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EVALUATION OF CURRENT SALES AND DISTRIBUTION MODEL OF HEINZ

NAME: ROHIT MAHAJAN SPECIALIZATION: SALES AND MARKETING MENTOR: MOHD. ARIEF SUMMER PROJECT: 2011

2 TABLE OF CONTENT:

1 OBJECTIVE OF THE PROJECT 3 2 WORK PLAN FOLLOWED..4 3 CURRENT DISTRIBUTION MODEL OF HEINZ IN PUNE..5 4 COMPETITORS DISTRIBUTION MODEL IN PUNE..6 5 COMPARISON OF CURRENT MODEL WITH OTHER PLAYERS 79 6 EVALUATION OF PERFORMANCE OF DSR.1011 7 EVALUATION OF THE PERFORMANCE OF DISTRIBUTOR...............12 9 SWOT ANALYSES.13 10 RECOMANDATIONS AND SUGGESTIONS.14-17 11 SUMMARY................................................................................................ ...........................18

1 OBJECTIVE OF THE PROJECT:

The objectives of the project are as follows:
1. Submit Business Plan for Sales & Distribution in Heinz for competitive advantage in 1. Distribution 2. Rapid Business Growth 3. Enhanced Sales Productivity

To conduct the following Analysis for Arriving at the Business Plan.

1. Evaluate Current Distribution Model of Heinz across channels and across town class.

2. Compare Heinz Model with other players in the category/ Competition/ other industries.

3. Understand various Channel Partners and their role and evaluate their current performance.

4. Understand the role of the sales team position (DSR/TSP/KASP/TSO/SO/ASM) in driving the sales/distribution and evaluate their current productivity.

5. Conduct SWOT Analysis of Present S&D Model of Heinz.

6. Arrive at a business plan for the area which will give Heinz a competitive advantage.
A.

In terms of distribution, rapid business growth and productivity enhance the sales

B. Test out parts of the business module in the market.

2 WORK PLAN FOLLOWED:

Dates 16th May-14th June 14th June 14th June- 24th June

Work Done Market visits and assisted in launching of Complan C.N.G Got Project Setting of New Distributor and Training and market visit with the Distributor Dsrs

25th June 8th July

Evaluating Competitors Collecting Data

Distribution

Network

,And

8th July 13th July

Collecting Company Data And Analyzing Data

13th july 15th july

Report Making

3 CURRENT DISTRIBUTION MODEL OF HEINZ IN PUNE:

NUMBER OF DISTRIBUTOR

3+1

NUMBER OF DSR NUMBER OF OUTLETS NUMBER OF BEATS AVERAGE OUTLET /BEAT DURATION BETWEEN TWO VISITS DELIVERY TIME

11 2450 71 35 1 week 24 hrs

4 DISTRIBUTION MODEL OF SOME FMCG COMPANIES

IN PUNE

COMPANY NAME NUMBER OF RETAIL OUTLETS NUMBER OF DISTRIBUTOR

NESTLE

DABUR

CADBURY

GSK

R&B

KALLOGS

approx 13,745 11,000

8500

5,000

5,500

4,000

7+1

7+1

7+1

2+1

8+1

6+1

NUMBER OF DSR

50

48

40

22

31

18

OUTLETS PER BEAT CREDIT POLICY IN THE MARKET

25-40

35

30

30

30 30-35

1 WEEK Rs. 6,00014,000

15 DAYS

7 DAYS

7 DAYS Rs 5,500 -Rs. 7,500

7 DAYS

7 DAYS Rs 5,500 -RS 6,500

SALARY OF THE DSR FREQUENCY OF TAKING ORDER

Rs 10,000

Rs 7,000

Rs 5500

WEEKLY with in 24 HRS

WEEKLY WITH IN 24 HRS

WEEKLY WITH IN 24 HRS

WEEKLY WITH IN 24 HRS

WEEKLY WITH IN 24 HRS

WEEKLY WITH IN 24 HRS

DELIVERY

5 COMPARISION OF CURRENT MODEL WITH OTHER PLAYERS IN THE CATEGORY:

A On the basis of POPULATION

POPULATION OF PUNE IS: 35,08,529 NUMBER OF COMPANY RETAIL OUTLET HEINZ NESTLE DABUR CADBURY GSK R&B KALLOGS 2450 13,745 11,000 8,500 5,000 5,500 4,000 POPULATION/OUTLET 1432 255 318 413 702 638 877

MAJOR COMPETITORS IN THE SAME CATEGORY:

1 CADBURY

2 GSK

THE RATIO OF POPULATION/OULET OF HEINZ Vs COMPETITORS=

HEINZ: CADBURY = 1432:413=3.5:1 HEINZ: GSK =1432:702=2:1

THIS RATIO ANALYSIS SHOWS THAT, THE NUMBER OF OUTLETS OF CADBURY AND GSK ARE 3.5 TIMES AND 2 TIME RESPECTIELY MORE THAN HEINZ IN PUNE .

B ON THE BASIS OF SERVICE:

NUMBER NUMBER OF OF RT RT. AVERAGE NUMBER AVERAGE COMPANY OUTLETS DISTRIBUTOR OUTLET/DISTRIBUTOR OF DSR OUTLET/DSR

HEINZ

2,450

817

11

223

NESTLE

13,745

1,964

50

275

DABUR

11,000

1572

48

230

CADBURY

8,500

1214

40

213

GSK

5,000

2,500

22

227

R&B

5,500

688

31

177

KALLOGS

4,000

667

18

222

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AVERAGE OUTLET/DISTRIBUTOR: HEINZ=817 CADBURY=1214 GSK=2,500

AVERAGE OUTLET/DSR HEINZ =223 CADBURY=213 GSK=227

THIS SHOWS THAT THE NUMBER OF DSR OF HEINZ IS ADEQUATE WHEN COMPARED WITH THE SERICE OF THE COMPETITORS.

C. ON THE BASIS OF MODERNISATION:

ALL THE COMPETITORS COMPANIES ARE USING SOFTWARE FOR ONLINE BILLING AND MAINTAINING THE LEVEL OF STOCK .

D. ON THE BASIS OF FRQUENCY OF VISITING

DURATION BETWEEN TWO VISITS OF DSRS OF ALL THE COMPANIES IS 1WEEK.

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6 EVALUATION OF THE PERFORMANCE OF DSRS:

A ON THE BASIS OF DEMAND AND REACH:

NAME OF THE DSR LAXMAN DEEPAK KUCHEKAR MAHENDRA PATODAR SABBIR

BEAT NAME CHAMP2 KOTHRUD WADGAON SHERI HADAPSAR-3 SALUNKI VIHAR KARVE NAGAR

OUTLETS IN THE BEAT 33 32 47 31 36 44

TOTAL CALLS 32 24 30 31 29 30

EFFECTIVE CALLS 29 22 25 27 19 22

PRODUCTIVITY 87% 68% 53% 87% 52% 50%

It is clear from the above table that, in a beat where the number of OUTLET is more than 35, the productivity is very low as compared to areas having outlets up to 30 .

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B ON THE BASIS OF SALARY:

COMANY NESTLE DABUR CADBURY GSK R&B KALLOGS HEINZ

DSR'S SALARY 6,000 - 14,000 10,000 7,000 5,500-7,500 5,500 5,500-6,500 5,000

Heinz is paying lowest salary to its DSR as compared to other players in the market.

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C ON THE BASIS OF ACTIVITIES DURING THE DAY:

1 DSR has to take the order from the market. 2 After taking order, he has to go to distributor point and has to generate the bills.

This is the whole work a DSR does in the whole day, where as other companies are having separate person for generating bills. This lead to decrease in the productivity of the DSR.

7 EVALUATION OF THE PERFORMANCE OF CHANNEL PARTNER:

FROM THE MARKET VISITS IT HAS BEEN ANALYSED THAT:

A PROBLEM IN DELIERY TIME:

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DSR are punctual in taking order from the market, but the same is not deliered on time in areas far away from the distribution point. This is the main reason behind lower sales in areas like Kalyani Nagar, Koregaon Park , Chandan Nagar ,Katraj.

B DELIVERY BOYS ARE NOT GOOD IN THEIR WORK:

The delivery boys are not good in their job, due to which there occur gap in taking repeat order. This cause problem for the DSR when he next time visit Retail Outlet .

C PROBLEM OF SKOCK OUT:

Major of the time some there are stock out at distributors end .This cause problems in meeting targets.

D NO SUPERISOR:

There is no supervisor on the part of the distributor, who keeps an eye over the performance of their people and quality of work. This makes delivery boys to do what ever they wish, also DSR to leave shops with out taking order.

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These are the major reasons behind lowering of the distributor performance.

8 SWOT ANALYSIS OF CURRENT DISTRIBUTION MODEL OF HEINZ:

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9 FINDINGS FROM THE MARKET AND

RECOMMENDATIONS:

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A. CATEGORISE THE SHOPS ON THE BASIS OF THE SALES AND ORDER:

Eg: CATEGORY A- SALES OVER Rs5,000/WEEK CATEGORY B SALES OVER Rs 1,000/WEEK CATEGORY C SALES LESS THAN 1,000/ WEEK

Recommendation:

Try to provide each and every of schemes and displays in A category of outlets. In case, if there is some repeat order in between two visits, as per schedules, try to fulfill the order. So that a healthier relation ship can be built between distributor and retailers

B. REDUCE THE LEVEL OF STOCK OUTS :

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a Due to stock out , Retailer suggest Competitors product to Customer, because He dont want to loose customer ,in that case HEINZ is in loss as Customer switch over towards competitors product.

b When the retailer demand for the product and its not available , He cancel out the whole order.

c And the DSR has to bear their shooting talks.

Recommendation:

By taking the average of 3 months SALES for each Sku, make norms, and this much quantity should always be present at distribution point so that retailers order can be fulfilled and delivered as demanded by him.

C. MAKE A POLICY FOR SALARY OF DSR:

The current salary paid by Heinz is lowest among other FMCG companies, this is causing problem in adding new people to its work force.

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RECOMMANADATION:

The DSR having more experience should be paid more .This will motivate them, increase their performance and reduce the level of switching to other companies.

D. ACTIVITIES DURING THE DAY:

The average time taken by DSR in each outlet is 5-7 minutes. To cover 40 outlets more than 4 hours is required. DSR generally start market at 10am and finished at 2:30 pm. After that they have to generate the bills. Due to additional work of billing, they usually finish market at 1:30 p.m, and after having lunch come to distribution point for billing. This is one of the reason behind the low productivity of the DSR.

RECOMMATIONS:

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a. In a beat, if there are more than 10 Acategory outlets , In this case, the number of outlets in that particular beat restrict to 25. b. In a beat if the number of A category is less than 5.In this case, the number of outlets restrict to 35.
c. Appoint a separate person for billing purpose.

E. INCREASE THE MARKET SIZE:

Number of retail outlets of Cadbury is 8,500 Number of retail outlets of GSK is 5,000 Number of outlets of Heinz is 2,450

There is need to Increase the existing market size, i.e, add more number of outlets in the current structure, in all the product categories .This will generate more Sales Volume for company and Increase the effectiveness of existing channel.

RECOMMENDATION:

There is large provision of adding new outlets in the system. For this

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Sales officers should make regular visits to market and check out that no outlet will be left out. This will cover-up the gap between Heinz channel and competitors.

F. ISSUE OF EXPIRY AND REPLACEMENT:

This problem is very serious and is hampering the sales as well as good will of the company. In almost every 3rd shop there is problem of expiry. Due to this, the retailer first asks for replacement and then place the order. The expired stock also blocks the retailers capital.

RECOMMENDATION:
Make a proper schedule , so that after every 2nd month all the expiry should be cleared from the market.

G. RECOMMENDATION FOR MAINTAING SERVICE REGISTER:

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The DSR should be convinced to maintain service register every day, this would help in calculating productivity as well as LPBC. Also this let DSR to know his current performance.

H. RECOMMENDATION FOR PARALLEL SOFTWARE FOR DISTRIBUTOR:

Convince distributor to have crystal software , which will let them know, a. The demand in the market on the basis of previous data. b. Reorder Point. c. Minimum order quantity. d. slow movement products. e. not in demand products.

I.

WITH THE INCREASE IN MARKET SIZE, SIMULTANEOUSLY, INCREASE THE QUANTITY OF DSR AND DISTRIBUTOR SO, THAT QUALITY OF THE SERVICE REMAIN MAINTAINED.

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Summary:

1 There is strong need to increase the market size. 2 Need to increase the salary structure for DSRs. 3 Try to reduce the level of stock out as far as possible by using the average of last 3 month sales as norms for future sales. 4 Need of appointing a operator for billing at all the distributor points. 5 Need to handle the issue of expiry of after every 2nd month. 6 Need for a software for handling all the issues of distributor. 7 Regular supervision for the on field performance of DSR and delivery boy .

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THANK YOU