Distribution and Logistic Management for Local Bakery

DISTRIBUTION & LOGISTICS MANAGEMENT

PROJECT ON DISTRIBUTION STRATEGY FOR THE GROWTH OF A LOCAL BAKERY BUSINESS IN OUR LOCALITY.

Project Done By :

•Ruppratim Das•Himadri Guha•Sayantan Bhattacharya

‘Existing Bakery business in India’

The bakery sector in India is estimated to be worth over 3.2 billion Euros (Rs 210 billion), and is still the cheapest form of ready-to-eat food .The rate of growth is approximately 13-15 per cent.

According to Research and Markets reports, the bakery industry is the third-highest revenue-generator in the processed food sector.

The market size for the industry is pegged at $4.7 billion in 2010, and is expected to reach $7.6 billion by 2015. It also mentions that the shining star of the sector remains the biscuit industry.

Biscuits and bread, which are considered to be the major bakery products, account for 82 per cent of all bakery products. 

The unorganized sector accounts for about half the total biscuit produced in India (which is estimated at about 1.8 million tonne). 

It also accounts for about 85 per cent of the total bread, and about 90 per cent of other bakery products (including buns and rusks ) produced in the country, which is estimated at 0.8 million tonne.

Most of the machinery is manufactured in India. However, if needed, it is generally imported from Germany, Italy, Switzerland, France and the United States.

The bakery industry is a largely unorganized sector. Throw some light on this.

The market share of the branded and organized bread and biscuit sector to that of the unbranded and unorganized market share has been 60:40.

So we can see that there is a high potential in the biscuit and cakes industry and the Unorganized sector (local bakery) has a pretty good market share in it. We should look forward to developing the sector rather than lagging behind to ultimately be wiped off by the big players who would potentially be aiming at capturing the whole market and get the local Bakery out of competition.

‘Distribution System in the Bakery Business’

Manufacturer Big Bakery Van

Cross Docking

Local Bakery Van

Tea-Stalls, House-Sales

‘Existing Distribution system of a local bakery’

According to our survey we found out the following distribution system in a bakery system

Manufacturer – He is the one who makes the product and supplies it to the wholesaler (big bakery van).

Big Bakery Van – They are the wholesalers who generally take goods/product from a bakery and supplies it to the small bakery van.

Small Bakery Van – The small bakery van comes to a point where they meet the big bakery van and takes product from them , here we can clearly see a Cross-Docking taking place. They don’t take a single brands product rather they take multi-brand product and goes on to supply to the tea stalls / house sales.

Tea stall – Generally they keep the biscuits or bread to be sold to the end consumers. The biscuits are generally sold in small quantity and the bread is sold after some value addition by the tea stalls like egg-bread, sugar-bread, butter-bread etc.

‘CONFLICT’

What is Conflict ?

Situation when a producer or supplier bypasses the normal channel of distribution and sells directly to the end user. 

Types of Conflict that occur is an distribution system

There are mainly three types of Conflict Horizontal Conflict Vertical Conflict Multi-Channel Conflicts

‘Horizontal and Vertical Conflicts in the Distribution system’

While doing the project we have observed the Horizontal Conflict is carefully managed as the Big Bakery Vans have assigned areas and they don’t go into another’s area. Rather they maintain a co-operative relation among one-another, because if one of the Big Bakery Van is absent another one comes for his cover. Same goes for the Local Bakery Van too.

In the Vertical Conflict we see that the Big Bakery Van and Small/Local Bakery Van the conflict doesn’t take place as the Big Bakery Van doesn't go around distributing to the customers of the Local Bakery Van. They simply distribute the items to the Local Bakery Van and let them sell it to the retail outlets, tea stalls & home sales.

In this way Bakery Business avoids Conflict but in few cases we see Conflicts taking place where the Big Bakery Van sells his product to the Customer or the Local Bakery Van sell it to the end user by avoiding the tea stalls or the retail outlets.

Distribution Development Index and Category Development Index

DDI - Distribution Development Index is defined as the availability of a brand/ category in the market relative to that of a bench mark brand/ category.

CDI - Category Development Index is defined as per capita consumption of the category in that market relative to the national per capita consumption of the category.

According to our view it’s better to follow the CDI because it tells us to concentrate more on the following

The Quality of Distribution

Providing better Service

Extending Distribution system immediately.

‘The Major Challenges faced by Local Bakery Business these days’

Longevity of the product due to bad packaging. No brand identity created Labour cost on the higher side; Lack of knowledge of raw materials and quality control check; Lack of awareness about latest development; Poor hygiene and process control Competition with Big Players like Britannia, Bisk-Farm, Priya,

Anmol, ITC etc.

If the Bakery can overcome this factor it would be helpful for the Bakery to grow and flourish.

Cross-Docking occurring between a Big Bakery Van and a Small Bakery Van

Cross-Docking occurring between a Big Bakery Van and a Small Bakery Van

Prince Bakery Factory

Reverse Logistics

Reverse logistics is the collection of all processes that come into play for goods that move in the reverse direction, i.e., from the customer to the business. Here are the most important processes that are covered under reverse logistics.

Physical Movement of Goods.

Warehousing.

Triage.

Repair.

After Sale Support.