1. 1 by Milind M. Shahane 2009-10 Case Studies Distribution Management

2. Sales Management 2 Case Study – Superb Appliances Ltd. Situation Analysis Changing market conditions Declining sales and market shares Increased competition from MNCs Change in distribution channels Uncompetitive products Technology issues Response to market growth

3. Sales Management 3 Case Study – Superb Appliances Ltd. Products Air-conditioners Water coolers Refrigerators Deep freezers Washing machines Ovens White goods portfolio

4. Sales Management 4 Case Study – Superb Appliances Ltd. Current Distribution System Franchisee distributors Small distributors – appliance stores Direct sales for institutional customers Higher margins Limited exposure to department stores Coverage of around 1500 outlets

5. Sales Management 5 Case Study – Superb Appliances Ltd. Current Distribution System Characteristics –Family owned businesses –Small size –Low volume, high margin –More emphasis on service support Positives –Exclusive –Full focus on company’s products –Full service

6. Sales Management 6 Case Study – Superb Appliances Ltd. Current Distribution System Positives –Sales persons for push –High degree of specialisation –Demonstrations Negatives –Non-prominent areas –Limited capacity to invest –No investments in promotion –Family owned

7. Sales Management 7 Case Study – Superb Appliances Ltd. Market Changes Consumer profile changing Fast growth of economy – higher PDI Increase in DINKs Change in buyer shopping habits More retail oriented Growth in household segment Attracted by promotions

8. Sales Management 8 Case Study – Superb Appliances Ltd. New distribution system Super markets / chain stores / malls Prominent areas High volume Hard sell Large organisations Professionally managed Low on service

9. Sales Management 9 Case Study – Superb Appliances Ltd. Positives High volume, high capacity Consumer pull Promotion schemes Mass selling techniques Attractive showrooms Multiple product lines

10. Sales Management 10 Case Study – Superb Appliances Ltd. Negatives High cost Low margin No proper salesforce No service support No specialisation

11. Sales Management 11 Case Study – Pure Tea and Beverages Situation Analysis M&A (takeover) of DDL by PTBL Need to align the distribution systems Rationalise distribution system for DDL Increase volumes and market shares Payback / ROI on the purchase of DDL Large and very fast growing market for mineral water How to exploit the market?

12. Sales Management 12 Case Study – Pure Tea and Beverages Market Structure Various segments – retail and institutional Highly fragmented distribution structure Competitors using bottler route Franchisee bottlers are used in distribution High physical distribution costs – transportation, storage, packaging

13. Sales Management 13 Case Study – Pure Tea and Beverages Decision Factors Approach for sales and distribution –Different sales force –Use of alternative channel structures for different segments Use of Bottlers as a channel alternate Use of non-store retailing as alternate Modification of current distribution structures

14. Sales Management 14 Case Study – Pure Tea and Beverages Decision Factors Merging channels of PTBL and DDL Appointing new distributors Increasing reach Re-aligning physical distribution in line with new channel structures / alternatives

15. Sales Management 15 Case Study – Pure Tea and Beverages Advantages – Traditional channel Well set Relationships with retailers Relationships with customers Established terms and conditions

16. Sales Management 16 Case Study – Pure Tea and Beverages Disadvantages – Traditional channel Family managed Lack of professionalism Aversion to modern techniques Use of technology Reach to new areas / segments Lack of flexibility

17. Sales Management 17 Case Study – Bisleri Mineral Water Products Bottled mineral water Consumer acceptance – why will they buy / pay? Price point is critical Impulse purchase Wide / intensive distribution is critical Brand recall is key Hi volume – lo margin business

18. Sales Management 18 Case Study – Bisleri Mineral Water Market High growth sector > 40% CAGR for past many years Many local players Few national brands – Bailey, Aquafina, Kinleys, Oxyrich Competition from MNCs Cold chain / refrigeration at POP POP displays / advertising

19. Sales Management 19 Case Study – Bisleri Mineral Water Brand Building / Creation Bisley (Blue Monster) – Mascot Distinct Green labeled bottles Advertising Brand visibility on trucks Has become generic name for mineral water Purity is critical – loss of reputation due to contamination

20. Sales Management 20 Case Study – Bisleri Mineral Water Company Details Revenues – Rs.500 crores No. of manufacturing plants – 49 No. of SKUs handled - 6 Distribution No. of distributors – 3000 No. of retail outlets covered – 1 million No. of supply chain employees - 200

21. Sales Management 21 Case Study – Bisleri Mineral Water Distribution No. of WH – 10 Inventory turnover – 2 days No. of LSPs – 6 (various transporters) No. of technology providers – 2 Various suppliers for items – 10 for Pre- forms, Bottle caps and labels

22. Sales Management 22 Case Study – Bisleri Mineral Water Supply Chain Divided into 4 regions – NEWS Own logistics and supply chain as low margins Run mini logistics company Need to continuously innovate supply chain to keep costs under control Cost structure –Freight 28-30% –Packaging 30% –Distributor margins 30%

23. Sales Management 23 Case Study – Bisleri Mineral Water Supply Chain Short route distribution Continuous Replenishment Program Replenish JIT / real time based on sales Needs high level of synchronisation –Production schedules –Raw material delivery from suppliers –Product planning / job scheduling Direct routes e.g. Mumbai –230 trucks (150 own + 80 hired) run daily –Deliver 50,000 cases per day –Make 2 trips per day

24. Sales Management 24 Case Study – Bisleri Mineral Water Supply Chain Route charting and mapping for optimisation Returns of 20 litre bottles for re-filling and re-delivery Hub and spoke model Transfer stocks in bulk to WH – pallets and caged bins Handling, loading / unloading is a problem as its voluminous and bulky items Storage space is scarce due to Hi volume Need to be efficient and operate JIT / real time Replenish distributors daily as can hold only 2-3 days of stock at any time

25. Sales Management 25 Case Study – Bisleri Mineral Water Material Handling Bulky yet fragile SKUs – bottles Multiple handling will lead to damages – avoided as much as possible Care to be taken with mechanised handling Distributor WHs also used for storage

26. Sales Management 26 Case Study – Bisleri Mineral Water Manufacturing Standard products – no customisation High volume manufacturing – automated assembly lines RM suppliers close to the plants Contract manufacturing – 30 plants –Manufacture and supply to company WH –Paid for manufacture only Franchisees – 11 plants –Manufacture and supply to distributors and retailers

27. Sales Management 27 Case Study – Bisleri Mineral Water Manufacturing Franchisees – 11 plants –Manufacture products and sell / supply to distributors and retailers –Pay royalty to Bisleri for use of brand –Strict quality norms to be met –Need full adherence to manufacturing standards laid down –Company involved in growth plans Own plants –600 bottles per minute – 70000 cases per day –Run 24x7x365 days –3 automated lines

28. Sales Management 28 Case Study – Bisleri Mineral Water Supply Chain Optimisation Shorten distance from manufacturing to distribution to minimise cost Contract packer for every 200 km to shorten distances 200 distributors in Mumbai territory with defined areas Strict adherence to boundaries for operation Unable to keep pace with demand growth

29. Sales Management 29 Case Study – Bisleri Mineral Water Supply Chain Optimisation Reverse supply chain to collect empty PET bottles Send bottles back to recyclers for re-use Environment friendly actions Continuous improvement for cost reduction –Reduced logistics cost by 24% in one year –Load optimisation –Larger trucks – more trips per day –Mechanisation of handling – forklifts –Manpower reduced to 1 from 8 needed

30. Sales Management 30 Case Study – Bisleri Mineral Water Supply Chain Optimisation Delivery of products to retailers in the evening Adding blowing machines for faster filling to increase manufacturing capacity Rural markets through contract packers Aim to have plant for every 200 km as transportation beyond this is unviable Many other problems – complex logistics –Cash collection from retailers –24 hour operation –Daily replenishment