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Published by: Kishan Solleti on Feb 24, 2012
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A Study Of Distribution Channels &Strategies For Strengthening It.
Submitted By:SOLLETI V.MANOJ KISHAN (2011196)

Amul Ghee. Of high-quality products sold at reasonable prices. Amul Ice cream. of the genesis of a vast co-operative network. Today Amul is a symbol of many things. Amulspray. Amul Butter. List of Products Marketed: Breadspreads: y y Amul Butter Amul Lite Low Fat Breadspread CheeseRange: y y y y y y y Amul Pasteurized Processed Cheddar Cheese Amul Processed Cheese Spread AmulMozarella Cheese AmulEmmental Cheese Amul Gouda Cheese AmulMalaiPaneer (cottage cheese) Utterly Delicious Pizza MithaeeRange (Ethnic sweets): y y y y y AmulShrikhand (Mango. Amul Chocolates. Cardamom) AmulAmrakhand AmulMithaeeGulabjamuns AmulMithaeeGulabjamun Mix AmulMithaeeKulfi Mix UHTMilkRange: 2 . 25 billion in 2002). of the marketing savvy of a farmers' organization and have a proven model for dairy development. AmulShrikhand. are found in several Indian languages.THE COMPANY AMUL means "priceless" in Sanskrit. Amul Milk and Amulya have made Amul a leading food brand in India. Almond Pistachio.´ from the Sanskrit ³Amoolya. A quality control expert in Anand suggested the brand name ³Amul. Amul products have been in use in millions of homes since 1946.´ Variants. all meaning "priceless". (Turnover: Rs. Saffron. Nutramul. Amul Cheese. Amul Milk Powder. of the triumph of indigenous technology.

y y y y y y AmulTaaza 3% fat Milk Amul Gold 4.5% fat Curd Products: y y AmulMastiDahi (fresh curd) Amul Butter Milk AmulIcecreams: 3 .5% fat Milk Amul Slim-n-Trim 0% fat milk Amul Chocolate Milk Amul Fresh Cream Amul Snowcap Softy Mix Pure Ghee: y y Amul Pure Ghee Sagar Pure Ghee InfantMilkRange: y y y Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amulspray Infant Milk Food Milk Powders: y y y y Amul Full Cream Milk Powder Amulya Dairy Whitener Sagar Skimmed Milk Powder Sagar Tea and Coffee Whitener Sweetened Condensed Milk: y AmulMithaimate Sweetened Condensed Milk Fresh Milk: y y y y AmulTaaza Toned Milk 3% fat Amul Gold Full Cream Milk 6% fat Amul Shakti Standardised Milk 3% fat Amul Smart Double Toned Milk 1.

ShahiPistaKulfi. ShistaPistaKulfi) Utsav Range (Anjir. Chocochips. MawaMalaiKulfi. Chocolate) Nature's Treat (Alphanso Mango. Rose. Roasted Almond) Simply Delicious Range (Vanilla. Chocolate) Megabite Almond Cone Frostik . ShahiBadamKulfi. Chocolate. Mango. Black Currant. Dates with Honey) Milk Bars (Chocobar. Strawberry. Fresh Litchi. Mango) Cassatta Tricone Cones (Butterscotch. Fresh Strawberry. Strawberry) Millennium Icecream (Cheese with Almonds. Pineapple. Black Currant) SundaeRange (Mango. TuttiFrutti) Nut-o-mania range (KajuDrakshi. BadshahiBadamKulfi. Raspberry Dolly. Roasted Almond.y y y y y y y y y y y y y y y Royal Treat Range (Rajbhog.3 layer chocolate Bar FundooRange . Mango Dolly. Butterscotch. Pineapple) Chocolate & Confectionery: y y y Amul Milk Chocolate Amul Fruit & Nut Chocolate AmulEclairs Brown Beverage: y Nutramul Malted Milk Food THE CHANNEL NETWORK 4 .exclusively for kids SlimScoop Fat Free Frozen Dessert (Vanilla. Cappuchino. Anjir. Banana. KesarPista. Green PistaKulfi) Cool Candies (Orange. Kesar Carnival.

n Second leg WD«1 WD«n Third leg Retail«1 Retail..Distribution channel GCMMF Head office Manufacturing First leg (from manufacturing units) Depot.1 Depot....n Downstream flow Procurement Channel 5 ...

.n VCS«1 VCS«n Village«1 Village«n SUPPLY CHAIN MANAGEMENT Upstream flow 6 ..Distribution GCMMF Head office MU«1 MU.

50. the data right from the procurement from the farmers till the delivery of goods to the retailers is fed into the system.000 retailers spread all over India Total house hold consumers covered are 100. The products are then transporters to the company Depots located in various parts of the country. 7 . Market logistics deals with the implementation of the SCM of the company. from there the milk is taken to manufacturing units where the milk is processed into various products. The products are then sent to Wholesale Distributors (WD) and from there to the retailers.The network Milk is procured from the villages and collected at Village Cooperative Societies (VCS). 3 corers in collaboration with TCS ltd. The software enabling the channel members to use for the synchronized working and best possible utilization of the available resources maintains details regarding the inventory management. 4. The fact sheet y y y y y y y y y y y y Milk is procured twice a day from 2 million from Gujarat alone The payment is made under twelve hours of procurement There are 10000 village cooperative societies There are 3600 wholesale distributors in the country 45 depots The C&F agents are not fixed and are decided by the local company offices There are aproxx. The company uses it.000 The milk procured per day is 5 million liters Where the total capacity of operation is 7 million liters per day The peak processing till date has been 6 million liters per day These co operative societies are bound to supply there produce only to GCMMF Enterprise Resource Planning The company at has implemented an ERP program as low as Rs.

Frozen food the temperature of these trucks is kept below 18ÛC b. This is done using 9 and 18 MT trucks any lesser quantity will be uneconomical to the company there fore is some time the quantity ordered is lesser then club loading is done which means that the product ordered is supplied with some other products. 3. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk. Third leg this is the flow of good from WD¶s to retailers. a. MOTIVATION & EVALUATION OF CHANNEL MEMBERS 8 . this transport is carried out in insulated 3 and 5 MT TATA 407¶s here a permanent dispatch plan (PDP) is prepared where the distributor plans out the quantity of various products to be ordered on a particular date. SELECTION. rickshaws and bicycles. From the manufacturing units to the retailers. Dairy wet the temperature of these trucks is kept between 04ÛC 2. In the first step. a beat plan is prepared and transportation is done on auto-rickshaws. it is the distribution part of the supply chain. 1. Second leg is from the depot to the WD¶s. 1. First leg of transport is from the manufacturing unit to the company depots. Downstream Channel.Upstream Channel in which milk is procured from the farmers to the manufacturing units. the milk is taken to the VCS by the farmers on foot or bicycles in small quantities 2.

The following are the host of factors considered by the company in selecting the channel members: y Authentication is required by the regarding the identity of the channel members. Dealers of the company must carry a good reputation. GCMMF acknowledges the fact that it needs to be sensitive to the market demands. Details of the delivery vehicle. Market coverage by the distributors needs to be defined which includes details of Geographic coverage & Outlets per market area. y y y y y y y y y 9 . photograph of the location. cold room & walk in coolers. The number & model of each of the vehicle needs to be furnished to the company. which means that the distributor/ dealer should get the stock of the company insured. The technical competence of the salesmen needs to be mentioned Details of the product kept of other companies have to be provided. For this it requires that a number of salesmen needs to be present on the field. 3 Wheeler Van. Proof of solvency which requires name & address of the channel member¶s bankers Safety of the inventory. which includes Light Commercial Vehicles. Also the details of Clerical Staff &Mazdoors are to be provided. Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space & Refrigeration facility is to be provided. Matador. Also details of complementary products & product lines need to be mentioned. Tricycle Van & Hand/Push cart. This is due to the fact that the company believes reputation of the dealer affects the clientele. Refrigeration system should have deep freezers. This is because GCMMF believes that selection of channel members is a long run decision & the rest of the decision regarding the supply chain depends upon the efficiency & coverage by the channel members. The salesmen too are divided into various categories like the Field salesmen & Counter salesmen. The company also requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.Selection: The company takes into consideration a host of factors while selecting the channel members. The annual sales of these products too have to be mentioned. which includes the name & address.

However to keep the channel members motivated to work. Also if the channel members are motivated. Usually the margins offered by the company are 8% & it is raised to 8. is the margin. y y y y 10 . Vision and mission statement: the company cascades down the vision to the various channel members. The company has already got the Rajiv Gandhi award for quality. Amul builds on the concept of ³Trade Marketing´ which makes the dealers & the distributors believe that the company¶s products are worthy of being pushed in the market. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin. The company is organizing various Total Quality Management initiatives & workshops. This in turn help the company to co ordinate the entire value chain. In order to keep the Channel members motivated in the long run. So that the channel members can have an experience of the working of the company and can pick up some quality measures that can help them to synchronize and improve their own functioning at various levels.5%. Amul yatras: this includes taking the channel members on a guided tour of the manufacturing and procuring facilities in Gujarat. Volume wise this comes out to be a big figure since Amul¶s product has a good demand in the market. The following are the motivation programs run by the company: Distributors y One of the main factors. they can also initiate advertising & sales promotion schemes on behalf of the company. as the channel members understand the various constraints and liberties the company goes through. In fact all monetary incentives are just the short run means to promote the company¶s product. the company has to incur certain costs but the benefits of it are felt in the long run. Amul¶s products are considered to be value for money since the company does not believe in charging high margins. Amul being a cooperative cannot afford to give heavy monetary incentives. Also the fact that Amul being a cooperative society cannot afford to spend exorbitantly on such events therefore it has a very traditional way of organizing these get together which leaves an impact on the members.Motivation: GCMMF strongly believes in maintaining a good relationship with the channel members so that they are genuinely motivated to work for the company. which keep the distributors motivated. this is done through various events organized by the company at different locations where the values of the company are made clear and enforced to the channel members. But the very fact that Amul¶s products have good demand in the market motivates the distributors to stock it. Here various counseling measures are undertaken by the company to improve the overall working of the distribution network.

Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre estimate the quantities of the various products needed. y y Evaluation: y Beat plan: this plan is generated for the various product categories i. Dhara and ice cream. However this is only a short-term initiative to push the products of the company.g. Ice creams.The Retailers y Trade schemes: these are undertaken by the company only for the hard selling items e. diary dry.e. Target versus achievement: the performance and the targets are compared and therefore the gaps are identified which help in evaluating the WD and planning for the next year as well. y Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost. A weekly schedule is prepared for various markets and the retailers the turnover for each of the product is calculated for the wholesale dealers. Infrastructure facilitation: the company facilitates the retailers to buy freezers and fridges by formulating an easy payment program and a commitment to buy back the equipment at a reasonable price when the value of the equipment has depreciated. for these the company raises the margins by 2%. y y y Other criterion 11 . also schemes like good packaging incase of butter and cheese is undertaken by the company. diary wet. flavored milk etc. This is done for each of the product category. Cumulative performance: the performance of the dealers is averaged out over a period of three years where a comparison is made of the present performance visà-vis the previous ones.

when the company wanted the stuff back. Replenishment: The replenishment of the stocks is not prompt in case of amul cheese and all hard selling items. The retailer¶s margin in case of butter is 8% as compared to Britannia¶s 12% y y y y y y Co-operation among channel members y Amul quality circles: The members of the local channel meet together every month to share issues and the achievements of the channel members. For e. Credit policy: Compared to the market. Stocking issues: The company doesn¶t want the retailers to stock the competing brand in the company leased fridges. Packaging: The channel members for easy storing demand a better quality of packaging. which at times s hard to manage as retailers tend to do it often. Margins: The Company provides least margins to all the channel members. This is an 12 . the retailer disagreed to comply and created issues of ownership.g. Replacement of products: The deterioration in the product calls for fail in replacement by the company this major issue of vertical conflict. the company¶s credit period is less that specially incase of institutional sales is very important.o o o o o o o o o Details of the bank guaranty Photographs of the offices Details of the WD salesmen and the product lines he deals in The computerization facility available The storage space Refrigeration facility with photograph Details of the delivery vehicle with photograph Summary of the monthly potential sales of markets Summary of the product wise monthly sales potential of institutions CONFLICTS AND CO-OPERATION AMONG CHANNEL MEMBERS Conflicts y Ownership of assets: Previously the company used to give the cooling equipment on lease to the retailers.

COMMENTS AND SUGGESTION Observations : y The company¶s strength is in its procurement and not the distribution even they know this. therefore avoiding any conflict amongst the distributors regarding their areas of operation. also the fact this would affect the cost of the product the company doesn¶t undertake many promotion schemes. as this is the industry¶s main problem. The not being a profit driven organization. y y y y 13 . y Pilot salesmen scheme: To reduce the financial burden of the distributors this scheme is run whereby half the cost of the salesmen is born by the company and the rest half by the distributor Scheduling of sales: The WD¶s provides Schedule of the distributor¶s sales men to the retailers so that the retailers can plan out and place the orders in advance.ongoing activity facilitated by the company offices in different locations. lowering the costs. this enables the channel members to learn together and reduces the horizontal conflicts among the WDs. Agreement defining rights: The company makes the distributors sign an agreement where the areas of operation for each of the distributors are defined. Transport channel is another strength as the transporters have grown with the company overtime the bonding with them enables the company to give least margins when it comes to the distributors in the industry. Amul has loyal cooperatives that provide milk only to them. over time the relationship of trust has built up with these people that amul leverages now. y y OBSERVATION. The company believes that there is an ongoing demand in the market and therefore no promotions are needed to increase the sales. Other companies fail to replenish demand due to lack in procurement of raw milk. is able to provide products at the least price in the industry. and is able to give least channel margins as the channel members earn through volumes and not through high margins.

iii. Comments and Suggestion: y Amul should go in for exclusive outlets in at least all the shopping malls coming up these days and any location where footfalls are large in number. In order to remain sensitive to market demand. Trade promotion should be formulated for newly launched products instead of just tagging them onto best sellers. iv. Amuldahi where it faces competition from Nestle & Mother dairy. ii. The advantages of this channel will be: i. y y y y 14 . In order to motivate the channel members it is also very essential for the company to increase the margins for the hard selling items e. y Full range display Easier to promote new products Easy to push impulse purchase products Brand building will be facilitated Pushcarts should be increased in number in order to increase the market reach this can provide with e very effective channel for ice creams and flavored milks.y The company is enabled to push its new products into the market by hooking them onto the fast moving products like Amul butter. The company should start a home delivery where a particular household will order full range of products required by itovera period of time.g. they force the channel members to carry the new products as well. it is essential for the company to place additional salesmen on the field since the brand as such commands a high demand in the market but fails to match it with the supply. For this the company could provide a deliveryman with cycle to reach the different houses.

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