A TERM PROJECT ON

SUPPLY CHAIN PRACTICES IN BHARTI AIRTEL: GENERIC AND VIZAG LEVEL

Under the guidance of

Prof. Ravi Shankar

Submitted by Indrajit Banerjee Regd No. 1226109116 MBA (IB) - 2009-11

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BACKGROUND
The very mention of the words- telecom, telephones etc instantly evokes the images (in the psyche of the bygone generation of India) of big machines (land-line telephones) where one would take few minutes to dial a phone number, symbols of prestige (land-line telephones) normally kept in drawing rooms of the elite and the nouveau riche of the society, the problematic yet nostalgic trunk calls, non-existence of mobile phones Indian telecom sector got an impetus when in 1984, Mr. Satyanarayan Gangaram Pitroda, (better known as Mr. Sam Pitroda) was invited to India by the then Prime Minister Indira Gandhi. He started the Center for Development of Telematics (C-DOT), an autonomous telecom R&D organization. In 1987, as the advisor to Mrs. Gandhi's successor, Rajiv Gandhi, he was responsible for shaping India's foreign and domestic telecommunications policies. Later he became the founder and first chairman of Indias Telecom Commission. He is largely considered to be responsible for the telecommunication revolution in India and specifically, the ubiquitous, yellow-signed Public Call Offices (PCO) that quickly brought cheap and easy domestic and international public telephones all over the country. In the late 1980s, under the leadership of Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications (DoT) , VSNL and MTNL. The demand for telephones was incessantly increasing. It was during this period that the Dr. P.V. Narasimha Rao led government introduced the national telecommunications policy [NTP] in 1994 which brought changes in the following areas: ownership, service and regulation of telecommunications infrastructure. Successful joint ventures were forged between state owned telecom companies and international players. But still complete ownership of facilities was restricted only to the government owned organizations. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just involved in technology transfer, and not policy making Soon, the World Bank and ITU had advised the Indian Government to liberalize long distance services in order to release the monopoly of the state owned DoT and VSNL; and to enable competition in the long distance carrier business which would help reduce tariff's and better the economy of the country. The Rao run government instead liberalized the local services, taking
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the opposite political parties into confidence and assuring foreign involvement in the long distance business after 5 years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for mobile services. These circles were divided into category A, B and C depending on the value of the revenue in each circle. The government threw open the bids to one private company per circle along with government owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. The government threw open the bids to one private company per circle along with government owned DoT per circle. For cellular service two service providers were allowed per circle and a 15 years license was given to each provider. During all these improvements, the government did face oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep away from all the hurdles. In this tumultuous regime of policy measures, Bharti Tele-Ventures was incorporated on July 7, 1995 as a company with limited liability under the Companies Act, for promoting telecommunications services. It launched mobile services in New Delhi with the name of Airtel. Bharti Tele-Ventures received certificate for commencement of business on January 18, 1996. The Company was initially formed as a wholly-owned subsidiary of Bharti Telecom Limited. In 1997, Telecom Regulatory Authority of India (TRAI) was established to ensure that in the fast emerging global information society, proper ground work and supervision is done to maintain affordability and ease among the consumers in availing the telecommunication tools (land-line, mobile, broadband etc). This ensured non-interference of the Union Government in decisions pertaining to the telecom sector. Seizing this opportunity, Airtel quickly expanded itself to cover more regions like Himachal Pradesh, Madhya Pradesh, Karnataka, Andhra Pradesh and Chennai within just 4 years. The Airtel vision statement aims to be globally admired for telecom services by incessantly focusing on providing customer delight. Airtel carefully analysed the mind set of Indians (then the ambitious middle class, and the richer business class) and focused on its core strength of providing quality connectivity and plethora of value-added services by outsourcing customer

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care services to IBM Daksh, technological solutions to Infosys, network equipment to Ericsson, Siemens, Alcatel etc.

BHARTI AIRTEL : THE PRESENT

Supply chain management in telecom sector is involves evolving a set of policies and practices some of which are similar to and some are different from the normal supply chain practices in an FMCG sector. SIMILAR- Both involve choosing partners who can be mutually beneficial in the long term. The activities like outsourcing, enhancing system wide operational efficiency by adopting IT tools, latest techniques of inventory management etc DIFFERENT- Normal supply chain practices in FMCG sectors, retailing etc focuses on decreasing the system wide inventory costs. But in the supply chain this is almost irrelevant because inventory is non-existent here (no physical inventory, data banks etc are there, which are inventory generated in the process of providing services) Here, let us analyse the supply chain philosophy and practices of Airtel at two levels- generic i.e. concerning the company as a whole and specific, concerning the distribution system practiced in Visakhapatnam. Before delving deep into the supply chain practices at the generic level, let us understand the philosophy of Airtel towards supply chain management. As per Airtel- Bharti Airtel understands the importance of partners to remain competitive in a dynamic business environment. As a step in that direction, the Supply Chain (SCM) function has been created with a mandate to develop partner relationships to maximize mutual opportunities for growth and profitability. The SCM organization has a central core team of supply chain subject matter experts and execution teams operating under different business divisions across the country.

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At the center of Bharti Airtel's Supply Chain Philosophy is partnership and collaboration. The Supply Chain characteristics have therefore been defined using the same approach, shown in the table below. Supply Chain Characteristics Bharti Airtel approach Number & Structure Fewer; Clustered Procurement personnel Limited Outsourcing Strategic Nature of Interactions Cooperative, positive-sum Relationship focus Mutually-beneficial Relationship focus Performance Contract length Long-term Pricing practices Target costing Price Changes Downward Quality Designed-in Delivery Smaller Quantities (JIT) Inventory buffers Minimized, eliminated Communication Extensive; multi-level Communication Collaborative; two-way Role in development Substantial Production flexibility High Technology sharing Extensive Dedicated investments Substantial Mutual commitment High Governance Self-governing Future Expectations Considerable

Thus this policy statement clearly suggests that Airtel emphasizes a lot on selecting and developing supply chain partners so that the objectives of providing efficient services at competitive prices to the customers. This approach of careful selection of the supply chain members and integrating their activities assumes greater importance in the highly-competitive cellular services market in India, where focus is both on expanding the customer base as well as retaining the customers.

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There are numerous product groups which are derived from various suppliers from around the world.

Product Group Electronics Site Infrastructure Equipment IT Equipment Site Expenses Services AMC Trenching Works Out Door Equipment Admin Items Customer Premise Equipments (CPE) Leased Line Marketing Items Office Infrastructure Printing S&D Items Tools & Hardware VAS Satellite Link

Definition Items related to Electronics technology and used for Network e.g. Decoder, DSLAM etc. Item related to setting up the Site Infrastructure e.g. Canopy, Shelter, Tower, Batteries, Power supply etc. Items related to Information Technology e.g. Desktops, Servers etc Items/ consumables required to run the site Type of services. e.g. IT services, surveying, etc Types of annual maintenance contracts Types of Services required for trenching Items required for the operations connectivity between sites or locations. e.g. OFC, Copper cables, Duct category, etc. Items related for office operations. e.g. Fax, Photocopier, consumer durable, Papers, Envelops etc Items bought for specifically CPE usage e.g. Blackberry, DXC, Telephone Instruments, etc Lease line related Items related to Sales Promotion Activity e.g. Apparels, caps, gifts, etc Items related to Furniture and Storage. e.g. Modular cabins, chairs, racks, etc. Items related to Printing e.g. Digital Printing, Manuals etc. Item related to S&D domain e.g. Recharge Coupons, SIM Cards etc. are in this category Items related to Tools & Hardware, as used for operations. e.g. cutters, fasteners, etc. Items related to Value Added Services Items related to VSAT

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Partners Network Equipment Mobile Services Services Nokia Siemens, Ericsson, Huawei ECI, Tellabs IBM IBM Daksh, Hinduja TMT, Teleperformance, Mphasis, Firstsource & Aegis Singtel Telemedia & Long Distance Nokia Siemens, Juniper, Cisco, Alcatel Lucent,

Information Technology Call Centre Operations Equity Partner {Strategic}

Some of the detailed supply chain outsourcing decisions, partners of Airtel and the reasons are1) India - Ericsson said inked a contract worth US$1.3 billion with Bharti Airtel in March 2010. The Swedish company will provide second-generation (2G) radio base stations to boost the quality of phone calls and speed of data access, allowing the network to switch to third-generation (3G) services later. The telecommunications giant plans to expand and upgrade Airtel's network in 15 of India's 22 licensed jurisdictions, allowing its users to enjoy enhanced voice quality and faster data access.

2) Bharti Tele-Ventures Limited (BTVL) and IBM India today launched (in 2005) Managed Services under their Joint Go-To-Market program that both the companies signed a year ago. The initial offering portfolio will include Managed Hosting Services & Business Resiliency and Continuity Services to enterprise customers in India. The agreement between Bharti and IBM is a first-of-its-kind, where a telecommunications leader and a leading Information Technology company have come together to address the Information & Communications Technology (ICT) market in India. They will jointly

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deliver end-to-end managed services, including connectivity, at client locations around the country.

The Joint-Go-To-Market initiative would enable clients to achieve continuous access to their enterprise information and critical business processes without having to increase/add infrastructure requirements. While Bharti will provide the telecommunications infrastructure and lead the sales engagements, IBM Global Services will provide the IT infrastructure and technology management services to clients. Managed hosting and business resiliency & continuity services are targeted primarily at the Banking, Financial Services & Insurance (BFSI), Manufacturing and the government segments, which constitute a significant part of the Indian ICT services market. Under managed hosting services, the alliance will not only host and manage the data & application for enterprises but also provide them with end-to-end connectivity for the same. Companies will also be able to safeguard themselves against any unforeseen disasters by getting back up of critical business data and applications through the business resiliency and continuity services. Both the offerings would enable companies to conduct what is termed business@ease by not only entrusting their entire ICT requirements to Bharti and IBM and focus on areas of their core competence but also benefit from the convenience of working with a single point of contact for managed services and connectivity. 3) There was an agreement signed between IBM Daksh and Bharti Airtel in 2008 where in, IBMs managed business services unit IBM Daksh would provide voice and back- office services including customer service, collections, and customer retention from its centers to Airtel. 4) In 2008 there was a joint venture between Airtel and Alcatel. Under the Joint Venture, Alcatel-Lucent will design, plan, deploy, optimize and manage Bharti Airtels broadband and telephone network across India. A new legal entity is being formed which will be managed and controlled by Alcatel-Lucent. This is the first Managed Services partnership for broadband and telephone services in India
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5) In 2008, there was another agreement between Infosys and Airtel where by Infosys Technologies Limited (Infosys) would deliver superior customer experience to the customers of Airtel digital TV, its Direct-To-Home (DTH) TV service. As part of its Digital Convergence Platform, Infosys will provide a suite of products including devices, application servers and interactive applications that will focus on providing an enhanced digital lifestyle to Airtel digital TV customers. 6) There was also another agreement with Asklaila, Indias first local information service, enabling Airtel customers to get up-to-date information about their city, free of cost, through Asklailas extensive city information database. The Asklaila-powered Airtel city search is accessible across six cities, including Delhi, Mumbai, Chennai, Hyderabad, Kolkata and Bangalore. 7) The latest in its outsourcing kitty is the managed services outsourcing pact with Comviva. As per this new arrangement Comviva will manage the infrastructure for Airtels value added services including SMS, ringtones and multimedia messaging. As per Airtel this is first of its kind deal in the.world.Comviva will manage more than 2,000 nodes - including SMSCs (short message service centers), MMSCs (multimedia messaging service centers), and IVR (interactive vocie response) servers that deliver Airtels mobile value-added services, and report to Airtel through a series of stringent service level agreements (SLAs).

Through these innovative outsourcing decisions and other supply chain practices (discussed below) Airtel today has 136,620,401 GSM mobile and 3,153,080 Telemedia Customers in India and Rs. 122,308 million (ended June 30, 2010-Audited) in proportionate revenues.

INVENTORY MANAGEMENT
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Airtel implemented Oracle Communications Order Management and Inventory Management in 2007 for streamlining business operations as well as for efficient service delivery. The key features of Oracle Communications Inventory Management include enabling the tracking of all physical resources ranging from access media to physical equipment to asset locations and addresses and supporting end-customer services and network technologies with a variety of number and name resources. This implementation expanded Airtels existing usage of Oracle Communications Order Management and Inventory Management for its optical/SDH services. Airtel has now integrated Oracle communications solutions with Oracle Financials and CRM to reduce the projects total cost of ownership and deliver state-of-the-art customer service. Airtel implemented Oracle Communications suite of solutions for its flexibility, scalability and rich functionality i.e. in this phase of tremendous growth of Airtel, Oracle Communications offering has helped transform Airtel into both a cost leader and a premier provider of communication services.

E-TIZE PROGRAMME
In a bid to make its operations more efficient and cost effective, Bharti Airtel undertook a major internal IT programme called e-tize in 2008 in order to revamp its processes and systems through the use of technology. The project was being implemented by IBM through 30 software applications from various vendors including Oracle, Veri Sign and SAP. E-tize was a drive for defining and cultivating an e-culture within Airtel. The program made invaluable contribution to the reduction of both operating and capital expenses incurred by the company. More than 250 processes were automated under this project. Bharti Airtel also witnessed a decrease in its overall real estate costs with infrastructure requirements coming down.

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Automations done under the e-tize program resulted in lesser rework due to overall error reduction, which in turn improved employee productivity. For example, applications like Dispatch Requisition Automation led to a 50 per cent decrease in rework required and therefore the time required for approvals or follow-ups diminished significantly for the company. The Important achievements 1) Removing gaps The e-tize program led to an improvement in the productivity through the reduction in the overall cycle time via re-engineered processes, removal of existing gaps and elimination of the nonvalue adding steps. This was made possible due to the establishment of a central repository for all organisational as well as functional information. This also resulted in savings due to lower search costs associated with the activity. Processes, which were highly complex, totally paper-based and involved multiple parties were automated. For example, the Supply Chain Management (SCM) transformation, where close to 40 processes were automated, completely changed the way Bharti Airtel works with its suppliers. 2) Online works The company enabled capabilities like Reverse Auction, Online bidding and Online negotiations with its suppliers to make it a transparent choice of the best bid. Applications like payroll integration with the system used by the outsourced processor resulted in savings of approximately 20 per cent in the payout made to the supplier. Thus Airtel saw an increase in its revenues due to lower time to market, reduction in payable days and increased working capital availability.

RURAL REACH
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The mobile revolution is spreading fast in rural India. With the mobile penetration still abysmally low, there are plethora of opportunities for the providers of cellular services to tap this hitherto unexplored market. In a bid to achieve this, Airtel planned (in 2008) to implement firm steps. It planned to focus on livelihood generation, and improvement in educational and healthcare facilities in this region. A sample of the numerous problems faced by the rural consumers are

They need to go to another nearby village to even charge a mobile handset, and pay Rs. 20 to use a battery to recharge the phone for the simple reason that neither village has electricity.

They feel uncomfortable talking to Airtels customer care executives because they speak in English, or just because the phone is being answered by a woman.

They have to travel 15km to top-up their account because of distribution problems. They find the IVRS menu confusing, and end up buying products by accidentally activating services that they did not need.

Even to operate telecom towers the operators, because of lack of rural electrification, need to transfer diesel 30 km twice a day.

Airtel came up with some solutions by removing certain gaps in the supply chain management in the rural areas. Some of the measures which are still being implemented are

Airtel is investing in a hub-and-spoke model, so that wherever there is a matchbox being sold, the company will have a presence. Theyre planning to cover 2 million outlets.

Make it easy to recharge, using smaller recharge denominations of Rs. 5 and Rs. 10. It started a joint venture with IFFCO, IFFCO Kisan Sanchar Ltd (IKSL) that will harness the power of telecom to add value to the farm sector and empower the rural farmer by giving him access to vital information, which will enhance his livelihood and quality of
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life. IKSL will offer products and services, specifically designed for farmers, through IFFCO societies in villages across the country. On offer are affordable mobile handsets bundled with Airtel mobile connection and customized value added services. This was an innovative method to penetrate the rural market by innovative distribution method. Airtel opened up numerous Airtel Service Centre (ASC), which is an ideal combination of distribution and service to reach out to rural customers and an important step in Airtel's objective of expanding its presence in the rural areas of various states like Maharashtra, Andhra Pradesh, Karnataka etc. ASCs are Multi Brand Outlets (MBOs) located in an easy accessible location, preferably in the main market in a village that attracts high footfalls. This new initiative is based on meticulous consumer research and insight which highlights different behavioral patterns of a customer in rural / smaller towns and villages.Thus emphasizing Airtel focus on a dominant rural strategy to strengthen the 4As in mobile communication, i.e. Availability, Affordability, Awareness and Acceptability.

Primary Objectives of setting up ASCs: One-stop shop for information about the entire gamut of Airtel products and

services Helps in removing barriers towards availing mobile communication Handling customers queries and complaints Reducing rural calls per customer

This unique rural model of distribution and service has been developed on the basis of multiple Consumer Studies, which reflect that rural consumers are hesitant to speak with machines and most rural people are not comfortable speaking with the call centre executives these customers prefer to be served in the local dialect, by a local representative.

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Services available to rural customers in an ASC are: Sale of connections Exchange of damaged or lost SIM cards Best value recharge and offers of the day Educating and subscribing to relevant value added services

Specific Sales & Distribution strategies of Bharti Airtel Ltd (in Vizag)

Airtel has put into place a pretty decent distribution network to cater to the ever expanding base of consumers in one of the most important Tier 3 cities of India. The observations and analysis done here reflect my experience of doing internship from 21 st April to 21st June, 2010. It uses second and third degree distribution network.

AIRTEL

UDs

RSs SECOND DEGREE

RDs

THIRD DEGREE

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FOSs

FOSs

Second degree distribution network: Airtel makes invoice of SIMs, PEFs (Pre-Paid Enrollment Form), GSM Pay Phones, RCVs (Recharge vouchers) of various denominations chiefly Rs.10, Rs 30 and Rs. 60 and gives them to only Urban Distributors and Rural Super Distributors. Easy balance (i.e. recharge through mobiles of retailers) is also transferred to only Urban Distributors (UDs) and Rural Supers (RS).

Urban distributors distribute the above items to the respective retailers according to the demand and transfer easy balance to retailer through FOS (Field officer Sales) SIM. Therefore, this setup of distribution is Second Degree and it is more suitable for catering to the need of urban areas which have good road and transportation facilities. Third degree distribution network: RS distributes the above said items to Rural Distributors known as RDs and transfers easy balance into SIMs of Rural Distributors. Rural Distributors then distribute them among the retailers according to the demand and transfer easy balance to retailer through FOS SIM from easy balance of Distributor SIM. This three level distribution is used to reach to sub urban and rural areas which are emerging markets. Advantages of second and Third distribution networksSecond degree distribution is suitable for urban areas because there is high population density and the customer demand is also substantial and thats why quick availability of product and
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services are required.

As the UD gets items directly from the company so products, services and promotion materials can be made available to retailers in shorter period of time. This ensures timely communication of promotions and advertisements to the customers.

Three degree distribution is suitable for catering to rural areas because of the lesser population density and large spread of retailers in these regions which necessitate more penetrative efforts in distribution.

Urban Distributors: These are known as UD and are located at District HQ i.e. Visakhapatnam. Functions1) They distribute the products, easy balance (referring to the balance of the SIMs used for easy recharge), services and promotion material to the retailers in designated urban areas of a district 2) They are responsible for smooth attainment of target of SIM activations and recharge amount without encroaching into other distributors territories. This is an constraint imposed upon them. 3) They distribute SIM, RCV, Easy Recharge, GSM Pay Phones, Lapu SIM, FOS SIM, replacement SIM (for contingency situations if the retailers lose SIMs) according to the retailers and other requirement within their territory only.

4) Activate customer SIMs within its territory after proper checking of POI (Points Of Interaction) and error free PEF (pre paid enrollment form). They need to collect all PEFs and re-documents from retailers and send it to respective Circle Head Quarter.
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5) They need to distribute the promotional materials among the retailers according to the allocation of TM/ZSM (Territory manager/Zonal Sales Manager), received from company.

6) They have to maintain the health report of the distributors, secondary details regarding retailers and SIM activation details. These reports have to be shared with TM.

7) They have to circulate communication from the company properly to the retailers grievances of retailers to TM/ZSM.

and

the

Specific examples (data obtained during my internship in Airtel, Vizag)

Number of SIMs sold in April, 2010 (OLD Town Area)

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Number of SIMs sold in May, 2010 (OLD Town Area)

1) In the month of April, Airtel was the market leader as far as selling of new SIMs are concerned with a very comfortable lead over its next rival Vodafone. 2) But this situation turned on its head during the month of May, where Vodafone overtook Airtel by a very, very large margin.

Comments and the main causes for this change are-

1) The local distributor of Vodafone introduced a tempting offer- upon a purchase of a SIM card worth Rs 10, the subscriber would get Rs 35 as talk time

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Along with this, the said distributor also encouraged target-selling of SIMs by the selected retailers, who were given gifts (expensive pens, free SIMs etc) 2) The various complaints of the retailers (explained below). Even though this region has the largest number of retailers (of various kinds e.g. cell points, kirana shops, general pan shops etc), due to the various complaints of the retailers the sale of SIMs decreased as the retailers started harboring a feeling of disenchantment towards Airtel, and hence they were not indulging in word-of-mouth promotion of the various schemes and impeccable services of Airtel. Even they were not trying to convert the un-decided new subscribers into Airtel customers.

Shop Details Sri Srinivasa Pan Shop Maharanipeta Visakhapatnam-2 Ph- 9849064721 Sri Rama Communication Kotha Jalaripeta Visakhapatnam-1 Ph-9866029221 Balaji Kirana Ph- 9849500807

Complaint(s) Earlier new SIMs gave 100 A2A free minutes, now this scheme has been stopped by the distributor.

The supply of new SIMs stopped even though sales are satisfactory.

Distributor is not coming daily, also not properly explaining the various schemes, and giving very less time to the retailer. Require new SIMs but not provided.

Friends Net

Network failure complaints come from customers. The Distributor (Satish) is not delivering cards in time.
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A.V.N College Down The shop is new so showing step motherly attitude.

Sri Sai Srinivas Mobile The Distributor (Satish) is not supplying cards properly. Shoppee AVN College Down, 33 Shops # 26-15-65, Near Purna Market Visakhapatnam-1 Mobile Gallery Ph- 9949006507 Singapore Collections Ph- 9849622917 Star Enterprises Ph- 9490074786 Ganesh Electronics Ph- 9866114660 New local agent is not behaving respectfully, hence not keeping Sri RajNavin Netlooks Ph- 9299606701 Yelamma Devi Stores New SIMs not available.
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Customer Care Service is unsatisfactory as it is responding after continuous calling for about 15 days or so. Free minutes are also not provided. Activation problem of new SIMs. Customers complain that these are disconnected after 10-15 days even though the documents provided are genuine. The agent of existing distributor (Pranati Enterprises) is not delivering cards properly, also delay in giving the margin money. Customer demands Rs 500 in easy recharge but as it is unavailable so loss for them.

Airtel recharge cards and easy recharges for 2 weeks. New local distributor is not coming regularly even after repeated requests.

Rice Require new pamphlets.

Ph- 9701489362 Sai Durga Pan Shop Ph- 3200690 Srinivasa Kirana General Stores Ph- 9866118603

Local distributor is not coming so cards etc have to be purchased from Purna Market. and Only expired SIMs are present, local distributor is not giving new SIMs. He is not providing satisfactory service.

Madhava

Medical

and Mobile phone lost but the distributor (Pranati Enterprises) is not giving new demo number. SIM replacement problem is there, the local agent is giving after 10 days. & Customers often complain of the network problem in the region.

General Stores Ph- 9030325755 S.K. Hardware Kotha Jalaripeta Ph- 9849075605 Electrical

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Number of SIMs sold in April, 2010 (MVP Colony)

Number of SIMs sold in May, 2010 (MVP Colony)

1) The highest number of SIMs sold were of Airtel, closely followed by Vodafone and other players like Idea, Reliance GSM, etc were very closely following the leaders.

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2) In the month of May, the sale of Airtel SIMs decreased. Still it was the leader, as the sell of other SIMs also decreased.

The reasons for these were-

A) There were very less instances of retailers having complaints on Airtels products and services here. The reasons were- good relationships between the distributor and the retailers, frequent visits of concerned distributors here along with office-boys (they enjoyed very good rapport with the retailers and also ensured that the banners, posters and pamphlets depicting the various schemes of Airtel are adequately stocked up with them) But, there were some very fundamental fallacies pointed out by the retailers which the Airtel authorities (mainly the distributors) are falling prey to. These were- the increasing amount of complacency and over-confidence in them due to the high brand name acquired by Airtel (Airtel distributors, customer care representatives, even officials dwell under the belief that Airtel has created such brand name that new subscribers would automatically choose Airtel, thus there is a peculiar behavioral change on the part of them resulting in stopping of gift-system by distributors, lowering of the standard of clarifications by the customer care representatives, lower investment in promotional tools like- increased banners, posters, etc.) These comments were positive criticisms from dedicated retailers of Airtel and hence pointed out a very fast emerging but disturbing trend in Airtel. GENERAL ANALYSIS

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A) The distributors in particular and the company in general have to drastically focus on improving the services (to the retailers).

This is because the business of mobile services is very heavily dependent upon the service aspect, where even a weeks complacency or delay on the part of the distributors, customer care executive(s) or other concerned company officials can give golden opportunities to the dealers of other mobile operators to convince the retailers (who sell the SIMs of various companies) , lure them with attractive service offers or gifts (upon selling pre-determined number of SIMs), ensure that the retailers indulge in sufficient word-of-mouth promotion of the products and services of their concerned mobile companies and ultimately sell the products of the later companies.

B) Good relationship with the retailers ensures that the intrinsic value that is created in the minds of the retailers do not erase immediately.

This is evident in the region of MVP, where although sell of new SIMs of Airtel has decreased but still Airtel retains the top-spot.

The Working All retailers Lapu SIMs (a SIM provided to the retailers by the company at free of cost for providing easy recharge service. Only regular retailers have this facility. This SIM has a memory of 128 kb and is specially designed for easy recharge purposes) falling under the particular beat is mapped with corresponding FOS of that beat and FOS SIM is mapped to the distributor (UD)
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SIM. Distributors use distributor SIM to transfer and distribute Easy Balance to mapped FOS. FOS uses FOS SIM to transfer the easy balance to mapped retailers Lapu SIM.UD gets certain percentage discount on their billing to company. From which certain percentage discount they have to give on their secondary sales to the retailer. Thus Urban distributor works with certain percentage margin on all its sales.

Rural Super: These are known as RS and are mainly located at district headquarters. They distribute the products, easy balance, services and promotion materials to its rural distributors only. Under one Rural Super there can be maximum 12 RDs and they can have maximum turnover of Rs 1 crore. They get certain percentage discount on the amount of their billing to company. From which certain percentage discount they have to give on their secondary sale to the RDs. Thus RS works with certain percentage margin on all their sales. Roles of Rural Super:

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 They need to distribute SIMs, RCVs, Easy Recharges, PEFs, GSM Pay Phones,

replacement SIM etc. , according to the RDs requirement within their territory only.

They need to collect all PEFs and Re-documents from RDs and send to respective Circle Head Quarter.

They need to distribute

promotional materials among the RDs according to the

allocations made by TM/ZSM

They need to maintain required stock of RCVs and Easy Recharge for 7 days secondary.

They need to collect money for invoices to RDs on schedule date and arrange the supply

of items of the invoices to RDs.

Rural Distributors: These are known as RD and can be located at blocks and towns. For every population of 5000 people there has to be a rural distributor. They distribute the products, services and promotion material in designated territory and are responsible for smooth attainment of target of SIM activation and recharge without encroaching into other distributors territories. They get certain percentage discount from RS on their billing to Rural Super. They cannot get invoice from company directly. From which certain percentage discount they have to give on their secondary sales to the retailer. Thus rural distributor works with certain percentage margin on all its sales. The RDs of Ankapalli and Bheemunipatnam (both sub-urban areas) as well as that of the approx. 300 villages within the Visakhapatnam Metropolitan Region are doing a commendable job in pushing Airtel products like RCVs, coin boxes (Bheemunipatnam has infact one of the largest numbers of coin boxes in the whole of Andhra Pradesh circle).

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Even during my internship in Airtel, I was deputed to bring retailer complaints from Bheemunipatnam and sell coin boxes here, during which I had interactions with the RDs here. Field officer sales (FOS) FOSs are the manpower of UDs and RDs, who on behalf of them sell the SIM, RCVs, Easy balance etc. to retailers under his assigned beat. These are the only manpower of the distributors who work in the market. These are the frontline sales people. The FOSs deputed in MVP Colony, Daba Gardens (both high revenue earning areas for Airtel in Vizag) have very good relationships with the retailers here. They have successfully convinced the retailers of these regions to shift to easy recharge system of recharging from the archaic system of recharging through recharge cards, thus eliminating the use of paper-based cards and hence saving a lot of money (spent on transaction costs) of the company and also aiding the retailers to understand the importance of technology in the modern age. Roles of FOS:
FOS is responsible for the secondary sales under his assigned beat. FOS is responsible for collecting PEFs, money against billing by retailer and distribution

of promotion material among retailers in consultation with TM.

He needs to circulate communication from the company properly to Retailers regarding

schemes, new offers, incentives etc.

BULL-WHIP EFFECT It is often observed (in the analysis of Old Town and Daba Gardens) that to increase the customer base the distributors engage in offering promotions and discounts at certain times. This accentuates the practice of forward buying in the retailers, which implies that retailers purchase
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large number if SIMs during distributors discount and promotion time and order relatively small quantities at other time periods. The result is- inventory of SIMs (at the distributors) which then gets expired and result in loss for the company as a whole.

MODERN DISTRIBUTION CHANNEL

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Apart from this framework of traditional distribution channel of Airtel in Vizag, there is a modern distribution channel which consists of: 1) The Mobile Store Name Address Contact

No. Dabagardens-Vizag Shop No:A 3, Ground Floor, Pawan Arcade, Door No:48-18-2/7, Opp.0891Ramnagar-Vizag Sriharipuram DOCOMO Sriripuram SiS John Players, Daba Gardens, Vizag - 530020 6635433 10-40-14, G Floor, Balaji ArcadeNear Care Hospital, Waltair mainroad 0891Ram Nagar, Vizag - 506001 6636012 D. No. 64 - 1 - 19/1/2/3Yarada Park, Gullalapalem, Sriharipuram, Vizag -0891530024 6464912 Surya Manor, Ground Floor, Opp. HSBC Call Center, Siripuram0891Junction, Vizag - 530003 6451005

All these mobile stores sell mobiles and also provide Start Up Kits (SUKs), recharge vouchers and top-up options of various cellular operators (the last one in Siripuram keeps only Tata Docomo products and services)
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These normally cater to the upscale shoppers in the said areas. 2) The Mobile Bazaar Address: Mobile Bazaar, Vizag with Big Bazaar GV Manor, Beside Sangam Sharat Theatre Station Road Dwarkanagar, Vishakapatnam 533016 This mobile store, along with selling mobile phones of different companies (both new and second-hand), also sell SUKs, RCVs and top-ups of different mobile operators. 3) Airtel Relationship Centres These are the different ARCs in Vizag. These facilitate in getting new Airtel connection, subscription to any of the value added services, payment of bills or getting a new handset Name and Address of showroom Coastal Communications 8351waltair palace pedda waltair junction opp subiksha super market vizag 533002 GRACE Communications 8132610 Main Raod, Gajuwaka, Vizag 530016 Vizag Lobby Vizag Vinayaghar Apts HNo: 101813 Opp:
HSBC Bank CBM Compound Visakhapatna

Parking Timing Yes 10:00:00 AM8:00:00 PM No 10:00:00 AM8:00:00 PM Yes 9:00:00 AM8:00:00 PM

Weekly off Sunday

Sunday

Sunday

m 530015 Vizag SIM Communications KSR Mansion Opp Rythu Bazar Near Eenadu Office- Seethammadhara Visakhapatnam 530013 Vizag

Yes

9:00:00 AM8:00:00 PM

Sunday

Among these ARCs, the ones situated in CBM Compound and Gajuwaka attract lot of foot falls and also substantial sales take place here.
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The important thing to take notice is that these ARCs are well-spaced (geographically) and also located strategically.
Gajuwaka- Gajuwaka became a municipality in 1990 and was mixed in Greater

Visakhapatnam Municipal Corporation (GVMC) in 2005, now it is 5th zone in GVMC. Gajuwaka is the fastest growing part of Visakhapatnam city. It was a small village almost up to 1970s. With the construction of Vizag Steel Plant its growth started at a rapid pace.
CBM Compound- This region is a thriving business centre of Visakhapatnam City

having HSBC office, numerous retail outlets (apparels, food courts etc), hub office of Airtel (Andhra Pradesh circle) etc.
Peda Waltair and Seethamadhara- Peda Waltair is a residential zone, thus the ARC

here cater to the inhabitants of this region. Seethamadhara is a busy market place where the common Vizagites shop (medicine stores, kirana stores etc)

4) Airtel Exclusive Outlets These offer all the products and services of Airtel (with respect to Andhra Pradesh circle) i.e. SUKs, RCVs, top-ups, value-added services, bill payment options for post-paid customers etc. These outlets serve as a good distribution channel for customers who desire latest products, services, and customized services all under one roof.

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REFERENCES
1) www.economictimes.indiatimes.com 2) www.airtel.in 3) www.coai.com 4) www.trai.com 5) www.cdg.org 6) www.telecomabc.com 7) www.talkinfo.com

8) Personal interactions with various distributors and retailers of Airtel in Vizag during my internship.

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