) 840 96 (4 Days) 880 192 (8 Days) 1120
192
(8 Days)
1200 96 (4 Days) 1000

Preferred Model
of Transport
Less Costs Faster Delivery More Mishandling
Hygiene
Problems
Quality
Deterioration
More Reliable More Flexibility Price Negotiable Service Dependent
Bus 6 17 7 8 6 12 13 14 16
Train 14 3 13 12 14 8 7 6 9

Nellore – Hyderabad| Nellore -Bangalore
• Bus or by road is the most easiest and efficient of transportation and since frequent buses available
• Less possibility of any mishandling of the product as there is sufficient time for loading & unloading of boxes
• Journey by trains take around more time and punctuality or timely delivery cannot be expected.
• Loading & Unloading problem because since the trains have a stoppage time of only 5 minutes
• Care must be taken while stocking of the material in Buses so that they are not exposed to Sunlight, wind or rain

Nellore – Kolkata
• No buses available
• frequent express high speed trains from Nellore to Kolkata available with a duration of 24 hrs
• ITC-ABD is having its own factory in Kolkata i.e. Calcutta Sea Foods which is having its own Cold Rooms in the factory itself
• Safety stock can be stored in Calcutta Sea Foods will replenish the stock to ITC Sonar during emergency or delay in delivery

Nellore – Delhi | Nellore to Mumbai
• The distance between Nellore to Delhi is even more than that of Kolkata and the duration of the journey is also high.
• Supplemented by safety stock in Calcutta Sea foods incase of emergency, duration takes 18 Hrs by trains from Kolkata
• Reefer vehicle feasible option with duration of 8 days
• Reefer vehicle is the only option for Mumbai

Quantity Considered is
40Kg
Effective mode of
transportation
Duration Costs Incurred Alternatives Considered
Nellore to Hyderabad Bus 8 Hrs Rs 150 Nil
Nellore to Bangalore Bus 8 Hrs Rs 150 Nil
Nellore to Kolkata Train 24Hrs Rs 194 Safety Stock in Calcutta Sea Foods
Nellore to Delhi
Reefer Vehicle
(Part Load)
8 Days Rs 1200
Safety Stock in Calcutta Sea Foods to be utilized for delivery incase
of urgency, duration will take 18hrs through trains
Nellore to Mumbai
Reefer Vehicle +
Hiring a Warehouse
(Part Load)
4 Days
Rs 1000 +
Rs
1720/Month
Hiring a warehouse for storage of safety stock at Mumbai for
1 pallet = 650Kgs
Key-Takeaways

Distribution Model for HoReCa Channel:
• After the study and analysis of various models of distribution followed by IFB and Sumeru,
• Before arriving at any conclusion the three distribution models for the HORECA channel
identified from study will be briefly described along with its benefits and drawbacks.
CWLP cum Super
Stockists cum Distributor
Model
CWLP cum Distributor
Model
Super Stockists cum
Distributor Model

CWLP cum Super Stockist cum Distributor Model:
• Geographical Scenario divided into North, South, and East & West.
• CWLPs appointed in Delhi, Bangalore, and Kolkata & Mumbai which cater to this cities
• Super Stockist provide stocks to the distributors in tier 2 and tier 3 cities
• Easier distribution in tier 2 and tier 3 cities where market potential doesn’t exists
• Distances from Warehouse to Super Stockists is negligible
• CWLP = Cold & Logistics Warehousing Partner

ITC
(Nellore)
Cold Star
(Delhi)
Super Stockists
(Chandigarh,
Jaipur)
Distributor
(Delhi)
Cold Star
(Mumbai
Super Stockists
(Pune, Indore)
Distributor
(Mumbai)
Cold Star
(Bangalore)
Super Stockists
(Hyderabad,
Mysore)
Distributor
(Bangalore)
Cold Star
(Kolkata)
Super Stockists
(Guwahati,
Siliguri)
Distributor
(Kolkata)
All distances from Cold Star
Warehouse to Super Stockists can be
covered by 12 Hrs

CWLP cum Distributor Model:
• Lower logistics cost but higher warehousing and CWLP as CWLP each city.
• CWLPs not on a geographical basis but on the basis of market size and market potential
• Involves appointing CWLPs and distributors in all those cities.
• Tier 2 cities catered by distributors rather than Super Stockists
• Results in appointing multiple distributors
• limits market reach since distributor infrastructure limited

ITC ABD
(Nellore)
Cold Care
Delhi
Distributor
(Delhi, Chandigarh,
Jaipur)
Cold Care
(Mumbai)
Distributor
(Mumbai, Pune,
Indore)
Cold Care
Hyderabad
Distributor
(Vizag,Vijayawada,
Hyderabad)
Cold Care
Bangalore
Distributor
(Bangalore, Mysore,
Mangalore)
Cold Care
Kolkata
Distributor
(Kolkata, Guwahati)

Super Stockists cum Distributors Model
• Costs of logistics is high
• customer establishes business relationship with only Super Stockist.
• The manufacturer not participate in billing and payment processes with customer.
• Super Stockist delivers product to the customer or customers come directly to the Super Stockist
• Super Stockist would receive the consignment under a contract or agreement like high credit
• The manufacturer loses control over the end customer.
• For billing and payment manufacturer carries out a monthly inventory of the Super Stockists warehouse
• reduces the visibility of the process for the manufacturer

0 10 20 30 40 50 60 70
Lower Logistics Cost
Greater Access to Tier 2 & 3
Markets
High Traceability
Contact with end customer
Comparison of the models
Super Stockists- Distributor
CNF - Distributor
CNF - Super Stockists - Distributors Model
Distribution Model
Lower Logistics
Cost
Greater Access to
Tier 2 & 3 Markets
High
Traceability
Contact with
end
customer
CWLP - Super Stockists
- Distributors
50 60 60 50
CWLP - Distributor 47 20 30 40
Super Stockists-
Distributor
3 20 10 10
KeyTakeaways
Inferences : CWLP-Super Stockists-Distributor model scores highest

OperationalVariables and Selection Guide of the Model
• Seven operational variables have been selected as important in determining the appropriate distribution model for HoReCa
• Order and supply frequency; Order size, Product shelf life (Product Shelf Life, Sell-by date); Defined service quality;
Delivery requirements, Order Capture
• The distribution models are:
• CWLP cum Super Stockists cum Distributor Model
• CWLP cum Distributors Model
• Super Stockists cum Distributors Model
• TheVariables will be compared with all the variables thus giving an explanation about the possible scenario for the respective
cases against those variables

Order Frequency:
• The frequency of order and supply is defined as the average period of time that elapses between the orders of a particular customer.
• CWLP cum Super Stockist cum Distributor : The order frequency is predetermined and the customer takes the initiative in placing the order
thus a stable order frequency helps to minimize the logistics cost of the manufacturer.
• CWLP cum Distributor: similar in the matter of order frequency & logistics cost
• Case 3: Super Stockist cum Distributor : vary between daily orders to weekly or monthly so it can be seen that there is no stability in the
order frequency thus leads to the increase of logistics cost for the manufacturer.
• Some factors that may influence the frequency with which customers place orders are the HORECA customer’s storage facility capacity or
obsolescence (sell-by dates, perishability, durability) of the product concerned.

KeyTakeaways
CWLP -SUPER
STOCKIST -
DISTRIBUTOR
CWLP-
DISTRIBUTO
R
SUPER
STOCKIST -
DISTRIBUTOR
Order
Frequency/Month
Weekly Weekly
According to
Customer
Needs
Thus from the above analysis, the CWLP-Super Stockists- Distributor & CWLP-Distributor has stabilized order
frequencies which ultimately lowers its logistics cost.
Order Frequency/Month Weekly According to Customer Needs
CWLP-Super Stockists-Distributor 50 10
CWLP-Distributor 40 30
Super Stockists 10 70

Order Size
• CWLP cum Super Stockist cum Distributor: High because of presence of two levels of intermediaries
• CWLP cum Distributor: The order size in this model is same as that of the first case.
• Super Stockist cum Distributor: The Order Size in this model is not huge because as discussed in the
previous slide the order frequency varies along with size. So there is great uncertainty in case of order
size

KeyTakeaways
CWLP - SUPER
STOCKIST -
DISTRIBUTOR
CWLP -
DISTRIBUTOR
SUPER
STOCKIST-
DISTRIBUTOR
(Case 3)
Order Size
(Pallets)/Month
4 Pallets (High) 2Pallets (Low) 2Pallets (High)
Order Size is High in case of CWLP-Super Stockists-Distributor & CWLP-Distributor Model
because of the presence of higher number of intermediaries
Order Size/Month 4 Pallets 2 Pallets
CWLP-Super Stockists 70 10
CWLP-Distributor 30 40
Super Stockists - Distributor 50

Deadline for Deliveries (Product Shelf life, Sell by Date)
• Represents the remaining product shelf life when the product has been received by the customer
or HORECA distributor.
• CWLP cum Super Stockist cum Distributor: The deadline for increases as it moves through a
multiple number of intermediaries but nonetheless the product gets sold before it attains the
deadline because it moves through multiple channels.
• CWLP cum Distributor: The deadline for deliveries also increases since the stock is sometimes
stuck at the distributors end.
• Super Stockist cum Distributor: The deadline for deliveries can increase or decrease it depends
upon the customers ordering frequencies.

KeyTakeaways
CWLP-SUPER
STOCKIST-
DISTRIBUTOR
CWLP -
DISTRIBUTOR
SUPER
STOCKIST-
DISTRIBUTOR
Deadline for
Deliveries Low Possibility
Medium
Possibility
Medium
Possibility
• In CWLP-Super Stockists-Distributor the instances of products reaching their expiry date for delivery to the end customer is
extremely low
• There is a very less possibility of the product to be not getting sold if proper FIFO is maintained by all the intermediaries.
Deadline for Deliveries Low High
CWLP - Super Stockists-Distributor 55 30
CWLP - Distributor 40 30
Super Stockists - Distributor 5 40

Service Quality
• Measure of the degree of fulfillment of the level of service agreed to with each HORECA customer
using the percentage of references/lines of orders delivered on time.
• The importance of this variable reflects not only the service quality offered to the customer, but also if
this service quality is directly controllable by the manufacturer.
• Generally, HORECA customers demand a high degree of service quality.

KeyTakeaways
CWLP cum SUPER
STOCKIST cum
DISTRIBUTOR
CWLP cum
DISTRIBUTOR
SUPER
STOCKIST cum
DISTRIBUTOR
Service Quality High Medium Low
Here timely delivery is more on the CWLP-Super Stockists-Distributors Model because of the infrastructure
and distance factor.
Service Quality Timely Delivery Late delivery
CWLP - Super Stockists-
Distributor
60 30

Delivery Requirements
HORECA customer may agree to a set of requirements or restrictions that should be fulfilled at the time
of delivery, such as set receiving times, unloading by the manufacturer (need for maintenance) or
refrigeration.

KeyTakeaways
CWLP - SUPER
STOCKIST -
DISTRIBUTOR
CWLP-
DISTRIBUTOR
SUPER
STOCKIST -
DISTRIBUTOR
Delivery
Requirements
Yes No No
In many instance CWLP-Super Stockists-Distributor Model is able to fulfill the Delivery
Requirements of the customer because of the infrastructure factor.
Delivery Requirements Fulfilled Not Fulfilled
Distributor
60 30

Order Capture
CWLP cum Super Stockists cum Distributors : Two levels of order capture are present from CWLP to
Super Stockists to Distributors.
• CWLP cum Distributors: In this case there is only one level of order capture that takes place starting
from CWLP to Distributors.
• Super Stockist cum Distributors : In this case also there are two levels of order capture that takes
place which happens at the Super Stockist level & distributor level

KeyTakeaways
CWLP cum SUPER
STOCKIST cum
DISTRIBUTOR
CWLP cum
DISTRIBUTOR
SUPER STOCKIST
cum
DISTRIBUTOR
Order Capture
(Number of levels)
3 2 2
So after analyzing all the cases it can be said that the CWLP-Super Stockists-Distributor Model
can be the best model to maximize the Order Capture of the Product thus maximizing the
customer reach and also the sales
Order Capture High Low
Distributor
60 30

Decision Matrix
• The Decision Matrix summarizes the aspects that have just been analyzed.
• It is meant to serve as a selection guide for ITC ABD which operates in the HORECA channel
• The operational variables defined in the study and the assessment of each of them given
• Thus, manufacturer can choose which of the three models best suits their needs
• compilation of all the tables has been made in to one single table to make it easier to do the
comparison

Decision Matrix
CWLP cum SUPER STOCKIST cum
DISTRIBUTOR
CWLP cum DISTRIBUTOR
SUPER STOCKIST cum
DISTRIBUTOR
Order Frequency Weekly Weekly According to Customer Needs
Order Size (Pallets) 4 Pallets (High) 2 Pallets (Low) 2 Pallets (Low)
Deadline for Deliveries
Low Possibility Medium Possibility Medium Possibility
Service Quality High Medium Low
Delivery Requirements Yes No No
Order Capture
(Number of levels)
2 1 2

Discussions
• The analysis of the selected operational variables leads us to conclude that the CWLP cum SUPER
STOCKIST cum DISTRIBUTOR will be the most appropriate model for ITC ABD to follow after the
analysis of all the variables
• Market access to tier 2 & tier 3 markets along with lower logistics costs are the two benefits that can be
achieved from CWLP - SUPER STOCKIST - DISTRIBUTOR MODEL .
• Sales through Super Stockist most appropriate when manufacturer has difficulties in reaching the end
customer, with low frequency of orders and high logistics costs involved in reaching the customer.
• Super Stockist sales model implies a high hidden cost: loss of visibility and the manufacturer’s loss of
control over the HORECA market.

ITC
(Nellore)
Cold Star
(Delhi)
Super Stockists
(Chandigarh,
Jaipur)
Distributor
(Delhi)
Cold Star
(Mumbai
Super Stockists
(Pune, Indore)
Distributor
(Mumbai)
Cold Star
(Bangalore)
Super Stockists
(Hyderabad,
Mysore)
Distributor
(Bangalore)
Cold Star
(Kolkata)
Super Stockists
(Guwahati,
Siliguri)
Distributor
(Kolkata)
All distances from Cold Star
Warehouse to Super Stockists can be
covered by 12 Hrs

Suggestions
Primary Distribution
(Full Load Logistics)
Warehousing
Charges /Pallet/
Month (Rs)
Handling
Invoicing, order
management,
e bill, stationary
(In Rs)
Secondary Distribution Super Stockists Distributors
Source Destination
Rate
Quote
(12T)
In Rs
Rate
Quote
(17T)
In Rs
1 Pallet = 650-
700Kgs
Loading &
Unloading
800Kg 5.5T 3.5T Place Margins
Credit
Policy
Margin Credit Policy
Nellore
Kolkata 115000 130000
1500
Rs 8/box
weighing
20Kgs
15,000/Month Rs 25/Km Rs 32/Km Rs 28/Km
Guwahati,
Siliguri
25%
Advance
Payment
10%
Advance
Payment
Mumbai 50000 65000 Pune, Indore
Bangalore 20000 13,000
Mysore,
Mangalore
Hyderabad 25000 25000
Vizag,
Vijayawada
Delhi 100000 32000
Chandigarh,
Jaipur
CWLP - Cold Star | Contract for three years| No change on rates |

Source Destination <=750 (Minimum Charges for 750kgs) 751-1000 Kg (Charges for 1000 kgs )1001-2000 KG 2001-3000 KG
3001-
4000 KG
4001-5500 KG
Nellore
Delhi ( In INR) 30 26 22 18 13 10
Bangalore ( In INR) 22 20 18 16 12 11
Hyderabad ( In INR) 21 18 17 15 10 8
Mumbai ( In INR) 25 23 22 20 18 17
Kolkata ( In INR) 25 23 22 20 18 17
Cold Star - Part load Logistics | Contract for 2 years | Subject to change on increase or decrease of fuel charge |

Suggestions
• The Parameters to be followed for selecting any CWLP are
• Analysis of the CWLP: Present client base, feedback from the present clients regarding their service
and analysis of their infrastructure across the length and breadth of the country
• Appointing a Single CWLP for all locations: Single CWLP for all locations helps to re-negotiate
Costing but and reduces the problems of multiple handling and communication.
• Advanced Infrastructure Facilities: Infrastructure such as Docking Area, Ante Cold Room, Automated
Pallet handling Machines & OnlineTemperature & Inventory Checking helps to maintain traceability
and saves time
• Complaint to international & safety standards : ISO 22000, FSSAI, etc
It has to be noted that the same criteria applies for the Super Stockist as well but on the lesser part

Limitations
• Some intermediaries were reluctant to share information.
• Many intermediaries were out of station and were busy so appointment was
not available
• Due to time constraint many intermediaries could not be contacted

Learnings from the project
• Analyzing the Supply Chain
• Knowledge regarding Distribution Model
• Opportunity to visit various cold rooms
• Opportunity to interact with various industry persons
• Importance of Super Stockists and distributors in the distribution channel
• Work under deadlines
• How to make project report.

THANKYOU

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