Mr. Afzal national sales manager called a Level 10 meeting at the financial year ending at 2012.

Level 10 meeting is an internal meeting conducted in Youngs food company. The meeting purpose was to discuss slow growth local sales of Youngs company two biggest revenue generating products Chicken spread, Chicken Mayonnaise. Local sales for mayonnaise and spread grew by 1% and 3% in 2011 and 2012 respectively see Exhibit 1. Mr.Afzal was worried for slow sales growth even though Youngs has a market share of 75% and 80% in chicken spread and chicken mayonnaise respectively. A cross functional team was formed during the meeting headed my Mr.Ahmed to investigate the stagnant sales growth and ROI of Chicken Mayonnaise and Spread. Afzal Background Mr.Afzal has been with with the company for around 15 years. He graduated from U.K and started as an Area sales manager for Youngs. Mr.Afzal contribution to Youngs foods success has been exceptional, he has been the main person behind the revolution of companys distribution system. He was the person behind the introduction of SSS software (secondary sales system) discussed later. Company Background The house of Youngs started its operations in 1988 as a food processing establishment. The first product launched by Youngs was Mayonnaise that received tremendous acceptance and appreciation. Another milestone in spread category is Youngs Chicken Spread; the first ever commercially produced in 1989. This journey of successful launches continued with Sandwich Spread, Chocolate Spread, Olive Spread, Pizza Spread and recently launched Mayo Garlic. Youngs Natural Honey is also playing a significant role in Youngs Family. Today, Youngs enjoys tremendous Brand Leadership in Mayonnaise and Spreads category throughout Pakistan with presence in various global markets. Company is rapidly expanding its global market and currently exports to different continents Asia: Saudia Arabia, Iraq, India, Qatar, UAE, Kuwait, Jordan and Afghanistan Europe: England, Norway North America: Canada Africa: Nigeria, Uganda, Kenya, Ghana, Ethiopia, Libya, Mauritius Business Area The company focuses on two main categories Mission At Young's, our mission is to provide our customers Halal, Hygienic, Healthy, Nutritional, and Convenient food products; through our customer driven and service oriented dynamic team. We strive to do business in accordance with the Islamic Guidance and to develop a business model of excellence. Spread Mayonnaise

Current Distribution system

Young has big distribution channel and it geographically cover the whole country. It has four company owned warehouse in Karachi, Lahore, Multan, Rawalpindi see exhibit 3. It has one production unit which is in Karachi. Small cities are catered by small distributors such as Sukkur. The goods are transferred from the factory to warehouse on bases of lifting plan. A lifting plan is a plan which tells how much product is needed in a particular warehouse; it is based on sales history or average sales. Maximum 3 days are taken to deliver products to distributor or warehouse. Buffer stock has to be maintained by warehouse and distributor for company lead time. Inventory is maintained based on the requirement of the area. Youngs and Distributor Distributors main responsibility is to ensure availability of products in their respective areas. Distributor cost for penetrating new market is shared by Youngs but no third party is involved in penetrating as the company send its own sales force for penetration, no credit is given to distributors. All transactions

are done in cash. Stockiest and mobilist are used on the need basis for example during instability in Karachi stockiest and mobilist are used to distribute goods in instable areas.
The company carries an in-depth investigates about the distributor before getting in an agreement. The criteria set by the company for selection of distributors are: 1. 2. 3. 4. 5. Should be financial strong Should have good reputation in the market Business IQ Vision short term n long term Can he cover future needs

Youngs food is very strict in criteria and every distributor has to match the criteria for selection

Good flow chart

Youngs adopts a simple distribution system for transferring of goods. The goods are transferred from company owned warehouses to distributors and then it is supplied to the retailers. Karachi has 7 distributors which looks after Karachi and in its sub urban parts. Each distributor is looking after a particular geographic area north, south, Lahore and Pindi. Youngs food uses its own logistics to deliver goods from manufacturing to distributors.

Methods for routing

Youngs food uses a Cloverleaf method for routing. In cloverleaf a base town is set then its surrounding areas are covered. See exhibit 8

Basis for territory design

Geographical territories:

At Youngs Foods the territories are divided on geographical basis. Youngs operate all over Pakistan. The whole country is divided into four zones: (see exhibit 3) South zone which includes Karachi, Hyderabad, Sukkhar, Quetta it also caters Baluchistan, Central zone which includes Multan, Faislabad ,lower Punjab, Lahore zone which include Lahore to Jhelum and northern Punjab, Pindi zone includes Islamabad Peshawar and northern areas of Pakistan. In every zone there are one base station in which at least two territory managers are assigned and many non base stations/outstations.

TERRITORY DIVISION IN SOUTH ZONE:

Servicing Required + Geographic:

In the south zone, Karachi is further divided into eight territories based on the Servicing Required. Each territory has its own territory manager and a distributor. LMT, DMT and FSD are different territories on the basis of account types While General Trade (GT) is on geographical basis. Each territory manager has Order Bookers and Merchandisers. The job of the Order booker is to take orders, they work like sales reps. while on the other hand the job of the merchandisers is to check and ensure the availability of the product at the outlets. See exhibit 4 Each order booker has to visit 50 outlets per day on average and 300 outlets per week. Distribution basis for small cities Youngs has appointed one separate distributor to cater small cities and its surrounding areas. The distributor follows a fixed PJP plan and covers any new outlet in its area. In recent years outlet coverage in small cities has not been increased by distributors.
Pakistan rural population is 65% and largely untapped Youngs urban to rural sales ratio is 9:1 with target market of urban middle class.

Youngs Business Units

Youngs Foods has divided its whole market into 4 channels based on which they distribute their goods in the market see exhibit 2. Territories are formed on the basis of these categories which are mentioned below; each category is assigned to different distributors except for Direct Modern Trade (DMT). 1. Direct Modern Trade (DMT): It includes all the direct key accounts. e.g- Makro, Metro, Hyperstar, etc. It also includes Utility Store Corporation (USC) and Canteen Store Department (CSD) and all those outlets which operate internationally. In DMT, the company directly delivers the good because these are the Direct Key Accounts of the company. Highly experienced sales personnel and mostly the sales managers are the ones who deal with the DMT. There is no order booker. On every outlet one merchandiser is permanently deployed and its job is to make sure the availability of product on the shelf and display as per planogram and responsible for sales and to engage consume. The planogram is a visual diagram, or drawing, that provides in detail where every product in a retail store should be placed. These schematics not only present a flow chart for the particular merchandise departments within a store layout but also show on which aisle and on what shelf an item is located. There is also one Channel Incharge at every outlet. In DMT Company conduct free promotions at on and off bases, normally in General trade company give trade offers but in DMT they do not give trade offers Instead every month on selected SKUs they do onsite free promotions under a contract, lets say 12-15 promotions activities every year. For low sale Products Company also conduct free trial and discount offer in which buyers try their product for free and also get discount on purchase of product. DMT has 5% to 7% share in overall sales of Youngs total sales. DMTs objective is not to facilitate the trade but to facilitate the consumer. Hyperstar, CSD and USDs target market is consumers whereas Metro -Macros target market is retailers and wholesalers which is in conflict with the DMTs objective i.e. to facilitate the consumer. Macro-Metros 40% to 50% sales is through wholesalers and retailers of competitors brand whereas youngs products sale is 10% to 15% to retailers and wholesalers. It is because Youngs do not give them higher discount and do not let them get competitive so that they do not affect youngs overall targe t market by selling at lower rates or higher trade margin to retailers and wholesalers then the actual rates being offer in the market by distributors. These activities also eliminate the danger of not fulfilling the targets by the distributors in the market.

2. Local Modern Trade (LMT): It includes all large key accounts e.g- Naheed, Imtiaz and Chase etc. And all those outlets which operate locally. The objective of local modern trade is the consumer engagement and sale as well. Local modern trade is very important and it is a growing market so youngs give a lot of focus to this trade.12-15% of the total sale out of all channels come from this trade.local modern trade do exist in Karachi, Lahore, Islamabad and pindi but it does not exist in Faisalabad but can exist in near by future. There is a separate distributor for the local modern trade. In every city there is one separate distributor for local modern trade, but in Lahore there are 2 distributor for this trade. They are the key account holders, in local modern trade the merchandiser plays a very important role and they have the core responsibilities in this trade like display setting, consumer involvement and engagement and they are the same as that of direct modern trade. They actually force the consumer to buy their product. Order bookers are also there but they have less job to do than the merchandiser especially in this sort of trade that is the reason why youngs appointed three order booker and 5 merchandiser unlike general trade where there are 5 order booker and only one merchandiser as order booker have a lot of work to do in general trade. In local modern trade the order bookers visit twice a week mostly after every 3 days because youngs are operating in slow moving goods like mayonnaise, chicken spread, honey etc only the users who are habitual of using the product will buy it. One strategy which the youngs follows is that they have permanently deployed one merchandiser to the accounts like IMTIAZ and CHASE because they are located near to each other so one merchandiser is responsible for the displays, consumer engagement in imtiaz as well as chase. The channel heads and the area sales manager is responsible for making relationship with the traders. They maintain healthy relations with them by arranging informal meetings with them in order to boost sales. There are two categories in local trade, one is H.P.OS and other is L.M.T. naheed, imtiaz, chase they are high profile categories so they included in H.P.OS whereas j umbo included in L.M.T. naheed, imtiaz and all other high profile outlets they might not give us the revenue but display is very important in those outlets we cannot ignore them because we consider them as the growing market as people shifting there trends to these outlets. There are special targets given to the order booker, distributor which are the key performance indicators. The target include that no outlet should go negative means in every outlet there should be availability of there 4 basic segments i.e mayonnaise, chicken, honey and chocolate. Their performance measure by looking at the outlets orders whether they are ordering the categories or not.

3.

General Trade (GT): General trade has always being the major source of the business
contributing 60 to 65% of sales revenue. The company has different amount of distributors for different cities like 4-5 for Karachi,4 for Lahore, 2-3 for Islamabad and Pindi,2 for Faisalabad and 1 for multan. As written above LMT has 100% productivity per month but in general trade there different target for each quarter like 45%,50% and so forth depending on the category. The company uses quarter wise because its product comes under slow moving FMCG or life style product. So people we has a habit of eating mayonnaise or chicken spread will buy it other would not. In general trade there must be 90% of order generation in a particular month. In general trade the company has divided the distributor into section, section are route for a particular day. SSS software helps the company to track the secondary sales and it has data of every outlet. So everyday a report is generated which tells the distributor which outlet he has to cover. There should not be any negative section and every section should growth more then 50%. The SSS software tell which are negative section and a report is generated so that the company can improve on it. Self space is very important for the company its the job of order booker to maintain the self space. For general trade in one setup there are 5 order booker and 1 merchandiser. The high profile outlets the order book visit after every 3 days but for low profile outlet like in mahmodabad or akhtar coloney the order booker go after 15 days. Visit of different people A territory manager or supervisor should visit the whole area in 90 days which includes all outlet in his area. Area sales manager should the area 7 days in a month and a general manager should visit the for minimum 5 days in a month. The director also visits the area 3-4 times in a month. They go with the order booker or sometimes with merchandiser. Outlet name Sku Last sales Minimum order

Distributor stock level There should be any zero stock level with the distributor. A zero stock report is generated from SSS and it tell that how many day there was a stock out with the distributor like it had 2-3 days of stock or when it had zero stock. So the company sit with the distributor and discuss why it had zero stock because of which companies sales decreased. So the company tries to minimize stock out. Markup for distributor The trade margin the company gives to distributor is 6-9% depending on the product. The distributor passes the margin of 1, 2 ,or 3% to the retailers depending on 2 things

Bulk sales Display pass on

Like for example the distributor gives 1% on bulk sales and 1% on display pass on but that 1% depends on the display offer if the retailer finishes that this offer will be eliminated and no discount wil be given. Expiry is distributor he ache but the company return all the product which has quality issues and a return is given to the retailer. Area development in GT If the company wants to enter into a new market they are different method used into introduce the product in that area. School activation is done by the company; heavy merchandising is done in major outlets of that area and schemes are done in bakery like given chicken spread with bread. In developing area spot selling is done by the company, so bike rider go around the area with product and give to retailer hand to hand.

Rural coverage Rural market is important to the company but it is not a huge chuck, it contributors 10% of whole sales. It is also called outstation. If a rural area 10 distributor 1-2 distributor generates 80% of the sales. As Young product is life style product and it mostly caters to a niche market, the company cannot pull the product. The distributor system in rural area is as follows distributor order warehouse delivery

The company has made 4 type of out station Metro base station are like suburb of Karachi,Lahore,pindi. Order to delivery is 1 day Base station: in base station a permanent person is deployed for example Faisalabad,multan and there more than 2 supervisor people looking after it. . Order to delivery is 2 day Small base station: there is permanent person deployed here and one supervisor is looking after it. These were non base station which were converted to small base station. . Order to delivery is 3-4 day Non base station: there is no permanent person deployed here places like wah cantt ,gujar khan

The visit frequency are 3-4 day per month or if its really small place then 2 months. The supervisor is given full reimbursement for the charge if he stay over night or visit and comes back. Rural development programmers are initiated by the company to penetrate in the market.

4. 5. Food Service Division (FSD): This category includes all hotels, restaurants, hospitals etc and is catered by the company itself

CHANNEL HEADS
The Channel heads (see exhibit 5) are the heads of each channel and they work parallel to zonal managers. Their primary job is to provide technical and strategic assistance to zonal managers. For example: trade offers or discount schemes are provided by the Channel Heads. They are at the same hierarchy level as zonal Managers. They report directly to national sales managers. Each channel head their respective provided by national sales manager.

Sales and marketing hierarchy explain it exhibit 6 & 7

External and internal customer officers in youngs play an important part in communication between customers and company. They act as a bridge for company. Customer queries, issues are handled by the customer service department which report to brand executive managers.

Salary calculator
YOUNGS have a very efficient salary structure for its employees. The one who is capable enough and has the skills of selling the product,the structure is design in such a way that a normal salesperson can earn a lot of money if he has the capability. There salary structure comprises in such a way that it includes fixed salary, fixed compensation and percentage of sales. There staff is very happy with their salary structure that is the reason why they are with the company for years. Salary calculate different for different skus. for each ton of mayonnaise RS1000 will be paid and for each ton of chicken spread RS 1500 will be paid. Incentive will be given on 80% of target achievement and also 200RS per sku is given which creates the environment of selling the product. For salespeople generating a sales is very important if they want to go with the company. If a salesperson could not be able to achieve a target of 80% out of its overall target all the other incentive will be unlock for him it means he neither 1000RS per ton on mayo and nor he get the 200RS per sku so it means he will only get his basic salary which is not so attractive so if a salesperson wants to earn and he has skill so he will definitely make money in this firm. Basic salary for salesperson is 8000 but with the type of salary structure they have their salesperson would end up earning to RS 23000 to 25000. So if a salesperson would not be capable of generating sales the company would never fire him the structure is such he would have to leave the organization

PERFORMANCE EVALUATION
Company does performance evaluation on the basis of primary sales and secondary sales. Primary sales are those made by company to the distributor and Secondary sales are those made by the distributor to retailer. Performance evaluation is done in these four ways: Stock outs (Inventory Turnover): Number of days when distributor runs out of stock. Order booking v/s execution: how much orders were booked and how much executed properly For Example- If 50 orders were placed and only 40 were executed properly it means that 80% performance were achieved. Call Productivity: Percentage of outlets who gave order. Administrative and other evaluation.

Exhibit 1

Exhibit 2
YOUNGS PRIVATE LTD

OUTSOURCED DISTRIBUTION

DIRECT MODERN TRADE

GENERAL TRADE

FOOD SERVICE DIVISION

LOCAL MODERN TRADE

Exhibit 3

PAKISTAN

SOUTH ZONE

CENTRAL ZONE

LAHORE ZONE

PINDI ZONE

Exhibit 4

KARACHI (AREA SALES MANAGER)

LMT

DMT

FSD

GT1

GT2

GT3

GT4

GT5

OB

MERCHANDISER

Exhibit 5 GM

NSM

DMT/LMT Channel head

GT Channel head

FSD Channel head

Outstation Channel head

Exhibit 6

CEO

Director

GM

NSM

South zone

Central zone

Lahore zone

Pindi zone

ASM Karachi (GT)

ASM Karachi (DMT,FSD, LMT)

TM DMT

TM FSD

TM LMT

TM GT1

TM GT2

TM GT3

TM GT4

TM GT5

Exhibit 7
Director Marketing and sales

Senior Marketing Manager

Brand executive Manager (Spread)

Brand executive Manager (Mayonnaise)

Internal customer service officer Marketing team Marketing team Marketing team External customer service officer

Exhibit 8