National Foods

Monthly joint sales meeting of Lahore region was called on March 21 st 2014 by Mr. Rana Muhammad
Azam (General Sales Manager, Punjab region). It was unusual for GSM Punjab to call or attend a meeting
of only Lahore region. All members of Lahore region were present at 9.00 am sharp in the committee
room. Punctuality is not a normal trait in Pakistani tradition, but today it seems to be a different day. The
air in the room was very tense, nobody was chatting with each other, and you could only hear the
shuffling of the papers. The anxiety was obvious on the faces of the committee members waiting for the
boss. The participants were Mr. Nadeem Farooq - Regional Sales Manager (RSM) Lahore, Mr.
Muhammad Farhan - Zonal Sales Manager (ZSM) North & Central, Mr. Shehzad Irfan - ZSM East, Mr.
Tahir Butt ZSM South, and four Assistant Sales Managers (ASM) of each zone. Everyone knew this
was going to be a rough day.
Mr. Rana (GSM) walked in and stomped a bunch of computer printed sales reports on the table and
yelled, Where did I fail? I have given you full support and complete freedom to achieve your targets but
look; this is what you give me in return. We are terribly below our targets. This way we all are going to be
in the streets looking for jobs. Tell me what I would tell the bosses in upcoming board meeting. What do
you want me to do, cheer for your dismal performance? Tell me what is wrong with us?
He seemed unhappy after reviewing the target achievement reports. The sales for the month of March
2014 - 2015 vs 2013 - 2014 were showing declining sales for Food and Kitchen Division of Lahore
region. The primary target for Food Division in March 2014 was Rs. 73 million whereas actual sales in
March 2014 were Rs. 38.5 million, showing a sales almost half from the March 2013. The primary target
for the Kitchen Division in March 2014 was Rs. 85.5 million whereas actual sales in March were Rs. 46
million showing a similar decline. What has happened, he pondered? What is wrong, he mumbled to
himself. Sales of March 2013 were right on target. What happened? What went wrong? What about our
vision for 2020. He was contemplating about probability of success of 2020 vision (Exhibit # 1). GM
stood there with frown on his face and demanded the reasons for such poor performance of both divisions
in Lahore.
Company Background
National Foods Limited (NFL) was founded in 1970 and emerged as a spice company. Over the years
NFL continued on the path of growth & expansion and became publically listed company in 1988. NFL
has produced a variety of products; from Masalas to Achaars and from Ketchup to Rice over the years.
It has over 150 different products and the company made sure that its products were available all over the
country. It also serves the international market by providing them with over 100 different products. With

the changing time and lifestyles of consumers, NFL has come up with broad range of innovative products
that provide quick and convenient cooking solutions for the consumers. These products are easy to use for
the modern era and offer a nutritional and traditional food taste experience. NFL believes in family
relationships and thus has developed products not only for daily use but also for family occasions. The

main aim of the company is to focus on hygiene and reduce the time women spend in the kitchen
specially working women. They also want to change the lifestyle of people with quick recipes,
taste and convenience to a very large segment of the population to keep pace with the changing
global environment. They are also concerned about the health and safety of their organization and
its employees and have developed an Occupational Health and Safety System.
Products
The following are main products of NFL:
1. Recipe Masalas
2. Ketchup
3. Jams
4. Rice
5. Desserts
6. Powdered Drinks
7. Pickles
8. Chinese
9. Snacks
10. Plain Spices
11. Salt
The year 2013 was one of the best years in the companys history. Moving into 2014, it would be
challenging to maintain such an outstanding performance as that of 2013, but I believe our business is
uniquely positioned to deliver as per plan. The economic environment and volatile security situation
present challenges but we are confident that with our portfolio, careful management of the value equation,
and appropriate measures of cost reductions we can accelerate growth further. (Annual Directors Report,
2013).
NFLs vision is to become Rs. 50 billion worth food company by the year 2020 in the convenience food
segment by launching products and services in the domestic and international markets that enhance
lifestyle and value for our customers through management excellence at all levels (Vision, Annual Report
2013).

In order to become a Rs. 50 billion company by 2020 means NFL should grow at an average of 23%
annually. Currently the company is growing at 12% annually. Therefore it needs to launch new products.

NFL is not the market leader in deserts and powdered drinks. It would take extra marketing
efforts to become one, but on the condition that the company remains within the feasible budget.
For example Mr. Farhan, the RSM, commented, We have Red Syrup ready with our R&D
department but have not launched it yet because we have to check feasibility first of doing it so. Creating
products is not a hassle, marketing them effectively is!
NFLs Current Sales Program
A sale is a profitable exchange of products and services with money in which both the seller and the
buyer have mutual confidence and long term satisfaction, said Mr. Shahzad Irfan, ZSM. The major
departments of any company are production department and sales department. All other departments (e.g.
Finance, Administration, and Human Resource Department etc.) are support departments. said Mr. Rana.
NFL has 13 different categories of products and brands that when clubbed together become a SKU-Stock
Keeping Units. They are as follows:
1.
2.
3.
4.
5.
6.

Pickle
Ketchup
Chinese
Jams and Jellies
Instant Powder Drink
Desserts

Food Division

When these six SKUs are clubbed together they become a division known as Food division. NFL has a
separate sales force catering to this division that will be explained further in the report.
The remaining products include plain spices that further include:
1.
2.
3.
4.
5.
6.

Dehydrate
Basic Recipe
Recipe
Snacks
Salt
Rice

Kitchen Division

National Foods Limited

NFL

Rs.12 billion

has

Food Division
43%

Kitchen Division
57%

become a huge company earning a total sales of Rs. 12 billion. Out of this food division contributes to
43% of sales while the Kitchen Division contributes to 57% of sales.

(Source: NFL Sales Manager, Mr. Nadeem Farooq, 2014)

The following table further breaks down the sales figures:
FOOD DIVISION
Product
Pickle
Ketchup
Chinese
Jam and Jellies
Desserts
Instant Powder
Total
(Source: NFL Sales Manager, Mr. Nadeem Farooq, 2014)

Sales in Rupees
1.82 billion
1.20 billion
380 million
350 million
400 million
200 million
4.35 billion

NFL has a 53% of total market share. The major players in the market are Shan Recipe Masala with a
43% share of the market, and Mehran Foods with a 4% market share in Recipe Masala.

NFL has one GM, Mr. Nadeem Farooq. There are two SMs under the GM. One SM is designated for
urban sales and the other is designated for rural development sales. Under each SM, there are four RSMs.
Under each RSM, there are four ZSMs. Under the ZSMs are the sales executives/sales supervisors. Under
the supervisor are order bookers (BBO). The sales structure can be analyzed through exhibit # 2.

Sales Dilemma/Role of Distributors

The role of distributor in NFLs supply chain is very important in achieving sales for NFL (Exhibit # 3
and 4). The distributors work in collaboration with RSMs and ZSMs. Sales executive and order bookers
as well as delivery men/sales men report directly to distributor. The orders bookers are the ones who go in
the market and get orders from the shops that distributors have assigned them. The orders are taken one
day before so that the order are processed at day end i.e. the order receipts and bill summaries are
prepared and early morning the distributors load up the vans and distribute the order stock to the retail
shops in areas of the zones assigned to them. For Customer Relationship Management, he has to visit the
outlet twice a week, or once a night on weekly basis. There are also one to two merchandisers in the sales
team but they do not do anything. Their work is done by the order bookers. They follow a trade visit plan
made by distributor (Exhibit # 5)
ZSM analyzed that Cost of goods sold has increased by 19% from Rs. 7.168 billion in 2012 to Rs. 8.545
billion in 2013.
Current Territory Design
Pakistan is divided into six regions geographically.
Regions
1. Karachi, Quetta
2. Multan and Faisalabad
3. Lahore
4. Gujranwala
5. Pindi City Centre (RWP till Jhelum)
6. KPK and Rest of Pakistan
(Source: NFL Sales Manager, Mr. Nadeem Farooq, 2014)
The province of Sindh and Baluchistan was combined as one region. The province of Punjab was divided
into four major regions. Because 70 percent of total domestic sales came from Punjab. KPK, AJK and all
northern areas were grouped into one region. The regions are head by RSMs. Then under every region,
there are four zones. The zones are divided based on geography as well as the business that they generate.
The following table explains the Lahore region zones:

ZONE NAME
1. Lahore DHA Zone
2. Lahore Central Zone
3. Lahore Johar Zone
4. Lahore North Zone
Source: Company - 2014
Under each zone, there is a metro distribution and under metro distribution, there are towns. Collectively
the towns make one Zone (Exhibit # 6).
Current Quota/Sales Target Setting
The GM makes the entire budget for the rest of the hierarchy. He makes secondary and primary sales
targets for the entire team, where major focus is on primary sales target setting. The SM splits the budget
to achieve his target and also sets targets for RSMs. The RSM then divides the budget amongst the
regions appointed and strives to achieve his target and also sets the target for ZSM. The ZSM is given
target for zones and he has to achieve those while remaining in the budget. The ZSM then sets the target
for sales executive of the areas appointed to him.
The Budget is divided into 12 months. The seasonal impact is also taken into consideration and
opportunities have to be taken advantage of. Every month the budget is made, the process is called
phasing. The budget is made for SM till sales executive in the team as to how much sales to achieve, and
how much growth is required etc.
Formulation of New Sales Force Program
Mr. Nadeem Farooq worked in collaboration with Mr. Farhan and other ZSMs to propose two
alternatives to reverse the adverse impact of declining primary sales. The solutions were to be presented
in the next months Joint Sales Meeting.
A. Separate division or sales force for key accounts
NFL must create a separate division for dealing with major accounts. This approach will allow close
integration of manufacturing, logistics, marketing and sales activities. This strategy is important when one
or a few major customers account for such a large proportion of a firms total sales volume that variations

in their purchases have a major impact on the firms productions schedules, inventories and the
allocations of resources. If it is not feasible for the company to have a separate division for key accounts
than rather than creating an entire separate division to deal with major customers, a company may create a
separate national key account sales force.
A separate sales force has several advantages in dealing with key accounts. By concentrating on only one
or few major customers, the account manager can become very familiar with each customers problems
and needs and can devote the time necessary to provide a high level of service to each customer. Also the
firm can select its most competent and experienced salespeople to be members of the national account
sales force, thus ensuring that important customers receive expert sales attention. A separate national
account sales force provides an internal benefit to the selling company because only the most competent
sales people are typically assigned to national accounts, such an assignment is often viewed as desirable
promotion. Thus, promotion to the national account sales force can be used to motivate and reward top
salespeople who are either not suited for or not interested in moving into sales management.
B. Territory Design
Another recommendation includes NFL to decrease its number of distributors from five to one. With this
proposed strategy, one distributor will cater the entire Lahore Region and that one distributor will further
employ sub-distributors to better control the supply of the product. The following diagram shows the new
hierarchy:

Deploy SubDistributors
for Towns

SM explained the following advantages of implementation of this strategy to the GM:

1. Reduced Administrative Costs: Currently NFL is administering five distributors based in Punjab.
The administration costs to handle operations effectively are high. These operations include
maintaining purchase information, reconciling invoices to purchase orders and other
administrative task. This leads to the greater lead times resulting in unresponsive and inefficient
supply chain. With only one distributor of NFL, all these tasks will be consolidated at one origin
and delivery point resulting in lower lead time. Moreover, NFL manufactures food products that
are perishable in nature and require a system that is responsive in nature.
2. Reduced Inventory: NFL at present operates with five distributors that require a fixed minimum
level of inventory in their specific store. The replenish points needs to be at an optimum level in
which the supply can reach all the stores. They should not have excess storage or units in the
inventory due to the products being perishable in nature and may expire in the warehouse of
distributor. Whenever the product expires its entire replacement cost has to be borne by
distributors. Moreover, it creates wastage as the retailer will not accept that product due to
shortened shelf life.
3. Increased Sales: Higher sales may be anticipated with one distributor as he will experience
greater control over the sales process. NFL will be able to create better demand visibility with the
right product, in the right place and at the right time. This strategy will further help NFL with
better collaborative planning for promotions, new product introductions based on authentic and
timely feedback and demand projection. This one distributor will further have sub distributors to
aid the growth of sales. It will be the distributors decision to choose those sub distributors. They
can be current sales men or order bookers. The choice will be based on a certain criteria, which
includes performance sheet, target achievements reputation in the market.
4. Logistic Cost: Having multiple distributors tend to increase the logistics cost of the company as
stock is supplied to various distributors depo/warehouse. To decrease this cost, it is proposed the
company to have only one distributor that will enable it to minimize its cost which is a relatively
controllable factor.

Exhibit # 1
Mission and Vision Statement
To be a Rs. 50 billion food company by the year 2020 in the convenience food segment by launching products and services in
the domestic and international markets that enhance lifestyle and create value for our customers through management excellence
at all levels. (NFL Annual Report, 2013)
Founders Philosophy
1.

National Foods Limited must focus on customers needs and serve them with quality products at affordable prices at

2.
3.

their doorstep.
Our products must be pure, conforming to international standards.
Our research must produce continuously new, adventurous products that are scientifically tested and hygienically

4.

wrapped in safe and attractive packages.

We must create an environment in our offices and factories where talents are groomed and our people have every

5.
6.
7.

opportunity to advance in their careers.

We must prove ourselves good corporate citizens, support good causes and charity and bear our fair share of taxes.
Reserves must be built, new factories are created, sound profit made and fair dividends paid to our stockholders.
Through building a reliable brand, National Foods Limited must get itself recognized as a leader in Pakistan and

8.

abroad.
With the help of Almighty God, the Company can achieve its target in time to come. (NFL Annual Report, 2013)

Core Values
Passion: We act with intense positive energy and are not afraid to take risks. We challenge ourselves continuously, were good at
what we do, and we take pride in who we are.
People-centric: We put our people first. We treat them with respect and actively contribute towards their development.
Customer Focus: We see the world through the eyes of our customers. We do everything possible that makes them happy.
Leadership: We are part of the solution, never the problem. We act like owners and have a positive influence on others.
Teamwork: Our roles are defined, not our responsibilities. We believe in going the extra mile to accomplish our goals. We coach
and support each other to ensure everyone wins. We have a WE versus I mindset.
Ethics: We dont run our business at the cost of human or ethical values.
Excellence in execution: We say. We do. We deliver. We talk with our actions. We strive for nothing but the best. Execution is the
key to winning!
Accountability: We see. We act. We take full responsibility for our actions and results. We dont blame others for our mistakes;
we analyze them and correct them. (NFL Annual Report, 2012)

Exhibit # 2
Sales Structure

General
Manager
National
Sales
Manager

Regional
Sales
Manager

Manager
SCM (Special
Category
Managemen
t)

Sales
Supervisor

Zonal
Sales
Manager
Sales
Executive

Distributors

Order
Bookers
Delivery
men
Source: Company Records 2014

Manager
Rural
Developme
nt Program

Manager
Public
Accounts

Manager
Internation
al Modern
Trade

Zonal
Sales
Manager

Supervisor

Zonal
sales
Manager

Sales
Executive

Merchandi
ser

Booker

Order
Bookers

Exhibit # 3
FOOD DIVISION MARCH SALES COMPARISON 2013-2014 VS TARGET 2012-2013
Sales up to

March 2014

Last Year

Primary Target

Base

Lahore DHA Zone

16,881,000

15,819,524

10,814,688

-31.6

Lahore Central Zone

21,794,280

14,691,159

7,730,351

Lahore Johar Zone

15,216,000

12,547,281

Lahore North Zone

19,112,500

Total Lahore Region

73,003,780

ZONE NAME

Target

Balance Sales

Required /

Vs Target

6 Day Sales

64.06%

6,066,312

1,011,052

-47.4

35.47%

14,063,929

2,343,988

9,951,131

-20.7

65.40%

5,264,869

877,478

17,053,297

9,968,691

-41.5

52.16%

9,143,809

1,523,968

60,111,261

38,464,860

-36

52.69%

34,538,920

5,756,487

21st
March

Growth
(%)

Achieved
(%)

Source: Company - 2014

Exhibit # 4
KITCHEN DIVISION MARCH SALES COMPARISON 2013-2014 VS TARGET 2012-2013
Target

Balance

Achieved

Sales Vs

(%)

Target

-39.2

48.90%

16,321,961

2,720,327

8,512,488

-29.6

46.37%

9,843,712

1,640,619

17,900,594

12,612,258

-29.5

73.26%

4,603,742

767,290

17,730,500

21,509,505

9,567,153

-55.5

53.96%

8,163,347

1,360,558

85,242,200

77,194,984

46,309,438

-40

54.33%

38,932,762

6,488,794

ZONE

March 2014

Last Year

Sales up to

Growth

NAME

Primary Target

Base

21st March

(%)

31,939,500

25,696,067

15,617,539

18,356,200

12,088,817

17,216,000

Lahore DHA
Zone
Lahore
Central Zone
Lahore Johar
Zone
Lahore North
Zone
Total Lahore
Region

Source: Company - 2014

Required /
6 Day Sales

Exhibit # 5

Monday
Shalimar road
pakki thati
Darbar
riwaz garden
toheed park

Tuesday
pir ghazi road
nellam block
Ibrahim road
mozang
nagra fall

bastmi road
awan town

jameel town
ghunj buksh

Monday
Tuesday
Ichra
Shalimar road
Kareem block
pakki thati
Islam pur
darbar
raj ghar
riwaz garden
moon market
toheed park
sabza zar
bastmi road
Rahman Pura
awan town
Source: Company - 2014

Booking Plan Recipe

Wednesday
Thursday
shera kot
rustm park
peco road
samna abad
sanat nagar
Rashid road
litan road
sanda
rasool park
ghulshan

Friday
shama road
Kashmir block
out fall road
hakeema wala
motor way

Saturday
Ichra
Kareem block
Islam pur
raj ghar
moon market

Ravi
millat road
dholanwal

shah fareed
Shah Kamal

sabza zar
Rahman Pura

Supply plan Recipe (van 6)

Wednesday
Thursday
pir ghazi road
shera kot
nellam block
peco road
Ibrahim road
sanat nagar
Mozang
litan road
nagra fall
rasool park
jameel town
Sodiwal
ghunj buksh
Hasan town

Friday
rustm park
samna abad
Rashid road
sanda
ghulshan ravi
millat road
dholanwal

Saturday
shama road
kashmir block
out fall road
hakeema wala
motor way
shah fareed
Shah Kamal

Sodiwal
Hasan town

Exhibit # 6
The following table shows the Towns under the Lahore Zones:
Towns
Nazir & Co. Lahore
Shahdara City
Kasur
Pattoki
Raivind
Bhai Phiru
Chunian
Ellah Abad
Kot Radha Kishen
Manga Mandi
Khudian Khas
Emaan Enterprises -FSD-Lahore
MAF Hypermarkets Pakistan (Pvt) Ltd-Lahore Cantt
Metro Cash & Carry (THK) (O.B) S-Lahore
Metro Cash & Carry (Def) OB (S)-Lahore
Metro Cash & Carry (LC Foods)-Lahore Cantt
Lahore DHA Zone
Al-Hanif Traders Lahore
Sheikhupura
Shakargarh
Narowal
Farooqabad
Narang Mandi
Mureedkay
Sharq Pur Sharif
Boucheki

Qilla Kalar Wala

Safdarabad
Khanqadogran
More Khunda
Pearl Continental Hotel Lahore
Agrow (Pvt) Ltd Lahore
Ravi Chemical Complex-Sheikhupura
Lahore Central Zone
Lahore Johri
Arifwala
Okara
Okara Cantt
Pakpattan
Sahiwal
Haveli Lakha
Dipalpur
Renala Khurd
Basirpur
Hujra Shah Muqeem
Creative Marketing-Lahore
Makro Habib Pakistan Ltd (Lahore)-Karachi
Metro Habib Cash & Carry-(MT)Lahore
Metro Cash & Carry Pakistan (LHR)-Lahore
Agrow Pvt. Ltd-Pak Pattan
Usman Traders - FSD Lahore
Khan Traders - FSD-Lahore
Akhtar & Sons Enterprises Lahore
Lahore Johar Zone
Lahore Imran
Prince Associate Lahore

Usc Sheikhupura
Usc Lahore
Usc Okara
Usc Sahiwal
CSD Okara
Csd Lahore
Metro Habib Cash & Carry (Ravi)-Lahore
Makro Cash & Carry (Foods)-Lahore
Lahore North Zone
Source: Company - 2014