Distribution
Distribution
Consumer Products Distribution Chain
↓ Plant ↓ Depots in state capitals / major cities↓ Distributors↓ Retailers
DEPOTS
DISTRI-BUTOR
PLA
NT
Distribution: Typical Model
RETAIL
Distribution: Current Model
• Home grown “Indian” solution • Evolved to service retailers across the country –
millions of them• Low cost – In particular, manages last mile
delivery efficiently• Driven & sustained by regulatory environment
– CST– Local regulations (Sales Tax, Octroi, Licences..)
• Well established legacy, several decades old.
Is this going to remain the same way in future ?
Is this sustainable?
Does this model serve needs of current times?Of the manufacturer
Of the Retailer
The Larger Picture
• Manufacturing became “modern” decades ago• Retail became modern less than a decade ago
and ‘modern trade’ is growing
Modern Manufacturing….
…….Modern Trade
….What about Modern Distribution?
What is Modern Distribution?
• Organised • Scale / scalability• Reach• Driven by agreed KPI’s & processes that assure
achievement of KPI’s • Technology Enabled
Why ‘Modern’ Distribution?
Does the current model meet current needs?
• The current Model evolved when Modern Trade did not exist
– Needs of Retailer– Needs of Manufacturer servicing Modern Retailer
Distribution is not just about trucking & storing
Optimal fulfillment of customer needs at minimal cost
1. Customer Satisfaction 2. Cost
Sustainable logistics need performance on both
Sustainable Logistics: Needs Performance
1. Shelf Availability% of articles on the shelf
2. Logistics Cost% of Sales
3. Total InventoryDays of stock
Performance on these needs capability for measurement – rigorous, accurate & continuous
Measurements lead to Improvement
• Current order fulfillment in 48 hours ? Target same day,
4 hours…?
• Current fill rate is 80% ? Target 95%
• Current accuracy is 98%? Target six sigma?
• How can my business grow @ 50%, why can’t my
logistics cost come down by 20%
What is my ‘cost to market’? What’s my ‘time to market’?
Emerging Solution which address current & future needs
Modern Brand Distributor
What is a Modern Brand Distributor?(MBD)
• Distribution of branded products from brand owners to retailers & other channels.
• Products are sold by the brand owner to the distributor, with a pre-agreed mark-down.
• Physical distribution is an integral part of the service, wholesaler being the other major part. By acting as a wholesaler, the distributor takes over the receivables exposure from the brand owner.
Advantage MBD to Manufacturer
• MBD simplifies relationship management for the brand owner by becoming one wholesale customer replacing hundreds of customers.
– Leaner Sales org at regional level & more professional relationship mgmt– Leaner commercial org at regional and national level
• MBD distributor also obviates the need to have company depots / C&F agents – Leaner Distribution org needed for managing inventory, relationship and commercials with
depots.
• MBD distributor takes over from the brand owner the major part of – Inventory carrying– Customer credit– Receivables exposure
• MBD distributor can make it easier for the brand owner to manage – Trade promotions– Consumer promotions– Faster and synchronised, new product / pack/ promotions roll outs
• With IT & connectivity capability, MBD can provide superior information which will help track product life cycle & consumer response better.
Advantage MBD to Retailer
• MBD will service each retailer with key account managers at the category mgmt level. This will facilitate retailers plan & execute promotions & other activities across geographies better.
• Retailer will have one vendor across the country for the brand and for multiple brands.
• By having wider control on inventories, MBD will be able to offer significantly better fill levels and make Auto Replenishment work effectively.
• Retailers will be able to interface their IT systems to MBD systems thereby substantially improving information flow & operational efficiency.
• MBD’s focus will be optimal profitability through maximising sales compared to a conventional distributor’s ROI approach. This way, MBD can ensure brands remaining “active” at the stores so revenue to retailer is maximised.
Opportunities
• Brand owners seek to focus on their core competence –
marketing brands
• Companies want to become leaner
• Companies are generally dissatisfied with the current
distribution model – service, quality, cost & flexibility
• Companies are willing to outsource supply chain as they
increasingly see ownership as ability to drive
performance around KPI’s instead of ‘control’ on assets.
Customer Space
• Value of BDS is more when the brand owner need not drive day to day sales directly
– Predictability of demand: Stable or steadily growing product range– Relatively fewer SKU’s– Product unit value is not very high, but volume is high & hence the distribution
cost as % of sale is significant ( 2 to 10%)– Products can be consolidated – do not need special care (not fragile, perishable
or hazardous)– A significant share in Modern Trade
• Using these filters categories suitable for BDS:– FMCG (Processed & Packaged Food, Personal Care, Hygiene & Home care,
Cosmetics)– General Merchandise (Luggage, Crockery & cutlery, Footwear, Toys, IT,
stationery & office products)– Home – Appliances (of value < 5000)– Value apparels
Modern Distribution – The next level of excellence in Distribution of Consumer Products
Thank you
Future Logistics Future of Logistics
Consumption Supply Chain
Consumption Solutions
The 30 Supply Chains of Consumption
• Over 2.9 million SKU’s
• Over 1600 outlets
• Upto 4 million pieces handled everyday
• Inventory of over 30 million pieces
• 67 warehouses / distribution centers
• Covering 3.5 million sqft
• 500 vehicles-strong dedicated fleet and thousands of outsourced trucks
Deconstructing Logistics Deliverables
The End-to-End technology enabled
Supply Chain
The End to End Technology Enabled Supply Chain
Supply Chain Solutions
Supply Chain Services
• factory-gate logistics
• storage & fulfillment
• retail store replenishments
• movement (nationwide and intra-city)
• cold chain
• freight forwarding & custom clearance
• reverse logistics
• distribution services
Value-Added Services
• inventory planning & control support
• vendor management
• supply chain network modeling
• quality assurance
• bar coding services
• process & productivity management services
• packaging solutions
We shall deliver Everything,
Everywhere, Everytime for Every
Indian Consumer in the most
profitable manner.
Thank you
Future Logistics Future of Logistics