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