YFactor Citibank Training 22.09.15
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This document provides an overview of YFactor, a business advisory firm for FMCG companies in India. It then discusses India's demographics and FMCG market, highlighting the large and diverse population across urban and rural areas. The physical distribution system for FMCG goods in India is also outlined, involving movement from factories to stockists to urban and rural retailers. A case study is then presented on distribution planning, order taking, monitoring and control for an upper mass personal care company operating in India. Key decisions around town coverage, outlet coverage and sales force deployment are discussed. The use of a handheld system for digital order taking, reporting and sales force management is also summarized.
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YFactor Citibank Training 22.09.15
- 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
- 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
- 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
Editor's Notes
- Physical goods flows are represented in blue. Cash Flows in green and information flows in red. The salesman uses the hand held computer to book orders from the retailer. This replaces a Daily sales Report and Retailer Cards that he used to fill earlier. In the evening he downloads the data into the stockist’s computer. That generates invoices and loading slips for the goods to be dispatched to the retailers the next day. It also updates the distributor’s stock and creates an order for the company. The hand held system is then programmed for the next day’s work and the cycle repeats itself