DISTRIBUTION CHANNEL OF NESTLE-INDIA

Submitted To: Prof. Dr SREEDHARA R

Class / Batch: MBA 2nd Year M3

Course Name: Distribution and Supply Chain Management

Date of Submission: 05.06.2018

Submitted By

Avin Ebanesh A 1727804

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About NESTLÉ
NESTLÉ India is a subsidiary of NESTLÉ S.A. of Switzerland. With eight factories and a large number of
co-packers, Nestlé India is a vibrant Company that provides consumers in India with products of
global standards and is committed to long-term sustainable growth and shareholder
satisfaction.

Distribution Structure of Nestle

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Stocks manufactured at the factories and co-packers reach the C&S through mother Godowns. The
stocks stored at C&S are the property of Nestle. Encashment of stocks are done through Invoicing
to Cash Distributors C&S as per the guidelines given to them. They also receive and store support
materials like give away’ s, stickers and complementary items etc.

Logistics Structure

 Logistics comprise of Road Transportation through Container trucks

 From the factory to the distributor stage the company ensures that there is availability of
cool chain for transportation. At the mother godown (Located at Sahibabad) there is
temperature control by hired cold storage.
 For the purpose of transporting chocolates from the mother godown to the Cash
Distributor Dedicated Air Conditioned Vans are used (especially for the summer seasons).
 Distribution from point ofDistributor warehouse to Retailer shops / Modern trade shops is
handled by Distributor
 Distributor has fleet of mix of transport vehicles right from refrigerated vans to small
tempos to supply to Pan shops
 Company is connected to Distributor / Super Stockist through SAP for online order
booking and processing
“Stock in Transit” module is installed at Distributors network systems for tracking the supply of
goods

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Transportation system followed by Nestle

Mega Factory

Direct Trucks

Sahibabad Mother
Godown
Delhi-UP border
Direct by rail containers

Transhipment Godown
Indore

Mostly by
Patna/ Calcutta Road :

/ trucks

By trucks

C&S C&S C&S

By Canters / Vns

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Company’s Distribution Guidelines

The company has created two kinds of distributors, namely Trade and Chocolate. The former deals
with the Maggie range, Nestle dahi, Aquafina etc. Chocolate deals with all confectionery items like
chocolates, sweets etc

 A representative of each distributor goes to the various outlets, once or twice a week
(depending upon the area), takes the order and then either delivers the goods there and then,
or on the same day.
 It has been realized that a retailer has a limited pocket for a day’s purchase. If one sales
representative goes for an order with 50 SKU’s the retailer will only buy what his pocket
allows, for a one-time purchase. Whereas, if two different sales people go, representing
different distributors there is a possibility both will get an order and the company will
witness better sales.
 The company has also taken an initiative for deeper reach and penetration into the
market with its operation “STING”. Whereby the sales representatives on the company go
on bicycles and try to fulfill the order of small ignored and unserved outlets. For
example, the panwallas, the kirana stores etc.

Selection of Distributors

 Capital investment-

This is dependent not only on the present required turnovers but also on the
estimated future capital investments that will be required by the distributor (based on
company’s growth plans in the area). Amounts required vary from area to area and
markets to markets.
 Relevant experience-

It is imperative that the distributor has had some prior experience as a channel
member in the FMCG sector so that no training is required to be imparted to him on
aspects of the business. The distributor should not be dealing in competitor’s products and
should be able to function as a dedicated channel for Nestle. For example, while
deciding on a distributor for chocolates, an obvious preference would be an existing
distributor for other products of Nestle This is because he will pay attention to the
entire range of the chocolates and not focus on any particular SKU only.

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  Infrastructure-
Appropriate infrastructure (depending on the market served and overall volumes

o Godowns / storage space. For chocolates, air conditioned godown space (with
wooden padding will be required).
o Delivery vehicles

o Salesmen

Counter Analysis

Types of Counter
 Supermarket

 Small Grocery Store

 Big Grocery Store

 Convenience Store

 Local paan store

 Chemist
Incentives to the distributors
Margins

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Schemes spread over 2-3 months. These schemes encourage specific target achievements. Targets
are given as indexed growth rates based on weights. For example, the meaning of 10% growth for a
distributor having sales of Rs.20000 will have a different meaning from one having sales of Rs.1
lac.

The prizes in the schemes can be monetary- for example additional 2% margin on turnover

Or non-monetary – for example, free T.V. sets on achievement of targets. It is attempted to keep in
mind the monetary benefit to distributor in case he sells the gift given in kind.

Secondary schemes: Promotional schemes to consumers & Trade Partners such as free packs for
Consumers, gifts, bundling, price off etc.

For retailers: Coupon, Bulk discount, Additional Margin, Free packs

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