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“ Investigation of key triggers and pain-points that are affecting the adaptation decision within consumer goods companies to the growth of organized retail”   May 2008
OVERVIEW ,[object Object],[object Object],[object Object],[object Object]
INTRODUCTION ,[object Object],[object Object],[object Object],[object Object],[object Object],Food & grocery has been the fastest growing retail segment at 91% of the whole market
ESTIMATED FIGURES FOR 10 YEARS Source: Economist Intelligence Unit Projected Sales in Retail Till 2014 also Category Wise Sales Projections
KPMG Advisory Services DEVELOPMENT OF THE QUESTIONNAIRES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ADDRESSING PROJECT QUESTIONS ,[object Object],[object Object],[object Object],[object Object]
Supply Chain   Logistic Issues Inventory Issues Promotional Issues Performance Issues Stock Security, Cost Reduction, Service Levels, Control Out of Stock, Replacement, Return Execution of campaigns, High Costs, Revenue, Less Inventory Late Deliveries, Damaged Goods, Missing Goods, Short Supplies (R) Internal Processes, Manpower, Conflicts, Awareness (M)
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Details of each issue will give a better picture of the problems in the supply chain.
[object Object],[object Object],[object Object],[object Object]
Pressure on margins, execution and not enough inventory support from retailers for promotions. Data constraints & retailer resistance in assortment. Not enough skilled manpower with retailers. Execution of promotions, weak internal processes & lack of skilled manpower from retailer’s side Competition, Pressure on margins.  Payment issues & also bargains are high. Manpower, competition, pressure on margins. Not enough revenue generated by promotions, not enough inventory to support it. Integration challenges in assortment. Not enough awareness among retailers. Lack of modern tools to analyze sales. Backend operations are weak with retailers. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Common pain points: Competition, Pressure on margins, Execution of promotions, Lack of skilled manpower, Assortment problems Manufacturers
Retailers Replenishment is one of the major problems faced by Nilgiri’s, also due to high setup costs of manufacturer equipment, they have resorted to their own machinery. One reason for not using 3 rd  party logistics is the stock security issue. Also they have a problem of space for new SKU’s in their stores. Metro wants improvements in service levels & cost reduction for their 3 rd  party logistics. Replenishment is a big issue. Store specific product lot. Short supplies. Execution & high cost of promotions are issues. Integration challenges in assortment of products. Late deliveries, damaged goods & missing goods Due to stock security issues they avoid 3pl.Space for new SKU’s & high costs for promotions also pose problems. Stock security issues, return of goods, aisle specific product lot, high cost of promotions, merchant resistance in assortment of goods are various challenges they face. Croma very often goes out of stock & the layout of the stores is not increasing the profitability. Common Pain Points Stock security issue, Replenishment, High cost of promotions, Return of goods ,[object Object],[object Object],[object Object],[object Object],[object Object]
Merchandizing Logistics Inventory Performance Responses By Manufacturers The pie charts represent the responses by all the manufacturers N-No , Y-Yes The responses also reflect the pain points and problems of manufacturers N N Y (RTC Logistics) N N Y (Own) 3rd  Party Logistics Nestle L'Oreal ITC P&G Godrej HUL  
Logistics Merchandizing Inventory Performance Responses By Retailers The pie charts represent the responses by all the retailers N-No , Y-Yes N Y N N N N Y (Local Players) 3rd  Party Logistics Reliance Fresh More Croma Namdhari Nilgiri Big Bazar Metro  
A Perception On The Performance of CPG Companies on Various Supply Chain Fronts Areas Details  Godrej L'Oreal HUL P&G ITC Nestle STRUCTURE Structure in terms of departments dealing with organized retail 3 4 4 4 4 4 SYSTEMS How good are their forecasting, merchandizing stock management systems 3 3 4 4 4 4 PROCESSES ,[object Object],3 3 4 4 4 3 PRODUCT ASSORTMENT ,[object Object],3 3 4 4 4 3 PROMOTIONS Tie ups and partnerships with retailers.   4 4 4 4 4 4 PRICING Using price discrimination with retailers 2 3 2 2 2 2
A Perception On The Performance of Retailers on Various Supply Chain Fronts Areas Details  Big Bazaar Metro Nilgiri’s Namdhari More Croma Reliance Fresh STRUCTURE Structure in terms of departments dealing with organized retail 4 4 3 3 4 4 4 SYSTEMS How good are their forecasting, merchandizing stock management systems 4 4 3 3 4 4 4 PROCESSES ,[object Object],4 4 4 3 4 4 4 PRODUCT ASSORTMENT ,[object Object],4 4 3 3 4 4 4 PROMOTIONS Promotions across different categories of products. Budget allocated for promotions. 5 4 3 3 4 4 4 PRICING Is the pricing policy competitive. Also how competitive are the prices of private labels. 4 3 4 3 4 4 4 SOURCING/SUPPLYING Sharing of information with suppliers and sourcing of products from international  or domestic locations 4 4 2 3 4 3 4
[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],* Current inventory turns for Nilgiris is not a good representation 21.9 Nilgiris 2005* 27.2 Nilgiris 2006* 12 Food Bazaar 7.54 Wal-Mart 5.73 Target 3.21 Tesco 31.45 Inventory Turns 7 Eleven Organization
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object]
GODREJ   ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],For Godrej & L’Oreal to evolve it will require certain strategic modern trade teams and planning systems which assist in proper negotiations and terms with the retailers. Also they need to initiate joint category management steps for proper SKU management HUL ITC P&G L’Oreal TIME EVOLUTION Evolution of different CPG companies since the advent of Modern trade
Clearly HUL has an edge over other Manufacturers in certain areas of the supply chain, hence on a comparative basis it is more evolved than others   No (direct) No (direct) No (direct) No (direct) No (direct) Yes Payments (Channel Financer) Yes Yes N/A  Yes Yes Yes Promotions (objectives defined) No No No N/A  Yes Yes Logistics (3PL) SAP SAP Trade Marketing teams N/A  SAP & SIFY Planogram Information Technology (Planning Systems) GODREJ NESTLE L'Oreal P&G ITC HUL AREAS COMPANIES  
LEARNINGS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
THANK YOU

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Samarth Final

  • 1. “ Investigation of key triggers and pain-points that are affecting the adaptation decision within consumer goods companies to the growth of organized retail” May 2008
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  • 4. ESTIMATED FIGURES FOR 10 YEARS Source: Economist Intelligence Unit Projected Sales in Retail Till 2014 also Category Wise Sales Projections
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  • 7. Supply Chain Logistic Issues Inventory Issues Promotional Issues Performance Issues Stock Security, Cost Reduction, Service Levels, Control Out of Stock, Replacement, Return Execution of campaigns, High Costs, Revenue, Less Inventory Late Deliveries, Damaged Goods, Missing Goods, Short Supplies (R) Internal Processes, Manpower, Conflicts, Awareness (M)
  • 8.
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  • 12. Merchandizing Logistics Inventory Performance Responses By Manufacturers The pie charts represent the responses by all the manufacturers N-No , Y-Yes The responses also reflect the pain points and problems of manufacturers N N Y (RTC Logistics) N N Y (Own) 3rd Party Logistics Nestle L'Oreal ITC P&G Godrej HUL  
  • 13. Logistics Merchandizing Inventory Performance Responses By Retailers The pie charts represent the responses by all the retailers N-No , Y-Yes N Y N N N N Y (Local Players) 3rd Party Logistics Reliance Fresh More Croma Namdhari Nilgiri Big Bazar Metro  
  • 14.
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  • 21. Clearly HUL has an edge over other Manufacturers in certain areas of the supply chain, hence on a comparative basis it is more evolved than others No (direct) No (direct) No (direct) No (direct) No (direct) Yes Payments (Channel Financer) Yes Yes N/A  Yes Yes Yes Promotions (objectives defined) No No No N/A  Yes Yes Logistics (3PL) SAP SAP Trade Marketing teams N/A  SAP & SIFY Planogram Information Technology (Planning Systems) GODREJ NESTLE L'Oreal P&G ITC HUL AREAS COMPANIES  
  • 22.