Published on December 20, 2008
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Sales & Distribution Network of Hindustan Uni Lever (HUL)- DOVE bathing Soap (Region: Kolkata) A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and possession gaps that separate goods and services from those who need or want them. Members of the marketing channel perform a number of key functions like forward flow of activity from the company to the customers(goods) & backward flow from customers to company (order, Payment). FMCG major HUL is the subsidiary of UNILEVER with a market capitalization of $ 14 billion. HUL owns 35 of India’s 150 most trusted & powerful brands and is Market Leader across categories • Fabric wash, Personal wash, Dish wash, hair wash, skin applications, Talcum powders, packet tea, Jams • Number two: Toothpaste, instant coffee, ketchup The sales and distribution challenge of HUL HUL caters to Seven million distinct outlets across India (one for every 29 households) and 59% of these stores are in rural India. HUL directly services over 1 million stores and has a network of over 7000 Stockists and distributors. 1
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 HUL’s Approach to Distribution Direct Coverage Indirect Coverage Streamline Distribution 2
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 S & D of HUL in Kolkata Hindustan Unilever in Kolkata covers the consumers mainly with the combination of C&F and stockists who indirectly deal with the Retail outlets. The company which is headquartered in Mumbai has appointed M/s Mitra Logistic Pvt. Ltd as the C & F agent for Easter region (West Bengal, Assam, Orrisa & Bihar). C & F agents can be classified into 2 types, one with investment and the other without investment. The without investment C&F agents are mere Forwarding agents and act as the transporter to the company. M/s Mitra Logistic Pvt. Ltd is a forwarding agent on behalf of HUL. The C&F agent then supplies the goods to the authorized stockists . These Stockists are also classified into 2 categories called U1 and U2. U1 & U2 The stockists are classified as U1 and U2 stockist on the basis of the products that they stock. E.g. U1 stockist generally stocks products like surf and ponds whereas the U2 stockist deals with high profile products of HUL like Lakme and Dove. The stockiest is HUL system are commonly referred to as Re Stockist (RS). In Kolkata there are approximately 7 U1 Stockists and 5 U2 Stockists. These are appointed for a particular region of the city. Each Stockist is then responsible for distributing the goods to the retail counters in his region. On an average Each Stokist caters to 700-900 retail outlets of the city. The retailers then provide the goods to consumers. The depending upon the type of products, sales, turnover and the number of retail counters a stockist is dealing with, the company has classified the stores into Super Value Stores Smart/ FLO Unicare Vijeta U2 The stockist is also responsible for dealing with Modern retail outlets like shopper stop and pantaloon. The stockist also supplies the goods to CSD Canteens and bills them for the same and the difference in the amount is reimbursed by the company. The Stockist which I visited was supplying to the CSD Canteen Fort William of Kolkata. 3
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 ‘Direct-to-Consumer’ Distribution Project “Sangam Direct”- a non-store home delivery retail business - was conceptualized (2001) and test marketed by HLL in Mumbai. Sangam operates a dedicated call centre with trained personnel in Mumbai. The centre after procuring orders from customers passes them on for execution to a network of re-distribution agents. This model, which does not call for owning a physical warehousing or selling facility, offers the twin benefits of convenience and value to its customers. HLL, after understanding and analyzing consumer response, wanted to take the idea across the country. Diagrammatic representation o the Distribution Channel HUL C&F STOCKIST CSD CANTEENS RETAIL OUTLET MODERN TRADE CONSUMER CONSUMER CONSUMER 4
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Sales force behind the Distribution channel The distribution channel cannot be successful without a good sales force. In the case of HUL Kolkata the sales were co-ordinated by Area sales manager (ASM), Activation Manager (AM), and a Territory Sales Incharge (TSI). These people were working on behalf of HUL and were a Link between the stockist and the company. The goods moved to the stockist’s godown by the company’s Truck. The stockist then appointed a (Re Stockist Salesman) RSSM who was responsible for collecting the orders & payments from the retail outlets. The Stockist which I visited had 11 sales man, 6 people in the warehouse, and 11 delivery man. The delivery was made by either cycle or through a van depending upon the size of the order. The sales were monitored by the way of MOC . They had 12 MOC’s per annum and the stockist has 3TDP’s (21st-30th/1st-10th/11-20th of a month). The lead time for delivery from the company was 1 day. The orders were placed online using the CRM software of unilever called “UNIFY”. Evaluation/ Selection of Channel Members The stockist were selected with a proper evaluation on the factors like the investment capacity, Number of retail stores covered, Appropriate Sales force, and Infrastructure. I also noticed that the company’s policy is to work in advance payment mode. To ensure this the company maintained a stock of signed blank cheques of the stockist and these cheques were presented to the bank upon the receipt of order and generation of the bill. Normally 20 cheque leaves were maintained by the company and any decrease in this level was communicated to the stockist. Ecommerce Marketing Practices The company heavily relies on Electronic means of communications for running the business. The entire Sales and distribution channel is integrated through eCRM software called “UNIFY” which are installed in every PC system of the C&F, Stockist. The company has up to date record of the inventory position of all the stockists. A stockist is required to maintain a minimum level of inventory. If the stock position goes below a critical level order is automatically triggered and the company sends the goods to the stockist. All operations thus take place online. 5
December SALES & DISTRIBUTION NETWORK OF HINDUSTAN UNILEVER 21, 2008 Unconventional Marketing Channel Looking at the booming retail sector of India and the success of retail business of Pantaloon and shopper stop I would like to suggest a distribution channel on similar lines. I would suggest that HUL opens a specialty store which houses all the brands of HUL under one roof. These stores should be located near the strategic locations so that the people do not have to cover a long distance to reach the store. Since HUL has a diverse product line it will a huge success and it would be commercially viable also. 6
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