Birla Institute of Management Technology

Summer Project Certificate
This is to certify that Vidyut Perti, Roll No. 131 , a student of Post Graduate Diploma in Management has worked on the Summer Project titled “Effective Implementation of SDS and Seamless Operations of Channel Finance” at Nestle India Ltd. after trimester III in partial fulfilment of the requirement for the programme. This is his original work to the best of my knowledge.

Date: Seal:

Signature (Dr. Anshul Verma)


A Summer Training project is a synthesis of knowledge and experience of experts in their related fields. However, no project is possible without the guidelines and help that is extended by the experts to the student with the sole benevolent purpose of intellectual development. First and foremost I would like to express my gratitude and thank Mr. Anil Sayal, Branch Controller, Delhi Branch who was my Mentor, for guiding me throughout the entire training period. I owe enormous intellectual debt towards my teacher and mentor Dr. Anshul Verma whose suggestions and guidance were invaluable and helped me throughout my project I am also thankful to Mr. Rohit Talwar (Assistant Manager Accounts) and Mr Pankaj Kumar Jaiswal (Assistant Branch Controller) for guiding me and for providing fruitful insights on subject. This Report would not have complete without the inputs and the words of advice from them for which I shall always remain grateful to him. I would also like to thank all members of the Finance & Control Department who have directly or indirectly helped in providing the information and amenities which have helped in development of this report, without such help this report would not have been possible. This project has given me the opportunity to work with one of the most Respected companies in the world. I am Thankful to Nestlé India Limited for providing me with this opportunity

(Vidyut Perti)


CHAPTER 1- INTRODUCTION...........................................................................................8 1.1 1.2 1.3 1.4 ABOUT NESTLE..............................................................................................9 NESTLE INDIA................................................................................................9 NESTLE DELHI BRANCH...........................................................................11 TYPES OF CHANNELS................................................................................14

CHAPTER 2 – OBJECTIVES..............................................................................................16 CHAPTER 3 – METHODOLOGY......................................................................................18 CHAPTER 4 – CLAIMS MANAGEMENT........................................................................20 4.1 4.2 WHAT ARE CLAIMS.................................................................................21 GROUPING OF CLAIMS..........................................................................21
SECTION II CLAIMS................................................................................23 LUMPSUM CLAIMS................................................................................26

4.2.1 4.2.2

4.3 4.4

KEY ACCOUNTS.....................................................................................33 BAD GOODS.............................................................................................34

CHAPTER 5 – SAR DISTRIBUTOR SOLUTION (SDS).................................................36 5.1 5.2 5.3 5.4 5.5 5.6 INTRODUCTION TO SDS....................................................................37 ADVANTAGES......................................................................................38 LANDSCAPE..........................................................................................39 CONSOLE...............................................................................................40 DESKTOP ANALYSER.........................................................................41 KEY PROCESSES & FUNCTIONALITIES..........................................41

CHAPTER 6 – PROCEDURES FOR SETTING OF BUDGETS & RECEIVING CLAIMS IN THE SAR DISTRIBUTOR SOLUTION........................46 6.1 6.2 6.3 6.4 6.5 6.6 TEMPORARY PRICE PROMOTIONS................................................47 DISPLAY CLAIMS...............................................................................47 BAD GOODS.........................................................................................48 SAMPLING............................................................................................49 REDISTRIBUTOR COMMISSION & FREIGHTS..............................50 MANUAL CLAIMS...............................................................................51

CHAPTER 7 – CHANNEL FINANCE................................................................................52

...............................................................31 T 1................2 PROBLEMS.........................................................................................................NET PROCEED FROM SALES (NPS)...1 8................64 T 1.............CHOCOLATE DOMINANCE PROGRAM...................2...................60 BAD GOODS......................................................4 8.....2 7.....58 TEMPORARY PRICE PROMOTIONS (TPP)............4 .......................................30 T 1...5 8..............................................................................................STAR PROGRAM.....................3 8.......................2............1 .................................3 ANALYSIS OF CLAIMS RECEIVED....................................................................1 8............................56 8.............BAD GOODS...............................7 ..................MAGIC STICK PROGRAM....................8 ................................67  INDEX TO TABLES T 1..................................................58 DISPLAY CLAIMS........3 INTRODUCTION TO CHANNEL FINANCE..........................53 ADVANTAGES OF CHANNEL FINANCE.57 CHANGES & IMPACTS......DIFFERENCE BETWEEN DIRECT & INDIRECT PARTIES................................NET PROCEED FROM SALES (NPS)...62 T 1..................................PERFORMANCE OF TRADE SPENDS (PTS)..............3 ...........................11 5 .........................59 SAMPLING CLAIMS...........................34 T 1..1 ......................................9 .............................................................................................62 CHAPTER 9 – CONCLUSION.......2........................60 REDISTRIBUTOR COMMISSION & FREIGHT......2 .....................................53 RTGS.....................................................54 CHAPTER 8 – FINDINGS & ANALYSIS...........5 ....2........................................................................TOTAL CLAIMS.............6 ....AREA WISE SALES CONTRIBUTION TO DELHI SALES.....1 7.....................................61 8..2 8................................................2..................................7....................................31 T 1..11 T 1.................. 64  INDEX TO GRAPHS G 1...............63 T 1..........................................

...............76 6 ......72 ANNEXURE 4 – MANUAL SECTION II CLAIMS FORMAT.........................................................................14 F 1.................1 ........................ INDEX TO FIGURES F 1......................................42  INDEX TO ANNEXURE ANNEXURE 1 – PRODUCTS OF NESTLE INDIA..SCREEN SHOT OF SAR DISTRIBUTOR SOLUTION (SDS).........75 ANNEXURE 7 ..................................................................................................TYPES OF CHANNELS................71 ANNEXURE 3 – MANUAL FOOD SERVICES/VENDING CLAIMS FORMAT.........................................................29 F 1.............LANDSCAPE OF SAR DISTRIBUTOR SOLUTION (SDS).....69 ANNEXURE 2 – MANUAL LUMPSUM CLAIM FORMAT...........................................................73 ANNEXURE 5 – RETURN REQUEST FORM...............3 .............................................74 ANNEXURE 6 – MANUAL FOR CDs FOR USAGE OF SDS.......................................39 F 1.........................DISTRIBUTION MODEL.........4 .........................................................................................5 ..12 F 1.......................75 ANNEXURE 8 – AUDIT REPORT FOR ATUL ENTERPRISES...............2 .......................................TYPES OF DISPLAY PROGRAMS........MANUAL FOR DOCUMENTATION FOR OPENING OF A CHANNEL FINANCE ACCOUNT...

The project included understanding the manual process undertaken so far for passing these claims and how effectively has SDS been in improving the process. commissions etc. Channel Finance(CF) is an innovative mode of payment for distributors. The results of this study were mainly that SDS is a New Automation System. promotions. The Audit report prepared can be seen in Annexure 8. Claims management is a process by which the distributors of Nestle claims the various discounts. it does not make much of a difference as they have a strong Liquid position.5 months to open a CF A/C. It also included preparing a manual to help Distributors operate SDS. schemes. This wastes time and increases costs. Channel Finance has been useful to small distributors who sometimes face a cash crunch.EXECUTIVE SUMMARY My Summer Internship at Nestlé. However Distributors do face a problem for documentation. The basis of the project being understanding the operations of the system at the Distributor level and finding out the various bottlenecks so as to convey them to management to help streamline the process. A major part of the project included understanding the „Claims Management System‟ at Nestlé. it is a relatively new system. My project included understanding the entire process of Account opening and preparing a Manual for distributors to help speed up the process The results of this study were that. As SDS was implemented in November 2009. It currently takes 1. More and more MNC‟s are using asking there distributors to open Channel Finance accounts. Even though Nestle has achieved 100% implementation. Nestlé Delhi branch has an agreement with HDFC Bank to open up Channel Finance A/Cs for its distributors. The Project „Effective implementation of SDS‟ looks after the newly implemented Sales Automation project – SDS( SAR Distributor Solution). 7 . With the manual. they can call the Branch and easily solve their problems. The second project is „Seamless Operations of Channel Finance‟. it helps the Distributors and if they face any problem. provided to them by the company. Delhi Branch Office included 2 main projects. there are a number of Distributors who are facing problems which have been listed and are in need for a manual which has been prepared. It included visiting various Distributors in different areas in Delhi and NCR. I had also gone for an Audit at one of the Chilled Distributors. for which an employee of Nestle has to visit them each and every time. For the big Distributors.



Nestle SA, Switzerland is amongst the world‟s largest food and beverages companies, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866 by Henri Nestlé. The company is progressively evolved from a respected, trustworthy food and beverage company to a respected, trustworthy food, beverage, nutrition, health and wellness company. This objective is encapsulated in “Good Food, Good Life”. The principle activities of the group encompass: beverages, milk products, nutrition and ice cream; prepared dishes and cooking aids; chocolate, confectionery and biscuits; water; and pet care. It has 511 factories in 86 countries and employs nearly 283,000 individuals around the world

Nestlé India comes under the Nestlé SAR region which includes India, Bangladesh and Sri Lanka. Nestle India Limited is the Indian arm of Nestle SA, which holds a 51% stake in the company. It is one of the leading branded processed food companies in the country with a large market share in products like instant coffee, weaning foods, instant foods, milk products, etc. It also has a significant share in the chocolates and other semi-processed foods market. Nestlé's leading brands include Cerelac, Nescafe, Maggie, Kitkat, Munch and Milkmaid. Nestlé‟s relationship with India dates back to 1912, when it began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. After India‟s independence in 1947, the economic policies of the Indian Government emphasized the need for local production. Nestlé responded to India‟s aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestlé to develop the milk economy. Nestlé India‟s first production facility, set up in 1961 at Moga (Punjab), was followed soon after by its second plant, set up at Choladi (Tamil Nadu), in 1967. Consequently, Nestlé India set up factories in Nanjangud (Karnataka), in 1989, and Samalkha (Haryana), in 1993. This was succeeded by the commissioning of two more factories - at Ponda and Bicholim, Goa, in 1995 and 1997 respectively. The seventh factory was set up at Pantnagar, Uttarakhand, in 2006. Nestlé has been a partner in India's growth for over nine decades now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods.

The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestlé Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices. Nestlé India manufactures products of truly international quality under internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Fresh 'n' Natural Dahi and NESTLÉ Jeera Raita. The 4 branch offices in the country help facilitate the sales and marketing of its products. They are in Delhi, Mumbai, Chennai and Kolkata. The Nestlé India head office is located in Gurgaon, Haryana. Nestle has divided its product offering into 4 major categories: 1. Beverages like coffee, tea and health drinks contribute to about 30% of Nestle s turnover 2. Infant food/ milk products – Milk based products such as EveryDay, Milkmaid & Fresh 'n' Natural Dahi and baby food such as Cerelac, Lactogen & NAN contributes to 43% of Nestle's turnover. 3. Chocolates & Confectionery – Nestle comes 2nd in this segment in India. This category contributes 14% to Nestle s turnover. It includes mostly the following brands - Kitkat, Milky Bar ,Bar-One, Munch Polo etc 4. Prepared Dishes & Cooking Aids - Ready to cook food/ cooking aides are sold under the umbrella brand name Maggie. This category accounts for about 14% of Nestle s turnover. Maggie is the market leader in the noodles (45% market share) and the ketchup (43% market share) categories. The various products produced by Nestle under Different Heads can be seen in Annexure 1


The Delhi Branch looks after the following regions – Delhi+NCR, Rajasthan, Haryana, U.P, Jammu & Kashmir, Uttaranchal, Himachal Pradesh, Punjab & also Nepal. It covers 31% of the total area and reaches 30% of the population. Nestle calculates its Growth by looking at its Net proceeds from Sales(NPS) and Real Internal Growth(RIG).NPS is calculated by reducing the claims received from the Gross Sales. The RIG is calculated by calculating present year sales on the basis of previous years prices, i.e they do not include into count external factors such as Inflation. T 1.1 - Area wise Sales Contribution to Delhi Sales Region Delhi+NCR Western UP Eastern UP Chandigarh Rajasthan Source- Nestle % Contribution 31% 14% 14% 25% 16%


16000 14000 12000 10000 8000 6000 4000 2000 0 05 06 07 08 09


The entire business of Nestle is conducted through Cash Distributors known as CD. The CD is the main party of contact between the company and the Retailer. There are around 450 CDs

A RD is set up under a CD. The role of a CD is:      Accomplish the Company Business Plan Shares Leadership of the company Provides support in Distribution Maintain effective contact with the market Co-ordinate with the Sales Officer The Role a RD is:    Vital distribution link Sell in areas which cannot be reached by a CD Shouldn‟t be in the same town as a CD The following is the distribution model of Nestle: F 1. An RD looks after a smaller area mostly which are in the rural areas. A RD is a distributor in small rural areas where it is not viable to set up a separate CD.under the Delhi Branch. Another important party is the Re-Distributor known as RD.1 – Distribution Model of Nestle Factories Distribution Centres CD RD Retailer Retailer Direct Parties Consumer Consumer Consumer 12 .

ii. gatherings ex. Weddings. There are 3 main groups of CDs: i. 13 . Trade Parties.This includes CD who looks after the Food Services (FS). for ex.This CD handles all those products which come in retail packs and are meant for the end consumer to buy directly from the retailers Nestle Professional (NP) . Vending & Alternate Trade Channels (ATC). There are CDs specially established for the sale of these packs or a CD can look after both Trade Products and NP products Chilled Dairy-This includes CDs who handle only the milk products of Nestle. FS includes all the Nescafe and Maggi Stalls that we see in different Institutions. Vending products are those which are packed in bulk for the various Vending machines that we see for ex. The Nescafe Vending Machines. There are only 6 exclusive Chilled dairy CDs and that only so far in Delhi as the other areas face problems of logistics iii. Reliance. Bharti Wal Mart. ATC includes packings meant for events.In the above figure Direct Parties are huge Retailers to which the company supplies goods itself.

KB's Fair Price. Reliance Fresh Limited Each CD has a Sales Officer (SO) who is an employee of Nestle. Some the Key Account Parties are Aditya Birla Retail Limited. HR. A SO is the link between a CD and the company. Information System and Administration. In the Branch. Key Account parties include the Huge retailers that have entered the Market recently. there are Parties which are categorised under Key Accounts. A SO reports to an Area Sales manager (ASM) who looks after a particular area. Accounts. However the schemes and discounts provided to these parties are different than those given to normal retailers.Types of Channels Nestle has divided its market into 10 Channels as shown below: F 1.2. The accounts and administration department are under the Finance & Control Division of the firm. They can be either Direct Parties or supplied through by the a CD. This area may be a city and a few towns in the same district. The basic duties of the Accounts Departments are:   Handling the various claims of CDs Receiving payments for the orders of CDs 14 . a Branch Controller heads its activities.Types of Channels Apart from the above. The Delhi Branch office has 5 Departments: Supply. There are 6 RSMs. The ASM in turns reports to the Regional Sales Manager.

  Releasing orders after receiving payment Handling the claims of the employees 15 .


To understand the Claims Management Process 2. To understand the Operation Aspects of SDS. To prepare a Manual for Opening of a Channel Finance Account for Distributor 17 . To understand the workings of Channel Finance 5. its advantages and shortcomings 3.OBJECTIVES 1. To prepare a SDS manual for Distributors 4.


Understand about Claims Management. their various types. Gurgaon b. Pankaj Jaiswal. Used SDS at the CD points. CPL Trading Company Private Limited. Understanding the meaning and use of Channel Finance from Mr. Suntime Traders. Raman Ghosain 6. Understanding the process of Order Release from Ms. Understanding what is SDS from Mr. Rithala b. Amit Parashar 4.EFFECTIVE IMPLEMENTATION OF SDS The following Methodology was used: 1. Prepared a Manual 19 . Nirmesh Gupta and Mr. Also collected the GPS and NPS figures from SAP 8. Mr Rohit Talwar and Mr. Gave a Presentation to Mr.R Agencies. This was done by sitting next to the employees while they process claims and ask them question when things were not clear 2. Delhi c. Amritsar c.K Traders. Kala Singh Kuljit Singh. the manual processes from the employees of the Finance & Control Department. Delhi d. Rohit Talwar 2. Also asked questions related to SDS usage 5. 3. Bhatinda d. Had to visit the following Distributors for understanding the Operational Working of SDS from them: a. Delhi 4. Conducted an analysis to see the various claim spends made by the company Pre and Post implementation of SDS to see the impact SEAMLESS OPERATIONS OF CHANNEL FINANCE The following Methodology was used: 1. Understanding the process of opening Channel Finance Accounts from Mr. M. Undertook to visit the following CDs to understand the importance of the Channel Finance Documentation a. Rewari 5. Sandhya 3. Mukund lal ude chand. K. Collected Raw Data which included the Claim Data sheet of February & March 2009 & 2010. Prepared the manual 7. Advance Agencies. Raman Ghosain. Siddharth Enterprises.


The following are types of claims       Buy 3 kg of Ice Tea and get a discount of 4% Buy 12 pieces of Dahi and get 1 piece more The Merchandise that is shown in the Shops. making the product available to the end consumer for consumption). CD claims the amount of the Boards Providing incentives to the Salesman Providing discounts to the RDs Claims for Bad Goods returned by the Retailer GROUPING OF CLAIMS All claims can be classified under the following different heads: 1. ZCR Claims ZCR Claims require a detailed product wise (with product code) break up of expenses.These expenses are claimed by the CD & RD through various types of claims. For ex. we observe that the products from factories go to the Distribution centre‟s and from here they are picked up and sold to the CD‟s. The expenses claimed under this head include:  RD Commission  Staff Sales Discount  Dented Discount  Price Difference  Branch Special Activity 21 . After the invoicing the title of goods is transferred from nestle to the customer.An important part of the project „Effective Implementation of SDS‟ involves understanding the claims Management system. The entire SDS is based upon streamlining the claims procedure and making it simpler for the CD to ask for reimbursement of claims and for the company to provide the schemes and budgets for various products and activities. SECTION II CLAIMS a. Now nestle reimburses its customers (CD and RD) for a lot of activities and expenses incurred by the CD‟s in promotional and selling activities (i. Therefore it is pertinent to understand in detail Claims Management WHAT ARE CLAIMS? Seeing the distribution structure of nestle.e.

FB75 Claims FB75 claims are claims that do not require a product dimension. Ideally. not all the claims can be claimed through SDS. these should be expenses that cannot be directly linked to any one product sold by the distributor. Ongoing / FS Claims Ongoing / Food Services discount are claims made by the CD on account of expenses incurred by the CD for discount to Food Service outlets or product promotions which are more permanent in nature. These include the follow expenses:  RD Freight  Van Operation Expenses  PS / DS Subsidy  Merchandiser Subsidy  Cycle Boy Incentive  Training Expenses  Visicooler Maintenance The above heads under ZCR and FB75 were popularly known as “Section II” claims. They are booked to pre-specified account codes (G/L) and cost centres directly. These would be expenses reimbursed to the distributor for carry out the business in general. Please refer the sales manual for further details. Claims under each of the subheading require different types of supporting documents and authorization letters. The procedures given below is the basic manual procedures that were followed before the implementation of SDS.   Dhamaka Home Economics Branch Media b. Subsidies given to cycle boy (sting operations) are also claimed under Ongoing/ FS claims The format for Ongoing / FS / ATC claims is attached as per Annexure – III Now to understand in brief the meaning & procedure followed in each type of claims. therefore the manual process is needed to be understood. In addition to this the CD can use this format to claim reimbursement for expense incurred on account of payment to authorized retail outlets for providing dedicated display shelves (PPP) for Nestle products. The details are mentioned further in this document. The format for the Lumpsum claim statement is attached as Annexure II. As the software is new. so as to understand the advantages brought about by SDS: 22 . Lumpsum Claims A Lumpsum claim format is used when the CD has to claim expenses incurred while running certain temporary product promotions (TPP) as when directed by the company. 2.

The purpose for providing these discounts to RDs is so as to keep the RD interested in Supplying Nestle Products in rural areas. the RD is allowed a commission of 3%. Here again the company will reimburse 1% to the CD. The freight incurred by the CD on account of supplying goods to the RD can be claimed as per the approval from the office. The procedure is as given below:    The total amount needs to be mentioned on the ZCR/FB75 claim format (Section II). This claim should be in line with the claim for RD commission claimed by the CD. CD to give consolidated amount basis claims cycle in the specified format. RD Commission & RD Freight – This is commission allowed to the CD on account of goods sold by the CD to the RD for the company. Staff Sales DiscountThis is the discount given by the CD to Nestle Staff. RD discount should be given after the scheme discount – be it TPP or Ongoing Discount While the commission paid by the CD to the RD will be 4% (for all products where the CD commission is 5. Nestle shall reimburse 1% to the CD. Supporting bills (carbon copies and not photocopies) duly signed by the sales officer also need to be attached with the claim and submitted to Nestle 23 . This claim is usually reimbursed per case of finished product shipped to the RD. The Accounts department the check the Claim Top Sheet with the various supporting provided by the CD     2. The format of all Section II claims is in Annexure 4 The following is the procedure for making and checking claims:    Approved RD list already available with the branch. A pack wise summary of goods sold to Nestle staff needs to be attached. No.BRIEF SUMMARY OF SECTION II CLAIMS 1. of cases multiplied by the pre-approved freight rate per case would be the RD freight claim. CD submit‟s the signed and stamped copy of the Invoice raised on the RD as supporting for the claim and send it to Nestle CD also submit‟s a RD discount summary report which contains the Number of cases billed to various RDs.8% or higher). For products where the CD commission is 4.8% or lower.

a sanction from the Branch Controller is required 4. Branch Spl Activity / Dhamaka / Home Eco. / Branch Media / Branding For all of the above claims. the CD claims on account of dented discount. For these products. These special activities are to be conducted only after an approval. Van Expenses CD can claim their expenses for covering outstation markets through their expense statements under the head FB-75 duly authorized by Regional Sales Manager. Any expense in excess of the budget will not be passed by the Branch 6. Price Difference These are claims on account of changes in price of a product. Dented Discount This is the discount given by the CD to the retail outlets for purchase of Dented Products. However it can be sold only if the product inside the package has not been affected. the claim amount should be supported by bills as well as an SO folio verifying the expense. The SO has to ensure that the above activities should be within the sanctioned budget. The claims should be supported by a SO Folio – certifying the holding of the CD at the time the change in price was made effective. This claim should be supported with a monitor sheet wherein the following details should be mentioned:     Freight Sanctioned Name of the market Distance in KMs Date 24 . the following procedure is followed:  SO looks at the product & approves of the discount  After that an authorisation from the concerned Area Sales Manager (ASM) is required  Supporting bills for the dented products are to be sent to the Branch along with the SO folio stating the discount amount The following are the norms to be followed for providing the discounto Up to 10% to be passed basis Sales Officer‟s authorizations o Up to 15% to be passed basis ASM‟s authorizations o Beyond this.3. This needs to be counter signed by the concerned ASM 5. The folio needs to be counter signed by ASM. Sometimes while the goods are In transit from the Distribution Centre(DC) to the CD or at the CD godown they might get dented.

Training Expenses / Visi Cooler Maintenance Training is needed to be provided to DS/PS/Cycle Boys. They are usually paid on a commission basis by the CD. He has the same role as a PS. 7. Their maintenance expenses can be claimed on SO Folio and should be supported by relevant bills. A Merchandiser subsidy is related to all the Merchandise i. In a Merchandiser Subsidy.S Incentives A Direct Salesman (DS) is employed by the CD. Transportation or sometimes wrong orders taken involving certain loss to the CD can be claimed. a part of their salary is paid by Nestle.. A cycle boy is a normal salesman in smaller areas where even DS don‟t go. A PS subsidy involves that apart from their commission. it needs to be supported by the DMP Format (Distributor Market Participation) with complete details and duly signed by both the CD and SO. Hoardings of Nestle at Retail Outlets. While the total amount needs to be mentioned under the FB75 section of the claim format. Pilot Salesman / Merchandiser Subsidy/Cycle Boy Coverage A Pilot Salesman (PS) is Salesman who is employed by the RD. Subsidy for appointment of PS/Merchandiser can be made along with the section II claim. the rest has to be borne by the CD. The usual training period is 1 week.S Incentive format.e Boards. 8. 25 . The same must be claimed in the D. D. The CD then claims a subsidy on the price of the Merchandise bought from the Company. 9.    Cash Memo numbers Quantity in cases Total Amount If freight is to be reimbursed then the same should be approved by the branch controller in the specified format This statement has to be duly signed by the sales officer before being sent to the office. It is he who gets the orders from the various retailers. the CD can claim 69% of the value of the merchandise from Nestle. Training Expenses for DS/PS/Cycle Boys can be claimed from the company provided they are pre-authorized by Branch Training Exec and are well supported by all relevant bills. Expenses such as Food. DS have incentives based on the amount of sale they make per month. Unsigned statements will not be processed. Nestle appoints a 3rd party to prepare these Merchandise and they deal with the CD. These Incentives can be claimed by the CD in accordance to the directives issued by the company from time to time. Visicoolers are small Fridges provided by Nestle to keep their products such as Chocolate & Dahi.

It is this department which decides provides the Budget for the various promotions and schemes to the CDs SWOT analysis for the Market – They undertake a SWOT analysis regularly at different areas for the purpose of understanding the market better which would help in sales Channel Opportunities in Regions – They continuously strive to develop more Business Partners with Nestle for ex. 2. These claims require budgets to be prepared and the CD can claim only as much discount as whatever he has spent or the budget limit whichever is less. They have a product dimension to them. BCCSD to create RSM wise trade activity in SAP to run schemes in market for the next month. Getting more CDs. A comparison would be made later showing the Key change impacts between the 2 methods. The schemes are run for a short duration (< 1 month) and the expense can be claimed by the CD basis the sales for that month. 26 . RDs. Before that it important to understand the role of The Branch Channel Category & Sales Development (BCCSD):  Optimum Utilisation of VISA‟s – VISA‟s over here mean Budgets. BCCSD to receive category wise budget for the quarter from Head Office and give RSM wise in SAP for the quarter to Branch Control. Now the claims for TPP are made entirely through SDS. All expenses under this head can be traced to a unique SKU / Brand. Branch Control to enter Plan Split into SAP.LUMPSUM CLAIMS Lumpsum claims are the most important types of claims. 3. This is the procedure that was used prior to the implementation of SDS. They are also the most common claims to be claimed by the CD and passed by the company. Lumpsum claims are generally of 2 types viz Display Claims & TPP Temporary Price Promotions (TPP) TPP claims are on account of discount schemes run by the company from time to time. 4. wholesalers The following is the entire procedure from the preparation of budgets to submitting the claims by the CD:   1. BCCSD to issue ASMs wise VISAs for the schemes to be run in the next month by 25th of the previous month. According all claims under this section should have product wise breakup.

ASMs must take written approval from BCCSD for additional budgets or any deviation in Input plans.5. Ongoing. 10. 11. schemes to be run and input plans to the distributor in hard copy signed by him/her for the next month before the end of the previous month. 9. ASMs to forward VISA amount for each distributor to respective DC locations for providing Off Invoice Discount (OID) up to the extent of 80% of the budget amount to the distributor. 16. The number of BCCSD VISA should also be mentioned in the ASM Visa. 15. Distributors to run the scheme in the market as per the input plan given by the ASMs. The process of FS. After completion of the month. Vending & ATC discounts are provided in the same way as TPP schemes are 27 . 12. Nestle Professional Manager to provide listing of such schemes/contracted rates to Branch Control. distributors to generate SKU wise TPP statement checked by Sales Officer and send it to the branch control for claims by 10th of the next month. ASMs to prepare the input plan for each distributor. Ongoing discounts are discounts meant to be given to Wholesalers by the CD. ASMs to split the VISA amount among distributors considering the sale requirements. 14. It must be serially numbered. Also. 18. Apart from the normal TPP. Alternate Trade Channels (ATC) and Key Accounts. 17. 8. Vending. 6. Branch Control to make accrual for the scheme expenses in SAP before month end on the basis of estimated expenses from BCCSD. 13. ASMs to communicate the absolute amount. Branch Control to approve such schemes on the basis of written approval from Nestle Professional Manager. ASMs to ensure that the Input Plan conveyed is exactly in line with the BCCSD VISA. Sales officers to ensure that the scheme is operated as per the input plan and VISA given by the ASM. Branch Control to check the correctness of TPP register on sample basis and pass the credit note in SAP after adjusting the OID discounts from actual authorized spends. Sales Officer should sample check TPP register against cash memos and countersign such records on a routine basis. VISAs must be issued up to the overall budgetary cap. it must be communicated to the distributor following the same procedure and mention clearly that the latter VISA supersedes the initial VISA. Trade schemes also include Food Service (FS). In case of any change during the month. Distributor must have the hard copy of input plan available and displayed at the CD point. 7. In case of Nestle Professional (NP) party specific schemes or contracted rates.

VISA clearly states the scheme start and end dates of redistribution and invoicing cycle to CDs and the scheme details. These may be given as one of the various discounts monitored by the branch office such as Temporary Price Promotion (TPP). Off Invoice Discount is mentioned. Accounts to intimate to the Order Management Centre (OMC) applicable rates and validate OID given as per the VISA. The OMC is to ensure that the OID given to the CD does not exceed budget allocation. 5. 2.OFF INVOICE DISCOUNT In the above. This is established in the month previous to the month in which the scheme will be run. ASM. An OID will be given is only after VAT factorisation 28 . Similarly. Food Services Discount (FS) etc. The statement gives details of the scheme. the OID received and the actual utilization during the period. if at the end of the month money is due from the CD. 3. Off Invoice Discount (OID) is given by the branch administration department to a CD while Invoicing. The rationale behind advance funding or OID is to:   Avoid cash flow problems for distributors Accrue tax related savings A detailed procedure is outlined below: 1. A VISA is to be given by the Branch Marketing Operations giving ASM wise budget allocation. Ongoing Wholesale Discount. SKU wise 7. If the total balance (Utilization less OID) is due to the CD. The Scheme utilization reports which are to be generated monthly by the distributors are sent to the branch in the prescribed format. 4. A maximum OID that can be given is 80% of the Invoice. 6. is to give a CD wise OID allocation in the prescribed format to the OMC at the beginning of the month. in Point No. the same will be given through a Credit Note. it will be recovered through a debit note. after discussion with the SO. This needs to be verified and counter signed by the SO. 8. OID is meant for advance funding to the CD.

There are 3 main programs under NCVP described as below: 29 .DISPLAY CLAIMS Display claims deals with expenses undertaken by the CD for undertaken promotional display activities showcasing the various products of Nestle at Retail Outlets. F 1. The CD is allowed to compensate the approved list of outlets to the extent sanctioned by the branch. The retailers can be compensated for the display shelves provided for Nestle products.3 – Different Types Programs under Display The Display claims in Nestle mostly come under „Nestle Corporate Visibility Program‟ (NCVP) head. This amount that was given to the retailers can be claimed by the CD as a Display claim.

STAR PROGRAM The objective is to have dedicated space for Nestle Products within the shop.2 – Summary of the Star Program Monthly Turnover in Rs. The priority channels for this program are Small Groceries.50% Minimum Maximum *F&B(-C&CNUT-GHEE) F&B-C&CNUT-GHEE F&B-C&CNUT-GHEE F&B-C&CNUT-GHEE 9000 5000 7449 SILVER 2. showcasing Nestle Products & New from Nestle to the Shopper with the purpose of increasing Sales.00% 15000 79999 DIAMOND 3% 80000 PLATINUM *Food & Beverages excluding Chocolate & Confectionary. T 1. The SO has to provide the Sales data for each outlet monthly. The Star Program is classified into Platinum. Nutrition and Ghee 2.75% 7500 14999 GOLD 3. 30 . STAR PROGRAM Classification Pay Out (Quarterly) 2. The Star program would be removed if for continuously 2 Quarters the sales of the Retail Outlet is below its slab. Brands & Products Maximum Pay Out in Rs. The priority channels targeted here are Large Grocers and Tier III Supermarkets. The Pay out for the retail outlets would be on a Quarterly basis.1. A SO also has to make visits at outlets to see if the Displays are put correctly and are clearly visible. 300 per quarter. Diamond and Silver. This program would operate in areas where there are currently CDs undertaken Merchandise. MAGIC STICK PROGRAM The objective is to have a dedicated space for nestle product specific SKU‟s within the shop on a hanger called Magic Stick for a clear visibility to the shopper with the sole purpose of inducing trials & increasing sales. The payout is fixed at Rs. Gold.

The priority channels here are Bakeries & Large Grocers. Magic Stick and Chocolate Dominance. There is a periodic activity of the selection of outlets which adhere the to company specified norms/parameters prior to market level negotiations by the field force.3 – Summary of the Magic Stick Program MAGIC STICK Pay Out Minimum Turnover (Rs. T 1. showcasing Nestle Chocolates & Confectionery to the Shopper with the purpose of increasing Sales through Visibility Program. 2.) *Only F&B (Ghee-NUT. There are 2 classifications here are Gold and Silver.4 – Summary of the Chocolate Dominance Program CHOCOLATE DOMINANCE PROGRAM Pay Out 4% 5%  Brands & Products Maximum Pay Out in Rs.per Quarter 1500 *Food & Beverages excluding Ghee and Nutrition 3. a manual VISA is issued by the BCCSD team containing ASM wise split of Quarterly Budget 31 . Classification Minimum 2000 5000 Maximum 4999 *C&C C&C 2500 SILVER GOLD CHOCOLATE & CONFECTIONARY PROCESS FOR PROVIDING VISAs & CLAIMS The below procedure is the same for all the 3 Programs – Star. After the feedback from the field. The payout here would be made on a monthly basis. CHOCOLATE DOMINANCE PROGRAM The objective is to have a dedicated space for only Nestle Chocolates within the shop. 1.) Brands & Products 300/.T 1. Monthly Turnover in Rs.

if any. Post payout to Dealers. Counter foils of Coupons which were issued against market level disbursement are signed by the retailer. Branches then prepare Coupons to be given to the Retail Outlets indicating the Pay Out amount. a copy of the same is given to the branch for control purposes 5. For proof of payment. A centralized manual database is created indicating the Sales amount of Retailers and the amount of Payouts that they should get ensuring Budgetary control 7. Inclusions/Exclusions/ Modifications/ Exceptions. After the Dealer list is finalized. need to be approved by the management.3. Distributors on Quarterly basis make the payment to respective dealers in line with contract. 32 . Finalization of Dealer list is done by the field. 4. a contractual agreement signed by the Retailer is carried. distributor Claims through assigned Document (Sec II) supported by reimbursement details duly acknowledged by the third parties/authorized Coupons. 8. They are signed & Stamped by the Branch Controller 6.

Apart from Direct parties there are 2 more kinds of services being provided  Direct – supplies made directly from Nestlé‟s DC to Key Accounts DC. dual customer base i. „More‟ and „Reliance Fresh‟ etc.  Hybrid . Their strength is catering to local needs and loyal customer base. Wal-Mart. Organised Wholesalers – accounts which sell to wholesalers and retailers on a B2B model like METRO. Tesco. Cash & Carry. increase in the consumption and provide shoppers a more sophisticated shopping experience. food spending per capita has surged from INR 299 in 2007 to INR 350 2009 with a significant potential for growth. retailers and shoppers and manufacturers perceive them as enablers of distribution. Their strength is deep understanding of Indian markets.e.KEY ACCOUNTS With the increase in urbanization of 1125 million Indians.  Indirect – supplies made by Nestlé‟s CD to Key Accounts. international experience and global tie up. project management and implementation skills and customized solutions for different kinds of shoppers. Their strength is low cost operations. Their strength is technical expertise. To tap this opportunity created by sustained development witnessed by the Indian economy over the last few years. Sabka Bazaar etc.In case of some Key Accounts supplies are made direct to some locations or categories and indirect for other locations and categories. Nestlé India set up a Key Accounts team to look after these Modern Retailers There are different types of customers which come under Key Accounts International Accounts – accounts which have global presence like Wal-Mart. Regional Accounts .Accounts which have regional presence like DMart. leading player have set up retail chain across India. National Accounts – accounts which have national presence like „Big Bazaar‟.    As mentioned before there are certain parties which are called Direct Parties which come under Key Accounts. and Carrefour etc. To address the specific needs of evolving Modern Trade channel and ensuring better service. This includes sector pioneers such as Big Bazaar. 33 . resourceful Reliance and Aditya Birla and foreign giant like Walmart and Carrefour.

BAD GOODS At certain times there are goods which are returned from the market to the CD. The format of Bad goods is given in Annexure 5. Ensures confidentiality. Similarly for products expired at CD point EOGA needs to be prepared. For Damaged/shortages in transit (for 4 & 5) Claims for Damages / Shortages in transit should be accompanied with transporters certificate.5 – Difference between Direct & Indirect parties Basis Direct     Logistics & Infrastructure Cost to Serve Servicing Confidentiality Responsibility of Nestlé. signed and stamped by the CD as well. Indirect Responsibility of CD. Servicing through CD may have some defaults. This advice is to be filled in complete by the Direct Salesman (DS) while replacing the bad goods lying with the retailer. Bad goods claims are made by the Distributor due to the following reasons: 1) Expired Stocks from Market 2) Damaged Stock from Market 3) Expired Stock at CD 4) Damages in Transit 5) Shortages in Transit 6) Technical Defect For Expired / Damaged stocks from Market or CD (for 1. High due to CD commission. Better due to better focus. a copy of the Goods Received and SO Folio requesting credit (or supply) for goods received Damaged / Short by the CD. It may be due to certain reasons such as expiry or breakage. 34 .T 1. These goods which are returned are referred to as Bad Goods. The claim form for bad goods due to above reasons must be supported by a product sheet which is essentially a summary of EOGAs that are supporting the bad goods claim. Lower due to saving of CD commission. The retailer is required to sign and stamp the advice. Does not ensure confidentiality. 2 & 3) Bad Goods returned to the company from the CD or the market must be accompanied by an “Exchange of Goods Advice (EOGA)”.

a separate Transfer Memo (Return Request Form – Bad Goods Related) must be raised.For Technical Defect (for 6) Claims for technical defects either from market or CD has to be accompanied by SO folio and necessary approval received from the Head Office/Factory quality assurance. 35 . The quality assurance is needed from the Head Office as Nestle takes the aspect of quality of goods very seriously For each of the above types of goods return (1 to 5). The Transfer Memo must clearly mention on the reason code for which the goods are being returned.


and human resources. This will increase transparency. there was a software named “Nesprint” was used by Nestle India limited. It was a standalone system installed by the company at 37 . Also as SDS is directly connected to nestle servers and thus Nestle has access to the operations being undertaken by the distributor. enable enhanced efficiencies in trade spends and ultimately. It is an integrated computer-based system used to manage internal and external resources including tangible assets. efficiency in TPP (temporary product promotions) schemes and claims. SDS has been installed and implemented at both the distributor point and at the nestle offices. robust and integrated Distribution Management System and have started the process of Advanced Sales Automation. Factories. accuracy and transparency.INTRODUCTION TO SDS Nestle believes that while its products must be available to as many people who may prefer to buy them. Before SDS. It will improve productivity and internal controls The SDS (South Asia region distributor solution) is a recent and contemporary Sales Automation project at Nestle India Limited. SDS caters to this issue by standardizing and simplifying the claims management process. In order to use this network more efficiently and be able to better track the movement of stocks through this pipeline. It will also help the frontline sales force from some of their administrative burden and enable them to focus more on their core function. Nestle India Ltd. financial resources. Customers. It is an ERP solution. it has a well planned distribution structure as seen before comprising of Order Management Centers. This hence leads to efficiency in terms of reduced time lag between formulation of plans and their final implementation. accuracy. Retailers and Consumers. and Distribution Centers. has a wide distribution channel comprising of around 1800 distributors through which it ensures that its products are fresh and easily available to its consumers. It was a distributor management solution. speed. the freshness and quality of the stocks is important and the distribution system needs to continuously improve to ensure this despite a larger reach. built on a centralized database and normally utilizes a common computing platform. execution in the market. materials. it consolidates all business operations into a uniform and enterprise wide system environment. It is a standard operating procedure being implemented at nestle India limited on a continental level. The retail trade in India is predominantly fragmented General Trade where the distributors play a major role in the route to market. SDS has been implemented with the objective to ensure timeliness. This means that there is a continuous updation of information. In its quest to make its products available throughout the territory. Redistributors. Nestle has decided to connect the Distributors through a uniform.

4. This gives a Distributor a clear picture of its transactions any time he wants to see them 2. It automates their entire business All the details of a distributor are entered into SDS at the beginning of the Automation Process. The Direct Salesman (DS) employed by the CD. Now it is done faster. the closing stocks as this is very important while writing a new order. He would know for which product would be needed and how many units of the product would be needed. various kinds of reports. inventory. it used to take them a long time to feed in the orders into the system. his Sales Routes are now chalked out in SDS. Claims generated from Nesprint were printed and send to nestle at the end of month and a lot of times a lot of adjustments and manipulations were made by the distributors. so he can get whatever information he wants at that moment only. From then on all the transactions that take place via the Distribution Centre or Retailer is done through SDS. Apart from that earlier after getting the orders from Retailers. a solution to NESPRINT: SDS (South Asia region distributor solution) The following are the advantages of using SDS over the manual system that was previously used: 1. Enables Corporate control over the Distributors Inventory With SDS. Thus. 3.distributor point for billing purposes and had to be operated manually and nestle people had no connectivity with the system installed at the distributor point. Nestle can check the distributors sales. Better informed Sales force The SO can get information about the present stocks. Everything is automated. 5. whether the schemes are being cut or not etc. Manual reports need not be prepared by him anymore. Informed Decision making at all levels 38 . This led to a possibility or chance of manipulation in bills and claims as nestle had no control over the Nesprint system installed at distributor point apart from providing technical support. The SO can manage his operations more efficiently at the CD point. It is a Distributors ERP. so by looking into the system the CD and Nestle knows where all are the DS going. Improves the Sales Force Efficiency It improves sales force efficiency from both Nestle and the Distributors point of view.

promotions etc. Therefore the CD can see for which products. 7.The schemes and discounts are automatically uploaded in SDS by Nestle. Through this. Also. whether they were claiming false Bad Goods claims etc. all the information that is uploaded by the company for. schemes. Nestle can keep a check on various CDs as they have the option of logging on the CD‟s SDS and looking at what all they are doing. Prevents Manipulation Earlier there used to be a lot of manipulation going on in terms of whether the CD is providing proper schemes and discounts to Retailers or not.4 . The entire system is online The most important advantage that SDS has over its previous systems is that SDS is online. Through Implementation of SDS these practices have tremendously reduced. Food service or Vending schemes. channels. whether they are Trade. Flows into SDS. all the information that is saved at the CD point flows into the Nestle system. LANDSCAPE OF SDS F 1. 6. outlets.Diagrammatic representation of SDS showing its working and connection with other systems The above diagram shows the 2 other systems involved so that SDS can work effectively 39 . are the schemes and discounts for. This way the CD can target its sales by inducing a retailer with the various schemes and discounts.

the Console is installed at the Branch Sales Automation office. Just as SDS is installed at the CD point. or it can be of 28 pieces of 32 grams each. Now the invoice flows through the console from the Distribution Centre (DC). Apart from that If a CD has to include a new Wholesaler. As shown in the diagram the following flows down through the Console into SDS:  Promotions. Pricing & taxation – The CD does not have to keep a check on the prices of goods and does not have to enter them manually into the system. Therefore after they have checked the goods received. constant updates are provided by the company. 40 . Whenever a new application is started or if changes are brought about in the current application being used. the CD saves and confirms the invoice.This includes all the Schemes. However as of now only Claims Regarding Temporary Price Promotions (TPP) and Bad Goods claims flow into the Console. An SKU is defined as each product has different packaging and different weights for ex a Bar One can be 55 pieces of 8 grams each. The prices of various SKUs flow into the SDS. after it is approved it is entered into their system and the CD can start billing them Updates – As the system is newly implemented. 2-3 people at the Branch office enter these promotions every month. All the CD has to do is to Save & Confirm the various schemes and discounts cut for the Outlets. They then had to physically enter the increase in stocks and the various schemes on them into the system. Apart from the various VAT rates. Earlier when the CD used to give an order to the company. RD or a retailer he will pass the information to the sales Automation Office. Sales Tax rates are also updated automatically     As shown in the diagram the following flows up from SDS into the Console:  Claims From Distributors – Ideally all the various types claims discussed in the Chapter „Claims Management‟ are to flow through into the Console and no more annual reports are to be sent to the Branch. Discounts. Currently there are many aspect of SDS that are not being used. they used to receive a physical invoice from the Distribution Centre (DC). everything is automatically updated into SDS. Promotions on different Standard Key Units (SKU).CONSOLE The console is an Interface for Nestle. The CD can see the new schemes at the beginning of each month Master Data – This includes new products introduced by Nestle or new SKU. the CD is informed about them Invoices – This is a very important aspect. It is through the console that all the information flows into SDS.

DESK TOP ANALYZER The Desk top analyse is a local system installed at the CD point. Through the Desk top Analyser the CD can take reports of any mostly any type. For eg. there is a sync process that takes place. For this the Internet Connection is a must. This syncing helps the flow of information from the Console to SDS. Sales. It is basically a Pivot Table List. Product Wise. It is connected with the SDS. or a invoice to flow through. are they being passed down to the other parties. It consists of 3 elements or cubes:  Sales  Stocks  Schemes The Pivot Table list consists of 39 Fields for ex. Month. it all happens when the system is synced. Explained below are the modules of SDS and the key function under them and why they are used. However before a CD starts using SDS.   Sales Details – The Branch can check on the sales made by the CD. Retailer wise. These reports are generated automatically Inventories – The Branch can also see how much stock does the CD holding currently Promotions Monitor – The Branch can check whether the various promotions and schemes being given. Therefore for instance the CD can take out under the Sales Cube the Sales of some of the following reports:        Brand/Channel Salesman wise Sales by Value. Through this they can also check for any false claims being made. Batch code. Date etc. One can see reports in SDS. Various types of sales Report can be seen. KEY PROCESSES & FUNCTIONALITIES As a part of the project „Effective Implementation of SDS‟ was to prepare a Manual for Distributors showing them the various steps In using the present options available in SDS. value & quantity Product wise sales by volume. DS wise. Brand wise etc. Volume & Quantity Brand wise sales by volume. Therefore if there are new schemes. there is an important function called „Sync‟. When the CD opens SDS. 41 . value & quantity Outlet wise sales Brand/SKU/month wise sales Promotion Utilisation sales etc. however the types of reports or already defined and cannot be changed. Product Code. It is basically a Report Generator.

They are as following: 1. Product Management 5. Stocky Management 10.F 1. Planning 12. Financial Management 9. Customer Management 4. Reports 42 . Claim Management 11. Inventory Management 3.5 – A screenshot of the background display of SDS As can be seen above. there are 12 modules available in SDS. Logistics Management 8. Sales Force Management 6. Company Management 2. Route Management 7.

The advantage that a CD has by receiving the Invoice through SDS is that once it is Save & Confirmed. the stocks in the system get updated and the schemes and discounts for each SKU are also automatically updated A screen shot of the Purchase Receipt Master can be seen the SDS Manual on Page no. The CD can only enter the Bad Goods received. At the end of the month.7 2. the current stock of the product. After that he saves & confirms in the Salvage Module after which the claim is made.31 Salvage – This function is used by the SO for confirmation of Bad Goods received. The Purchase Receipt is the invoice that the CD receives when he makes an order with the company.5%. It is prepared one day before the actual delivery of goods. But in SDS they are still at 12. It includes the following important function:  Billing – The CD uses this when he has to prepare a bill for its Outlets. Therefore now all his current stock would reflect a VAT rate of 14%. Through Batch Master the CD can transfer his old stock into the new batch. CUSTOMER MANAGEMENT This is the most important module for the CD. The Bad goods received by the CD is entered in the Sales Return Module which is explained below. The basic reason for having the Batch Transfer function is due changes in the tax rates or surcharges. they would include a VAT rate of 14%. A screen shot of the Purchase Receipt Master can be seen the SDS Manual on Page no. Therefore when the CD purchases a new batch of the above product. For ex. A screen shot of the Purchase Receipt Master can be seen the SDS Manual on Page no.5 %. If the CD has a current stock 2 cases of MAGGI Tomato Ketchup Bottle 24x500g which has VAT of 12. The CD can see various other details such as the scheme being cut. Now. The CD has to select the retailer. Now the VAT rates for these products increase to 14%. Batch details etc. COMPANY MANAGEMENT Under Company Management the only function used here is „Purchase Receipt‟. the CD used to receive only a physical invoice. Earlier on.1.10 43 . the route at which the outlet is & select the SKUs ordered. usually on the day the CD receives the goods. INVENTORY MANAGEMENT This module handles the Inventory details for the CD. After that a temporary Bill is generated. the tax rate and amount. The important functions used here are:  Batch Transfer – Each SKU produced has a Batch Code to it. he receives the soft copy of the invoice through the Purchase Receipt Master. the DS. the SO physically checks the Bad Goods with the Bad Goods information entered in the system.  3.

A screen shot can be seen in the SDS manual. 73 7. A screen shot can be seen in the SDS manual. They can also add new DS and delivery boys. PRODUCT MANAGEMENT Under Product Management. Page No. SALES FORCE MANAGEMENT Under this Module the CD might find 2 functions that might be useful – „Salesman Master‟ and „Delivery Boy Master‟. Over 44 . Over here the CD enters all the goods returned from the market. It will also display the pending amounts which can be seen through this register or when the particular party is billed next time in the Billing Master. ROUTE MANAGEMENT As the name suggests. The „Product Master‟ gives information about all the available products at Nestle. Page No. the only function used is the Product Master. A screen shot can be seen in the SDS manual. The Goods returned can be Saleable or Unsalable i. Page No. 58 Collection Register – In this function. A screen shot can be seen in the SDS manual. This function is used after the Bill is saved under Billing Master in „Company Management‟. It is here that the Bill is confirmed and a Tax Invoice can be printed Sales Return – This is a very important function. The CD can add new Retailers through this Master. 62     4. 68 6. the CD selects the Delivery Boy. A screen shot can be seen in the SDS manual. Sales route. Page No. The various routes used by all the DS can be seen here and new routes can be added also. this module deals with the various Routes the DS uses. 33 Retailer Master – Through this function. the CD can add the Cash/Cheque received from its Retail outlets. The CD can see information about its DS and Delivery boys. DS again. the CD can see the details of all the Retail Outlets. Page No. 29 Scheme Master – In this Master. Page No. They can also check the Batch information. Delivery Process – Over here. 65 5. A screen shot can be seen in the SDS manual. the CD can see all the information regarding a particular SKU and the schemes being provided for it.e Bad goods. LOGISTICS MANAGEMENT Under this Module the most important and used function is „Vehicle Allocation‟. A screen shot can be seen in the SDS manual. Page No.

Manual Claims – Under these claims all the Section II claims are entered here. however as of now only TPP. the CD can print the Bill. these pending bill numbers are allocated permanent bill numbers in this function.  45 . 10. The CD then sends the Manual claims report along with supporting to the Branch  11. This module also shows the Financial Calendar used. However the most important reports for the CD are o Bill wise Sales Report o Product wise Report o Customised Claim Top Sheet Report o Customised Claim Top Sheet Summary o Scheme Utilisation Report o Closing Stock Report Bill Print – After the „Delivery Process Master‟. The sales return details can also be printed here. the sales route and delivery route are selected and the vehicle to be used is selected. Ideally all the claims discussed in the Claims Management Chapter can be seen here. Page No. 17 8. CLAIM MANAGEMENT The 2 important functions used here are:  Customised Claim Top Sheet – Under this function. FINANCIAL MANAGEMENT This module deals with all the accounting part of the business. 9. the DS. REPORTS  Custom Reports – There are a total of 156 different types of reports that can be generated and printed. the CD can the schemes & Discounts cut on various SKUs sold. STOCKY MANAGEMENT Under this Module a CD can see the information about themselves. A screen shot can be seen in the SDS manual. the Bill numbers are not permanent as changes may be made in the Bill. However this application has not been started in SDS yet. Also at the time Billing. Ongoing claims can be seen as of now.here.


And pass the credit note in SAP after adjusting the OID discounts from actual authorized spends. After completion of the month. CD/SO has the option that they may include/exclude the retailers. 3. 47 5. the BCCSD will issue the budget by June 24th or 25th. The CD will then get an update of all the schemes to be run in the month. the number of outlets that will be brought under Product Display program. 2.In the Claims Management Chapter. Gold. Thereafter. After feedback from the field.e Silver. The BCCSD will issue all the budgets to ASM‟s for the schemes to be run in the next month by the last week of the previous month. The Schemes as before will be created quarterly. 4. the BCSSD will issue the Budgets for the same. Apart from this. it will automatically pick the retailers on the basis of their turnover of the previous quarter. 3. Same visa will be defined for all RSM zone. distributors are to generate a Claim Top Sheet (No need of TPP register). TEMPORARY PRICE PROMOTIONS 1. Post download of the scheme to SDS. The ASMs will then sign a hard copy of budget splits which is the same as in the soft copy and to be sent to Branch Control within a week of receipt of soft copy by the Branch Control. 6. Thereafter branch promotional person in Branch Control enters this visa in console. 2. The ASMs will then forward Budget amount for each distributor to respective DC locations for providing Off Invoice Discount (OID) up to the extent of 80% of the budget amount to the distributor. The Schemes will have various slabs (i. The Branch control will then define the schemes to be run in next month and upload the budget for each distributor in CONSOLE by around 28th of the previous month. 4. This Claim Top Sheet will include all the Trade claims. Payout % and Maximum payout. absolute budget and from SDS. The Branch Control is to check the correctness of TPP claim sheet from CONSOLE whether both the amounts match or not. the old and manual procedures to make claims were explained. distributor wise budget will be uploaded in Console. 7. get it approved by Sales Officer and send it to the branch control for claim. For the month of July. After that an analysis will be made to discuss the differences and advantages for making claims through SDS. The following will discuss the ideal procedures. DISPLAY CLAIMS 1.) with Turnover. . This Visa will be essentially created specific display related activities (category wise). 5. for the CD to do while making claims through SDS. For ex. Diamond etc. Creation of Display related scheme in the console centrally at the branch by the Branch Control team basis manual VISA.

SDS will decide their payouts 9. Visibility amount will be given in the bills raised after the end of the period of scheme and it could be given only up to a date pre-specified in the scheme (upto two months from the date of end of the scheme). the slabs will be picked by SDS for the above retailers which have been added. 10. However he would not pick up the Bad Goods. after the end of the period of scheme. 2. 3. For Damaged/shortages in transit 48 . Any difference in the quantity collected with the DRC quantity (both higher and lower) need to be mentioned in the DRC at the time of collection 4. the DRC has to be confirmed in SDS which will then be converted into un-saleable sales return and credit note will be generated for the value of the return at trade price (incl. 5. The delivery boy should collect the sign and stamp of the outlet acknowledging the actual quantity handed over. 7. Stock could then be visible in un-saleable stock location.6. The DS on return to the CD point would generate an outlet wise sales return order for the expired/damaged stocks to be collected. They should select the Display claims category and press Save & Confirm. The delivery boy will take the printout of the DRC and collect the expired/damaged stocks in the market as per the same. VAT) payable to the retailer. All these additional retailers included/excluded will come to the Visibility Manager for approval. This is printed in „Bill Print‟ under the „Reports‟ Module. would also note the details of products to be taken back from the outlet. on the basis of their turnover. For claiming the CD has to Go Customized Claim Top sheet under „Claim management‟. The credit note to the retailer for bad goods should be paid by adjusting in the subsequent invoices only. 8. This document is called “Delivery Return Challan (DRC)”. 6. The claim them flows into the console 11. The DRC without the sign and stamp of the retailer are invalid. along with taking order for fresh stocks to be delivered. The Direct Salesman (DS) at the time of order booking. All the above bills wherein the Visibility amount has been adjusted will come as monthly claim. on the basis of their turnover of the current quarter. No cash payment to be made to the retailer by the CD. After the end of the period of scheme. After collecting the Bad Goods from the market. For the current retailer under the Display schemes. BAD GOODS For Expired / Damaged stocks from Market or CD Following is the process of recording expired/damaged stock returns from the market in SDS:1.

CD should transfer this stock from saleable condition to un-saleable condition using a „Stock Journal‟ under the „Inventory Management‟ module. these salvages will be picked as part of the monthly claim. the SO has to confirm the Bad Goods under the „Salvage Process. Stock (Nestle Product) received through Zero value invoicing and issued for Sampling 2. For Technical Defect In case of technical defects in transit. In case of Damage/shortage in transit by the CD. Post the Salvage Process. under the „Inventory Management‟ module in SDS. Following is the procedure for handling and claiming zero value items in SDS:49 . VAT). while loading the claims. Coffee Mug etc.e.) received through Zero value invoicing and issued for Sampling 3. Following kinds of free stocks are being handled at CD 1. it should be received as saleable stock during company invoice download and then CD should transfer this stock from saleable condition to un-saleable condition using a stock journal. Sampling out of CD stock In the above Zero value invoicing refers to those goods which are used for sampling however they have a Zero value when the CD receives the invoice i. Claims for Damages / Shortages in transit should be accompanied by a copy of the Lorry Receipt (LR) signed by the driver of the vehicle agreeing for the shortage/damage. For each of the above types of bad goods. SAMPLING Nestle also undergoes Sampling activities either done by the CD or through 3rd parties. Claims for technical defects have to be accompanied by necessary approval received from Head Office/Factory for quality assurance stating that there was a technical defect Without this a CD would not be able to claim this.In this case transit refers to goods getting damaged or short while coming from the Distribution Centre (DC). the CD does not pay for these goods. Stock (Non Nestle Product i.e. Under the salvage process the SO will destroy the bad goods and post the quantity destroyed and quantity to be claimed by the CD. This salvage claim would contain the quantity and the value calculated at the trade price (incl.

Format of the VISA is attached herewith. If zero value stock is un-available in the system. However in SDS once the rates & the RD commission are entered into SDS. it will come for approval in the Console. Whenever a new RD is being created in SDS.Stock (Nestle Products) received through Zero value invoicing and issued for sampling –  All the zero value invoiced Nestle products are entered manually as receipt in the „Sample Management Module‟.   50 . RD Commission and RD Claim % has to be defined. Post creation of the CD in SDS. the claims are automatically generated once billing to RDs are done.Date and description of the Sampling activity . RD COMMISSION & FREIGHT The RD claims are a part of the Section II claims. Following is the proposed procedure to be followed in SDS:  Whenever a new SKU is being created in the Console. In the remark column of the sample issue. Claim for these stocks will be raised on the company at CD Purchase price of the respective product. system will issue stock from the saleable stock.VISA (Budget) No. The same has to be approved by concerned ASM and RSM. the Branch control uploads the RD freight as rate per case in console which is pre-approved at CD level. 53  All Issues of these free stocks should also be through this module  No claim can be raised on the company on issue of this stock as they are invoiced at zero value to the CD Stock (Non Nestle Products) received through Zero value invoicing and issued for Sampling –  All the zero value invoiced for Non Nestle products should be handled outside system  No claims can be raised on the company on issue of this stock Sampling out of CD Stock – Issue of stocks for Sampling has to be done through „Sample Management‟. CD has to mention: .Batch code of the products issued . The screen shot can be seen in the SDS module page no.

S Incentives For the above apart from the RD commission & RD freight. manual claims in SDS refers to the section II claims discussed in the Claims Management Chapter. / Branch Media / Branding Van Expenses Pilot Salesman / Merchandiser Subsidy/Cycle Boy Coverage Training Expenses / Visi Cooler Maintenance D. The following are the types of Section II claims:          RD Commission & RD Freight Staff Sales Discount Dented Discount Price Difference Branch Spl Activity / Dhamaka / Home Eco. At the month end. the CD has to send the supporting documents showing the expenses undertaken such as Bills. Post SO approval. For all the manual claims entered. the rest of the claims are manually entered in „Manual Claims‟ under the „Claim Management‟ Module. CD has to load the RD claim as well. workings for the claims etc. This claim has to be approved by SO after scrutinizing the signed and stamped RD bills maintained by the CD. along with other claims. To the Branch office. the CD can see all the claims under „Claim Top Sheet‟ under „Claims Management‟. In the same load both the RD Commission claim (basis the RD claim % defined while creating an SKU) and RD freight claim (basis the rate per case defined as mentioned above) will be created. claim will come in console for processing. 51 .   MANUAL CLAIMS As discussed before. After they are entered.


Normally. Before understanding the process of Channel Finance. As the Banking Industry involved so did the mode of Payments. Therefore in the beginning. and Nestle has the authority to Debit the Account.30 p. Then came Real Time Gross Settlement (RTGS). Leading banks (89 banks & about 18000 branches) are members of RTGS system and are providing transfer of funds through RTGS to its account holders. the Accounts Manager „sweeps‟ all the funds from the Channel Finance A/C of Nestle into the Accounts of Nestle. Nestle can see in its login with the respective banks whether payments have been received or not. the CD has to have a Channel Finance with any one of these Banks. However this mode also faced sum problems. the CD only has the option of depositing Money. There was no special arrangement for Nestle. Under these facilities. In this facility.INTRODUCTION TO CHANNEL FINANCE Channel Finance Scheme for collections has been implemented to facilitate efficient and faster collection from distributors. it can be carried out during stipulated RBI business day which are till 3. for ex. Channel Finance is a mode of payment used by Nestle to receive payments from their CDs. This process involves giving RTGS fund transfer application by the Customer at his bank's branch to remit the amount by debiting their bank account & crediting beneficiary‟s bank account. RTGS was meant for anyone to use. ABOUT CHANNEL FINANCE Nestle India has a tie up with HDFC & ICICI Bank for opening up of channel finance A/Cs. More and more FMCG companies are using. Cash.m on all working days & upto 12. RTGS etc. At the end of the Day. Payments can be made into this A/C like any other A/C and through any mode. the money is transferred from the Bank Account of the Remitter (Customer) to the Bank Account of the Beneficiary (Nestle India Limited) on the same day. Soon banks started to provide nice service to Corporate Clients. RTGS should be explained first.00 p. Nestle has a strict policy of no Cash Transactions.m on Saturday. then the funds will be credited on the next working day with the value date of the previous working day 53 . Earlier and still in many companies. In case the recipient branch is holiday on the day of receipt. RTGS Real Time Gross Settlement (RTGS) is a system managed by RBI through which the transfer of payment is carried out electronically between banks. Successful execution of RTGS transfer by the Remitting bank at Bank‟s system generates a Unique Transaction Reference number (referred as UTR No.) Under this mode. that of payment in Cash or Cheque/DD. all the payments were made by Cheques or DDs. One of these services was Channel Finance. Cheque.

It was difficult for the Accounts Dept. Now it takes around 10 minutes  Business Flows for the CD as well as Nestle. identification is very simple  Transfer of Funds – Earlier transferring of funds from the different A/Cs to Nestles A/C use to take 2-3 hours. The Accounts Department has to then check whether the CD has done the payment either through Channel Finance. Even if they have not made the payment. the O/D limit is used automatically. as Nestle is getting its money on time VARIOUS FUNCTION INVOLVED FOR RELEASE OF PAYMENTS 1. This is then sent to OMC. if there are not enough funds in the CDs Account. This excel sheet contains the estimated amount of money that they will receive for each region. the Accounts Department will use their O/D limit to finance the 54 . the CDs business does not suffer  A nominal interest rate of 12% is being offered (HDFC Bank) For Nestle  Identification of Payments – Earlier most of the payments were made through RTGS. If the amount paid by the CD is less than the order amount. 1000 to use this Account  At the time of Invoicing. Therefore because of delay in payments.PREREQUISITES FOR A CD TO OPEN A CHANNEL FINANCE A/C    For a CD to get a O/D limit. DD. Over here parties under Channel Finance are at an advantage. or RTGS. This sheet contains the List of orders made by CDs along with their amounts. Matching . then Accounts will pass the order till the amount paid. 3. 2. To track which UTR no. This is made on the the basis of the orders. Through Channel Finance.When the money is received. OMC then passes these orders onto the Distribution Centre. Order Release Form – The Branch receives an Order Release Form throughout the day. Is of which CD. he must be a distributor with Nestle for at least 2 yrs Nestle should contribute 60% if the firms Turnover They must have an account with HDFC ADVANTAGES OF CHANNEL FINANCE For CD  The CD is getting an O/D limit without any Security Deposit. the Accounts department enter this amount in to SAP.  They just have to make an annual payment of Rs. Estimate Order File – Every morning the Branch receives a Estimate order File from the Order Management Centre (OMC).

However before the next invoicing. the CD has to pay the outstanding amount along with interest. This process transfers all the funds from the Channel Finance A/C to Nestle‟s A/C 55 . 4.order. Sweeping – This process is done at the end of the day.


5 months as before. Due to this the CD cannot save & confirm the Purchase receipt which in turn delays the entire Billing Process. the major benefit for CDs was that. 8. Schemes are not Uploaded – Sometimes the new schemes are not uploaded onto the scheme master. the CD receives a physical copy of the schemes for that particular month. Sometimes the Retailers might complain to the Company that they are not receiving their goods on time. the Retailers cannot receive the schemes 5. the SO and CD have saved & confirmed however the console has not receives such information 7. they do not receive a confirmation whether the information has flowed to the Console or not. Invoice not Reaching on Time – The Purchase Receipt which is to flow from the Console into SDs before the physical receipt of goods. even though the invoice date shows that the CD has received the goods earlier. and due to that their entire system crashed 6. discounts and 57 . No Confirmation after „Save & Confirm‟ – The SO & CD after they press Save & Confirm on the various masters.FINDINGS ON THE PROJECT „EFFECTIVE IMPLEMENTATION OF SDS‟ After understanding the operational workings of SDS. does not flow sometimes. Budget Constraints – Selling is an art. The stocks are not updated into the system 3. Even though. However this still has not been implemented. Invoice Date & goods Received Date are different – In the Purchase Receipt master. till the schemes are not uploaded on SDS. Time in Claim Settlement – At the time of implementing SDS. these 2 dates are different. This would be a huge help for CDs who now use other softwares for accounting 2. However due to SDS it has become part science. it was said that the claim settlement would take only a week compared to a month. the following problems have come up: 1. When a CD requires additional budget for schemes. The claim settlement still takes 1. This may cause problems for the CD 4. SDS stops working – A few CDs have faced a problem that SDS stopped working. Not fully functional – There are still a number of function not working in SDS. There have been a number of instances where. The Financial Management Module still has not been started. meetings with the CDs and while preparing the Manual.

58 . 9. This will ensure better monitoring of TPP schemes and allocated budget.promotions. CD can get an update of all the schemes to be run in the month. It will further reduce the manual checking efforts made to check TPP register by Branch Control. They are added together in the same column. No need of Hard Copy Input Plan: Implementation of SDS will eliminate the need of input plan to be sent to the distributor. VAT related issues – There are certain VAT related issues with SDS 13. 3. Unwanted Back Up – Every time the CD „syncs‟ SDS with the Console a Back Up is creates. 11. Dedicated Helpline – There are no dedicated help lines to solve the SDS problems. This back up takes up unwanted space on the CD‟s Hard disk. They then have to be manually deleted at the end of the day 12. Uniliever have the same type of software and also a team to answer the distributors problems. IMPORTANT CHANGES & IMPACTS AFTER IMPLEMENTATION OF SDS TEMPORARY PRICE PROMOTIONS 1. Nestle should develop such a helpline. absolute budget and input plan from SDS. Better monitoring of TPP schemes and allocated budget: SDS will not allow billing more than the budgeted amount allocated to a particular distributor and also any variation in the TPP scheme will not get invoiced by the distributor. 2. Closing Stock Report – In this report. This time should be reduced as the CD would loose that particular selling opportunity. No need of manual TPP register checking: Implementation of SDS will eliminate the need of comprehensive manual TPP register to be sent to the Branch control. it take 4-5 days for it to be approved and uploaded to SDS. However they are not used and Nestle still asks for reports to be send by the CD 10. Company Demands Reports – The console has the option of taking out various kinds of reports just as in the Desk Top Analyser. there are no separate columns for the Price and the VAT.

In SDS the invoice gets downloaded giving visibility of the stock in transit. Better Monitoring of Party Specific Schemes and schemes other than TPP: Branch Control to approve such schemes entered by distributor in SDS on the basis of written approval. Increased Accuracy and transparency: Implementation of SDS will result into Increased Accuracy and transparency due to automated checks and procedures. Retail outlets will be selected and approved via workflow in the system. 9. In SDS product & price master will be maintained centrally & down loaded to the distributor system. 8. 10. Increased Market Exposure for Sales Officers: With the implementation of SDS. 5. Better Product and Price Management: Currently product & price masters are defined by the distributors manually. After receipt of stock & invoice manual entry is done. It will enable standardized data across all distributors. Payout will happens automatically by adjusting the specified amount on the first bill of the next month. DISPLAY 1. Better RDBN control: Implementation of SDS will make available correct reporting of physical holding by the distributor and will result into better RDBN controlling. 59 . Sales officers would be able to spend more time in market area rather than at CD point. Any exceptions in retail outlets will need approval in the SDS c. 6. Budgetary control in the system. a. 7. b. Total payout cannot exceed budget (at CD level) pre defined in the system console. CD wise Better OID control: Implementation of SDS will result into CD wise better OID control as ASMs will have to give OID split in soft copy for each distributor to branch control. d.4. Better Planning and Transparency in Invoicing: Currently the distributors do not have visibility of the invoice till they receive the stock. Shift in focus of control from manual to system driven. It can negatively affect data standards & data hygiene.

Every activity should have a Budget issued to the field by BCCSD indicating the CD from whom stock will be drawn & what stock will be drawn. 4. All the Zero Value Invoiced Nestle product will be handled through SDS. 3. 3. signed and stamped coupons for processing claims is not required. particularly the zero value stocks issued by the company. Necessity of Manual claims documents i. SAMPLING 1. Increase in white collar productivity by maximizing potentials of electronically automated system. batch code etc. The Signed and Stamped RD bills are not required to be submitted along with the claim since in SDS RD Commission is strictly passed to only those outlets which are 60 . Preservation of physical copies of claims for governmental regulatories /statutory requirements is subject to legal consultations/advices. RD COMMISSION & FREIGHT 1. 5. 5. 2. The required list of RDs can be taken from Console on real time basis. Date and description of sampling. 4. 6. a claim would be generated.e. In current setup. Complete trace back of the Sample stock will be available in the system. Claim for sampling of CD stock will have all the relevant detail i. The System helps on analyzing affectivity of the spends. If the CD doesn‟t do this and issue the same stock through Sample Issue.e. Issue to be made only for the quantity exactly to be consumed in the activity as any excess issue cannot be reversed or taken back by the CD as reversal in SDS. Claim request will flow electronically via console. It would provide the complete trace of the stock.2. 2. all the Zero value invoicing needs to entered manually in Sample Receipt. There is no need to manually maintain and update list of RDs by the Branch Control because each new RD is being approved by ASM & RSM. Sampling Agency‟s name.

Credit to the retailer for bad goods to be given only through the bill and other modes of reimbursement like cash payment. There is no need to prepare EOGA summary manually as the same is available in SDS and the same can be accessed online in console. SKU details. All the new RDs are being approved by ASM. The existing manual EOGA document will be replaced by SDS generated Delivery Return Challan (DRC) which will have necessary details like the retailer details. Claim % and RD freight is approved in console and it can‟t be changed in SDS. retailer wise trail of bad goods will be available in SDS/Console for cross checks. 4. RSM and Branch Control and only post approval billing can happen. 5. BAD GOODS 1. However these signed and stamped bills should be maintained at CD point and these acknowledgements need to be randomly verified by Branch Control during field visits. 2. SKU level. Similarly RD freight rates are pre approved & can‟t be changed in SDS. real time and more effective for both CD & Nestle. reasons for return etc except Batch Code. stock replacement etc will be discontinued.mapped under RD channel and these outlets are pre-approved by ASM/RSM in SDS. 61 . 4. 3. Similarly there is no need to attach EOGA summary to branch office along with Bad Goods claim because reason code wise. 3. 5. reason code wise etc become easier. Tracking of bad goods at retailer level.

the actual sales NPS – This is the figure we get after we reduce GPR from GPS GPR – It includes FS/Vending.01% 21.24 5.95 % Change for February 18.70 4.82% FEBRUARY: As can be seen above the Turnover has increase by 15.11 24.28 4.16 17.29% 20.56% 09 17.79 16.40 90.26 March 10 21. Gross Price Reduction (GPR) and Bad Goods for the duration February & March 2009 and February & March 2010.48% 31. Net Proceeds from (NPS).25 19.66% 28. UP has the highest NPS.91 crore in 2010.32% 22.86 4.75% 30.71% 15.26 107. The maximum growth takes place in Haryana.81% 18. as by January 2010 most of the CDs were using SDS.81 4.02 22.56 10.6 – NPS (Figures in Crores) February ASM Zone Delhi Haryana HP J&K Punjab Rajasthan UP Uttaranchal TOTAL 09 19.75 4.16 7.91 6. Performance Trade Spends (PTS).32 9.06 121.60% 19.77 8.49 5. Ongoing & ATC claims PTS – It includes Trade & Display claims The purpose was to see the changes in the claims made in different regions. MARCH: 62 .69 15.57 13. 24.45% 20.00 3. In the tables below are a comparison of figures for February & March 2009 & 2010 T 1. and see whether there is any difference Pre & post implementation of SDS.72% 16.44 3.22 % Change for March 18.60% 20.36 5.67 5.54% 6. that of Rs.29% 20.95 5.81 102. In absolute terms.ANALYSIS OF CLAIMS RECEIVED As a part of understanding Claims Better.88 5.56%.63 3.18 5.98 10 23. Firstly to understand what the various terms above mean:     GPS – It signifies the turnover of the CD.12% 16. I undertook an analysis of the Gross Proceeds from Sales (GPS).33 12.46% 15.

23 0.54% 6.98% -77. The maximum growth takes place in HP. The maximum increase happened in Himachal Pradesh.37 0.03 1.94% 16.06 0. Also during the winter months.52 March % Change for March 40. There is a fall in claims between the 2 months.64 respectively. This phenomenon can be seen in both the years.51 0.The NPS for March has increased by 15.51 0.93%.99% -18. Through SDS.23 0.84% and 77. UP has the highest NPS with Rs.41% 0.08 0.85 % Change for February 27.09% -18.13 2.32 0.03 0. The reason for this may due to the implementation of SDS.77% -12. 22.96% 40.93% FEBRUARY: The claims raised by the CDs have increased by 27. T 1.08 0.TOTAL CLAIMS (Figures in Crores) February ASM Zone Delhi Haryana HP J&K Punjab Rajasthan UP Uttaranchal TOTAL 09 0.03 0.05 0.64% 41.08 2.40 0. There are a number of Schemes and discounts provided for these items 63 .09 0. The reason can be due to less NPS as can be seen in T 1. In absolute terms.03 1.18 0.06 0.06 0. This happens even though its NPS increased by only 22.06 10 0.38 0.18 crore.10% 0.18 0. The growth rate has been steady for both the months.10.77% 09 0.84% 20. MARCH The claims raised by the CD have increased by 16.75% 27.21 0.46% -2.09 0.82% from 2009 to 2010.06 0.16 0. false claims cannot be raised.09 0. with Haryana after that.27 10 0. However as we can see above the claims raised by the CD in Punjab & UP reduced by 18.88% 57.01%.76% -3.77%. the Sales of Chocolate and confectionaries are more.23 0.18% 10.7 .21 0.30 0.13 0. therefore this might indicate the amount of False claims being raised in these 2 states.

26 0. The increase has been marginal in March as compared to February.02 0.04 0.Bad Goods as a Percentage of NPS February ASM Zone Delhi Haryana HP J&K Punjab Rajasthan UP Uttaranchal AVERAGE 09 0.00% -31.85 % Change for February 46.03 0.10% March 09 0.17% 0.31% increase.64 0.T 1.23% 0.11% 0.22% 0.14 0.11% 14.15% 0.23 0.05 10 0.01 1.20% 0.36% 5.27 0.12% 0.31% 09 0.20% 0.03 0.8 .47 0.18% 64 .13% 0.05 0.76% -14. There has been a huge drop in PTS claims from Feb 2010 to March 2010.15% 0.13 0. The claims are shown as expenses in the P&L A/C.06% 0.69% 37.14% 0.19 10 0.06% FEBRUARY: Performance of Trade Spends (PTS) include Trade & Display claims.26% 0.24 0.10 0. There has been a growth 58.70% 24.PTS (Figures in Crores) February ASM Zone Delhi Haryana HP J&K Punjab Rajasthan UP Uttaranchal TOTAL 09 0.40% 58.11% 0.43% 2.07% 0.48% 55.61% 69.06 0.03 0.02 0.14 0.15% 0.07 0.06% 0.08 0.07 0. T 1.09 0.09 March % Change for March -36.72% 25.14% 0.32 0. MARCH: There has been a drop in PTS claims for Delhi and Punjab for March.51 0.03% 0.23 0.32% 0.51% 65.19% 10 0.15% 0.05 1.28% 0.13 2.24% 3.9 .38% 0.13% 0.01 1.12% 0.16% 10 0. These are the important claims raised by the CD.14% 0.12% 0.76% 28.12% 0.68% 4. They increase with the increase in GPS.17% 0.13% 0.14 0.16 0.09% 0.20% 0.03 0.10% 0.

As it can be seen above in 2009. There are certain bad Goods Norms which are followed by Nestle. 65 . The increase in Bad goods of Delhi from February to March 2010 may be due to the unsold stock during the winter such as Beverages or processed foods. Whereas in 2010 Delhi exceeded the norms. They usually vary around . Delhi. When compared to 2010. MARCH In March 2009 only Haryana exceeded the Bad Good Norms. the process of claiming Bad Goods becomes stringent. UP had huge Bad Goods.19% of the NPS.FEBRUARY Nestle has to keep a check on the Bad Goods coming. J&K. only J&K exceeded the Bad Good norms. This decrease in Bad Goods can be attributed to SDS. Through SDS.


a system like SDS will help it grow more. money. Also the number of false and invalid claims has reduced significantly. as such a huge company it is difficult keeping track of everything. It has reduced the workload for the accounts and control department. With a huge company like Nestle. Claims processing through SDS have resulted in better and efficient handling of claims saving time. it has deals to deal with a huge number of accounting transactions. Most importantly. The accounts receivables department now has access to the distributor point data and that too on a real time basis. there will be total transparency Thus SDS is an invaluable and multi tasking tool. Nestle requires a system of this kind to keep everything on Track. Channel Financing helps reduce the administrative work. the time taken for opening an A/C can be reduced. This results in faster processing of claims. This can happen if Nestle & HDFC can work out a procedure effectively 67 . Also the documentation should be reduced. with SDS.SDS With SDS being implemented it has helped both the CD & Nestle. However while opening Channel Finance Accounts. resources and energy for everyone. CHANNEL FINANCE Channel Finance is an extremely important mode of payment. With A Huge company like Nestle. Despite some of the problems being faced by it.

in  Nestle Intranet  www.inbics.com  www.nestle.net  Nestle journal-Creating Shared Value  Other internal sources of Nestle  Personal interviews and interactions from various department heads 68 .fmcginfo.kr  www.indianfoodindustry.BIBLIOGRAPHY  www.co.








The temperature was considerably higher than 8 degrees Celsius and the temperature indicator was not working.without rest of the details being filled out. Sales Officer : Ritesh Anand Audited By : Vidyut Perti (Under the Guidance of Mr.ANNEXURE 8 . The proprietor reasoned that it was because the last vehicle had just left and the vehicle needed to be loaded with goods. Delhi. 2010 ---------------------------------------------------------------------------------------------- Warehouse:The warehouse/godown cooler was not on. Market Visit: We connected with one of the salesmen – Kanhaiyaji whose route included Mayur Vihar Phase 1 and 2. 76 .AUDIT REPORT CD Name : Atul Enterprises. There was Presence of pre-signed and stamped EOGAs (Exchange of Goods Advice) . IP Extension. Jindal Haria) Date : 14th May.

As supporting to this complaint. Stock with Mfg Date 04/05/2010 in the van 77 .Almost all the outlets we visited complained of old stock. we found old stocks in the delivery van as well as the godown.

there are 2 EOGAs for the same retailer on the same day. As seen below. indicating at least 1 is a fraudulent claim. improbable number of bad goods etc) 1) Annapurna Stores (Mayur Vihar – Phase2) The proprietor was shown all EOGAs in the name of his store. He verified that the signatures on all the EOGAs were not his.Stock of mfg date 11th may in Godown Bad Goods: We visited the following Outlets for verification of EOGA (The sample was selected out of Jan EOGAs – absence or difference in signatures in EOGAs of the same store. 78 .

174 2) Gulshan Provision Stores 79 .Date EOGA No 185819 185817 2770 Retailer No of Pieces Returned 6 16 3 6 10 3 6 Dealer Amt 164 341 82 137 232 82 137 Issue 1/2/2010 5/1/2010 21/1/2010 Annapurna General Store Annapurna General Store Annapurna General Store Annapurna General Store Annapurna General Store Annapurna General Store Annapurna General Store No DS Sign Diff Coloured Ink.No DS sign 25/1/2010 185847 22/1/2010 185818 18/1/2010 21/1/2010 2773 2778 No DS Sign No DS Sign No DS Sign No DS Sign Probable Adverse Impact: INR 1.

No DS sign Probable Adverse Impact: INR 560 3) Jain Provision Stores The proprietor acknowledged his signatures. EOGAs in this store‟s name had no problems. Date EOGA No 2878 2895 2883 Retailer No of Pieces Returned 5 9 14 Dealer Amt 96 150 314 Issue 3/1/2010 26/1/2010 19/1/2010 Gulsan Pro Store Gulsan Pro Store Gulsan Pro Store Diff Coloured Ink No DS Sign Diff Coloured Ink. But the EOGAs were showing exaggerated number of bad goods. He accepted that sometimes there are bad goods from his stores. 5) Richa Sweets Signatures refused on all EOGAs. False BG False BG Probable Adverse Impact: INR 1. 4) Snack Point The proprietor acknowledged his signatures. EOGA No 2846 2761 2844 2849 No of Pieces Returned 16 18 22 17 Dealer Amt 437 437 600 437 Date Retailer Issue 30/1/2010 4/1/2010 12/1/2010 28/1/2010 Richa Sweets Richa Sweets Richa Sweets Richa Sweets Too Many BG False BG Diff Colored Ink.The EOGAs had different signatures. but they haven‟t exceeded 5. EOGAs in this store‟s name had no problems.911 6) M B Enterprises 80 . The proprietor could identify only one signature out of 3 shown.

26% of EOGAs could not be verified.847 26% 8.355.604 81 .Large number of bad goods through periodic EOGAs. Though the proprietor accepted that his bad good returns were often high. CONCLUSION EOGAs Out of the selected sample. this is an impact of INR in Jan2010. he appeared surprised at the numbers. All figures in INR except % Sales in Jan „10 EOGAs in Jan „10 % EOGAs Unverified (based on sample) Probable Adverse Impact (Jan 10) – based on sample set 567. But also acknowledged his signatures. This retail partner is a wholeseller with monthly turnover of about Rs 1 lac. All praised his service and efficiency.769 31. Salesman‟s Rapport: Salesman Kanhaiya enjoyed tremendous rapport with the retailers whom he serviced.380 636.280 Extrapolation for the year 2010 All figures in INR except % Sales '10 (Based on Jan 10 Turn Over) EOGA '10 (Based on Jan 10 EOGA) % of EOGA not approved by retailer Probable adverse Impact '10 due to incorrect claims 11.940 26% 165. At a business level.

Warehouse The warehousing practices still need to be improved. This is also impacting market image with retail partners. Inventory FEFO is not being followed leading to presence of old stock in the system. However they need to be kept in check. the distributor can be debited for a month. 1) Dahi is a difficult business and EOGAs will be generated at higher percentage as compared to other businesses of Nestle. 4) As an alternative. RECOMMENDATIONS There have been substantial efforts by the Accounts team to point out the fact that there are significant portion of unjustifiable EOGAs in the system. they will have a tendency to balloon. 2) A directive must be sounded to the CEPs that they will be debited for unsubstantiated EOGA claims (based on a random sample of EOGAs appropriated to monthly turnover) 3) This must be done for a couple of months in continuation and then similar study should be carried out again to understand the changes in EOGA levels and claims. 82 . Unless EOGAs are kept in check. This will indicate the seriousness with which Nestle is looking at the veracity of EOGA claims and instill discipline.

Sign up to vote on this title
UsefulNot useful