Analyzing the distribution channel of

GCPL
Part-2
Submitted to: Submitted by:
Prof. Vinod alia Grou! "-#
$ Gireesh "abu %&2P'()*
$anish Gu!ta %&2P'(#*
$ohit "atra %&2P'(+*
,i-hil Gu!ta %&2P'(.*
,itish Gu!ta %&2P'((*
0
Recommendations
ROI of distributor
o /01 Structure
,et income of a Godre2 distributor is a!!ro3imately #4 of his turno5er
1n5estment of a distributor is in follo6ing four as!ects:
Stoc- Le5el- 7he in5entory le5el 6hich is -e!t by the distributor
-ee!ing a safe le5el in order to a5oid stoc--out
$ar-et Credit- 1t is the number of days after 6hich the money is
collected after deli5ering the goods to the 6holesaler8retailer
Claims- Any s!ecial schemes9 6hich are !re5alent in that month
from the com!any:s side9 are !aid on behalf of the distributor. 7his
money has to be collected from the com!any
;amaged Stoc-- Any goods 6hich are damaged 6hile trans!orting
or 6hile in in5entory ha5e to be incurred by the distributor
,et <3!enses of the distributor is in the follo6ing four as!ects:
Salary !ro5ided to the ;S/ %;istributor Sales /e!resentati5e* and
the deli5ery unit cost9 6hich further consists of salary of deli5ery
boy9 dri5er and the cost of the 5ehicle. =or the area co5ered by
e5ery 2 ;S/s9 there is one deli5ery unit. A deli5ery unit is further
1
of t6o ty!es- mechanized %motor 5ehicle* and non-mechanized
%ric-sha6*. 7he cost of a non-mechanized deli5ery unit is about
)'4 lesser than that of a mechanized unit.
Cost of the office and >arehouse9 along 6ith its o!!ortunity cost
An e3tra cash discount gi5en by the distributor to the 6holesaler of
about &4 in com!arison to the retailer
$iscellaneous e3!enses in the form of tele!hone9 stationary9
1nternet etc.
Subtracting the e3!enses from the net income and di5iding the net !rofit
calculated by the in5estment gi5es the final /01 of the distributor
o 7o increase the /01 follo6ing ste!s can be ta-en by the distributor
Su!!ly chain 5elocity- A fast re!lenishment system 6ould hel! in bringing
more sales. <5ery time a ;S/ goes to a sho!9 he should be able to ta-e an
order and a5oid ta-ing orders that last for t6o 6ee-s. Along 6ith this9
ne6er S?:s %6hich 6ere not earlier bought by that sho!* should be
!ushed in because they 6ill be sold incase the usually bought goods stoc--
out. 7hus increasing sales for the com!any and distributor
Visibility- ;istributor should ta-e care that the merchandising is being
done !ro!erly and that the !roducts ha5e !ro!er shelf s!ace in the sho!s or
not. >ith increased 5isibility9 sales 6ould ha5e an increase
2
$ar-et confidence- Schemes offered by the com!any should be !assed on
to the retailer. 7his hel!s in creating a mar-et confidence on the com!any
Pilferage- Stealing of goods at the 6arehouse by any !erson should be
chec-ed u!on in order to maintain !ro!er @hygieneA. 7his can lead to loss
for the distributor.
o Repercussion of the Changes- 1f the abo5e mentioned recommendations are
a!!lied9 in order to maintain a fast su!!ly chain !rocess9 e3tra man force may be
reBuired at the distributor !oint. So there might be a need for more deli5ery units
to ma-e sure that the deli5ery is done on the consecuti5e day of ta-ing the order.
$oreo5er9 the =ield 0fficer 6ould also ha5e to -ee! a chec- on this fact as e5en
one day of stoc--out 6ould amount to lost sales for the com!any.
Also9 currently not all ;S/s maintain a chec- on the 5isibility of Godre2 !roducts
6hen they go to a sho!. 1f the 5isibility needs to be chec-ed9 the ;S/s 6ould
ha5e to s!end more time on each sho! that might reduce their !roducti5ity.
Abo5e-mentioned !roblems can be ta-en care of by efficient 6or-ing of the
com!any and distributor officials. =or 5isibility9 there is a merchandiser se!arately
hired by the distributor9 6ho can -ee! a !ro!er chec- on the 5isibility of Godre2
!roducts at a sho!.
Credit Allocation- >holesalers are al6ays the bottlenec-s in e3traction-credited money.
1t is easier to ta-e money from retailers than 6holesalers because they al6ays deal in
3
large 5olumesC hence the amount to be !aid by them is al6ays larger. Certain ste!s 6hich
can be follo6ed to a5oid this !roblem is:
o ;ouble billing shouldn:t be allo6ed i.e. the order for the goods should be ta-en
by the ;S/ only if the 6holesaler8retailer has !aid for the !re5ious consignment
ta-en
o A record should be maintained as to the stoc-9 6hich is generally maintained by
the 6holesaler8retailer so that only that amount of stoc- is deli5ered e5ery 6ee-.
1f enough stoc- is gi5en that lasts for one 6ee- only and not for t6o 6ee-s9 then
the sho!-ee!er 6ill ha5e to order e5ery 6ee-9 6hich can only be done if he has
!aid for the !re5ious order
o 1f this system 6ere follo6ed then the deli5ery !rocess 6ould ha5e to be chec-ed.
7he distributor 6ill ha5e to ma-e sure that the good are being deli5ered the 5ery
ne3t day9 because other6ise there is a chance of stoc- out for the sho!-ee!er
along 6ith the 6ee-ly cycle of ta-ing orders 6ould also be disturbed
o =inally9 the com!any 6ill ha5e to !lay by its o6n rules i.e. if they ha5e set the
rules of not ta-ing the ne3t order in case the !re5ious bill has not been cleared9
then this system should be strictly follo6ed. 7he mar-et has trust on the
distribution system of Godre2 Consumer Products Ltd. and 6ould also start
adhering to its rules as there is a demand for its !roducts in the mar-et
o Repercussions of the Changes- =or the abo5e ste!s9 being strict 6ith the retailers
on credit basis but end u! losing some sho!s for Godre29 but in the long run it
4
6ould gi5e a correct signal to the rest of its customers and a5oid the !roblem for
credit collection.
Availability of Products- A 6holesaler doesn:t -ee! all S?:s that the com!any offers.
1nstead it -ee!s only certain S?s but it deals in large 5olumes. 7he total S?s carried
by a 6holesaler are al6ays greater than the total S?s stoc-ed by a retailer. 7here can be
three reasons for the una5ailability or stoc- out of !roducts at a 6holesaler:
o 7here is a stoc- shortage at the com!any le5el
o 7he brand being tal-ed about is a slo6 mo5ing brand because it is not generating
the necessary !ull and hence not bringing high sales. Dence9 the retailers are not
ordering in !ro!er cycles and its getting stoc- out at certain times
o 1ssue in the distributor:s distribution style
,o69 in the abo5e mentioned !oints the first t6o !oints are outside the !ur5ie6 of sales
and ha5e to be considered by officials belonging to the mar-eting de!artment of the
com!any. Chec-ing the record of the billing freBuency of 6holesalers8retailers can chec-
the third issue. 7he =ield 0fficer %=0* of the com!any can chec- these records. Another
alternati5e is that more number of S?s should be !ushed for6ard at the outlets that are
facing an una5ailability situation. 7his can al6ays hel! in increasing the sales for the
com!any.
Repercussions of the changes- 7here 6ould be a resistance from the =ield 0fficers in
acce!ting this -ind of 6or-9 because this 6ould add to their already high amount of
6or-load.
5
People Issues- 7he biggest issue faced here is by the =ield 0fficers %=0* in managing the
;S/s. Since the ;S/s are not under the com!any:s !ayroll9 their immediate senior in
authority !erson is the distributor himself. 1t is difficult for the =ield 0fficers to manage
the ;S/s9 to as- them to 6or- in a manner that is suited to the sales of the com!any. As a
solution to this !roblem9 the com!any currently offers an incenti5e on the sales target
achie5ement9 6hich is a!!ro3imately #'4 of their monthly salary. 7his acts as a
moti5ator for the ;S/s. 0n the other hand9 it also acts as a demoti5ation for some ;S/s
6ho are unable to achie5e their sales targets. 7his has to be constantly chec-ed by the
=ield 0fficer. 0n an a5erage a field officer has about &' ;S/s allotted to him.
Something e3tra that can be done by Godre2 is that they can start a /e6ards and
/ecognition !rogram for the ;S/s9 6hich 6ould in5ol5e in -ind gifts to them instead of
2ust monetary incenti5es. 7his model is being follo6ed by all other ma2or =$CGs in
1ndia
Repercussions of the changes- 7he /e6ards and recognition !rogram by the com!any
6ould add !ressure on the bottom line of the com!any9 but the returns on this 6ould be
long term and cannot be measured Buantitati5ely through a !ilot !rogram. 7his !rogram
6ill surely hel! in reducing the high attrition rate of the ;S/s for the com!any that 1s
around )#4 currently %yearly*
IT System- A generic solution that can hel! in sol5ing most of the !roblems for the
com!any is to maintain a robust $1S system. 7hough9 currently a highly ad5anced
system is being utilized by Godre2 to maintain and chec- data9 but there is still a sco!e of
6
im!ro5ement. 7his im!ro5ement can be achie5ed by benchmar-ing 6ith the $1S systems
being used by the best =$CGs of 1ndia
Contacts
Area Sales $anager %;elhi /egion*
$r Aman Sang6an
Contact: EF&-F#(2##2&''
Area Sales $anager %"ihar /egion*
$r /ishabh "ansal
Contact: EF&-('#&&''(2&
Area Sales $anager %Andhra Pradesh /egion*
$r Varun $aha2an
Contact: EF&-F.'G)#)2G&
Area Sales $anager %South "engal /egion*
$r arn "a6ara
Contact: EF&-F(G'')F#(G
=ield 0fficer %;elhi /egion*
$r A5nish
Contact: EF&-FG#'+&(G('
7
=ield 0fficer %ol-ata /egion*
$r Soumitro
Contact: EF&-F(G'&.')2&
8