Distributor Automation Study

Project Report: Supply Chain Management

Submitted to: Prof. Rupesh Kumar Pati

Date of Submission: August 30th, 2011

Submitted by: Group 6 Sec C Shikha Gupta | Deepak Prasad | Anurag Patra | Mahtaab Kajla Rahul Mittal |Santanu Chowdhury

Supply Chain Management

Executive Summary
More than an IT project, the project is about change management and communicating the benefits of the project to the stakeholders. Primary stakeholders for this project are the distributors, Sales people and Kelloggs company. Even though from the companys point of view the benefits of the project are well thought of and pretty obvious, Distributors will be reluctant to the change since they dont see any incentives for them to be a part of it. Kelloggs, as a company, needs to make sure that the communication to the distributors happens at the right level and the right message is put across to them so that they see the benefits for themselves. Technically the product has some issues which are being taken care of and most of the showstoppers have already been resolved. Such issues will keep on popping up every now and then as the software gets refined over time, but these issues should not be a reason for any further delay of the project. From the interactions with the distributors as well as with the Sifys technical team, it seems obvious that the project has to be driven by the sales team and they are the ones who can build trust in the distributors about the systems stability and the companys commitment to it. The report contains a list of technical issues which have been brought up by distributors and are being taken care of by the technical team. It also contains the way forward and proposes training for TSIs & ASMs as well as their respective roles in terms of ownership of the system.

2011 Group VI | Indian Institute of Management, Kozhikode | PGP II

Chapter: Executive Summary

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Acknowledgement
It gives us immense pleasure to acknowledge all those who have given their time and energy to supply all valuable facts and opinions that has helped us in bringing out this project to fruition. We would like to express our gratitude and respectful thanks to Prof. Rupesh Kumar Pati for constantly supporting and guiding us in achieving the prescribed objectives of the project. We tried to incorporate the elements of our learning in our own approach of working as a team so as to eliminate inefficiencies and bank upon the competencies of each individual member while allowing everyone to explore the marches of their comprehension and creativity. This project has been a wholesome learning experience for us and we would be glad to extend the learning process by welcoming criticism and suggestions on our work.

SCM Group 6

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Chapter: Acknowledgement

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CONTENTS
Executive Summary.................................................................................................................... 1 Introduction ............................................................................................................................... 4 FMCG Sector Overview .......................................................................................................... 4 About Kelloggs....................................................................................................................... 5 Indian Breakfast Cereal Industry ............................................................................................ 5 Changing Mindset of Consumer ............................................................................................. 6 Information Technology in FMCG .......................................................................................... 6 Project Details ............................................................................................................................ 8 Primary Objective ................................................................................................................... 8 Kelloggs Supply Chain ............................................................................................................... 8 Distributor Automation Project ................................................................................................. 9 Objectives ............................................................................................................................. 10 Implementation Process ...................................................................................................... 11 Current Implementation Issues ............................................................................................... 11 Process Related Issues ......................................................................................................... 11 Installation/Training Issues .................................................................................................. 12 Distributor Specific Concerns ............................................................................................... 13 Change Management ........................................................................................................... 14 SWOT Analysis.......................................................................................................................... 15 Other Similar Implementations ............................................................................................... 17 Marico: Project MiNET/MIDAS............................................................................................. 17 Godrej: Project Sampark ...................................................................................................... 18 Recommendations ................................................................................................................... 19 References ............................................................................................................................... 22 Chapter: Contents

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Supply Chain Management

INTRODUCTION
FMCG SECTOR OVERVIEW
Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. Indias FMCG sector is the fourth largest sector in the economy and creates employment for more than three million people in downstream activities. The total FMCG market is in excess of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to maintain a high growth rate. The FMCG sector is dominated by both MNC and domestic players and the industry is poised to grow to 33.4 Billion USD by 2015 from 11.6 Billion USD in 2003. The FMCG sector in India is attractive because of the following reasons: There is a low level of penetration as well as low per capita consumption for most of the products. An average Indian spends 40% of his monthly income on groceries and 8% on personnel care products. Large population base of India.

The problems faced by the FMCG sector are as follows: High deviation in forecasted and actual sales due to inaccurate demand prediction Inability to achieve operational excellence due to multiple level of sales data tracking in the supply chain Over production, higher occurrences of stock outs due to the bullwhip effect (lack of information sharing among the members of the supply chain) Chapter: Introduction Due to increasing buying power, the consumption pattern of average Indian is changing continuously. Some of the articles have seasonal demands and demand prediction becomes difficult for them.

2011 Group VI | Indian Institute of Management, Kozhikode | PGP II

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ABOUT KELLOGGS
In 1994, three years after the barriers to international trade had opened in India, Kelloggs decided to invest US $65 million into launching its number one brand, Corn Flakes. Their primary target audience consisted of children (5 to 12 years of age) and secondary target market consisting of older children and adults. Now, the challenge was to regain its initial momentum, as the problem was that the past two years had seen volume growth tumble dramatically from between 50% and 70% since launch (on a small base) to just 6% in 19992000. The failure of Corn Flakes in India was not a question of logistics or brand recognition. It seems that it was somehow tied to the peculiarity of consumption patterns of breakfast by Indians. In 1998, Kelloggs decided to expand its range (cornflakes and wheat-flakes) to chocolate-covered flakes, branded Choco-flakes, also in the same year they launched Mazza but even that failed miserably. In 1999 Project Red Alert, Kelloggs fortified its cereal range and called Iron Shakti. and launched a campaign depicting the Iron deficiency in children which boosted the sales but that campaign was withdrawn. Though, it has been quite some time that the company is in India, but still, a lot more can be done to improve its sales and revenues from India.

INDIAN BREAKFAST CEREAL INDUSTRY

With an estimated market size of Rs. 250 million a year and an estimated growth rate of 20% per annum, the breakfast category in India was experiencing tremendous growth. The breakfast category in India, includes products such as cereals, cornflakes and muesli with Chapter: Introduction popular brands such as Kellogs, Mohuns and Bagrrys. Focus on Health as a trend was gaining ground. Further, the difference between good food and food thats good for you is becoming more dominant with a greater percentage of consumers falling in line with the new trend. More and more players have also entered into this space. Besides a few established ones, local players are also testing the grounds with their own
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Supply Chain Management cereal variants. Another factor propelling the growth of health food, especially in India, is the changing lifestyle of millions of people. Worldwide, the concerns are high about wrong eating habits, health disorders like obesity and diabetes and India is no exception. Still the Indian Breakfast Cereal Industry is facing challenges Indian population not used to consuming processed foods Easy availability and low-price of traditional breakfast Low awareness about processed foods Habit of eating heavy breakfast Low awareness of the requirement of healthy eating and calorie intake Price sensitive customers

CHANGING MINDSET OF CONSUMER

People are becoming conscious about health and hygienic. There is a change in the mind-set of the Consumer and now looking at Money for Value rather than Value for Money. We have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. Consumers are switching from economy to premium product even we have witnessed a sharp increase in the sales of packaged water and water purifier. Findings according to a recent survey by A. C. Nielsen shows about 71 percent of Indian take notice of packaged goods labels containing nutritional information compared to two years ago which was only 59 per cent.

INFORMATION TECHNOLOGY IN FMCG

Market share movements indicate that companies such as Marico Ltd and Nestle India Ltd, with domination in their key categories, have improved their market shares and outperformed peers in the FMCG sector. This has particularly been aided by the use of information technology to facilitate various processes and logistics requirement. Single product leaders such as Colgate Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in their respective categories, aided by innovations and strong distribution. Chapter: Introduction

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Supply Chain Management A competitive edge in sales and distribution network provides much needed muscle to the companies to compete in market place as has been epitomized by companies like HLL, Marico & ITC etc. Use of IT in sales and distribution promises to provide a consistent source of competitive advantage that can go a long way in enhancing the overall power of company in market place. Sales and Distribution in India means a set of levels- wholesalers, Stockists, transporters, retailers etc. Automation of S & D promises the reduction in storage costs, administrative costs, communication costs, lesser wastage and lesser transportation cost because of better route planning. It enhances the revenue because of better marketing planning, demand volatility management, responsive product development. The people productivity is also enhanced because of effective use of sales data, improved communication flows and computer assisted ordering. Considering all these advantages, IT looks like to be a natural candidate to be used in sales and distribution.

Kelloggs, as a company, has always been associated with healthy food and this changing consumer mind-set indicates that its poised to grow at a relatively higher rate in India with its large product portfolio. To be able to capitalize on this opportunity, the sales and distribution network should be capable enough to handle the increased loads with reduced logistics cost. Information technology is the answer to required efficiency in S&D and would definitely act as an enabler.

2011 Group VI | Indian Institute of Management, Kozhikode | PGP II

Chapter: Introduction

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PROJECT DETAILS
TITLE: DISTRIBUTOR AUTOMATION STUDY

PRIMARY OBJECTIVE
One of the primary objectives is to understand the Distributor automation project which aims at connecting all the distributors on a common platform named FORUM TM provided by Sify. The main aim of the Distributor Automation study is to do a thorough analysis of the project comparing it with other such initiatives from other FMCG companies and provide recommendations to ensure successful implementation of the platform. This report will also study the critical success factors that ensure the success of IT automation in sales and distribution networks. Finally the report ends with a set of recommendations to be followed for the project.

KELLOGGS SUPPLY CHAIN

The manufacturing for Kelloggs is done in Taloje plant near Mumbai. After that the finished goods are transported to Carry and Forward Agents (CFA) who further deliver it to the distributors and super distributors. PRIMARY SALES The requirement for good delivery comes from the distributor who sends out a mail to the CFA based on the current inventory levels and the delivery is usually done twice for every distributor.
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Chapter: Project Details

Supply Chain Management SECONDARY SALES DVSM (Salesman) usually goes to a set of retailers in a day (called a Beat) and records the inventory levels at all the retailers in that beat. Then he notes down the requirement for new stock based on the average turnover and retailers suggestion for every retailer which he further notifies the distributor. The bills are created at the distributor end and the delivery is either done on the same day or the next one. Currently most of the distributors use one or the other proprietary software to record all the invoices, stock keeping, payment settlement et cetera. In majority of the cases, its the DVSM who actually operates the system to create invoices and prints the summary along with other reports required for the delivery.

DISTRIBUTOR AUTOMATION PROJECT

FOR VISIBILITY IN FORWARD SUPPLY CHAIN Project plans to automate most of the aspects of the supply chain using the all-pervasive platform from Sify named FORUMTM. The implementation of the software requires that the MicroERP gets installed on all the distributor sites which shall aid in day-to-day operations of the distributors like Invoicing, Stock Keeping, Payment settlement, Claims handling etc. The MicroERP shall be required to upload sales data on a daily basis to a central server from where data can be fetched by an application called the Sales Portal which shall provide MIS reports to the sales team on a real time basis regarding the sales data and related trends. Chapter: Distributor Automation Project
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OBJECTIVES
DISTRIBUTORS POINT OF VIEW Improved sales due to better decision making Better inventory management leading to perceivable cost reduction Problem of stock out (being faced by many distributors) will definitely be benefited to a great extent Better turnaround time for Claims processing Purchase order processing: Reduced effort

Better Market Opportunities

KELLOGGS COMPANYS POINT OF VIEW Better logistics and warehouse management - Absence of secondary and tertiary level data blurs the demand-supply graph. In-depth market understanding - Dealer's/retailers purchase reflects the buying pattern of retailers. Tracking secondary sales data with the help of a fully integrated Sales Tracking System helps you to know which segment, region, and product mix have high and low demands Formulating and evaluating distribution strategies - Know the distribution channel's performance and strategize the next distribution cycles accordingly. You can plan-out Chapter: Distributor Automation Project lucrative schemes for distributors who are under-performing or who are less motivated to sell your products. Better stocking: Elimination of lost sales and mal-distribution of stock due to stock outs or large inventory levels. SALES TEAMS POINT OF VIEW Reduced manual effort in terms of collecting data from the distributor, collating and processing it to extract meaningful information

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Supply Chain Management Real-time data helps keeping a close watch on the sales performance on a daily basis facilitating action at the right time for maximum results. MIS for improved decision making and performance appraisal

IMPLEMENTATION PROCESS

Site Readiness check

Installation of the software

Loading the masters Item, Customer etc. Initializing the system with opening inventory and other dealer specific details like User-defined codes, printing formats etc. Providing sufficient training to the distributor to ensure usage of the system

CURRENT IMPLEMENTATION ISSUES

PROCESS RELATED ISSUES
PARALLEL BILLING 1. Lack of trust in FORUMTM: Some of the distributors just dont think that the Sifys software is stable enough to be able to bring their day-to-day operations on it exclusively. One of the reasons for this has been the instability of the software during the piloting phase and the initial time-lag in responding to their queries. Thus they are still into an experimentation phase where they do primary billing in their own software and put some invoices in the FORUM just so as to keep Kelloggs satisfied. Chapter: Current Implementation Issues There are two primary reasons for the distributors indulging in parallel billing:

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Supply Chain Management This problem is being taken care of and the condition is improving with better response mechanisms put into place which will help develop the required trust among the distributors. 2. Consolidated Financial Statements: The need for consolidated financial statements to be maintained under single software is one of the primary reasons. The rationale is that most of the distributors have more than one agency of different companies and invoicing the bills for different companies in different software makes it very difficult for them to obtain consolidated financial statements for purposes like tax filling, VAT return etc. If the distributor makes sure that if he is doing parallel billing then he enters all the bills in both the software then as a company Kelloggs shouldnt have any problem with that. A possible roadblock here would be that as the volume of the business grows, this method of operation shall become unsustainable and the whole purpose will get defeated. BATCH NUMBERS AND PACKAGING DATE (PKD) NOT BEING USED The purchase invoice received from the CNF does not contain Batch no's and PKD and thats the reason that none of the distributors are in a habit to record them when they receive stock from the CNF.

INSTALLATION/TRAINING ISSUES
INEXPERIENCED TRAINING PERSONNEL FROM SIFY The training person from Sify who does the installation at the distributor site as well as train them for using the software was found to be not properly equipped to handle the job at hand. These personnel should be trained properly in the ways of how they are supposed to interact with the distributors as well as well-versed with the software to be able to respond to their queries. Steps Taken: 3-week refresher training has been organized for all the installation personnel so that they are competent enough to handle technical queries raised by distributors. Also every staff personnel will go through an evaluation test by Kelloggs to ensure their competency for the job at hand. Chapter: Current Implementation Issues

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Supply Chain Management An exclusive trainer has been hired for this purpose and he will be visiting distributors to understand their concerns as well.

NO REPRESENTATIVE FROM KELLOGGS TO OVERSEE THE INSTALLATION PROCESS One major disconnect here is the fact that the Sifys installation personnel cannot be expected to understand the business process assuming that they are technical people who only understand the software part. Absence of any person from Kelloggs who understand the sales processes and the distributor requirements makes the whole process very slow when distributor raises issues on site and the Sify person cannot answer them satisfactorily. LEARNING IS AN ONGOING PROCESS We cant expect the distributor to understand the whole software at the time of training. Once the basic understanding is there, the distributor will try to explore the software more and will definitely come up with queries regarding the technicalities of software. Right now the only way they can get information is by calling Sify call centre representatives which causes inconvenience for the distributor hampering extensive use of the software. Possible Solution: A comprehensive Usage Manual for FORUMTM Software should be

documented and provided to all the distributors using the system. We should ensure that the manual should be easy to understand from a distributors point of view and the language used in it should not be too technical Chapter: Current Implementation Issues

DISTRIBUTOR SPECIFIC CONCERNS

TECH SAVVY DISTRIBUTORS The more tech-savvy a distributor is, the more he wants to explore the system. These are the kind of distributors who willingly accept a superior system and further explore it to provide valuable suggestions. Good thing about their raised issues is that they give pretty detailed suggestions on the software which can be incorporated into the system from a convenience

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Supply Chain Management point of view. In the long run, these suggestions shall help to refine the system for maximum performance. But in the short run, such issues cannot be entertained since these are just too specific to be resolved right now when other bigger issues are still pending. This creates a problem since distributors start losing trust in the system and the processes driving the implementation of this project just because either they have not been properly attended to or their queries have not been satisfactorily answered. Possible Solution: The solution lies in effective relationship management. We should be the first ones to appreciate the effort spent by the distributor to understand the system and to raise issues. After all he deserves it having spent so much time on it and the only way to keep him engaged is to show that the inputs by him are considered valuable and highly regarded. Most of the issues are raised by distributors who are the power users of such systems and, apart from some critical issues, its more about satisfying their ego than anything else. FINANCIALLY CONSTRAINED DISTRIBUTORS One thing realized is the fact that not all distributors are capable enough to be able to invest extra time and money to be able to use the system. The case in point would be Anand Agencies (Dombivali) who does a monthly business of around Rs 5-6 Lacs from Kelloggs and does not make enough money to justify the additional cost that he incurs in getting his financial statements audited from two different softwares. Chapter: Current Implementation Issues Also some of the low volume distributors take out only one bill for a particular retailer in a day to keep his printing costs low. This is how they have been running their business and its definitely not cost-effective for them to start using the new system

CHANGE MANAGEMENT
GAINING TRUST OF PARTNERS Supply chain automation is uniquely difficult because its complexity extends beyond your company's walls. People will need to change the way they work and so will the people from

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Supply Chain Management each distributor that company adds to its network. Most of the larger FMCG players have also faced issues trying to force such radical changes down distributors throats. Distributors have to be convinced that the system just does not sit to benefit the company, rather theres something in it for the distributors as well. Increased ROI with reduced stock outs, and better managed inventory should be something that can be highlighted here. INTERNAL RESISTANCE TO CHANGE If selling supply chain systems is difficult on the outside, it isn't much easier inside. Sales people are accustomed to dealing with phone calls, faxes and hunches scrawled on paper, and will most likely want to keep it that way. If we our sales people cant see the benefits that it has for them and using the software will be worth their time, they will easily find ways to work around it. Also they wont have the conviction to convince the distributors to use the system.

SWOT ANALYSIS
STRENGTHS Sifys experience with GSK implementation is a great leveraging point to understand distributors preferences and that knowledge should be used to improve the system FORUM is a matured software with most of the features at par with the other software which are available in the market Integration module with Tally software for financial accounts management is a big plus for distributors who are already using Tally User friendliness of the software will go a long way in driving the usage among the distributors WEAKNESSES Dissatisfaction among the distributors with respect to the instability of the system and sluggish response from our side to their queries shall have to be taken care of in order to win their trust Due to the money and effort required, it might not be possible to bring all the distributors online easily especially the ones who do not do enough business from Kelloggs to justify the costs
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Chapter: SWOT Analysis

Supply Chain Management OPPORTUNITIES Auto-replenishment of stock at the distributor end shall help manage the inventory well. Use of handheld devices at the last mile will give company accurate information about the tertiary sales which can be used for market research understanding consumer behavior Sales forecast module can be used to make it a pull based selling rather than the currently used push based Ability to introduce dealer specific schemes can be a great feature to push sales for specific products in selected areas as per the trend Automatic data upload eliminates the need for manual data retrieval saving time for other activities Centralized upload of price lists leaves no room for manipulations at the distributor end Real time sales data facilitates intervention at the right time for declining sales

THREATS Current trend of Parallel billing might not be sustainable in the future as the volume grows Distributor has the flexibility to modify the PTS and PTR of the inventory which might lead to manipulations leading to higher prices being paid by retailers Lack of exposure to the system among the employees might require addition efforts in the future to get the necessary buy in

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Chapter: SWOT Analysis

Supply Chain Management

OTHER SIMILAR IMPLEMENTATIONS

MARICO: PROJECT MINET/MIDAS
MANAGING CHANGE The company went by the philosophy that ownership brings out a sense of responsibility in a person. One of the initiatives for creating a sense of ownership among employees was the appointment of functional heads of various departments, as the process-owners, of the integration. The onus of managing the entire process was on these process-owners and to add to the seriousness of the effort, was taken into consideration for their performance appraisals. KEY SUCCESS FACTORS The success of this initiative can also be attributed to the thorough planning that backed the project at the time of implementation. The first step was to involve the channel partners from the start. The channel partners and the entire organization had active roles in defining the functionality of the solution. Concerns raised by partners were addressed and much of the functionality desired by them was included in the solution. Chapter: Other Similar Implementations Next was allocation of adequate resources for the project. The core team consisted of line managers as well as members of the systems team. They were freed from their regular roles to concentrate on the deliverables of the project. To increase the focus of the team on the task at hand, a separate office was created for the duration of the project separate from the head office. Finally, a thorough analysis of all the risk factors was carried out as part of the planning process for the implementation. Clear mitigation plans were developed and deployed for each of the risk factors.

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Supply Chain Management

GODREJ: PROJECT SAMPARK

GCPL has around 1200 distributors of which around 400-450 are A-class distributors contributing 75-80% of the total business. Remaining 750-800 distributors are B & C class distributors. MANAGING CHANGE The initial challenge was that the distributors were not open to sharing the above data. Also the technical challenge was that most of the distributors were using some software or the other. Strategy adopted was to customize the ERP for them. Chennai-based BOTREE specializes in developing ERP for CPG sector. Therefore, GCPL obtained the BOTREE ERP solution and decided to customize it. It took GCPL 4-5 months to implement and customize the solution at Distributor end and convince them to use it instead of packages, which they were using earlier. For B & C class distributors GCPL did not want to give the ERP software. This was because it is not easy to maintain the software at so many distributed sites and these were small distributors who could not afford additional costs associated with using the new system. For these 750 distributors, GCPL thought of a different solution so that the investment was also minimized. These small distributors call CFA two times a week and read the sales and stock data over the phone. CFA keys in the data by logging on the web-site and then the data is taken backwards like in case of A-class distributors. This system was deployed in 3-4 months. In this way, GCPL is now connected to all distributors. KEY SUCCESS FACTORS The Critical success factor for the success of the SAMPARK project has been to ensure the participation from distributors and continuous support of Top Management. They were able to understand the requirements of low volume distributors and circumvent the system to make sure that it is convenient for the distributors as well. Chapter: Other Similar Implementations

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Supply Chain Management

RECOMMENDATIONS
From the observations made during the internship period, one thing realized is the fact that its more of a change management project than anything else. We need to make sure that distributors trust the system and the processes behind it. One thing common among all the other successful implementations has been the involvement of the channel partners and the critical role of top management in ensuring that.

CURRENT STATUS OF PROJECT

Most of the earlier found technical issues with the software have been resolved and released, so now is the time that we can start pushing it down to the distributors to use it properly. Re-implementations are being done at all the distributor sites so that everyone is on the latest version of the software and also includes refresher training on it. From now on, the usage of the software shall be strictly monitored and distributors would be required to maintain the daily usage.

WAY FORWARD
One of the most important things to be taken care of is trying to be responsive to the queries raised by the distributors in a prompt and satisfactory manner. This is not to suggest that we fix all the issues as they come but probably a convincing reply as to assure them that we understand the issue, and whether we are taking it up right now or in the future, will go a long way in maintaining a healthy relationship with the channel partners. In the end, it all comes down to the basic fact that how much the distributors trust the system and our commitment to it. INTEGRATION WITH THE CFAS ORACLE SYSTEM Auto-replenishment would be a great incentive for the distributors looking at the past trend of cost saving and improved stock-out situations. REFRESHER TRAINING FOR TSIS We need to get TSIs on board for this project. One thing common among similar installations done in Marico, Nestle, Godrej etc. is to make TSIs responsible for the usage of the system. TSI Chapter: Recommendations

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Supply Chain Management should be the first point of contact for any issue being raised by the distributor as well as making contact with the concerned technical support to get the issue resolved/attended to.

Refresher training for all TSIs

Reimplementation phase

In-Depth training of ASMs

Performanc e Evaluation

Scaling Up

A training session should be held for TSIs which will deal with the basics of the software and more importantly it would be more of a refresher on what to do when distributor has some issues with the software. The intention here would not be to make him a product expert rather enabling him to facilitate the process of escalating issues and getting them resolved to distributors satisfaction. IN-DEPTH TRAINING OF ASMS Just as distributors need to be convinced about using the system, the same effort needs to be put into training the sales team as well. The buy-in from sales people is very important since the translation of all these efforts into results will only come if they use the system to its potential and are committed to it. EVALUATE PERFORMANCE IMPROVEMENTS Regular audit of sale and channel partners should be done to identify improvement like reduction in inventories, reduction in stock outs increase in sales owing to availability, increase in coverage, expiry of perishable items etc. Chapter: Recommendations

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Supply Chain Management SCALING UP Financially constrained distributors (Ref. Distributor Specific Concerns) will be given a differential treatment initially as it would not be possible for them to be able to use the system from the start. The low volume nature of the business does not justify the extra cost incurred to use the system. Such distributors would not be part of the system right now but would be brought online as and when their sales exceed a particular threshold level.

PARALLEL BILLING: POTENTIAL ROADBLOCK

Once the re-implementation is done and distributors are asked to compulsorily use the system, they wont have any choice but to use it. The first reaction of some of the distributors would be to continue with the parallel billing. But as the volumes grow, this is bound to become unsustainable potentially leading to distributors clubbing the bills together to show just the secondary sales. They can do that to save their time which can be a serious issue for Kelloggs since the retailer specific data will not be available if this happens. Possible Solution: One of the solutions would be to have a different channel to report some other daily statistics like Number of calls made, Calls Converted for every salesman etc. This can be accomplished if TSIs collate such data for all the salesmen under him and put it into the system through some interface (which will require some development effort from Sify). The system will have the intelligence to compare the calls converted for a particular beat with the number of invoices entered into the system by the distributor. If these two numbers are largely different, the system can generate an alarm for the ASM which will be Chapter: Recommendations further escalated to RSM and management if the issue persists. Since we are still into a phase where we are starting to push the distributors for the usage, this would be the right time to build this functionality so that when we are ready to start taking actions for non-usage this will be a great tool that will help us identify such manipulations without doing a physical audit at the distributors site.

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Supply Chain Management

REFERENCES
http://www.erp.asia/scm-implementation.asp http://en.oboulo.com/information+technology+as+an+enabler+of+sales+and+distributi on http://www.networkmagazineindia.com/200412/coverstory05.shtml http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html http://www.slideshare.net/ashish1.bansal/impletation-of-it-in-marico http://www.scribd.com/doc/37532156/Distribution-Management-Nestle-Ppt http://howtogetfasteratrunning.com/botree-software-international-bags-order-fromnestle-globe/ http://www.scribd.com/doc/28383895/HUL-ITC-amp-Godrej-Supply-chainmanagement-comparision http://www.cio.in/case-study/emami-reaches-out-consolidate-data http://eng.hi138.com/?i261762_Distributor_of_FMCG_industry_how_to_make_money http://books.google.co.in/books?id=orimz5E6IO4C&pg=PA88&lpg=PA88&dq=marico++ MidAs&source=bl&ots=-tl9DR4Ksa&sig=VexQsXyiHT0sChGAfHghxBm2xM&hl=en&ei=9wPJTf3mIJStgfjrayECA&sa=X&oi=book_result&ct=result&resnum=9&ved=0CFcQ6AEwCA#v=onepag e&q=marico&f=false http://www.zdnetasia.com/whitepaper/marico-reduces-it-costs-by-50-percent-andincreases-performance-by-migrating-mission-critical-sap-applications-to-red-hatenterprise-linux_wp-2110023.htm http://www.itcinfotech.com/CPG/mobility-application-service.aspx http://www.slideshare.net/WayneGoodrich/how-automation-can-help-fmcg-salesmanagers Chapter: References http://www.accenture.com/SiteCollectionDocuments/PDF/DaburIndiaOECA.pdf http://en.wikipedia.org/wiki/Kellogg_Company Management Talk Case Studies - India Kelloggs Waterloo

2011 Group VI | Indian Institute of Management, Kozhikode | PGP II

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