Introduction…..

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Hindustan Unilever Limited („HUL‟), formerly Hindustan Lever Limited (it was renamed in late June 2007 as HUL). India's largest Fast Moving Consumer Goods company HUL is also one of the country's largest exporters The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life.“ HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Analysis of Rural Distribution Network
We have analyzed the rural distribution network of HUL from the following aspects: 1. Supply Chain Management

2. Evolution of HUL‟s distribution network
3. Transportation & Logistics 4. Channel Design 5. Initiatives taken for channel member management

Supply Chain…..
Level 1 Sets Scope & Context, Segments & Products PLAN Source Make Deliver

Return
Build to Stock Build to Order Engineer to order Level-2 Identifies major Configurations

Level 3 Identifies Key Business activities
Schedule Production Activities

Issue product

Product & test

Package

Stage product

Release Product to Deliver

Evolution of Distribution Network

The 1st phase of the HUL distribution network had wholesalers placing bulk orders directly with the company The focus of the 2nd phase, which spanned the decades of the 40s, was to provide desired products and quality service to the customers The highlight of the 3rd phase was the concept of "Redistribution Stockist" (RS) who replaced the RWs.

Rural Distribution

RURAL DISTRIBUTION MODEL

New Distribution Channels…

Shakti Operation

Project Streamline….

Shaktiman‟s to Power Rural Reach
„Shaktimaans‟ are been roped in by HUL to fulfil its ambition of reaching villages with population of less than 2,000 and are beyond the reach of the company‟s redistribution stockists (RS). Every day, Shaktiman sets out on a bicycle which has been provided by HUL for him to commute to villages to distribute products and sachets of popular brands like Wheel, Lifebuoy, Pond‟s, Brooke Bond, among others, to aspiring consumers. Earlier, these consumers had to satisfy their needs by purchasing products from nearby villages where the company has direct distribution. Now, their needs will be met in their own villages by the visiting shaktimaans. This FMCG Giant will push 25,000 Shaktiman‟s-distributors on cycles – into action in 1.5 lakh remote villages.

Hindustan Lever Network

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 ‐ a independent entrepreneurs, trained and guided by HLN's expert managers 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”

Hindustan Lever Network
Mother Depot and Just in Time System

Certain C&F agent‟s were selected across the country to act as mother depots. Each of them has a minimum number of JIT depots attached for stock requirements. All brands and packs required for the set of markets which the MD and JITs service in a given area are sent to the mother depot by all manufacturing units.

Market Leadership across various FMCG Categories

Channel Design
Hindustan Lever Limited (HUL) has two types of channel selling viz
1. 2.

Regular (traditional) retail channel & Direct Selling Channel in the name of Hindustan Lever Network (HLN).

Channel Structure
Redistribution Stockiest:

Sales Margin: 4.76% which includes cash discount, unloading expenses from depot, distribution expenses to retailers, incentive schemes & other incidental expenses. Modes of transport used: Rickshaw, tempo. Incentive schemes: Before 2000 holiday packages and tours but after 2000 no non‐monetary incentive for RS. Software systems and Information System: UNIFY 8.3 (Developed by IBM & CMC). This software needs to be synchronized daily and the system updates any information/ incentive schemes / sales figures etc to and from the common shared platform. Areas of Operations: Marked for each of the 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)

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Channel Structure
Contd…
Wholesaler:  Gets cash discounts and other schemes promoted by HUL (gets points under Vijeta Scheme). Retailers:  Total retailer base in Jamshedpur: Approximately 1070.

Sales Margin: Depends on the product  Soap, detergents ‐ 8% on MRP  Cosmetics ‐ 10% on MRP  Food items ‐ 8% on MRP Incentive schemes:  Company programs (Scheme Discounts + Cash Discounts)  TPR schemes based on Sales (1 % to 4 %)  Vijeta scheme is not for retailers.

Initiatives Taken to Improve The Rural Distribution Network

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Setting up of a full‐scale sales organization comprising key account management and activation to impact, fully engage and service modern retailers as they emerge. Servicing Channel partners and customers with continuous daily replenishment. Leveraging scale and building expertise to service Modern Trade and Rural Markets. Delaying of sales force to improve response times and service levels Launching the Unicare scheme with up market pharmacies and retailers to sale its premium brands. Launching of several promotional schemes for existing wholesalers and distributors.

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