PDF Hul Distribution Model Compress

Trusted by over 1 million members
Try Scribd FREE for 30 days to access over 125 million titles without ads or interruptions!
Start Free Trial

Cancel Anytime.
Maharashtra and West Bengal. The respective state governments and several NGOs
are actively involved in the initiative. The SHGs have chosen to partner with HUL as a
business venture, armed with training from HUL and support from government
agencies concerned
concerned and NGOs. Armed with micro‐credit, women from SHGs become
become direct‐
to‐home distributors in rural markets.
The model consists of groups of (15‐20) villagers below the poverty line (Rs.750 per month)
taking micro‐credit from banks, and using that to buy our products, which they will then
directly sell to consumers. In general, a member from a SHG selected as a Shakti
entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL rural
distributor. After being trained by the company, the Shakti
Shakti entrepreneur
entrepreneur then sells those
goods directly to consumers and retailers in the village. Each Shakti entrepreneur usually
service 6‐10 villages in the population strata of 1,000‐2,000. The Shakti entrepreneurs are
given HUL products on a `cash and carry basis.'
The following diagram shows the Project Shakti model as initiated by HUL:
Project Streamline
To cater to the needs of the inaccessible market with high business potential HUL
initiated a Streamline initiative in 1997. Project
Project Streamline is an innovative and
and effective
distribution network for rural areas that focuses on extending distribution to villages with
less than 2000 people with the help of rural sub‐stockists/Star
sub‐stockists/Star Sellers who are based in
these very villages. As a result, the
the distribution
distribution network directly covers
covers as of now about
about 40
per cent of the rural population.
Under Project Streamline, the goods are distributed from C & F Agents to Rural Distributors
(RD), who has 15‐20 rural sub‐stockists attached to him. Each of these sub‐stockists / star
sellers is located in a rural market . The sub‐stockists
sub‐stockists then perform
perform the role of driving
distribution in neighboring villages using unconventional means of transport such as
tractor and bullock carts. Project Streamline being a cross functional initiative, the Star
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Higher quality servicing, in terms of frequency, credit and full‐line availability, is to be

provided to rural trade as part of the new distribution strategy.
The diagram in the next page shows the model of Project Streamline:
Hindustan Lever Network (HLN)
It is the company's arm in the Direct Selling channel, one of the fastest growing in India
today. It already has about several lakh consultants ‐ all independent entrepreneurs, trained
and guided by HLN's expert managers. HLN has already spread to over 1500 towns and
cities, covering 80% of the
the urban population, backed by 42 offices and
and 240 service centres
centres
across the country. It presents a range of customised offerings in Home & Personal Care and
Foods.
The New Compensation plan for HLN partners provides new exciting ways of earning
substantial income in addition to offering rewards like revenue sharing through the
innovative concept of “pools”
Mother Depot and Just in Time System
In order to rationalise the logistics and planning task, an innovative step has been the
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Major Stakeholders in the distribution channel
1. HUL
Unilever India is the largest FMCG (fast moving consumer goods) firm in India and has the
widest reach in the nation with a retail network of 4 million outlets. Levers are
implementing an IT system to connect 3,500 stockists in 1200 towns who account for 80 per
cent of company sales.
Sourcing: HUL promotes sustainable agricultural practices by working with external

agencies, farmers/small growers. They have developed a programme that ensures:
 Farm owners and workers can earn an income they can live on and also improve
their living conditions
 Fertility of soil is maintained
 Efficiency in water consumption
 Certification from independent agencies
Manufacturing: In their manufacturing processes they intend to reduce the carbon footprint
of our operations through:
 Developing energy efficient production technologies like Ploughshare Mixer

Technology
 Increasing the use of carbon neutral fuels
 Implementing a strategy for water is based on the 4-R principle wherein they reduce
at source, reuse within process, recycle wherever possible and renew ground water
through rain water harvesting.
2. Carrying and Forwarding Agents (CNFs)
CFAs’ act as gatekeepers between the manufacturers and end-users. They are considered as
an important asset of a company in the overall company’s marketing & positioning strategy
and can serve as a key differentiator. Channel experience strongly affects end-user's overall
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
In the recent past, a significant change has been the replacement of the Company Depot by
a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer
stock‐points to ensure that stock‐outs did not take place. The C&FA system has also resulted
in cost savings in terms of direct transportation and reduced time lag in delivery. The most
important benefit has been improved customer service to the RS.
3. Transportation and Logistics partners
Distribution of goods from the manufacturing site to C & F agents take place through either
the trucks or rail roads depending on the time factor for delivery and cost of transportation.
Generally the manufacturing site is located such that it covers a bigger geographical
segment of India. From the C & F agents, the goods are transported to RS’s by means of
trucks and the products finally make the ‘last mile’ based on the local popular and cheap
mode of transport.
4. Redistribution Stockists
The role performed by the Redistribution Stockists includes: Financing stocks, providing
warehousing facilities, providing manpower, providing service to retailers, implementing
promotional activities, extending indirect coverage, reporting sales and stock data, demand
simulation and screening for transit damages.
5. Wholesaler
Wholesaler is an intermediary who buys goods for resale usually from company distributors
or stockists. He buys from various companies and stocks all major brands in the category in
which he operates. He has the ownership of the goods he sells and the operations are run
like a typical store where the resellers (could be retailer's themselves or bulk buying
individual customers) who come to him with an elaborate list and buy. To answer the
question why he survives as an intermediary, he is willing to provide smaller lots of goods,
provide credit if needed and is a one stop shop for all the brands in that category.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Companies like HUL have very specific wholesaler-activation plans to push their products
through the wholesale channel. And a recent example shared with me was how some
companies have been working with the boys who work at the wholesalers, by providing
them with very small incentives like taking them out for a pizza treat and other small
incentives and have got positive results out of that.
6. Retailers
These consist of Urban and rural consumers. While a traditional distribution chain is
followed in the urban markets, the rural areas have a new strategy implemented for
catering to the rural customers. In recent years, rural markets have acquired significance in
countries like China and India, as the overall growth of the economy has resulted into
substantial increase in the purchasing power of the rural communities. On account of the
green revolution in India, the rural areas are consuming a large quantity of industrial and
urban manufactured products. In this context, a special marketing strategy, namely, rural
marketing has taken shape.
This rural marketing effort is known as iShakti.

Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
HUL invests resources in training these village women to become entrepreneurs by helping
them become confident and independent. They are also a source of inspiration for the other
women in the community. Hence, besides being a sale, distribution and communication
initiative, Shakti is a micro-enterprise initiative that creates livelihoods and improves the
standard of life. The Shakti initiative also enables rural consumers to access world class
products, thereby reducing the menace of spurious products.
Today, it benefits business by significantly enhancing HUL's direct rural reach and enabling
communication of HUL's brands effectively in media-dark regions. The products distributed
through project Shakti are some of the country's most trusted brands of consumer goods
which are specifically relevant to rural consumers. From 17 SEs in 1 state in 2001 to more
than 45,000 SEs in 2008, Shakti has indeed come a long way in impacting lives in rural India.
7. End User/Consumers
User/Consumers
They are committed to responsible marketing and have clearly defined principles which
guide their communications. Advertising is a way for them to engage with consumers on
issues that matter to them. At the same time, we recognise the influence of marketing and
advertising on consumers and take our responsibilities seriously. This means ensuring that
all claims they make have a sound scientific basis and that all such communication passes
the baseline test of being 'legal, decent and honest'.
They also carry out scientific assessments of all their products to ensure they are safe.The
products are developed as per the guidelines set by Unilever globally. All risk assessments
are undertaken by the Safety and Environmental Assurance Centre (SEAC). SEAC's role is to
provide independent scientific evidence and guidance so that they can identify and manage:
 Risks for consumers, workers and the environment with regard to the safety of products and
supply chain technology, and
 Environmental impacts, with regard to the sustainability of Unilever's brands, products and
supply chain
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Monitoring the Stakeholders
Quantitative Measures
COST BENEFIT ANALYSIS
Cost benefit can be achieved through development of information technology at the

doorsteps of villagers; most of the rural farmers need price information of agri- produce and
inputs. If the information is available farmers can take quick decision where to sell their
produce, if the price matches with local market farmer no need to go near by the city and
waste of money & time it means farmers can enrich their financial strength.
NEED BASED PRODUCTION
Supply plays major role in price of the rural produce, most of the farmers grow crops in
particular seasons not throughout the year, it causes oversupply in the market and drastic
price cut in the agricultural produce. Now the information technology has been improving if
the rural people enable to access the rural communication, farmers awareness can be
created about crops and forecasting of future demand, market taste. Farmers can equates
their produce to demand and supply, they can create farmers driven market rather than
supply driven market. If the need based production system developed not only prices but
also storage cost can be saved. It is possible now a days the concept of global village.
Qualitative Measures
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
transaction systems, enables monitoring of stocks and secondary sales and optimises
RS’s orders
orders and inventories
inventories on a daily basis through
through online interaction on orders,
despatches, information sharing and monitoring. The IT‐powered
IT‐powered system has been
implemented to supply stocks to redistribution stockists on a continuous
replenishment basis. Today, the sales system gets to know every day what HUL stockists
have sold to almost a million outlets across the country. Information on secondary sales is
now available on RS Net every day.
ADEXA ICOLLABORATION SUITE
In 2000, HUL identified improved supply chain management as a critical business

priority and launched a comprehensive initiative, “Project Leap,” tasked with
increasing supplier/distributor responsiveness,
responsiveness, reducing inventory buffers, and optimizing
planning and scheduling. HUL chose the Adexa iCollaboration suite for facilitating
centralized monitoring of the SCM, live customer /supplier collaboration, and integrating
demand and distribution planning with production scheduling. With the aggregated view of
data provided by the iCollaboration suite, HUL was able to combine sales and distribution
efforts on the diverse product lines, which resulted in significant savings on the cost side
for inventories and distribution. HUL updates inventory positions, shipments and customer
orders on a daily basis with these software packages and can get a pulse on the market real
time.
Field Sales Force:
To meet the ever‐changing

ever‐changing needs of the consumer, HUL has set up a distribution
network that ensures availability of all their products, in all outlets, at all times. This
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Incentives given to channel partners
Redistribution
Redistribution Stockists:
 Sales Margin: 4.76% which includes cash discount, unloading expenses

from depot, distribution
distribution expenses to retailers, incentive schemes
schemes & other
incidental expenses.
 Modes of transport used: Rickshaw, tempo.
 Incentive schemes: Before 2000 holiday packages and tours but after 2000 n o
non‐monetary incentive for RS.
 Selling Operations : RSs sells the goods to ‐
o Wholesaler (gets 1.5 % max. discount from RS)
o Retailers (gets 1.0% max. discount from RS)
Wholesaler:
Gets cash discounts and other schemes promoted by HUL (gets points under Vijeta
Scheme). The wholesaler gets bulk discounts when he orders in bulk. Most of the
bigger wholesalers get these discounts since their orders are huge and they in-turn
supply to major retailers of a particular region.
Retailers:
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
that the customers do not face any problem.
HUL
C
h
a
l
l
e
n
C&F g
e
l
i
e
s
i
n
r
e
Stockists
a
c
h
i
n
g
t
h
e
c
CSD Canteens Retail Outlets Modern Trade u
s
t
o
m
e
r
s
Consumer Consumer Consumer

U
Steps taken by the company to tackle challenges
HUL has taken the following initiatives to improve its distribution network:
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
the extended supply chains. Backend processes have been combined into a
common Shared Service infrastructure.
 Launching of Project Shakti through which the company is able to extend its
operations in villages. HUL has also included several NGOs and state governments
as the initiative helps rural women to improve their financial position.
 Launching of HUL Network to leverage the channel of direct selling by presenting
customized offerings in 11 home and personal care and food categories. Started in
2003, it already has a base of 300,000

3 00,000 consultants across
across the country.
 Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer
standardized services, in line with the strategy to leverage the equity of its
brands through relevant services.
 Finding out Innovative ways to reach out to its consumers, particularly in rural
areas by leveraging non‐conve

non‐conventional
ntional media like wall paintings, cinema vans, weekly
markets (haats), fairs and festivals.
 Initiating the concept of Super Value Stores (SVS) in urban areas to partner
traditional stores to provide a range of services ranging from managing their
inventory to setting up POS (point of sale) banners.

banners. In addition
addition to this, to boost up
traditional retail in the face increasing in‐roads made by large, modern

modern retailing
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
 Launching of several promotional schemes for existing wholesalers and
distributors. For instance, it has started the ‘Vijeta ‐ Rishta Jeet Ka’ scheme last year
to provide a platform for the wholesaler and HUL to grow the business by earning
points and redeeming them.
RECCOMENDATIONS
Pure It needs a dedicated sales-force
Pure it, the water purifier from HUL has a very big service component attached to it, which they are
not able to provide customers. HUL needs to manage the distribution of this workforce better and
needs to ensure up to the
t he mark performance.
Pure it being a low cost water purifier has a lot of potential customers waiting in rural areas; HUL
should market it effectively in rural areas in order to tap that market. Non conventional marketing
strategies should be used like installing
insta lling a free purifier in Sarpanch’s house in the village which will
give them a champion who will help them further increase the sales.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
When we look at all the above brands, most of us would be using more than 60 % of these
brands in their respective categories. Have we ever wondered where do the remaining 40%
brands in our consumption come? They come from HUL competitors i.e. P&G, Colgate-
Palmolive.
When we were discussing about HUL for the project, we were wondering if there is anything
wrong with the FMCG giant. After some brainstorming, when we couldn’t find anything
drastically different, we paid attention to devising a new strategy which could help us
increase HUL’s revenue and give it an edge over intense competition sprawling up.
The organized retail, as many recent researches have pointed out, are growing at a rapid
rate. HUL covers maximum portion of shelves at these retail stores and has products for all
income segments.
We would suggest HUL to start bundling its products in a big way and kill the competition.
HUL should create a package for Upper Middle Class, another one for Semi-urban areas and
one for the lower income group or for rural areas. Following distribution will give you a
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
Start Free Trial

Cancel Anytime.
A similar package in Rural sector will include products like Wheel, Lifebuoy, Sunsilk, Ruby
Tea and other similar products. This packaging will help them take on the rivals in a better
manner.
HUL recently collated its distributors for all the three different divisions, now the products
can be collated at the distributors and forwarded to retailers in a basket. It’s now become
easy for HUL to follow such strategies.
REFERENCES
 HUL Website (http://www.hul.co.in/

http://www.hul.co.in/))
th
 HUL CLSA Conference, Investor Presentation (24 Sept., 2008).
 www.wikipedia.org

PDF Hul Distribution Model Compress

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PDF Hul Distribution Model Compress

Uploaded by

Copyright:

Available Formats

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Higher quality servicing, in terms of frequency, credit and full‐line availability, is to be

Hindustan Lever Network (HLN)

Mother Depot and Just in Time System

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Major Stakeholders in the distribution channel

Sourcing: HUL promotes sustainable agricultural practices by working with external

 Developing energy efficient production technologies like Ploughshare Mixer

2. Carrying and Forwarding Agents (CNFs)

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

3. Transportation and Logistics partners

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

This rural marketing effort is known as iShakti.

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Monitoring the Stakeholders

COST BENEFIT ANALYSIS

Cost benefit can be achieved through development of information technology at the

NEED BASED PRODUCTION

Start Free Trial

Start Free Trial

Trusted by over 1 million members

Start Free Trial

Trusted by over 1 million members

Start Free Trial

In 2000, HUL identified improved supply chain management as a critical business

To meet the ever‐changing