TO STUDY THE OPERATIONS OF SUPERSTOCKISTS IN BUNDELKHAND REGION By Harshdeep Singh

Under the Guidance of Prof. Pratima Sheorey Marketing

In (Partial) Fulfillment of the Requirements for the Degree of Masters of Business Administration.

SYMBIOSIS CENTRE FOR MANAGEMENT AND HUMAN RESOURCE DEVELOPMENT, SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY)

June, 2011

Symbiosis Centre for Management & Human Resource Development Symbiosis InfoTech Campus | Plot No. P-15, | Rajiv Gandhi InfoTech Park Hinjewadi | Pune 411 057 | India Phone : +91 020 22934303/5

To study the operations of the Superstockists in Bundelkhand region 2

CERTIFICATE

This is to certify that Mr. Harshdeep Singh has successfully completed the summer internship project titled To study the operations of superstockists in Bundelkhand region, in the Marketing department of Perfetti Van Melle India Pvt Ltd. (It is an independent research work done under my supervision during April11June11. It is being submitted to the Symbiosis Centre for Management and Human Resource Development, Constituent of Symbiosis International University (SIU) in partial fulfilment for the award of the Degree of Master of Business Administration.

Signature of Project Guide Designation Company Stamp

Signature of Faculty Guide Designation Institute Stamp

To study the operations of the Superstockists in Bundelkhand region 3

ACKNOWLEDGEMENT All words fall short to express a sense of deep gratitude for my highly esteemed supervisors and guides, Mr. Sandeep Chatterjee for guiding me and providing direction during the course of my internship at Perfetti Van Melle India Pvt. Ltd. I am highly indebted to them for their advice and support at crucial junctures. This project would not have been possible without their benevolent guidance, enlightening discussion and encouragement. I would also like to thank Ms. Pratima Sheorey for her constant guidance. I would also like to express my sincere gratitude to the entire team of Sales & Marketing of Perfetti Van Melle India for providing being there at every step.

To study the operations of the Superstockists in Bundelkhand region Table of contents 4

Contents
Abstract................................................................................................................................................................................... 6 Company Overview ................................................................................................................................................................. 7 Research Methodology ........................................................................................................................................................... 9 Project measurables .............................................................................................................................................................. 10 Billing efficiency (B.E.)........................................................................................................................................................ 10 Range selling ........................................................................................................................................................................ 12 Visit to the SS ....................................................................................................................................................................... 12 PJP plan between DSE and PSR ........................................................................................................................................... 13 New town openings .............................................................................................................................................................. 15 Competition .......................................................................................................................................................................... 16 HVP sales.............................................................................................................................................................................. 18 Scheme passing from SS to Sub ........................................................................................................................................... 19 Miscellaneous observations .................................................................................................................................................. 19 Recommendations................................................................................................................................................................. 19 References............................................................................................................................................................................. 24

To study the operations of the Superstockists in Bundelkhand region List of Figures

Figure 1 Billing Efficiency P1 ................................................................................................................................................. 10 Figure 2 Billing Efficiency P2-P3 ........................................................................................................................................... 11 Figure 3 Claim Bill ................................................................................................................................................................. 13 Figure 4 MSSR ....................................................................................................................................................................... 13 Figure 5 Sales_P1 SS_April .................................................................................................................................................... 14 Figure 6 Sales_P2-P3 SS_April............................................................................................................................................... 14 Figure 7 Competition Product comparison........................................................................................................................... 17 Figure 8 Margin Comparison ................................................................................................................................................ 17 Figure 9 Freight Comparison................................................................................................................................................. 18 Figure 10 HVP Sale_P1_April ................................................................................................................................................ 18 Figure 11 HVP Sale_P2-P3_April ........................................................................................................................................... 18 Figure 12 Mapping model_Cost &Benefit analysis ............................................................................................................... 20 Figure 13 Classification model_P1 ........................................................................................................................................ 22 Figure 14 Classification model_P2-P3................................................................................................................................... 23

To study the operations of the Superstockists in Bundelkhand region 6 Abstract

This project deals with the study of the operations of superstockists (SS) in Bundelkhand region. It basically includes the study of billing efficiency at the SS end, range selling at the retailers end, record maintenance at the SS and the substockists end, PJP plan finalisation between the DSE( Distribution sales executive) and the PSR(Pilot sales rep), opportunities in new town openings, check the growth from each substockist, selling of hvp products and competition benchmarking. To achieve the objective of the project, qualitative research was carried out around towns in Agra, Aligarh, Jhansi and Etawah. Required data was collected with the help of my ASM Mr. R S Arora, DSE and PSR at various places. After the data collection phase, the loopholes in the system were recognised and keeping in mind each SRO, solutions were recommended for the same.

To study the operations of the Superstockists in Bundelkhand region 7 Company Overview

Perfetti Van Melle is a European global manufacturer of confectionery and gum. It was formed by the 2001 merger of Perfetti of Italy with Van Melle of the Netherlands, having its corporate headquarters in Lainate, Italy and in Breda, Netherlands. Perfetti Van Melle bills itself as the third largest confectionery manufacturer in the world after Cadbury plc and Wrigley. It employs 14,000 people via 30 subsidiary companies and distributes its products in over 130 countries. The company owns a major subsidiary in several large markets around the world. Perfetti Van Melle India, a subsidiary of the global conglomerate, started operations in 1994. It leads the Indian sugar confectionery market with more than 1/4th of the value share of the market. With a basket of 13 main brands, the company strives to leverage the international brand portfolio, while adopting flavours and blends to the local tastes. Perfetti Van Melle India (PVM India) Pvt. Ltd. is a US$170 million multinational with three factories, 38 depots and four branch offices in India. In India, it is a market leader in confectionery products such as gums, candies and chewies; and globally, the group is ranked among the top five confectionery groups. PVM India is the manufacturer of world-class brands such as Alpenliebe, Center Fresh, Chlor-mint, Cofitos, Center Shock, Mentos and Happydent White. The company is known for its innovation in products, advertisement and trade. Since its inception in India, PVM India has been selling products for Rs.0.50/ Re. 1.0 only (despite inflationary trends and price rises of other products in the market). Its critical unit price point of US $ 0.01 has remained the same for more than a decade. Perfetti Van Melle operates with the largest distribution network among any confectionery company in India. They have 4 branches offices in Delhi, Mumbai, Kolkata and Bangalore to manage sales in these regions. They are the market leaders in all the categories that they exist. Some of the renowned brands from the Perfetti Van Melle product portfolio are: Alpenliebe Alpenliebe Creamfills Alpenliebe Lollipop Big Babol Center Fresh Center Fruit Center Shock Chlormint Cofitos Fruit-tella Happydent White

To study the operations of the Superstockists in Bundelkhand region

Protex Happydent Marbles Mentos

Perfetti Van Melle has been rated the fastest growing FMCG MNC and among the fastest growing FMCGs in India by the AC Nielson 2002 survey. Perfetti Van Melle has changed the way confectionery was marketed in the country. They have made innovations not only in their products but also in their packaging, communication and distribution.

To study the operations of the Superstockists in Bundelkhand region 9 Research Methodology

a. Tools used Interviews: Various substockists, superstockists and PSRs were interviewed in an unstructured way during this stint of 8 weeks to identify the working of the system, loopholes and to see how the whole chain could be improved. b. Sampling method Since the aim during the stint was to cover various towns present under Bundelkhand and understand the differences in the approach of billing, selling etc, a mix of towns were selected to ensure variety in range selling, hvp products sales, distributor growth from each region etc. Such a sample ensured an understanding of all the areas so that an adequate action could be taken where all necessary. c. Statistical technique The requirement of the project is also to compare the BE, range selling and selling of HVP products in various towns. Hence, tables and graphs have been used to explain the trends in various situations.

To study the operations of the Superstockists in Bundelkhand region Project measurables 10 1. To look into the opportunities in new town openings. 2. To look into the billing efficiency (frequency) at the superstockists end. 3. To check whether range selling is taking place. 4. To check whether growth from each substockist (organic and inorganic) is taking place. 5. To check record maintenance at substockist end. 6. To check the monthly plan done by the PSR (value wise, range wise). 7. To profile the existing substockists visited. 8. To appoint new substockists wherever not done. 9. To check the sale of hvp (high value packs) in the area 10. To check what is the competition doing in the same arena. 11. To check whether the passing of schemes from SS to substockists and from substockists to wholesale is getting done properly.

Billing efficiency (B.E.)

It is calculated as the ratio of the no of towns billed in an area and the total no of towns in which Perfetti is available. B.E. solves the following purposes: 1. 2. 3. 4. How many times a town is getting billed Whether a town is getting billed or not Measure of the performance of the company Also gives an idea about the product supply

The billing frequency of the P1 products in different areas of Bundelkhand is as follows:

No of billings 0 1 2 3 >3 Agra Aligarh Jhansi Etawah

2 3 3 2 12 19 9 17 14 14 8 0 5 6 8 0 3 0 0 0 Total 36 42 28 19 Billing efficiency 0.944444 0.928571 0.892857 0.894737 %of towns with 0.611111 0.47619 0.571429 0 multiple billing
Figure 1 Billing Efficiency P1

To study the operations of the Superstockists in Bundelkhand region

For P2-P3 products, it is as follows:
No of billings 0 1 2 3 >3 Total Billing efficiency %of towns with multiple billing Agra Aligarh Jhansi

11
0 4 2 15 4 13 9 6 3 0 4 3 0 0 0 24 18 21 1 0.777778 0.904762 0.375 0.555556 0.285714

Figure 2 Billing Efficiency P2-P3

Ideally, B.E. should be close to 100% for excellent results but since there are many issues that interfere, it goes down to 90% or even lesser than that. Some of the important reasons leading to low B.E. are: 1. Stockouts Stockout is a situation when the company is not able to meet the current demand. It has both positive and negative effects. As far as the B.E. is concerned, the effect is negative as the smaller towns where the demand is also less do not order many brands; they order only the products in high demand. The company in such cases is not able to supply the products as they want the distributor to take some luggage. Luggage means taking stock in ratio. For eg. To purchase one carton of centerfresh, the substockist has to purchase at least 2 cartons of other varieties. This is possible in bigger towns where the financial strength of the substockist is high but not in smaller ones. Hence, they dont get billed. 2. Dispatching The company gives a fixed freight charges to the SS to deliver stock to the substockists. It varies from place to place. For eg, it is Rs. 14 per carton in areas under Agra and Rs. 18 per carton for Jhansi. Now, if the SS has to send his vehicle to deliver stock to a route containing some towns and there are one or two towns which are somewhat isolated and small, the SS avoids going to such places because of two reasons: a. Small value order b. Transportation expenses are more than what is reimbursed by the company In such cases, the billing efficiency gets reduced. 3. Low financial strength of SS If there is a case where the SS is not able to pay anything extra than what the company is providing, then he thinks he is better off not going to the town which will make him pay that extra amount. This is again one of the reasons of low billing. Hence it is the responsibility of the people higher in hierarchy to see during the appointing of the SS that is he financially capable to handle crisis situations or not.

To study the operations of the Superstockists in Bundelkhand region Range selling

Range selling means selling of all the brands of the company. It is very important for the company to ensure 12 that all its products are getting sold in every region of the coverage. Now it becomes difficult to implement the same especially in smaller areas where the demand is very less and hence, they only want the products in high demand. Talking about UP, range selling remains a problem. It is not getting implemented properly in areas like Agra, Aligarh etc. Main selling products of the company include centerfresh, centerfruit, and Alpenliebe original in some cases. A mix of variety being sold in Agra includes: 1. 2. 3. 4. 5. Centerfresh Centerfruit Alpenliebe( original, cream mango, banana) Mentos (orange,mint) Mangofillz

A mix of variety being sold in Aligarh includes: 1. 2. 3. 4. 5. 6. 7. 8. Centerfresh Centerfruit Alpenliebe( original, cream mango, banana) Mentos (orange,mint) Mangofillz Creamfillz Marbles Fruitella

One of the ways to ensure range selling as seen during the stint is to handle stockout properly. Though stockout is not a good thing to happen, but it has given the company to sell the products which are not in very high demand. In many cases, the substockists are made to buy a fixed no of cartons of other variety along with the carton of centerfresh and centerfruit. It is justified if he passes the same to the retailer. Hence, the retailer has to take luggage along and ensure that he gives a good shelf space to all the products he purchases. This is one of the best opportunities to sell the variety as the famous saying goes: Jo dikhta hai , wohi bikta hai. Visit to the SS Following records were checked during a visit to the SS: Invoice bill Claim sheet MSSR

To study the operations of the Superstockists in Bundelkhand region

Shown below is the claim bill submitted by the SS to the company:
Sr no Particulars of claim Claim amount Remarks 1 Secondary freight claims 2 Secondary scheme claims 3 P.S.R . Expenses claims 4 P.S.R . Salary claims 5 P.S.R Incentive claims

13

Total
Figure 3 Claim Bill

Normally, the company takes around 60 days to reimburse the claims filed by the SS. The MSSR looks like follows:
Brand Alpenliebe 200 Alpenliebe 300 Alpenliebe 1000 Alpenliebe 1500 Creamfillz Mangofillz Happy dent white Happy dent wave Protex Creamfillz extra Centerfruit
Figure 4 MSSR

Opening receipts Total Stock sold Stock at Value Value last stock(A) this month(B) stock(C=A+B) this month(D)month end(D-C) of stock month

All the records are properly maintained and no issues were present. Talking about the taxes that get levied during the making of invoice, it is: 1. 4% in candies 2. 12.5% in chewing gums All the SS are connected through SAP to the management. Hence, the ASM or even the BSM can have a look at the daily sales at each SS point whenever he wants to, by logging in the SAP software.

PJP plan between DSE and PSR

Every month, the DSE intimates the PSR about his value and brand target that he is supposed to achieve to get the required incentive. Each month, the brand in the brand target keeps on changing depending upon the data available to the company about the revenues collected from each brand and also the stock available. The only issue that has been seen so far is the non availability of any written document with the PSR showing such details.

To study the operations of the Superstockists in Bundelkhand region 14

Sales of Super stockists for the last 4 months in P1 products are given below:
Month,Area(P1) Agra Aligarh Jhansi Etawah January 26.57 11.5 27 12.68 February 21.22 13.5 20 11.23 March 25.2 18 14 11.306 April 19.17 12 12 9.372 %growth from Feb to April -0.09661 -0.11111 -0.4 -0.16545 Note: all figures in lacs
Figure 5 Sales_P1 SS_April

For P2-P3 products, the sales are as follows:

Month,Area(P2-P3) Agra Aligarh Jhansi January Not available 4.5 9.73 February 1.94 2.86 6.64 March 4.68 3.3 9.3 April 6.05 3.63 7.32 %growth from Feb to April 0.269231 0.10241 Note: all figures in lacs
Figure 6 Sales_P2-P3 SS_April

As can be seen from the above data, the general trend shows a fall in sales from Jan to April. The major reason is stockout of the products in huge demand like centerfresh, centerfruit. There is a concept of luggage that we use during stockout where we apply the condition to the SS and the substockists that if they want to purchase one carton of centerfresh, he needs to purchase atleast 3 cartons of other variety. Now this can be worked out in bigger towns where the financial capability of the substockist is good. But in small areas where the population is very less and no of outlets are also less, they want only those products which are in high demand and hence dont accept the luggage. They finally dont get billed and hence the sales go down. In many cases, the PSR also has a role to play under such situations. If he has maintained good relations with the substockists and the retailers, they dont mind taking some extra luggage as they know that the same PSR will supply him good stock during nice supply. Another plan is made between the two of them that is called the itinerary plan which talks about the various towns which the PSR will visit on a particular date in that month. It is basically done to have some level of accountability about the presence of PSR so that the DSE can further plan accordingly his visits. Observation It has been seen that the PSR is not able to follow that itinerary plan during the month as he is so much dependent on the presence of the sub to visit the town. If the sub is not available, then he has to change his plan accordingly, making the itinerary redundant. Hence, the itinerary is getting more of a sort of formality these days.

To study the operations of the Superstockists in Bundelkhand region New town openings
One of the most important part of the project deals with the new town openings. The company wants to track 15 those areas where its products are not available and ensure they get opened at the earliest so that overall distribution of products can be improved. Before going for any new town opening, we need to consider some of the important issues: 1. Population Before opening any new town, we need to see whether investing money to appoint a substockist there will create enough demand for the products leading to high sales or not. There has to be a minimum population that the town should have for it to get included in the list of new town openings. These decisions are taken at the higher level. At our level, we get a list of new town openings which we have to open keeping in mind various parameters. 2. Feasibility We need to make sure that the SS should be able to deliver the stock easily to that area as if there are feasibility issues, then the delivery will not take place leading to low billing, hence not solving the purpose of opening a town. Here by feasibility, I mean transportation, road infrastructure etc. There have been cases during the 8 weeks stint that some towns were opened just for the sake of it and they did not get billed for the last 3 months. It does not solve any purpose. 3. Freight cost The company provides some freight reimbursements to the SS to supply to the sub. If that money is less than the actual transportation cost of the SS, the problems start to occur. He will then start avoiding to supply to those areas or will start cribbing to the PSR who himself is not in a position to change the rules of the company. There has to be criteria for finding good substockists. Following are some of the factors to keep in account: 1. Reliability in the market The sub should be reliable enough in delivering the stock at the right time at the retailers end otherwise he starts losing reliability value. And then starts the problem of payment. The retailers will start cribbing to pay back the money to the sub and the relation starts to sour. 2. Influence on the retailer The most important thing that exists in this whole framework is the relationship between different parties. When I say influence, I mean the power one has over the retailer. There would arise many situations when the sub will have to influence retailer to take the stock and mind you, by real time experience I can say that this can happen successfully only if the sub has a strong power in the market. 3. Financial strength The sub has to be a strong party financially. That would happen if he is also doing business of other companies as well. He should have the strength to keep some inventory. 4. Delivery on time The best way to find potential subs is to visit the retailers and ask them about the good subs. They will tell you about those who supply them stock on time.

To study the operations of the Superstockists in Bundelkhand region 16

5. Relationship building with the retailer There are many situations during which the relation building comes into picture. For eg. During shortage of products, there will be luggage to be carried by the retailer. And this may happen only if the links are strong between the two parties.

Profile of substockists.xlsx

Observation During the visit to new towns, it was realised that some areas were located in such a manner that appointing a sub would not solve any purpose there. Raja ka tal, near Firozabad is one such area. Retailers from this area get the stuff from Firozabad and the no of confectionery outlets are so less that the net profit margin in that area may not be satisfactory.

Competition
With rising no of companies in the confectionery market fighting for the shelf space, profits, revenues, it becomes an important part of the study to see which companies are there in competition and what products they are coming up with. In rural, especially in UP, the unorganised sector is huge. And in times of acute shortages, they earn loads of revenues because of giving high margins to retailers and also low cost per unit. Some of the examples are: 1. Amar candy 2. Canter cool But after surveying the market, I feel that it would be sufficient to know about the products of following companies: 1. ITC 2. Cadbury 3. Wrigley

To study the operations of the Superstockists in Bundelkhand region

Company ITC Candyman ITC Candyman ITC Candyman ITC Candyman Wrigley Wrigley Wrigley Cost to Cost to Type of schemes Product Competition to retailer customer to retailer(e.g.) Mango delite 85 110 5 units free per jar Eclairs Alp eclairs, Choco eclairs 85 110 5 units free per jar Natkhat mango Alpenliebe cream mango 85 110 5 units free per jar Toffichoo 85 110 5 units free per jar Boomer duet Solano Doublemint Big Babol Alpenliebe original Happy dent Centerfruit watermelon Centerfruit strawberry Centerfresh 100 130 115 5 units free per jar 150 5 units free per jar 5 units free per jar 122 5 units free per jar 122 5 units free per jar 122 5 units free per jar

17

Cadbury Bubaloo Decision gum Cadbury Bubaloo Strawberry Cadbury Bubaloo Coolmint

95 95 95

Figure 7 Competition Product comparison

The type of schemes given to the retailers varies from company to company but the most common example has been provided in the table. Important points: 1. Cadbury Bubaloo came up with a good strategy to compete with centerfresh and centerfruit. But in the starting, it was tough for them to enter the market because of our products of good quality. But when we faced shortage, they smelt the opportunity to enter aggressively and they succeeded. 2. As far as the eclairs is concerned, in rural, the sales of our company is not very good as we have come up with Re 1 eclairs as compared to the companies like Nestle, Parle who have come up with 50 Paise clairs. Though we have not compromised on quality, still this cannot be understood by the people in rural areas. 3. We need to be very cautious regarding the supply of Alpenliebe original as we have Wrigleys Solano as the competitor. Hence, shelf spacing and regular market work is very necessary. 4. Though Nestle and Dabur are also selling eclairs in huge numbers in rural, but it cant be termed as a competition to Perfetti as Alpenliebe eclairs and Chocoliebe eclairs are not able to fit into the rural market because of their price range. The margins provided to the substockists by various companies are given below:
Company Margin to substockists Cadbury 4.50% Nestle 2.80% Dabur 3.25% Wrigley Lays 5% 3.50%

Figure 8 Margin Comparison

The amount of freight reimbursed by different companies to SS for supply of stock to substockist are as follows:

To study the operations of the Superstockists in Bundelkhand region

Company Perfetti Dabur Nestle Marico Wrigley Cadbury Lays Freight Rs. 14 per carton 1.5% of stock value Rs. 15 per carton 1.5% of stock value Rs. 20 per carton 1% of stock value 2.5% of stock value

18

Figure 9 Freight Comparison

HVP sales
HVP are those which come in either sticks or boxes. For eg. 6 Rs. Centerfresh stick or 10 Rs. Happydent pack. The main aim of starting the hvp is to eliminate the need to buy the product again and again. Talking about the sales of HVP in rural, it is abysmal. The reason is quite obvious; people in rural do not have so much money to spend that they can buy a pack at the same time. They believe in buying for the moment. Following table shows the sale of HVP for P1 products:
HVP packs Centerfresh stick Alpenliebe stick Mentos stick BB Stick Happydent fliptop Happydentwave Rs 5 Centerfruit stick Xylit Re 5 Happy dent wave blister P1 Agra Aligarh Jhansi Etawah 9144 4536 3048 7560 5088 1272 2544 5088 1272 1740 5040 3408

Figure 10 HVP Sale_P1_April

For P2-P3 it is:

HVP packs(P2-P3) Centerfresh stick Alpenliebe stick Mentos stick BB Stick Marbles Happydent Happydentwave Rs 5 Centerfruit stick Xylit Re 10

Agra

Aligarh

Jhansi

1284

2520 1260 3816 1728 3852

Figure 11 HVP Sale_P2-P3_April

As can be seen in the table, the trend is very clear. The sale is not high. In some cases, there was also a shortage problem of centerfresh and centerfruit stick.

To study the operations of the Superstockists in Bundelkhand region 19

Observation The centerfresh stick of 5 pieces cost Rs. 6 to the customer. This 1 re increase becomes a big dissatisfier in rural because they have this perception in mind that it is better to buy 5 individual gums for Rs. 5 instead of buying a stick for Rs. 6.

Scheme passing from SS to Sub

There are certain schemes that the company decided for the substockists that are supposed to be implemented at the SS end while preparing the invoice for each sub. Some of the schemes include: 1. Rs. 42 off per carton 2. Rs 18 off per carton The proper way of executing these schemes is to subtract the total discount from the invoice when the billing takes place for that sub at the SS end. Observation During the market beats, the invoice at the sub end was checked and was seen that in many cases, the subtracted amount was less than the amount to be subtracted. This is an error happening at the SS end but causing loss to the sub.

Miscellaneous observations
1. Company does not have a product catalogue and the rate list. It becomes very important to have these 2 things during a new town visit as there has to be a proper way to show the products to the subs as it is not possible to carry big jars every time. 2. After having a conversation with various PSRs, it was realised that they dont have a written proof of their employment with the company. 3. In many areas including Aligarh, there is no availability of substockists appointment form to note down their details like competition turnover, salesman, outlets catered to, etc.

Recommendations 1. Mapping (Traditional modes of transport)

As mentioned in the report, there is a problem of distributing stock to smaller towns giving small orders because of various reasons cited out before. One of the ways to remove that is mapping the areas as done below.

To study the operations of the Superstockists in Bundelkhand region 20

As seen above in the map, we have our SS at Aligarh and a sub at Khair. The route from SS point to Khair is direct and no issues have been faced. But the new town opening list for P2-P3 includes Bajna and Naujhil to be opened. These two are small towns from which the billing cant be expected to be more than Rs. 20000 (value decided after a talk with PSR and sub). Hence if we appoint a sub in these 2 towns, the SS may have a lot of issues delivering the stock at those places as he may be in a loss considering the limited freight amount company provides; what we can do in this case is to have a milk run system from Khair to Bajna to Naujhil by contacting a transportation company at Khair. He can send his tempo or any other mode to these two areas and deliver the stock. The SS in this case can pay him the money and get it reimbursed from the company. The benefit here is that the transportation company can send the stock by traditional modes like tanga, jugad, rickshaw etc which would be his own headache. He can save his cost there. A cost analysis to explain the benefits has been shown below:
Freight charges per tour

cost as a %age of sale

Total freight cost

Value per billing

No of billings

As seen in the sheet above which explains the cost and benefit analysis of the mapping model, the total sales (actual figures) of P2-P3 of SS in Aligarh in the month of April was Rs. 363000. Now if we open 2 new towns, Bajna and Naujhil, and considering the billing per order as a reasonable Rs. 10,000; and the no of billings as 2, the total increase in the billing would be Rs. 40000 as shown. Now consider the freight amount, taking a figure

Current sale

Total billing

363000 Bajna 10000 Naujhil 10000

New town

2 20000 403000 400 2 20000 40000

Figure 12 Mapping model_Cost &Benefit analysis

Total sale

800

To study the operations of the Superstockists in Bundelkhand region

as Rs.400 for one trip which is actually more than what could be required, the total freight charges come out to be Rs. 800. Subtracting the freight cost from the total billing, we get a amount of Rs. 39200 which is not bad to 21 start with. Since it is a new model, it can be piloted in this area and can then be used for other areas. Some other but important benefits of this model are:

1. 100% B.E. B.E. is an important characteristic that could be used to explain the success of the distribution system of the company. In our case, after implementing the mapping model, B.E. becomes 100% which cannot be further improved. It will ensure that the billing is taking place across the towns and then we can work for increasing the billing frequency (no of billings per month). This would further increase the sales of the company. 2. Overall product coverage For any FMCG company, the coverage is important. And here, we are dealing with candies and chewing gums which can be easily sold anywhere. Hence the extensiveness of the distribution network becomes important. This model will ensure that our products reach everywhere so that the PSR could visit those towns and do the markets beat to ensure the delivery of stock to the retailers. This will also ensure shelf space for Perfetti which can help the company gain a competitive advantage. 3. Happy SS A satisfied and happy SS means smooth working and improvement in relations with the PSRs and the subs. This would also relieve the unnecessary pressure from the SS to deliver the stock to the smaller towns. He could now use this time and resources to service other important towns. 4. Happy substockists This would mean that the subs in smaller towns will now get stock on time. Hence, the relations with the PSR become smooth and they get motivated to work for the company now.

2. Distribution efficiency (D.E.)

One of the major aims of the company is to ensure range selling. This can be done by making use of a terminology known as Distribution efficiency (D.E.). It basically means that how many out of the total available combinations is the PSR able to sell. For eg, if the brands in P1 are 10 and towns under Agra are 20, total available combinations is 200. To ensure that the range selling is taking place, we need to set a constraint on D.E. as 50% so that the PSR has to sell atleast 100 combinations. In this way he will be flexible across towns but in all, the range selling will take place.

3. Substockist growth
It is important to know the growth substockist wise. Hence one of the ways to do that is to classify all the subs into 3 categories: A. Good B. Average C. Poor

To study the operations of the Superstockists in Bundelkhand region

While classifying them, the criteria to classify needs to be genuine. After going on market visits and 22 understanding various terminologies, I think 3 things can be used to classify them: 1. No of billings per month 2. Total billing value Below shown excel sheet gives the details of the various subs visited during the stint across Bundelkhand region. Their sale figures in April, no of billings in April and sale value per billing has been shown. The classification into 2 categories has been done according to the sale value per billing. The threshold values to divide them have been decided after looking at discussing it with the PSRs and looking at the demand of P1 and P2-P3. For P1, it is shown below
Sale value per billing

No of billings

Sales in April

Distribution

Category

Place

P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 P1 A B C

Farah Vindaban Pinahut Aurangabad Chhaata Chirgaon Mauranipur Etmadpur Gursaraye Badegaon Sirsakalar Madhavgarh Mehrauni Babina Pali Karhal Bhogaon Jaswantnagar Kurawli Kushmara Barnahal >40000 25000-40000 <25000

70320 101899 39062 47348 126478 115000 110000 167700 80000 41777 53429 62321 38859 24578 39402 150919 130371 117280 86101 59295 36720

3 4 2 3 4 3 3 4 3 1 1 1 1 1 2 3 2 2 1 2 1 38 38 24

23440 C 25475 B 19531 C 15783 C 31620 B 38333 B 36667 B 41925 A 26667 B 41777 A 53429 A 62321 A 38859 B 24578 C 19701 C 50306 A 65186 A 58640 A 86101 A 29648 B 36720 B

%age

Figure 13 Classification model_P1

To study the operations of the Superstockists in Bundelkhand region

For P2-P3, it is shown as:
Sale value per billing

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No of billings

Sales in April

Distribution

Category

Place

P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3 P2-P3

Atrauli Chharrah Iglas Tibai Murbar Chandau Farah Kheragarh Mehrauni Sikandra rao Jalaun kalti Mehraunipur Gursaraye Sadabad Govardhan Konch

25000 63000 18000 44000 36000 30000 20000 25000 17319 52234 69467 60289 31502 97935 44000 45000 73382

2 4 1 2 3 2 1 1 1 2 3 2 2 4 2 3 2

12500 C 15750 C 18000 B 22000 B 12000 C 15000 C 20000 B 25000 A 17319 C 26117 A 23156 B 30145 A 15751 C 24484 B 22000 B 15000 C 36691 A

A B C

>25000 18000-25000 <18000

41 35 24

%age

Figure 14 Classification model_P2-P3

Benefits of classification: 1. Prioritization This classification would give an exact idea to the company about the importance the PSR has to give to each town. For e.g. If a PSR is handling around 20 towns and he has 25 working days in a month, then he can market some of the towns more than once. In such a case, this would help him to know where to go. More market can ensure more selling and more shelf space and he can also make sure that adequate shelf space is being allotted to Perfetti products. 2. Improvement measures Such a model will also help the company to suggest improvement measure to the category B and C of how to improve their sales and billing frequency. Some award kind of a thing can also be suggested for those towns if they could improve to enter category A and hence this will give them motivation to work.

To study the operations of the Superstockists in Bundelkhand region References

1. http://www.uponline.in 2. http://www.wikipedia.org

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