MARICO –

PARACHUTE OIL

SUBJECT – DISTRIBUTION MANAGEMENT

GROUP MEMBERS
• SAVIO FERNANDES 12
• SANJANA IYER 19
• RAHUL NAIR 32
• AUSTIN TRINDADE 55
• ISMILE SHAIKH 43
• TRUPTI KUDALKAR 24
• RAJESH SHETTY 47
ABOUT MARICO
• FMCG company providing consumer
products and services in the areas of Health
and Beauty based in Mumbai.

• Sales revenue: FY14-15: INR 4689 Cr

• Net Profit: INR 545 Cr

• Leadership positions in most categories-

Coconut Oil, Hair Oils, Post wash hair
care, Anti-lice Treatment, Premium
Refined Edible Oils, niche Fabric Care etc

• Brand portfolio: Parachute, Saffola, Hair &

Care, Nihar, Mediker, Revive. Marico also
owns popular brands like Set Wet, Livon,
Zatak , and other personal care brands
8 Factories
Dehradun, Daman, Jalgaon,
Solan (Himachal Pradesh),
Palakkad (Kerala), Puducherry,
Perundura, Village-Tokion (HP)

Depot – 33
Direct Distributors - 882
Super Distributors - 153
catering to 2393 small stockists and
4523 van markets.

Sales territories: Urban-135

Rural-35
Towns covered:
Urban- more than 32000
Rural- more than 11000

Retail outlets: Urban - 1.65 million

reach & Rural- 0.85 million reach
MARICO FACTS
• Parachute is the world’s largest packaged coconut oil brand.
• Marico uses 1 out of every 25 coconuts grown in India, and 3 nuts of every coconut
tree in India.
• 1 out of every 10 Indians is a Marico consumer.
• Marico’s brands enjoy a leadership position (No. 1 or No. 2) in their respective
categories.
• Marico is now No. 2 in the hair oil market (up from No. 5) with the success of new
products - Parachute Jasmine and Shanti Amla.
• Marico sells over 56 million consumer packs every month.
• Marico reaches over 1.2 million retail outlets.
• Marico’s distribution network covers almost every Indian town with a population
over 20,000.
• Overseas sales franchise of Marico’s consumer products is one of the largest among
Indian companies.
• Marico has been distributing dividend every quarter for the past 13 quarters in a
row.
• Marico’s ROCE has been consistently above 30% for the past ten years.
• Marico ranks 15th among the top 200 corporate houses in India in terms of ROCE
(Business India Survey - November 2003).
MARICO - PARACHUTE OIL
MARICO - PARACHUTE OIL
DISTRIBUTION CHANNEL
DISTRIBUTION CHANNEL

Company’s Distribution Channel

CHALLENGES WITH SUPPLY CHAIN
The systems were Un-integrated
• The production didn’t scale with logistical requirements
• Inaccurate Forecasting
• Long Planning Cycle
• No Transparency of Warehouse Stocks
• Delayed response to customer needs

Problems Faced in Distribution

• Shipped only full stocks
• No Prioritization rule for configuring optimal truckloads
• Depot stocks reduced some days and increased some days
• Needed to hire extra space when shipment exceeded depot facility
• Higher delivery cost
• Sales started affecting
• Distributor lost confidence & Customers didn’t get product when required
CHALLENGES WITH SUPPLY CHAIN
• Planning Cycle was 30 days
• Manufacturing took 02 weeks and distribution took 01 week
• Only One qualified planner
• Due to the above there was Inventory problem

BUSINESS IMPACT
• Supply chain was not in tune with Marketing Strategy

• Company started losing Competitive advantage

• Poor performance affected cash flows

• Supply chain hindered expansion strategy of growth

• Affected Consumer’s Image of the company

IMPLEMENTATIONS
ADOPTED
FOR
SUPPLY CHAIN
BUSINESS INTELLIGENCE
MYSAP BUSINESS INTELLIGENCE
• It was installed at Companies, warehouse, Factories, Business Offices & at Contract Manufactures
• Improved Forecasting:
• Both Primary & secondary sales figure were available

• Advantages:
• Lower Inventory Holding and Supply chain cost
• Resolve forecasting problems, eliminate Inventory and stock out problem (Timely sales and
inventory information). Manage Distributors Inventory by replenishing Stocks on the basis of
distributors input of sales to retailers.
• Operational improvements:
• Reduced planning cycle from 30 days to 10 days
• Improved forecasting accuracy
• Improved delivery reliability
HOW IT WAS DONE?
STAGE 1: SUPPLY CHAIN MANAGEMENT
• Strengthen the internal Supply Chain Foundation- Planning to Fulfillment
• Tech Support- highly integrated application systems (ERP)

STAGE 2: DISTRIBUTOR PARTNERSHIPS AND VMI

• Resolve forecasting problems, eliminate major inventory and stock out problems
• Larger distributors- provide timely sales and inventory information to MARICO
• Access MARICO’S systems for pending orders, stock-in-transit etc.
• VMI- MARICO would replenish the stocks on the basis of distributor’s online input of stocks to
the retailers.
VENDOR MANAGED INVENTORY
(VMI)
Places order

Marico
EARLIER Distributor
Replenishment
based on order

Replenishment based on
norms
Distributor Marico
NOW
WITH
VMI
MIDAS Mi-net APO SAP
Orders are automatically generated
PERFORMANCE IMPROVEMENTS
FUNCTIONS - CHANNEL
INTERMEDIARIES
Agents/Brokers:
Act as an extension of the manufacturing company
Represent the producer to the final user in selling a product
They do not own the product directly, they take possession of the product in the distribution process
Make their profits through fees or commissions

Wholesalers:
Independently owned, and they own the products that they sell.
Do not work with small numbers of product: they buy in bulk, and store the products in their own
warehouses and storage places until it is time to resell them.
They sell the products to other intermediaries such as retailers, for a higher price than they pay
Distributors:
• Responsible for redistribution of the products, retail penetration and market coverage
• Function similarly to wholesalers in that they take ownership of the product, store it, and sell
it off at a profit to retailers or other intermediaries
• Maintains stock of the product to absorb the supply fluctuation from manufacturer
• Expands retail universe as well as retail penetration of various products
• They can maintain a closer relationship with their suppliers than wholesalers do

Retailers:
• The most popular channel intermediary for consumer goods, retailers operate outlets that
trade directly with household customers
• Enable producers to reach a wider audience, particularly if broad coverage by the major retail
chains can be obtained
• Retailers can be classified in several ways:
• Type of goods being sold (e.g. clothes, grocery, furniture)
• Type of service (e.g. self-service, counter-service)
• Size (e.g. corner shop; superstore)
• Ownership (e.g. privately-owned independent; public-quoted retail group)
• Location (e.g. rural, city-centre, out-of-town)
• Brand (e.g. nationwide retail brands; local one-shop name)
• Manufacturer
• Products are moved from 7 company manufacturing units to depots in each state
• Number of depots in each state is determined by size of state. For example, Maharashtra
and Uttar Pradesh have multiple depots to cater the demand of whole state.
• Area Sales Manager sits at Depot and handles the operations
• Also helps in evading taxes on movement of Marico goods from one state to another

• Parameters taken into consideration while appointing distributors

 Market Dynamics: Number of distributor in each district depends upon size of market
and number of outlet each distributor is required to cater
 Financial Factors: Depending upon availability of financially strong distributor and his
risk taking capacity, an independent or share distributor is appointed. Only those shared
distributors are selected which does not stock products of competing brands

• Big markets like Hyderabad, Delhi and Mumbai might have multiple independent dealers
while tier 2 and tier 3 towns might have shared distributors
 MARGINS / COMMISSION
STRUCTURE
• Margins
• In urban areas Marico gives a margin of 5% to its distributor and 10% to its retailer
• Margins are in line with that of Industry Standards
• Marico never increases margins, instead it plays on schemes on trade promotion which
are volume and SKU’s bases
• The scheme passed on to distributor is known as Primary Scheme, to Retailer is known
as Secondary Scheme and to Customer as Tertiary Scheme
• In rural area Marico gives a margin of 7% to its super distributor, 3% to its wholesaler
and 5% to retailer

Credit Policy
• Marico gives credit of 30 – 45 days to its distributor
• Retailer gets credit only for 1-2days
• The restocking at retailer is either once in a week or fortnight depending upon the area
• Wholesalers : Sell at a margin of 8-10%. Sell at local Kirana Stores in case the stock is left over.

• Kirana Store : The product is purchased at MRP and a margin fixed by the distributors of the
company is earned.

• Super Markets : Buyers decide on pricing Strategies depending on the locality and nearby
retailers. Products can be sold at a discount of Rs.1 or 50 paisa for Prachute Hair Oil.

• Hyper Markets : They sell in packs of 3 and reduce the total MRP by Rs.5-8. Small SKU’s are
at times available for free with the product.
 TRADE PROMOTION
• Point of Purchase- Best product display award at retailer level.
• Jo Dikhta hai woh bikta hai.

Trade allowances
• Gifts and Attractive schemes to make the retailers and distributors to stock more
which would increase the sales
• Additional margins for the retailers who sell more

CONTEST’S & AWARDS

• Retailers Meeting the celebrity contest.
• Retail Product push winner award.
• Best Seller of the quarter award.
DEALER MOTIVATION
TECHNIQUES
• Business promotion Recognition is the best incentive – Parachute King award for the
best Dealer

• Parachute Diamond award given to best distributor at Zonal level

• Training / informative recreational tours about hair therapy and coconut oil to
potential performing sales and trading partners.
WAREHOUSING & TRANSPORTATION
Chamadia Group - OUTSOURCED

The group is into construction of Warehousing facilities including those on Built To Suit
(BTS) basis.

At present the group has three warehousing complexes located in and around Pune having a
total built up area of about 6.75 lac sq. ft. These warehouses are provided on Lease rentals
to many companies of the various industries. One of its largest warehouse composite unit
under one roof for a single client is of 1.20 lac sq. ft.
The salient features of our warehouse facilities are:

Engaged in Transportation of FTL and Part Load Consignments

Dedicated Fleets of about 60 Vehicles Trucks and LCVs
Carrying about 2000 Truck Load of Consignments per month
Reaching out to about 450 locations across the country
Business Associates includes TCI, KTC, Patel, NECC, GCC etc.
Handling about 8000 dockets per month
Handling Shipping Consignments with time bound demurrage undertakings
WAREHOUSING FACILITIES
PACKAGING
THANK YOU