CBD Overview

V. Sridharan

 CBD : The engine of P&G !

Customer Business
Development
A multi-functional strategy
to deliver Co. brand volume & profits
by partnering with our Customers
to build their sales, shares & profits

Selling is the core of CBD

building P&G business with external
customers and managing customer
relationships

CBD Purpose
To win at the FMOT by delivering sustained
competitive advantage for our brands at retail so
that P&G brands become the brands of choice for
shoppers

Winning will mean two things

Winning in the store
Winning the store

What does winning the FMOT

mean?

Distribution
Visibility
Retailer Recommendation
Packaging
Sizing/pricing
Speed / quality of execution
Information feedback

THE TWO DIVISONS

29 States & 6 Union
Territories

North East

1030 MM
Population
South West
28% Population
in Urban India

P&G Organization

CBD
Customer Business Development

Stores
Distributor

But First, a Bit of History always helps..

P&G officially enters India in 1989
We understood quickly that mastering the
complex Distribution game was critical to its
business strategy
So How did we go about doing that?
Well, by following what everyone( including the
market leader) was doing. Of course!!

But First, a Bit of History always helps..

So we followed the Stockist Model
Appointed 3000+ stockists over the next 8 years..
And did everything that the existing players did to
build distribution
And the result?

We ended playing the game the way

Competition wanted us to- play to their
strength
Average HLL stockist was 7 times the size of
P&G stockist

Distributor Evolvement
COMPLEXITY :
3400 STOCKISTS

27 WAREHOUSES
4 DISTRIBUTION CENTRES
21 MANUFACTURING LOCATIONS
LARGE & SCATTERED INVENTORIES

POOR LOGISTICAL EFFICIENCIES & HIGH COSTS

INFLEXIBILITY :
16000 ORDERS PER MONTH
LOW TRANSPORT RELIABILITY
LONG LEAD TIMES
HIGH STOCKIST INVENTORY (25 - 30 DAYS)
REDUCED CAPABILITY TO INVEST IN COVERAGE EXPANSION &
FUND VOLUME GROWTH

Distributor Evolvement
NON FUTURISTIC :
NO LOGISTICAL EFFICIENCIES
NOT DESIGNED TO SURVIVE THE ENTRY OF LARGE EFFICIENCY
BASED VOLUME DRIVEN MULTI-NATIONAL RETAILERS

NON-STANDARD :
LOW STOCKIST VOLUME
UNABLE TO LEVERAGE PROVEN GLOBAL INITIATIVES LIKE SLOG
/ EDR / IDS etc.

LOW-CAPABILITY ORGANISATION
STOCKIST STRUCTURE NOT CAPABLE OF DELIVERING UNIFORM
& HIGH QUALITY SELLING EFFORT
LARGE CUSTOMER BASE RESTRICTS P&G INTEVENTION AT
EACH STOCKIST TO A NARROW LEVEL

SOLUTION
PROJECT GOLDEN EYE
IMPLEMENT ASIAN DISTRIBUTOR MODEL
CREATE A NETWORK OF LARGE LOGISTICALLY
EFFICIENT SIZED DISTRIBUTORS
IMPLEMENT DISTRIBUTOR MANAGEMENT PROCESSES
BASED ON REGION BASED CBAs
CREATE A MULTI FUNCTIONAL P&G CBD
ORGANISATION TO TRAIN & MANAGE THE
DISTRIBUTORS

CREATE A HIGH PERFORMING DISTRIBUTOR SALES

ORGANISATION TO CONSITENTLY DELIVER RPS

SOLUTION
PROJECT GOLDEN EYE

OPTIMISE P&G PLANT TO RETAILER

SUPPLY CHAIN
RESTRUCTURE THE P&G NETWORK TO DRIVE
EFFICIENCIES

CREATE RELIABLE TRANSPORTATION CAPABILITY

CREATE STRONG INFORMATION LINKAGES BETWEEN
ALL LOCATIONS FROM DISTRIBUTOR TO P&G PLANT &
GO

IMPLEMENT REGIONAL CBAs ON SUPPLY CAHIN

PROCESSES (OSB / EDR)

SOLUTION
PROJECT GOLDEN EYE
IMPLEMENT Asia
Distributor Model

IN A WAY THAT

OPTIMISE P&G
SUPPLY CHAIN

1. LEVERAGES P&G GLOBAL EXPERTISE & TECHNOLOGY

2. PROCESSES ARE SIMPLE, STANDARD & MECHANISED

3. CREATES & LEVERAGES SCALE OF OPERATIONS

4. DELIVERS COMETITIVE ADVANTAGE AT RETAIL THRU
CONCEPTUAL SELLING
5. INTEGRATES SUPPLY CHAIN & LINKS DISTRIBUTORS THRU
TO THE PLANTS
6. ACCELERATES OUR SPEED TO MARKET
7. DRIVES NON-VALUE ADDED COSTS OUT OF THE SYSTEM.

DISTRIBUTOR MODEL
P&G Level of Engagement

P&G PVP
CBAs
Processes
Operating Model

Distributor
Creativity
Innovation
Local Expertise
Local Realities

GOLDEN EYE - VISION

We will deliver RPS of availability &
visibility sustainedly in all covered stores
We will deliver competitive advantage
through conceptual selling
We will be the preferred supplier for trade

Distributor CWP, selection &

P&G support
Distributor core work processes
Distributor Profile, Evaluation and Selection

P&G level of engagement

Training

DISTRIBUTOR MODEL
P&G Distributor Strategy

Deliver sustained competitive

advantage for P&G brands at retail by
establishing a viable Sales coverage
and distribution network for all stores
under coverage through Distributors.

DISTRIBUTOR MODEL
P&G Distributor Strategy

Strategic elements
CBD Multifunctional Teams
Simplified, Standardized Systems and Technology

Training and Management Tools

DISTRIBUTOR MODEL
Distributor Definition
P&G Distributor is a Strategic Business Partner who
delivers Sales fundamentals (RPS of availability and
Visibility ) in all stores within specific geography .

They provide an efficient and cost effective means to

reach the retail outlets in order to achieve superior
instore presence and deliver strong business results.

DISTRIBUTOR MODEL
Distributor Definition
P&G Distributor

- Multifunctional interdependent entity.

Global standard

- Large & efficient

Efficient

- Size of Operation, processes

Technologies

- IDS, SLOG, Trade terms

Reinvestment

- Building Organization
- Logistics efficiencies
- Expand Coverage

DISTRIBUTOR MODEL
Distributor Roles and Responsibilities
Effective Trade coverage
Excellent execution of Proactive selling,
efficient logistics and customer service
Leverage local market expertise

Multifunctional skilled organization

Sound financial management and control

WHAT THE DISTRIBUTOR

WILL DO FOR P&G
BUILD BUSINESS
ENABLE TOTAL SUPPLY CHAIN
EFFICIENCY

WHAT THE DISTRIBUTOR WILL

DO FOR P&G

BUILD BUSINESS THROUGH

HIGH QUALITY Sellers

EQUAL PERFORMING CALLS
DELIVER 100% RPS
CREATE OUTSTANDING (GOLDEN) STORES
>95% HIT RATE ON INITIATIVES
<30 DAYS SPEED TO MARKET
ELIMINATE OOS IN COVERED STORES
PREFERRED SUPPLIER TO RETAILERS

DISTRIBUTOR MODEL
WINNING IN THE STORE
RPS, Superior Volumes and Profits

WINNING THE STORE

Preferred supplier status

CONCEPTUAL SELLING
DISTRIBUTOR CORE WORK PROCESSES
FINANCE

HR

SALES

LOGISTICS

SYSTEMS

P&G CORE WORK PROCESSES

WINNING ORGANIZATION

DISTRIBUTOR MODEL
How will distributor build business
Incremental callage
Incremental Productivity
Reduced Out of stocks

Increase Volume
Incremental On hand Distribution
Improved In-store Presence
Improved Initiative execution
Better information Availability for business decision

DISTRIBUTOR MODEL
How will distributor build efficiencies
Logistically efficient buying
Cost effective Quality Coverage
Leverage Scale

Reduce costs
Leverage Technology
Multi skilled multi functional organization

HOW DO WE DESIGN A
DISTRIBUTOR
QUALITY COVERAGE PLANNING
INFRASTRUCTURE

FUNDING
ORGANIZATION

QUALITY COVERAGE
PLANNING (QCP)

WHICH OUTLETS
HOW TO REACH
AT WHAT COST
PROFITABILITY
SUSTAINABILITY
MAN POWER
INFRASTRUCTURE

ANSWER IS QCP

OBJECTIVES &PRINCIPLES
MAXIMISE QUALITY &
PROFITABLE
COVERAGES
DESIGN SUSTAINABLE
OPERATION

PROFITABLE
OUTLETS/MARKET
REINVEST EXTRA
PROFITS
100% COVERAGE BY
DSES
STOCKS SUPPLIED BY
DISTRIBUTOR

QCP - 7 STEP PROCESS

1.

FIXED ADMINISTRATION COST

2.

COST PER DAY FOR ANY MODE OF COVERAGE

3.

POTENTIAL SALES/CALL/MARKET

4.

COVER 95% ACV OUTLETS ( 50%STORES=95% ACV)

5.

ESTABLISH TOTAL COST STRUCTURE FOR ROI

6.

INFIELD VALIDATION OF ASSUMPTION

7.

DRAW FINAL QCP

COVERAGE PLANNING
COVERAGE IS PLANNED ON THE BASIS OF PROFITABILITY
OF THE CUSTOMER TO ENSURE A SUSTAINABLE
OPERATION
TOOL USED FOR COVERAGE PLANNING IS CALLED QCP QUALITY COVERAGE PLANNING
QCP WILL ENABLE US TO ARRIVE AT THE FOLLOWING :
WHICH OUTLETS TO COVER

WHAT SHOULD BE THE COVERAGE PATTERN VIZ.

FREQUENCY / VEHICLE ETC.

DISTRIBUTOR
INFRASTRUCTURE
WAREHOUSE
DELIVERY VAN
OFFICESPACE
COMPUTING EQUIPMENT

Distributor Funding
The QCP will throw up the
Working Capital &
The cost to service the area.

Based on this and the minimum Debt : Equity

ratio, the distributor will arrange for funds to
purchase fixed assets Viz. computers, Vans,

furniture, office equipment & working capital to

run his daily operations

Evolved QCP
QCP as the Financial Engagement Tool
Principle Based
Collaborative effort by MFT

Elements of QCP
Gross Margin (Sales History)
Health Care 8%
Rest of P&G + GIL 5%)

Discount (Discount History)

Sales & Distribution Cost - Variable Overheads
Van to be hired based on Volume of the route

Admin Cost Fixed

Depreciation
Bank Charges

Evolved QCP
Investment (Debt Equity Ratio 1:1)
Average Inventory
Less payable to P&G / GIL
P&G 2 Days Credit
GIL 13 Days Credit

Average AR

MR 21 Days
India 1 / 2A 7 Days
W/Sale 7 Days
India 2B / 2C > 750 15 days
Upcountry Visit to Visit (India 1, 2A, W/S, 2B/2C>750)

Average Other Working Capital

Claims
Float

P&G Support to distributor

Damage
Fixed % off the invoice

BRS (Branch Replenishment Subsidy)

Actual Reviewed Time to time

DCFS (Distributor Coverage Fee Support)

Pay for performance (NOS growth) / efficiency
(Cost & Investment reduction)
Variable (19% - 29%)

Distributor Organization
Multi-functional team comprising of Sales, MS,
Finance & Logistics
Supported & trained by P&G multi-functional
organization.

Recruitment based on identified profile for each

function
R & R and measures well defined

S&B in line with specific market realities

Rewards & Recognition to distributor employees

Distributor Organization
Distribu
tor

BE HFS

A/c Mgr.
HFS

STL

DSE
Ws/2A
/2B/2C

VC &
JVC
Ws/2A
/2B/2C

DHRE

Sub D
Seller

India 1
DSE

A.
DHRE

India 1
VTL

VC
Crew

DFE

ADFE

Accoun
tant

In-store
/ Daily
Mercha
ndisers

Branch
Manage
r

Branch
Incharge

Cashier

DB

DLE

D Sys
Admin

ADLE

A. Sys
Admin

DLO

IDSS

Driver

Helper

BE MR

A/c Mgr.
MR

MTL

BRO

Mercha
ndisers

ABRO

CSO

Seller

So What Changed?

So What Changed.?

So What Changed??
Pre GE

# Customers

3500+

Avg. FY Business

Avg. Inventory Days

45+

Post GE

30
300
8

So What Changed??
In a Nut shell, :
1. Scale (Distributor biz 150 Crs to 600 Crs)

2. Quality of the call

3. Distribution via wholesale
4. Information & Goods flow

Break

CBD
Customer Business Development

Distributor
Stores

India How it compares

India

China

Morocco

Philippines

3,166,414

9,596,961

458,730

298,171

Population (MM)

1,130

1,321

33

91

Per Capita ($)

2,700

5,300

3,800

3,300

30%-70%

44%-56%

50%-50%

50%-50%

8500

7000

66

600

87

342

425

138

Total Area (sq. km)

Urban-Rural
Population Split
Store Universe (M)

Average P&G
Throughput in
covered stores
($ p.m.)

Predominant Rural
Population

Fragmented Trade
(only 6% of outlets
sell
>$1000/month)

Retail Store
Throughput at
$48/month only

India Channel Split

# Stores

P&G Coverage

Channels

Covered

% Business
Salience

9%

2.5M

9%

63 M

53%

75M

48%

7500 M

425 M

16%

1030M

20%

Pharmacy

328 M

120 M

11%

140M

13%

Emerging

30 M

14 M

11%

20M

10%

TOTAL

8 MM

620 M

100%

1270M

100%

Universe

Covered

Super/Hyper*

2.5 M

2.5 M

Wholesale

80 M

Provision

% Business
Salience

HUL Coverage Est.

Total FMCG Market size in India - $6.8 billion

Urban India 66% of total FMCG

What is India 123?

India 1/2/3 are Consumer Segments that will help us
delight consumers better via customized go-to-market
approaches and initiatives
India 1

India 2

India 3

Current $130 MM
09-10 - $272 MM

Current $261 MM
09-10 - $529 MM

Current - $74 MM
09-10 - $186 MM

India 123 GTM Strategy/Key Interventions

Strategy

Store Clusters
Enhanced Call Time,
Separate Selling & Merchandising

Amazing Shopper Experience via

Consultative Selling

Account Manager +
Responsive delivery

India 1 Super/
Provision/Drug

India 1 Emerging

Enhanced Call Time,

Merchandising supervision

India 2 a Super/Provision/
Drug/Emerging

Merchandiser with seller,

Power SKU selling

India 2 b Provision/Drug

Efficient Reach

Low Cost Coverage Model,

Merchandising solutions

India 2 c Provision/Drug

Efficient Reach

Low Cost Coverage Model,

Merchandising solutions

India 3 Provision/Drug/Uncovered

Dominant in-store presence

Golden Uncovered
Stores

Promoter for sell through,

Enhanced Call Time

Uncovered Retailers
through wholesale

First off - the CBD $ 1 bn. Roadmap

Explode Distribution
Cover a million stores through
winning coverage models
Expand branch network to 400
branches
Have a Total Supply Chain Network

Persuade India 123

shoppers across Channels
Shopper persuasion framework
to develop the right touch points
with the consumer
Invest behind Channel KBDs and
Corporate programs

Goal - $1
Bn+.
Develop True Interdependent
Distributors
World Class Distributor
Distributor Profitability
Distributor Systems
Distributor Capability

Build a Winning Organization

CBD University
Beauty Capability
Multi functional Capability

India DE Story

Quantity of Coverage (Reach)

Quantity of coverage Wider, Deeper

Quality of coverage Capacity, Capability
Distributor High Performing organizations
Distributor Model Evolution

Pre-GE Stockist
Model

GE Model Current

GE Model Start Up

Quality of coverage, HPO

Distribution
Extension

the elbow supports the wrist

Interdependent
dIstributors
Coordination role
Stronger DLT

Elbow

Wrist

Branch

Sub Distributors

Strengthening the elbow

Higher coverage

Exploding coverage
through sub d

Better quality of coverage

Increase frequency and

trade terms at top end

Increases number of
control points

Have one stl per branch

Improve controls

Smaller catchments of 25
km

Current retail landscape

Class
1
2
3
4
5
6

Sales/ town Throughput Stores / Town

1349926
5102
265
360424
4931
73
177766
4515
39
93020
3542
26
59549
2560
23
63250
2807
23
Sample of 7 site data

Coverage, Fundamentals and Revenues keep dipping with class of town

As much to do with Potential of town as to do with our Coverage structure
Distribution of Key Brands still ahead of coverage footprint indicating latent
demand

GE start-up