Patanjali

SALES AND DISTRIBUTION MANAGEMENT

Group 9 Sec A
PREPARED FOR : PROF SHIBASHISH CHAKRABORTY |
What is the salesforce structure? What are the advantages and disadvantages?

Sales force structure of Patanjali has been explained in the below diagram:

There are 24 districts in Jharkhand, which fall under four Area Sales Managers. There are 4 Sales
Officers under each Area Sales Manager. Under each Sales Officer, there are three Territory Sales
In-charges (TSI). The responsibility of TSI is to gather sales requirement data of his/her Sales Officer,
and subsequently the data is sent through the hierarchy ladder to regional manager, who does the
regional level forecasting. Sometimes, Distributors also hire sales agents. There two different product
categories of Patanjali: food and non-food. Among the four Area Sales Managers, two are assigned
to the food category, and the other two assigned to the non-food category.

The advantage of such sales force structure is that the sales force can concentrate on a few particular
products (according to product categories), rather than a very broad product portfolio. It helps the
sales force to keep their focus equally to all the product categories.

The disadvantage is that; multiple sales people has to visit same retailer or distributor for their
different product categories. This creates a problem to the retails or distributors as major retailers
keep all kinds of products in their shelves, and there is no division among distributors according to
product division (i.e., a single distributor serves all product categories.

How are the sales force motivated? How are the sales personnel selected and trained?

Sales force motivation in Patanjali is very different to other FMCG firms. The company imbibes a
strong value among employees that they are serving the country while working for Patanjali. This
creates an internal motivation among all the employees, not only the sales force. They think that they
working for the country, not for business.

Baba Ramdev’s influence is a big factor in attracting talent to the organisation. The company not only
looks for dedicated individual, but also the people who are driven by commitment to the country, not
only the business. Furthermore, the company prefers to hire sales personal who has one or two years
of experience in the FMCG industry.
Apart from the general training of the Sales force in the sales and distribution system of the company,
a special focus is on imbibing the values of the company.

What is the design of sales territory?

The distribution channel structure of Patanjali is mentioned in the below diagram:

What are the activities performed by the channel members and which activity is formed by
which channel member?

The products are shipped to the Super-distributors from the manufacturing facility in Haridwar. From
the Super-distributors, the products are sent to the distributors, and then to retailers. However, Aragya
Kendras and Exclusive Patanjali Stores get their products directly from Super-distributors. There are
two sub-distributors responsible for Jharkhand.
There is no product division among Super-distributors and Distributors. Each Super-distributor and
Distributor take care of all product categories. This creates a significant problem, as the channel
partners become more inclined towards the more selling products.
The company also tried to implement C&F agents, however, it was cancelled later on.
The distribution channel is designed in such a way, so that it can reach remotest parts of Jharkhand,
and this has resulted in sales growth of 10000 crores in a span of 5 years.

Number of channel members required in the network and how many C&FA distributor agents
or stockists do we need? What are their roles and responsibilities?

As per our discussion with one of the Aragya Kendra in-charges, having the same distributor
responsible for all product categories creates a lot of problems. Patanjali tried to implement C&FA,
but is had failed. The company needs to find a way to implement C&FA agent. Ideally, there should
separate channel for separate product categories, and each channel should have C&F Agents, Super-
distributors, Distributors and whole sellers, to increase the penetration.
What is the modern trade channel and by whom and in what way is it handled?

The modern trade channel for Patanjali is handled by another entity, named Pro-Balance Body Private
Limited. Pro-Balance collects the products directly from the Haridwar Food Park, and distributes to
Big Bazaar and Reliance outlets in Ranchi

What are the various conflicts (if any) among the channel members?

The conflicts are between the sellers from Arogya Kendra and distributors who are supplying to
other retailers. This affects the monthly targets of various channel members and take away the
share of distributors otherwise selling to retailers and Arogya Kendras also wants to take the
margin from the retailers hence resulting in conflict

There will be conflicts from Arogya Kendras supplying to other retailers but the areas of each
super-stockiest, distributor and retailers have been defined thoroughly which has reduced the
conflict to a great extent. The agreements of the contract clearly specify about siphoning the stocks
or funds to other smaller retailers etc. Each sales officer has a defined area to collect order and
TSI’s to cover for the beat plan.

Understanding of distributor/dealer business. Number of companies he deals with, number

of employees, turnover and infrastructure, market coverage (number of retailers and
wholesalers, routes in case of FMCG distributor), monthly targets, margin structures and
credit terms. (Obtain data from distributor/ ASM)
There are total of 2 distributors in Ranchi. Previously there was only one salesman for the
distributors who used to cover 5 areas in and around Ranchi but now they have increased the
number of salesman to three. The orders directly come from Patanjali Haridwar to super
distributor who then supplies to the distributors and then the distributors cover around 300-350
retail stores selling Patanjali products. The super distributor gets a margin of 4%, followed by
distributor margin of 5% and the margin for retailers varies with products, for e.g., for juices the
margin is 16% for oil it’s 5-6%. The warehouse has stock of about 8000 SKUs for the distributors.
What is the use of technology at his end?
The technology used at his end is the SAP software which is used for maintaining inventory. When
the products approach near expiry date, it is communicated by ASM to Zonal and regional
managers which is discussed by the regional managers with the company people to start giving
promotional offers to sell them out.
What are the changes over the (last 2-3) years in the sales force organization? And why?

The CFA agents are no longer functional in Ranchi since it was getting difficult for the distributors
to handle them. The C&FA agents were not maintaining the records properly and there was gap
in fulfilling the orders. So the previous method of fulling the orders is scrapped and now is being
filled directly from the distributors to the retailers.

ROI of distributor?
ROI of distributor is different in Ranchi and Jharkhand, the distributors in Ranchi gets ROI of 1.2-
2 crores whereas Jharkhand as a whole, the distributors gets around 10 crores.
Sales operation plan
The forecasted demands are updated regularly. These demands are updated to all the supply
chain managers to communicate the production plan for the production quantity. All the
members of the supply chain have knowledge about the forecasted demands and orders and if
the stocks are present in the warehouses the distributors intimate the company about the
availability of stock. Sales operational plan will also have SKU’s as per ABC Analysis where A
type is in highest demand and have larger inventory turns, B have lesser inventory stock turns
and C have the least. Generally, distributors do not stock products which have lower shelf life
since the probability of customer off take from retail stores are minimal. Hence rationalization of
shelf life along with inventory turns is essential for sales operation plan.
Monitoring structure of beat plan
Answer: The beat plan includes the company zonal manager, regional manager and the sales officers
to visit the retail outlets in a given sales area. The regional manager visits the shops once in a month.
The zonal manager visits more frequently. The sales officers visit the retail outlets once a week to
check on stock, targets, visual merchandising and to handle any issues faced by the retailers.
However, it has been found that the sales officers do not visit all the outlets in a given area.
What are the terms and conditions for selecting distributor?
Answer: A vacancy opens once in a span of a year where people can express their wish to become a
distributor. Then the distributors are selected based on their investment potential and previous
experience. However, lobbies are formed within this structure and the selection procedure becomes
biased.
How the metro market is different from market in Ranchi and Ranchi v/s villages?
Answer: In a two tier city like Ranchi, the distribution is done by fulfilment on order basis. Each
retailer covers a certain area. These retailers are serviced by distributors who are then serviced by
super distributors. There are no C&F agents. The distributors have their own warehouses and delivery
trucks to distribute stock. Rural areas also follow the same distribution channel, except that the
number of intermediaries and the number of distributors are less due to less demand over a
comparatively larger area. In a metro city, the stock turn is higher and thus the number of retailers,
distributors are higher over a given area.
How is the Beat plan designed and rationale of formulating a beat plan?
Answer: The beat plan is designed by the sales officers of the company and the zonal sales manager.
The beat plan is so designed so as to understand the kind of SKUs and counters that should be allotted
for the company and whether they are working at par with the expectations, to keep a check on the
sales and targets of the retail outlets and to look after visual merchandising. The sales officers visit
once every week to cover the above mentioned objective.

What are the factors that will affect the distribution in future? What are the challenges going
forward and what is the thinking about addressing those challenges?
Answer: As agreed upon by the company retailers and distributors, the imminent challenge that the
company would be facing is the expansion in terms of product line, the product mix, the distribution
channel associated with it and maintaining the demand supply balance. They also have competition
in each of the FMCG items which already have a strong distribution channel.
The thinking going forward is to come up with a more robust and structured distribution channel. The
company has already segregated their distribution channel on the basis of food and non-food items.
The firm is also coming up with computer based system to control the ordering, delivering and target
maintenance system. This should streamline the whole system in the long run.
How is distribution performance measured?
Answer: Besides looking at the financial performance of different regional and zonal managers, super
distributors, distributors, retailers such as sales revenue, loss in returns and defects, cycle times; the
company is also focusing on the standards and availability of products and service. The unavailability
of a product through a distribution channel, even if it provides a lower margin can affect the image
of the company. Thus, availability is one of the key metrics in terms of Patanjali.