Topic : Distribution Management of Hindustan Topic : Distribution Management of Hindustan Unilever’s (HUL) in India Unilever’s (HUL) in India

Subject : Distribution ManagementFaculty : Prof. Bins MathewStream: MMM, SEM V

Presenter: Angela Nediyodi Roll No. M08Deepali Aparaj Roll No. M02

Introduction…..Introduction…..

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.

SWOT AnalysisSWOT Analysis

Strength Innovative Aspects Presence of established distribution network in both Strong R&D Highly skilled HR Effective CSR

Weakness Strong Competitors Low Export Level (at Present) Changing consumption pattern High advertising costs

Opportunity Large domestic Market Untapped rural Market Changing life styles & rising income levels

Threat Mimic of brands New Entrants (ITC, P&G) Increasing cost of raw material

Analysis of Distribution NetworkAnalysis of Distribution Network

We  have  analyzed  the  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…..

Supply

Chain

PLAN

Source Make Deliver

Return

Level 1 Sets Scope & Context,

Segments & Products

Build to Stock

Build to Order

Engineer to order

Schedule Production Activities

Issue product

Product & test

PackageStage

product

Release Product

to Deliver

Level-2 Identifies major Configurations

Level 3 Identifies Key Business activities

Evolution of Distribution NetworkEvolution 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.

Distribution at Villages…Distribution at Villages…

RURAL DISTRIBUTION MODEL

Distribution at Urban Centers…Distribution at Urban Centers…

Distribution  of  goods  from  the  manufacturing  site  to  C&F  agents  takes  place  through either trucks or rail/road 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.  

New Distribution Channels…New Distribution Channels…

Shakti OperationShakti Operation

Project Streamline….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 NetworkHindustan 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 NetworkHindustan Lever NetworkMother  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 DesignChannel Design

Hindustan  Lever  Limited  (HUL)  has  two types  of  channel  selling viz 

1. Regular  (traditional)  retail  channel &

2. Direct Selling Channel in the name of Hindustan Lever  Network  (HLN).  

Channel StructureChannel StructureRedistribution 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)  

Contd…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.  

Channel StructureChannel Structure

Initiatives Taken to Improve The Initiatives Taken to Improve The Distribution NetworkDistribution Network

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.

Thank YouThank You