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ITC BINGO Sales and Distribution

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					[ITC LIMITED , ITD MARKETING, BANGALORE AND SIBM , BANGALORE]

To study the Sales and Distribution chain from the Wholesale Distributor point to the Retailer for BINGO and indentify the inefficiencies and inaccuracy in the processes ,if any , and suggest methods and processes to rectify them.

Submitted under the partial fulfillment of the MBA degree from SIBM, Bangalore.

This is to certify that the following study or work is my original work and has never been submitted by any one as for the award of any other Degree/Diploma/Fellowship or other similar titles or prizes.

Harshvardhan Singh Chauhan Institute Identification No. 11014 Marketing, Batch of 2010. SIBM, Bangalore.

Table of Contents

1. Executive Summary 2. Introduction 3. Objectives of the study 4. Relevant Literature reviewed 5. Proposed methodology 6. Logical Flow of the Project 7. Benefits as a student of management 8. Benefits to the organization 9. Analysis , Findings and Conclusions 10. Bibliography 11. Appendix

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1.Executive Summary
1.1 Synopsis Since its launch period in March, 2007, BINGO as a brand has been through a lots of ups and downs. Both Branding and Sales and Distribution aspects of marketing for BINGO have been explored and matured to a large extent. Though the product itself is considered to be in a growth stage, with a market share of 16% in the branded snacks food category, it has been successful to a large extent in creating the required Brand recall for the category. However, the Sales and Distribution for BINGO despite its extensive market reach has been abiding with a legion of issues which threaten its growth and profitability as a business category. The project purports to decipher the Sales and Distribution chain from the Wholesale Distributor point to the Retailer and indentify the inefficiencies and inaccuracy in the processes, if any , and suggest methods and processes to rectify them. After a initial exploratory survey of 8 Wholesale Distributor (WD) points, across 112 routes and 4200+ retail outlets, it was identified that there is a considerable demand – supply mismatch in the market. More precisely, the retailer did not get the variants he demanded in most cases. The stock keeping units’ (SKU) mix that the retailer required were not serviced to him by the Distributor Salesperson (DS) in the exact proportion. Also, the Destroy and Destruct (DND), SKU’s whose shelf life expired or had air outs and were incapable of selling, were 4%+ of sales by revenue for BINGO , which is huge as compared to other food category products of ITC and also by competitive industry standards of 2-2.5%. Lastly, it was found out that there is a variation in the Estimated Consumer Demand (ECD) and the SKU mix that was supplied from the Central Hub (CH) to the Wholesale Distributors (WD).

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The further course of the project, therefore, focused on setting up processes which would quantify and establish the impacts of the inefficiencies at various points in the chain and explore, identify and test appropriate processes which would eliminate or reduce the impact of inefficiencies. The scope of the project spanned across Bangalore city. ITC for BINGO operates in Bangalore via 12 WD’s and has a reach of more than 8000 retail outlets. Apart from this a Convenience Delivery Model (CDM) is also used to reach a miniscule part of the territory of about 1%. For the purpose of a Pan-Bangalore reach, to give a most possible accurate picture, the study was done at 8 WD points, across 112 routes having coverage of 4200+ retail outlets. This gave the study an approximately 72 % coverage of Bangalore City.

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2. Introduction
2.1 Industry Analysis 2.1.1 Indian Food Processing Industry Food processing industry in India is a sunrise sector that has gained prominence in the recent years. Availability of raw materials, changing lifestyles and relaxation in policies has given a considerable push to the industry’s growth. This sector is among the few that serves as a vital link between the agriculture and industrial segments of the economy. Strengthening this link is of critical importance to improve the value of agricultural produce; ensure remunerative prices to farmers and at the same time create favorable demand for Indian agricultural products in the world market. A thrust to the food processing sector implies significant development of the agriculture sector and ensures value addition to it. 2.1.2 Ministry of Food Processing Industries The Ministry was set up in 1998 and the industry segments that come under its purview are:
• • • •

Fruit & Vegetable processing (including freezing and dehydration) Grain Processing Processing of Fish (including canning and freezing) Processing and refrigeration of certain agricultural products, dairy products, poultry and eggs, meat and meat products

•

Industries related to bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery, savory snacks, malt extract, protein isolate, high protein food, weaning food and extruded food products (including other ready-to-eat foods)

• •

Beer, including non-alcoholic beer Alcoholic drinks from non-molasses base

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• •

Aerated water and soft drinks Specialized packaging for food processing industries.

The Ministry of Food Processing Industries, Government of India, has estimated the size of the Indian food market at US$ 191 bn (Rs 8,600 bn). The processed food market is projected to be over US$ 100 bn, of which the primarily processed food market accounts for 60%, while the value-added processed food market is around 40%. The average annual growth of the food processing industry has been around 8% between FY01-FY06. The segments that have driven the growth are the beverages and meat & meat products and processed fish sectors. The food processing industry in India has a share of 1.5% in the total GDP of the country, and as part of total manufacturing accounts for 9%. India’s share in world trade in respect of processed food is about 1.6%.

An extensive and highly fragmented industry, the food processing sector largely comprises of the following sub-segments: fruits & vegetables, milk and milk products, beer & alcoholic beverages, meat and poultry, marine products, grain processing, packaged/convenience food and packaged drinks. A large number of players in this industry are small sized companies, and are largely concentrated in the unorganized segment. This segment accounts for more than 70% of the output in volume terms and 50% in value terms. However, though the organized sector is comparatively small, it is growing at a much faster pace. Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009
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2.1.3 INDIAN SNACKS INDUSTRY Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is described as a small quantity of food eaten between meals or in place of a meal. Snack food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other light processed foods According to the ministry of food processing, the snack food industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume. Though very large and diverse, the snacks industry is dominated by the unorganized sector. According to an Apeda survey almost 1,000 snack items and 300 types of savouries are sold across India. The branded snacks are sold at least 25% higher than the unbranded products. Savory snacks have been a part of Indian food habit, since almost ages. Though there is no particular time for snacks, normally they are consumed at teatime. The variety is almost mindboggling with specialties from all regions, which have gained national acceptance. The industry has been growing around 10% for the last three years, while the branded segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to various reasons like Multiplex culture, snacking at home while watching TV, pubs and bars (where they are served free). AC Nielsen's retail audit shows that the large sales volumes are due to a marked preference for ethnic foods, regional bias towards indigenous snacks and good value-formoney perception. Of course the branded segment is much smaller at Rs 2,200 crore, which is what makes it so attractive to food companies that are looking at bigger shares. In the branded snacks market, to get down to basics, Frito Lay commands a share of 45%, followed by Haldiram’s at 27% and ITC at 16%. The rest is divided between a handful of new entrants, wannabes and many regional players. Of the wide range of snacks available, potato chips constitute a sizeable segment of the Indian snack food industry, according to India Infoline. The potato chip market is generally an unorganized industry. Nearly all potato chip snack products are manufactured and sold locally. Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009
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There is also no uniform standard for packaging, as there is in Europe, the United States and other more developed regions. Many snack foods are sold loose or packaged in poly-pouches, which may only be folded, or in some cases, stapled closed. As the Indian economy continues to grow, and production standards improve, many snack food companies are making significant investments into plant equipment and packaging machinery. Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food manufacturer’s brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes. Procter & Gamble's Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also a baked potato crisp, unlike many other potato based Indian snack foods that are fried. P&G currently imports the Pringles product and therefore the product has been priced at a premium and is marketed to a micro-niche.

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2.1.4 Constraints & Drivers of Growth Growing urbanization, increasing disposable income, emergence of organised food retail, changing lifestyles and food consumption patterns are the key factors driving growth for processed foods in India. These are post-liberalisation trends that have given an impetus to the sector. Consumption patterns in India have been undergoing a visible shift. Earlier, the share of cereal products was the highest, followed by milk & milk products, vegetables, edible oil and meat products. However, in recent years, the growth rates for fruits, vegetables, meat and dairy products have been higher than cereals and pulses. This shift in turn implies that there is also a need to diversify the food production base to match the changing consumption preferences. This shift in consumption follows the pattern observed in developed countries in the evolution of the global food demand. There is a shift from carbohydrate staples to animal sources and sugar. Going by this pattern, in future, there will be increasing demand for prepared meals, snack foods and convenience foods and further on the demand would shift towards functional, organic and diet foods. Some of the key constraints identified by the industry include:
• • • • • • •

Lack of suitable infrastructure in terms of cold storage, warehousing, etc Lack of adequate quality control and testing infrastructure Inefficient supply chain and involvement of middlemen High inventory carrying cost High taxation High packaging cost Affordability and cultural preference of fresh food Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009
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Highest priority has been accorded by the Government for the development of infrastructure. The Government has already taken several initiatives on this front which include developing of food parks, packaging centres, modernised abattoirs, integrated cold chain facilities, irradiation facilities and value added centres. The initiative to develop food parks was taken primarily in order to assist the small and medium enterprises which are unable to invest in capital intensive activities. So far, 22 food parks have come into operation which provide common facilities like cold storage, food testing and analysis laboratories, packaging centres, etc In terms of policy support, the ministry of food processing has taken the following initiatives:
• • • • • • • • • • •

Formulation of the National Food Processing Policy Complete de-licensing, except for alcoholic beverages Declared as priority sector for lending in 1999 100% FDI on automatic route Excise duty waived on fruits & vegetables processing from 2000 – 01 Income tax holiday for fruits & vegetables processing from 2004 – 05 Customs duty reduced on freezer van from 20% to 10% from 2005 – 06 Implementation of Fruit Products Order Implementation of Meat Food Products Order Enactment of FSS Bill 2005 Food Safety & Standards Bill, 2005

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Apart from these initiatives, the Centre has requested state Governments to undertake the following reforms:
• • • •

Amendment to the APMC Act Lowering of VAT rates Declaring the industry as seasonal Integrate the promotional structure

Investments The total inflow of foreign direct investment in the food processing sector has been around Rs 52.7 bn (US$ 1.2 bn) between 1991 to November 2006. During the last five years, FDI witnessed an inflow of over Rs 24 bn of foreign investment. The highest investment in a single year was in 2001-02 amounting to Rs 10 bn. Maharashtra was among the front-runners to receive the highest share of FDI in food processing during the last five years. The dairy and consumer industrise received FDI worth Rs 2.7 bn each as foreign investment. Nearly 30 per cent of FDI in the food processing sector comes from EU countries such as Netherlands, Germany, Italy and France. Perfetti, Cadbury, Godrej-Pilsbury, Nutricia International, Manjini Comaco are some of the successful ventures from EU countries.

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Major Food Processing Companies in India

The entry of multinational companies has increased competition in the food processing industry. At the same time, these companies are facing tough competition from strong Indian brands. This level of competition has increased innovations, facilitating a sustained growth of the sector and also improve global competitiveness. The emerging new growth phase of the sector is just in its initial stages with the potential for India to emerge as a leading food supplier to the world.

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2.1.5 SWOT Analysis of Indian Snacks Industry Strengths
• • • •

Abundant availability of raw material. Vast network of manufacturing facilities all over the country. Vast domestic market. Urbanisation.

Weaknesses
• • •

Low availability of adequate infrastructural facilities. Lack of adequate quality control & testing methods as per international standards. Inefficient supply chain due to a large number of intermediaries. High requirement of working capital.

•

Opportunities
• • •

Rising income levels and changing consumption patterns. Favourable demographic profile and changing lifestyles. Integration of development in contemporary technologies such as electronics, material science, bio-technology etc. offer vast scope for rapid improvement and progress. Opening of global markets.

•

Threats
• • • • •

Affordability and cultural preferences of fresh food. High inventory carrying cost. High taxation. High packaging cost. Competition between national and regional players.

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2.2 Company Analysis 2.2.1 Establishment Incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, the company's name was changed to ITC Limited in 1974. Rated among the 'World's Best Big Companies' by Forbes magazine, ITC ranks third on all major profit parameters among India's private sector corporations. ITC employs over 20,000 people at more than 60 locations across India. It has a turnover of $3 billion.

2.2.2 Growth and Diversification: ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel and Stationery.

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As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hotels business. Over time, the strategic forays into new businesses are expected to garner a significant share of these emerging high-growth markets in India. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy, which has already become the subject matter of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Limited, is aggressively pursuing emerging opportunities in providing end-to-end IT solutions, including eenabled services and business process outsourcing.

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ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating. ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 88,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation. For the Shareholder."

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3.Objectives of the study
3.1 Objectives of the study The project aims to achieve the following objectives during its course of study: 1. To formulate processes to evaluate pan-Bangalore sales loss incurred due to demand – supply mismatch. 2. To formulate a model and implement it to decrease the sales loss incurred. 3. To formulate processes to identify DND stocks for BINGO. 4. To formulate a model and implement it to decrease the DND stock percentage. 5. To formulate processes to identify the ECD-HUB supply mismatch. 6. To formulate a model to enforce most accurate ECD-HUB alignment in supply.

3.2 Limitations of the study The study though being done at a Pan-Bangalore level , takes into account the generalizations and repeatability of processes to be considered for the models to be implemented , to make them scalable at wider levels of geography. The study has been done on a 52% coverage area Pan-Bangalore to eliminate the risks of unnecessary and avoidable generalizations. The focus on more firsthand data and information also reduces the error rate in case of data procured from already inefficient sources.

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Since, the objectives of the project are implemented and tested across various WD points, it reduces the chances of erroneous assumptions and wrong premises. However, one limitation of the project can be the small size of geography covered to infer any results on a national level. But, even 72% of a territory is far bigger than a good sample space. Thus this limitation actually becomes the strength of the project. Lastly some obvious limitations of the study are: 1. A short period of just 1.5 months for implementation of the models. This could be hugely impacted by seasonal variations and temporary market forces. 2. Issues related to scalability of the models proposed , though being tested at various points in Bangalore , still can be debatable and might undergo changes in case of a different geography. 3. Moreover, the chaotic dynamics of some geographies can make the model susceptible to faulty inferences and thus a modification has to be proposed in that case.

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4. Relevant Literature Reviewed
4.1 References 4.1.1 Internet References (websites) 1. ITC PORTAL WEBSITE www.itcportal.com 2. ITC E-CHOUPAL WEBSITE www.echoupal.com 3. ITC AGRI-BUSINESS WEBSITE www.itcabd.com 4. FRITO LAYS’ WEBSITE www.pepsico.com 5. FRITO LAYS’ BLOG www.fritolayindia.blogspot.com 6. BINGO WEBSITE www.bingeonbingo.com

4.1.2 Internet References (articles) 1. ITC LAUNCHES BINGO www.itcportal.com/newsroom/press_releases_14mar07.htm 2. BINGO – ITC HAS FINALLY GOT IT !! www.rediff.com/money/2007/may/01bspec.htm 3. FRITO LOSES MARKET SHARE TO BINGO www.moneycontrol.com/india/news/business/frito-lay-loses-snack-mkt-share-toitcs-bingo/20/35/300325 4. ITC – PEPSICO BATTLE IT OUT IN WAFERS MARKET www.itcportal.com/newsroom/press06june07-b.htm

4.1.3 Books References 1. Strategic Brand Management , Kevin Lane Keller , Pearson. 2. Sales and Distribution Management , Havaldar and Cavale , Mc Graw Hill. 3. Consumer Behavior , Schiffman and Kanuk , Pearson. 4. Marketing Research , Nargundkar , Mc Graw Hill.

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4.1.4 Classified References 1. ITC Intranet 2. Forum ERP Implementation Tool at WD points. 3. SIFY 4. SAP Implementation Tool at Area Sales Manager Kiosks 5. WD record books (manual entry) and electronic media 6. Retailer Bill books and cash files

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5. Proposed methodology
5.1 Detailed Methodology The basic methodology is to formulate processes and identify the right places to implement them in order to achieve the objectives. Thereafter, these results obtained from the first hand data combined with a historical data are used to make inferences regarding the objectives to be fulfilled. The study then would aim at formulating processes to rectify them. The study starts with an initial one week of ad hoc market exploration which includes : 1. Visiting all WD points across Bangalore. 2. Covering as many routes as possible with the Distributor Salesperson (DS) on his sales day. 3. Focused group discussion with WD’s , DS and the retailers across routes. 4. To understand the Sales and Distribution chain from WD to Retailer. 5. To understand the various processes involved in the entire chain. 6. To identify the inefficiencies and inaccuracy in the processes. 7. To formulate processes to identify and quantify the inaccuracy in processes. 8. To implement these processes across Bangalore and find the average inaccuracy level. 9. To formulate models to eliminate or reduce the inaccuracy. 10. To implement the models across Bangalore and record the reductions in inaccuracy. 11. Further refine, improve and confirm on the models by testing them in varied territories. Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009

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5.2 Usefulness of the methodology Sales and Distribution is a dynamic environment. The models successful in a territory might fail completely in another. Also, the canvas of Sales and Distribution is wide enough to encompass all aspects, right from production to final consumption. The need was to formulate formal processes that are well tested and can be replicable to different geographies. Thus, the methodology adopted keeping in view the constraints is to determine robust models and test them widely across different territories.

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6. Logical flow of project
6.1 Schedule & Road Map followed

WEEK 1 : AD HOC MARKET EXPLORATION AND UNDERSTAND THE ENTIRE CHAIN WEEK 2 : IDENTIFY PROCESSES INVOLVED AND INACCURACY OBESERVED WEEK 3 : FORMULATE PROCESS FOR OBJECTIVE 1 AND IMPLEMENT IT WEEK 4 : FORMULATE PROCESS FOR OBJECTIVE 2 AND IMPLEMENT IT WEEK 5 : FORMULATE PROCESS FOR OBJECTIVE 3 AND IMPLEMENT IT WEEK 6 : FORMULATE PROCESS FOR OBJECTIVE 4 AND IMPLEMENT IT WEEK 7 : FORMULATE PROCESS FOR OBJECTIVE 5 AND IMPLEMENT IT WEEK 8 : FORMULATE PROCESS FOR OBJECTIVE 6 AND IMPLEMENT IT WEEK 9 : CONCLUDE AND PROPOSE RECOMMENDATIONS

WEEK 1 AD HOC EXPLORATION IDENTIFY INACCURACIES OBJECTIVE 1 OBJECTIVE 2 OBJECTIVE 3 OBJECTIVE 4 OBJECTIVE 5 OBJECTIVE 6 CONCLUDE

WEEK 2

WEEK 3

WEEK 4

WEEK 5

WEEK 6

WEEK 7

WEEK 8

WEEK 9

GANTT CHART

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7. Benefits as a student of management
The summer internship period at ITC has laid my foundation stone for my further years in the marketing industry. The nine week extensive experience of Sales and Distribution along with other aspects of marketing has bridged the gap between my theoretical knowledge and its applications in the real world. As a management student, apart from the experience and learning in marketing, I have been able to understand the ethical corporate functioning and the responsibility of an organization towards the society. During my short stint, I have also been able to come in touch with legendry marketers at ITC , who have had an indelible impression on my personality. My major learnings have been regarding: 1. The organizational setup and functioning of corporate. 2. The dynamics of market and the response of companies to it. 3. The role and responsibility of an employee towards the company and the society. 4. The need for ethical business. 5. The need for a sustainable business model. 6. The need for company to be resilient against change and chaos. 7. The basics & intricacies of businesses, apart from their core functions.

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8. Benefits to the organization
The Sales and Distribution for the snack food category of Bingo had been plagued with a host of inefficiencies and challenges which threaten its future growth prospects as a category. Despite its extensive market reach, snack food itself posed a host of difficulties in the distribution chain. Also, the presence of a strong competition makes it inevitable to refine processes and improve the distribution. 1. After a preliminary survey of the market, I found out that there was a considerable demand supply gap. Thus I had setup a process to evaluate the sales loss occurred through this gap in the chain. The process and information regarding the sales loss had never been used at ITC before. Thus, this process setup across 8 WD points gives ITC a deep insight regarding the market dynamics for their category. 2. I have proposed a process for stock rotation to combat the potential sales loss that occurred. 3. Lastly, I proposed a hybrid distribution model, which has now been implemented at 4 WD points across Bangalore. This model reduces their K4(logistics + DS salary ) by 40% and also there has been a recorded sales increase.

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9. Analysis, Findings & Conclusions
9.1 Process to calculate sales loss 9.1.1 Loading sheet to evaluate loading/unloading inaccuracy per day.

The process was implemented across 112 routes , 8 WD points across Bangalore 9.1.2 Route efficiency calculation process

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The route efficiency sheet calculates the potential sales loss that occurred during that day. This was implemented across 112 routes , 8 WD points. 9.2 Sales Loss Calculation

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9.3 Process to evaluate variation in demand and supply between HUB and WD The variation between demand and supply was evaluated as below. Variation for the month of January:

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9.4 Process for Stock Transfer to combat Sales Loss

The above process illustrates the transfer of stock that should happen between two WD points MA Associates and Rushub Enterprises to combat sales loss to each other. This process is based on the Cover Day reports , which exhibit the pipeline days for the stock on hand. Based on this pipeline prediction we transfer stocks that are far above the reserve level of 5 days.

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9.5 Hybrid Distribution Model Order Booking Model at M A Associates Description: In order booking , unlike ready stock delivery method , we cover the entire route by booking the orders on DAY 1,order booking day (OD) and make the supply on DAY 2,supply day (SD). Since order booking is fast as the mode of transport is a two wheeler , we have an increased efficiency of the Distributor Salesman (DS) and therefore we cover two adjacent routes on DAY 1 itself. Likewise, the supply on DAY 2 is made again for both the routes. This cycle of alternate OD and SD is continued for the entire week, making three days for OD and three days for SD. Also on the SD, the DS is supposed to carry 40% top up stock apart from the ordered stock, which he supplies through ready stock method or cash and carry method to all those outlets which for some reasons could not be covered or even to the same outlets in case they demand more, while he is traversing the route back end of the day. This provides us bonus sales or helps to compensate for any loss in sales potential of that route if it had occurred during order booking. Thus, on the whole, the above proposed method can be considered as a hybrid model which exploits and benefits the advantages of both ready stock and order booking method to achieve optimum results.

ORDER BOOKING SUPPLY READY STOCK SUPPLY The major objectives achieved in order booking method contrary to the ready stock are: 1. Reduced K4 cost (transportation + DS salary). 2. Increased Sales as per the actual potential of the route. 3. Reduced possible Sales Loss due to variant unavailable at WD point, if it had been delivered by ready stock supply. 4. Reduced possible Sales Loss due to variant stock out, if it had been delivered by ready stock supply. 5. Increased visibility or presence of the DS on the same route, which has now been doubled, as there are two visits on the same route per week. 6. Increased efficiency of the DS. 7. Increased Bill Cuts. 8. Increased Line Cuts. 9. Improved credit collection. Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009
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10. Improved supply chain with a larger coverage and more aggressive distribution.

OBSERVATIONS 1. Reduced K4 cost (transportation + DS salary)

READY STOCK FOR 2 DAYS PER WEEK 400 1200 900 2700 72 18.0555556

ORDER BOOKING PER FOR 2 DAYS WEEK 400 1200 450 1350 100 300 88 10.7954545

DS SALARY AUTO CHARGE OUTLETS/ROUTE COST TO SERVICE AN OUTLET

DS SALARY AUTO CHARGE TWO WHEELER CHARGE OUTLETS/ROUTE

SAVING OF ABOUT RS.8 TO SERVE EVERY OUTLET

2. Increased Sales as per the actual potential of the route. GROSS SALES LOSS GROSS ACTUAL SALES EXPECTED SALES LOSS% ORDER BOOKING ACHIEVED SALES LOSS % RECOVERED 2880 9415 12295 23.42416 12086.31 21.7268

3. Reduced possible Sales Loss due to variant unavailable at WD point, if it had been delivered by ready stock supply. LOSS % RECOVERED 21.7268

4. Reduced possible Sales Loss due to variant stock out, if it had been delivered by ready stock supply. NO STOCK OUT 5. Increased visibility or presence of the DS on the same route, which has now been doubled, as there are two visits on the same route per week. 6. Increased efficiency of the DS. LESS TIME SPENT IN BILLING. LESS TIME SPENT IN SERVICING. Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009
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7. Increased Bill Cuts. EARLIER AVG . BILL CUT 10 BILLS/ROUTE BILL CUTS IN ORDER BOOKING 14 BILLS/ROUTE 8. Increased Line Cuts. EARLIER AVG . LINES CUT 3.31 LINE CUTS/BILL LINES CUTS IN ORDER BOOKING 6.1 LINE CUTS/BILL

9. Improved credit collection. AVG. DAILY CREDIT COLLECTION 254.76/DAY ORDER BOOKING CREDIT COLLECTION 1468/DAY 10. Improved supply chain with a larger coverage and more aggressive distribution. AVG DAILY OUTLETS COVERED 36/ROUTE AVD DAILY OUTLETS COVERED 44/ROUTE , 3 SERVED TWICE , 5 NEW ONES. 9.6 Results of the new model deployed

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9.7 Conclusion 1. The sales loss calculated was 35.5% pan Bangalore. 2. The process for ECD determination should be followed as per the process suggested. 3. The process for stock transfer should be followed bimonthly. 4. The new hybrid model suggested increase the sales, bill cuts , line cuts and credit collection and hence should be used across Bangalore. This model has already been deployed at three more WD points.

Submitted by Harshvardhan Singh Chauhan , SIBM , Bangalore. 2009

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10. Bibliography
10.1 References 10.1.1 Internet References (websites) 7. ITC PORTAL WEBSITE www.itcportal.com 8. ITC E-CHOUPAL WEBSITE www.echoupal.com 9. ITC AGRI-BUSINESS WEBSITE www.itcabd.com 10. FRITO LAYS’ WEBSITE www.pepsico.com 11. FRITO LAYS’ BLOG www.fritolayindia.blogspot.com 12. BINGO WEBSITE www.bingeonbingo.com

10.2.2 Internet References (articles) 5. ITC LAUNCHES BINGO www.itcportal.com/newsroom/press_releases_14mar07.htm 6. BINGO – ITC HAS FINALLY GOT IT !! www.rediff.com/money/2007/may/01bspec.htm 7. FRITO LOSES MARKET SHARE TO BINGO www.moneycontrol.com/india/news/business/frito-lay-loses-snack-mkt-share-toitcs-bingo/20/35/300325 8. ITC – PEPSICO BATTLE IT OUT IN WAFERS MARKET www.itcportal.com/newsroom/press06june07-b.htm

10.2.3 Books References 5. Strategic Brand Management , Kevin Lane Keller , Pearson. 6. Sales and Distribution Management , Havaldar and Cavale , Mc Graw Hill. 7. Consumer Behavior , Schiffman and Kanuk , Pearson. 8. Marketing Research , Nargundkar , Mc Graw Hill.

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10.2.4 Classified References 7. ITC Intranet 8. Forum ERP Implementation Tool at WD points. 9. SIFY 10. SAP Implementation Tool at Area Sales Manager Kiosks 11. WD record books (manual entry) and electronic media 12. Retailer Bill books and cash files

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11. Appendix
1. Calculation for Sales Loss 2. Calculation for ECD-HUB variation 3. Calculation for Stock Transfer 4. Hybrid Model implementation details and figures for three weeks.

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