26 Lacs farmers

100 Lac ltr per day

7 lac houses in

Ahmedabad

35 dairy processing

plants

Distribution & Logistics Practices In

FMCG Organisations

Kandarp VGCMMF Ltd., Ahmedabad

FMCG & Distribution

• Fast Moving Consumer Goods• Low shelf life, faster consumption• Small quantity• Broad consumer base, scattered markets• Faster funds rotation• Highly fluctuating demand estimation

Typical Distribution ChannelCompany-

Production/Marketing

Depot Storage

Distributor/Wholesale Trader

Retailer

Consumer

Institutions

Functions of Distribution Channel

• Efficiency to manufacturers• Supply of products in Required Assortments• Provide Salesmanship-Presale and after Sales

Services• Merchandise the product• Implement Price Mechanism• Physical Distribution and Financing Functions• Act as Change Agents and Generate Demand

Depot - C & F Agent

• Depot/Branch• Invoicing• Carrying & Forwarding Agent– Reputed business house– Custodian of goods at Depot location– Maintenance of stock- FMFO– Dispatch, Loading and unloading of goods– Arrange delivery of stocks/POPs to upcountry WDs

Distributor

• Distribution of the products in allocated territory• Regular order booking, dispatch of products to

retailer• POP material at retail level• Schemes and discount, promotional activities• Demand estimation, feedback• Product replacement• Storage• Expansion of retail universe

Retailer

• Selling of product to consumer• Storage• POP display• Schemes, discount, consumer promotions• Demand estimation• Feedback from consumer

Selection of Channel Members

• Financial capacity• Market reputation• Operational ability• Prior experience in FMCG• Positive attitude

Motivation & Evaluation

• Return on Investment• Confidence of retailers and consumers in the

product• Reputation of the company• Brand Value• Future growth potential• Innovations

• Continuous monitoring & evaluation- actual Vs Potential

PRACTICES AT AMUL

Origin And History

• Late 70s –Early 80s –The brand building era• Monopolistic environment• Major focus on Procurement and Processing• Distribution through third parties1. Spencers-South and East2. Omprakash & Co. – North 3. Voltas-For Powders across the country

Birth of a new Distribution era….

• Anticipating new changes in market scenario - Shift of thrust

• Focus on Distribution Network• 1977- 82-Foundation of Federation’s own

Distribution network• 18 Depots initially –Own operations• Appointments of WC &F • Expansion of WDs

GCMMF TODAY

• Sales Turnover Rs.9700 crore (est 2010-11)• 5 Zones• 51 Depot Offices• 5000+ Wholesale Dealers• 5.5+ Lac Retailers• Modern Format Stores• Overseas Operations in 41 countries

Distribution Highways

Ambient (25-30° C Temperature)

Chilled (0-4° C Temperature)

Frozen (-20° C Temperature)

Fresh (Daily Service)

Distribution Highways

• Product Storage requirement

• Service Frequency

• Shelf life of product

• Target Market

Rural & Scattered Distribution

• Concept of feeder market• Hub n Spoke Model• Depth and Width of Distribution

Depot

WD

Retailer

consumer

Depot

WD

Super WD

RetailerRetailer

Consumer

Sub Dealer

Consumer

Hub n Spoke Model

• Distribution Depth- rural and scattered markets

• Cost effective• Encashing market

opportunities• Broadening of

consumer base

Hub

Spoke

Spoke

Spoke

SpokeSpoke

Spoke

Spoke

Thank You!

kandarp.patel@amul.coop