Ankit Chhabra (104)

Sankalp Kohli (110)

Abhijit Arora (303)

Arpan Mehra (309)

Anshum Kawatra (308)

Anshul Jindal (306)

Distribution Model of HUL

• India’s largest FMCG company

• Renamed as HUL in June 2007

• 20 distinct categories in Home & Personal Care Products and Foods &

Beverages

• Volumes of around 4 million tonnes and sales worth ` 13718 cr

• HUL’s mission driving its 15,000 employees – “add vitality to life”

• HUL has over 40 factories in India

• Operations involve over 2,000 suppliers and associates

Introduction to Company

HUL’s Product Portfolio

• 35 C&FAs, 4,000 redistribution stockists, covering 6.3 million

retail outlets

• Reaches the entire urban population, and about 250 million

rural consumers

• Its evolution over time - 1st Phase

• Initially, wholesalers and retailers used to place direct orders

• Company salesman used to take these orders and later

distribute the goods

• Cash payment was then remitted to the company

• 2nd Phase

• Registered wholesalers were appointed

• Sales man then took products from RW and distributed further

Distribution Network of HUL

3rd Phase

• RW were replaced by RS (Redistribution Stockist)

• Company Depot system was also established

• CD helped in transhipment, bulk breaking, and acted as a stock point to minimise

stock‐outs at the RS level

• In recent past, Company Depot has been replaced by a system of third party

Carrying and Forwarding Agents (C&FAs)

• C&FAs act as buffer stock‐points to ensure minimum stock‐outs

• The C&FA system resulted in cost savings in terms of direct transportation and

reduced time lag in delivery

• C&FA has improved customer service to the RS

Distribution Network of HUL

• Providing warehousing facilities

• Providing manpower

• Providing service to retailers

• Implementing promotional activities

• Extending indirect coverage

• Reporting sales and stock data

• Demand simulation and screening for transit damages

Role performed by Redistribution Stockists

• Areas with populations below 50,000

• Network covers about 50,000 villages, reaching 250 million

consumers, through 6000 sub‐stockists

• HUL approached rural market with two criterias ‐ the accessibility and

viability

• HUL launched Indirect Coverage (IDC) in 1960s.

• Indirect Coverage (IDC) method replaced company vans by vans

belonging to Redistribution Stockists, which serviced a select group of

neighbouring markets

Distribution at rural centres

New Distribution Channel

•Project Shakti

• 80000 villages

•Project Streamline

• 40% rural population

•Hindustan Lever Network

• 80% urban population

•Mother Depot and Just In Time

Distribution Network of HUL

Major Stakeholders

1. HULRetail network of 4 million outlets.

Implementing an IT system to connect 3,500 stockists in 1200 towns who account for 80 per cent of company sales.

Sourcing: HUL promotes sustainable agricultural practices by working with external agencies, farmers/small growers. They contribute towards • Adoption of technology

• Harnessing the land

• Achieving quality: Gathering certifications.

Manufacturing: Apart from employing world class facilities they look into broader issues such as reducing carbon footprint in their production activities. • Developing energy efficient production technologies like Ploughshare Mixer

Technology

• Increasing the use of carbon neutral fuels

• Implementing a strategy for water is based on the 4-R principle: Reduce, Reuse, Recycle and Renew

Major Stakeholders2. Carrying and Forwarding Agents (CNFs) • In the recent past Company Depots have been replaced by a

system of third party Carrying and Forwarding Agents (C&FAs). • The C&FAs act as buffer stock‐points to ensure that stock‐outs did not

take place.

• C&FAs also act as gatekeepers between the manufacturers and end-users.

• Can serve as a key differentiator as channel experience strongly affects end-user's overall perception of the brand's image.

• Main functions are:• ACCUMULATION – Bringing similar stocks from different suppliers, • ALLOCATION- breaking down a homogeneous supply into smaller slots & • ASSORTING-Building assortments that are readily consumable.

Major Stakeholders3. Transport and Logistics• Critical part of the distribution as they are responsible for the timely delivery of the stocks along the chain and finally to the customer.

•Manufacturing site is usually located close to the suppliers, thus major transportation takes place in the delivery to the market.

• Trucks: Used to transport stocks from manufacturer to C&FAs and then to the RSs (Redistribution Stockists)

• Local/Cheap Transport: To deliver the products to the end consumers or retailers.

Major Stakeholders4. Redistribution Stockists HUL's products, are distributed through a network of about 7,000 redistribution stockists

The major functions of RSs consist of:

•Financing stocks

•providing warehousing facilities

•providing manpower

•providing service to retailers

•implementing promotional activities

•reporting sales and stock data

•demand simulation and;

•screening for transit damages

Major Stakeholders5. Wholesaler• Wholesaler is an intermediary who buys goods for resale

usually from company distributors or stockists.

• He has the ownership of the goods he sells and the operations are run like a typical store where the resellers (could be retailer's themselves or bulk buying individual customers) who come to him with an elaborate list and buy.

• HUL considers it a necessary evil, in an ideal situation they would like to avoid them totally , but the fact is that in spite of the negatives like loss of control, and lack of transparency, they have an important role to play in Indian distribution channels.

Major Stakeholders

6. Retailer

They cater to the end customers.

While a traditional distribution chain is followed in the urban markets, the rural areas have a new strategy implemented for catering to the rural customers.

Major Stakeholders

Distribution at the Villages – Shakti• The company has brought all markets withpopulations of below 50,000 under one rural sales organisation.

• Started in the late2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's 638,000 villages .

• HUL's partnership with Self Help Groups(SHGs) of rural women, is becoming an extended arm of the company's operation in rural hinterlands.

• Project Shakti has already been extended to about 12 states.  The respective stategovernments and several NGOs are actively involved in the initiative. 

SHAKTI PROFILE

C&FA

Shakti

Ent#1

SHG1 SHG2

Shakti

Ent#2

SHG3

CONSUMERS

Monitoring the Stakeholders

Quantitative Measures

COST BENEFIT ANALYSIS

NEED BASED PRODUCTION

Qualitative Measures

LEVERAGING INFORMATION TECHNOLOGY

RS NET INITIATIVE:

ADEXA ICOLLABORATIO

N SUITE

• Target chasing• Reporting on a daily basis. • Technology Usage : Palmtops for effective reporting

Field Sales Force

Monitoring Methods

Redistribution Stockists: Sales Margin: 4.76% which includes cash discount, unloading expenses

from depot, distribution expenses to retailers, incentive schemes & other incidental expenses.

Incentive schemes: Before 2000 holiday packages and tours but after 2000 no non‐monetary incentive for RS.

Wholesaler: 1.5 % max. discount from RS cash discounts and other schemes promoted by HUL (gets points under

Vijeta Scheme). bulk discounts

Retailers 1.0% max. discount from RS Sales Margin: Depends on the product

Soap, detergents ‐ 8% on MRP

Cosmetics ‐ 10% on MRP

Food items ‐ 8% on MRP  Incentive schemes: Company programs (Scheme Discounts + Cash

Discounts) TPR schemes based on Sales (1 % to 4 %). Vijeta scheme is not for retailers.

Incentives to Channel Partners

Key Challenges and Initiatives

Three Way Strategy of HUL

Product Availability

Brand Communication

Higher

Level of

Brand

Experien

ce

Organizational Structure (Delhi Branch)

Regional Manager North

Regional Sales Manager

Area Sales Manager

Sales Officer

Territory Sales In charge

Salesman

Key Challenges FacedHUL

C&F

Stockist

CSD Canteen

Retail Outlets

Wholesaler

Consumers

Distribution at Villages

Town Based

Distributor

PHASE 1:VAN BASEDFixed Route Coverage

25 % Rural Population

PHASE 2:SS (Star Seller)Distributor Based in the VillageFollows Hub & Spoke Model25 % Rural Population

PHASE 3:SHAKTI ENTREPRENUER

50 % Rural Population

Large Villages: Accessible by Motor able Roads

Villages accessible from nearer villages

Small Villages

Key Initiatives of HUL

• Servicing Channel partners and customers with continuous daily replenishment

• Delayering of sales force to improve response times and service levels

• Revamping of its sales organization in the rural markets

• Implementation of supply chain system

• Launching of various projects

RecommendationsHUL, Absolute FMCG leader

How many of them do you use???

What we plan???

Middle Class Value Pack

Benefits

Kill competition in Non Leading categories

Leveraging the Top position

Faster inventory turnover

Other Recommendations

Pure It•Low cost water purifier

•Co-Creation• Involve customers in Value Creation

Thank You