Dabur Presentation

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PROJECT REPORT ON

THE GAP ANALYSIS IN SALES AND DISTRIBUTION OF

FEM PRODUCTS RELATING TO MODERN TRADE

SUBMITTED TO

Dabur India Limited

Kaushambi, Ghaziabad – 201010 Uttar Pradesh, India

&

BIRLA INSTITUTE OF MANAGEMENT TECHNOLOGY

GREATER NOIDA

BY

JITESH KHANNA

09DM049

2010

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Declaration

I Jitesh Khanna, student of Birla Institute of Management Technology, Greater Noida hereby declare that project entitled “The gap analysis in sales and distribution of FEM products

relating to Modern Trade” is original work done by me under the guidance of Mr Ankur Jain

Area Head Modern Trade (North Zone II) Dabur India Ltd. and Prof. Masilamani, Faculty, BIMTECH. The information provided in the study is authentic to the best of my knowledge. All care has been taken to make this report error free and I sincerely regret for any

unintended discrepancies that might have crept into this report. I shall be highly obliged if errors (if any) be brought to my attention.

Thank You

Jitesh Khanna

PGDM – 09DM049

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Acknowledgment

In Indian culture, a task is said to be incomplete without the blessings of almighty and elders. Also acknowledging the work and help of all those who have guided me for the completion of my research on time.

I am deeply indebted to Mr Ankur Jain Area Head Modern Trade (North Zone II) Dabur India Ltd. and my faculty mentor Prof. R J Masilamani for not only providing me with the

opportunity for this study, but also enthusing me to work on this very meaningful subject. I am also grateful for the cooperation and valuable support given to me by the employees of the organization throughout my training.

Their constant encouragement was a source of strength for me in pursuing this work.

I express my deep sense of gratitude and reverence for my parents and my dear friends for their endless love, guidance, moral support, encouragement and untiring cooperation throughout my study and work, without which this work would never have been completed.

I express my sincere thanks to all those who helped me in my training. Still, I feel I have not been able to express my gratitude to all of them, as no words can thank them for their teachings and love shown towards me.

Regards

Jitesh Khanna

PGDM – 09DM049

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Summer Project Certificate

This is to certify that Mr Jitesh Khanna Roll No. 049 a student of PGDM has worked on a summer project titled “The gap analysis in sales and distribution of FEM products relating

to Modern Trade” at Dabur India Limited after Trimester-III in partial fulfilment of the

requirement for the Post Graduate Diploma in Management programme. This is his/her original work to the best of my knowledge.

Date: ___________ Signature ________________

(_________________________) Name of Industry Mentor

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Summer Project Certificate

This is to certify that Mr Jitesh Khanna Roll No. 049 a student of PGDM has worked on a summer project titled “The gap analysis in sales and distribution of FEM products relating

to Modern Trade” at Dabur India Limited after Trimester-III in partial fulfilment of the

requirement for the Post Graduate Diploma in Management programme. This is his/her original work to the best of my knowledge.

Date:___________ Signature ________________

(_________________________) Name of Faculty Mentor

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Table of Contents



Executive Summary 8



Overview of FMCG Sector in India 10



Introduction 13

 Company Profile 14

 Introduction to Dabur 15

 Dabur Over Years 18

 Corporate Philosophy 22

 Location of Operations 23

 Company Business Activities 25

 Dabur Manufacturing facilities in India 26

 Dabur worldwide 27

 About FEM 28



About the Project 30



FEM Product Portfolio 34



Competitors of FEM 43



Organization Structure 49



Project Analysis 52



First Part

 Distribution network of Dabur 54

 Distribution process of Dabur in Modern Trade 57

 Data Presentation 60

 Gaps 71

 Second Part

 Sale Promotion 74

 Sale Promotion done by competition 77

 Data Presentation 78

 Findings 101



Recommendation

 Part 1 105

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

Conclusion 109



References 110



Bibliography 111



Annexures

 Annexure 1 113

 Annexure 2 114

 Annexure 3 115

 Annexure 5 116

 Annexure 5 117

 Annexure 6 118

 Annexure 7 119

 Annexure 8 120

 Annexure 9 121

 Annexure 10 122

 Annexure 11 123

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Executive Summary

Dabur India is one of the leading FMCG Companies in India. The project I undertook is‘Gap analysis of FEM products in sales & distribution across all national & regional chain modern trade stores in Delhi, NCR (includes Gurgaon, Faridabad, Noida & Ghaziabad).The study objectives were:

 Identify gaps in distribution, assortment, MBQ levels of FEM products in these stores within the following categories a) Bleach b) Hair Removal Cream c) Liquid Soaps

 ii) Study promotion/activation mix for these categories done by

competition’ was undertaken was undertaken for duration of two months as a part of the learning process during the summer training at Dabur India Ltd.

The main objective of this project is to identify the loopholes that exist in the current distribution, MBQ levels and assortment of FEM products and the various methods of sale promotion that can result in incremental sales of FEM products in modern trade.

To study the first part, various modern trade outlets and their central distribution centers were visited. interviews were conducted with them to know what kind of challenges are faced by them as regards to FEM. Some of the loopholes that came forward are Fill rate being less than 65%, retailers only prefer keeping fast moving SKUs thereby neglecting the other SKUs. Replenishment at times takes more than the stipulated period of delivery. MBQ levels are constant irrespective of their demand in the market. Footfall of the store is not considered while deciding the MBQ. Dabur offers very low margins to the retailers.

To solve these problems various suggestions have been mad. For instance to handle low fill rate, unavailability of one SKU can be substituted by making available more units of another SKU of the same product. Special schemes should be provided to retailers on sale of slow moving SKUs. Special norms should be created for timely supply of orders, MBQ level should be decided as per the footfall in a particular week of a store. Motivation should be given through various incentive schemes to the distributors, retailers and salesman to keep up the sale of FEM.

In the second part, a survey was conducted in different modern trade outlets. In total 152 people responded to the survey. Most of them were women in the age group 18-35. Findings from the survey were that most people think major part of the promotion is done

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through consumer promotion schemes. People are satisfied with the pricing of FEM, since FEM promotion is not consistent not many people have bought FEM under promotion. Most people prefer monetary schemes over non-monetary schemes. People prefer to try a skin care product before using it.

All the 3 categories of FEM naming Bleach, hair remover and liquid hand wash were put on the product life cycle stage, and my observations were that while hair remover falls in the introductory stage, bleach and liquid hand wash comes in the growth stage. Hair Remover needs more advertising. Personal selling and trial packs should be encouraged. Bleach and Hand Wash needs advertising, sale promotion and personal selling but above all it is dependent on word of mouth the biggest promotion tool.

It was an excellent experience while working with Dabur India limited. I learnt about the environment and culture of the organization, its distribution structure; which I feel will help me in my future endeavours in life.

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The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$13.1 billion. It has a strong MNC presence and is characterised by a well-established distribution network, intense competition between the organised and

unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc. In India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural

segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by2010, India needs around US$ 28 billion of investment in the food-processing industry.

India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million. Around 70 per cent of the total households in India (188 million) reside in the rural areas. The total number of rural households is expected to rise from 135 million in 2001-02 to 153 million in 2009-10. This presents the largest potential market in the world. The annual size of the rural FMCG market was estimated at around US$ 10.5 billion in 2001-02. With growing incomes at both the rural and the urban level, the market potential is expected to expand further.

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Rural-urban profile

Source: Statistical Outline of India (2008-09), NCAER

An average Indian spends around 40 per cent of his income on grocery and 8

per cent on personal care products. The large share of fast moving consumer

goods (FMCG) in total individual spending along with the large population base

is another factor that makes India one of the largest FMCG markets.

Urban

Rural

Population 2001-02 (mn household)

53

135

Population 2009-10 (mn household)

69

153

% Distribution (2001-02)

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72

Market (Towns/ Villages)

3768

627,000

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Company Profile

Dabur India Limited came into existence over 100 years ago in 1884 in

Calcutta.

The founder of Dabur India Limited-Dr.S.K.Burman (1856-1907) was a

physician who brought Ayurvedic medicines for the masses of Bengal. His off

quoted dictum is the guiding spirit behind Dabur even today:

"What is the life worth which cannot bring comfort to others"

And the Vision of DIL is:

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Introduction to Dabur

Dabur India Limited came into existence over 100 years ago in 1884 at Calcutta. The founder, Dr.S.K.Burman, was a practicing allopathic doctor. At that time Malaria, Cholera and Plague were the common diseases. He was a physician who brought Ayurvedic medicines to the masses of Bengal. Initially established as a proprietary firm for the manufacture of chemicals and Ayurvedic drugs it was later on 19th November 1930 incorporated as private limited company. Late Shri C.L.Burman, son of late Dr S.K. Burman and his son late Shri P.C.Burman in the name of Dr S.K.Burman Pvt. Ltd. to expand the operations by setting up production facilities at Garia and Narendrapur, West Bengal and Daburgram, Bihar.

Dabur (Dr.S.K.Burman) Pvt. Ltd. was merged with Vidogum and Chemicals Ltd. w.e.f. 1st July1985 and the amalgamated company was renamed DABUR INDIA LIMITED and a fresh certificate of incorporation was issued to that effect. In 1970, the bulk of manufacturing facilities were shifted from West Bengal to Faridabad in Haryana.

In 1975, vidogum and chemicals were incorporated in technical collaboration with Unipekin AG (Switzerland) for the manufacture of edible grade and industrial grade Guargum powder at Alwar in Rajasthan.

In 1977, a modern automated plant was set up in Sahibabad (U.P.) for the manufacture of Chyawanprash, Asavrishthas, Hair oil, Tooth powders, Hajmola, and other Ayurvedic specialties. Certification for production of toiletries and food grade products was issued on 13th October 1986 by the registrar of Delhi and Haryana to the company, Dabur Private Limited, a closely held Public Limited Company.

It was incorporated as a Private Ltd. Company in the name of Dabur (Dr S.K.Burman) Pvt. Ltd. From a humble beginning in 1884, a manufacture of traditional medicine in Calcutta, Dabur has come a long way to become a multifaceted multinational, multi-product, modern Indian corporation with a global presence. It now enjoys the distinction of being the 2nd largest FMCG Company and is praised to become a true Indian Multinational.

The main plant was set up in Sahibabad (U.P.) in 1977 for manufacturing of Chyawanprash, hair oil, tooth powder, Hajmola and other Ayurvedic medicines and food products etc. Dabur's main line of business is in the sphere of Health care, Personal care and Beauty care. Its strength lies in natural and herbal preparations.

Dabur's corporate philosophy has always been ahead of its time. The founder's initial

success was mainly due to his direct main campaigns- a technique that became very popular nearly a century later. The company was one of the earlier Indian companies to have fully equipped R & D lab as early as in 1919. Today, the company has its own mainframes and computers are a way of life here.

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Dabur is also an ISO 9002 certified company. The certification was obtained in 1995 by SGS YARSLEY international services Limited U.K. Dabur's revenue today exceed Rs.800 crores with plans to achieve Rs.2, 000 crores by year 2003. Dabur has 34,000 shareholders with market capitalization of over Rs.1, 400 crores.

Dabur has 11 manufacturing plants in India and Nepal and a licensee in the Middle East. It has manufacturing base in Egypt also. The company has over 4,000 employees with around 1,500 looking after sales and marketing functions.

The Indian market is being served through a transactional network of sales offices and carrying and forwarding agents. The company has its offices in London, New York and Moscow. Dabur products are being exported to around 50 countries. Dabur portfolio is exceeding 500 products of FMCG and health care products.

The Board of Directors of Dabur India Limited (DIL) met on July 23, 2003 to consider the unaudited financials of the company for the first quarter that ended on June 30, 2003. Company has recorded a growth of 36 per cent in its net profit per cent growth in its turnover during April-June 2003.

The turnover of DIL, during the three-month period, has increased to Rs 266 crore to Rs 300 crore while the net profit has increased 11.5 crore to Rs 16 crore during the same period. The first quarter results should not be annualized as sales usually improve in subsequent quarters.

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Dabur Vision

“Dedicated to the health and well-being of every household”

Dabur is a company with a set of established business values, which direct it's functioning as well as all its operations. The guiding forces for Dabur are the words of its founder, Dr .S. K. Burman, "what is that life worth that cannot give comfort to others." The Company offers its customers, the products to suit their needs and give them good values for money. The company is committed to follow the ethical practices in doing business. At Dabur, nature acts as not only the source of raw materials but also an inspiration and the company is committed to product the ecological balance.

The vision is intertwined with below mentioned core values of the company:-

Ownership: This is our company. We accept personal responsibility, and accountability to

meet business needs.

Passion for Winning: We all are leaders in our area of responsibility, with a deep

commitment to deliver results. We are determined to be the best at doing what matters most.

People Development: People are our most important asset. We add value through result

driven training, and we encourage & reward excellence.

Consumer Focus: We have superior understanding of consumer needs and develop

products to fulfil them better.

Team Work: We work together on the principle of mutual trust & transparency in a

boundary-less organization. We are intellectually honest in advocating proposals, including recognizing risks.

Innovation: Continuous innovation in products & processes is the basis of our success.

Integrity: We are committed to the achievement of business success with integrity. We are

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Dabur Over The Years

More than a century ago, a young doctor started with a vision to provide innovative and affordable health care products to Indian masses. Thus, was born an organisation today known as Dabur India Limited. The twelve hundred crores corporate today started with a small dispensary at Calcutta, the noble thoughts of Dr.S.K.Burman being the main source of inspiration behind the project. From that humble beginning, the company has grown into India’s leading manufacturer of consumer health care, personal care and food products. This phenomenal progress has seen many milestones, some of which are mentioned below:

 1884: Dr.S.K.Burman lays the foundation of what is known as Dabur India Limited.

Started from a small shop at Calcutta, he began a direct mailing system to send his medicines to even the smallest of villages in Bengal. The brand name Dabur is derived from the words "DA" for Daktar or doctor and "BUR" from Burman.

 1896: As the demand for Dabur products grows, Dr Burman felt the need for mass

production for some of his medicines. He set up a small manufacturing plant at Garhai near Calcutta.

 Early 1900s: The next generation of Burman’s takes a conscious decision to enter the

Ayurvedic medicines market, as they believe that it is only through Ayurveda that the healthcare needs of poor Indians can be met.

 1919: The search for processes to suit mass production of Ayurvedic medicines

without compromising on basic Ayurvedic principles lead to the setting up of the first Research and Development laboratory at Dabur. This initiates a pain staking study of Ayurvedic medicines as mentioned in age old scriptures, their manufacturing

processes and how to utilize modern equipment to manufacture these medicines without reducing the efficacy to manufacture these medicines without reducing the efficacy of these drugs.

 1920s: A-manufacturing facility for Ayurvedic Medicines is set up at Narendrapur and

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 1936: Dabur India (Dr S.K.Burman) Pvt. Ltd. is incorporated.

 1940: Dabur diversifiers into personal care products with the launch of its Dabur

Amla Hair Oil. This perfumed hair oil catches the imagination of the common man and film stars alike and becomes the largest hair oil brand in India.

 1949: Dabur Chyawanprash is launched in a tin pack and becomes the first branded

Chyawanprash of India.

 1956: Dabur buys its first computer. Accounts and stock keeping are one of the first

operations to be computerized.

 1970: Dabur expands its personal care portfolio by adding oral care products. Dabur

Lal Dant Manjan is launched and captures the Indian rural market.

 1972: Dabur shifts base to Delhi from Calcutta. Starts production from a hired

manufacturing facility at Faridabad.

 1978: Dabur launches the Hajmola tablets. This is the first time that a classical

Ayurvedic medicine is branded from Shudhabardhak bati to Hajmola tablets.

 1979: The Dabur Research Foundation (DRF), an independent company is set up to

spearhead Dabur's multi-faceted research. Commercial production starts at Sahibabad. This is one of the largest and most modern production facilities for Ayurvedic medicines in India at this time.

 1984: The Dabur brand turns 100 but is still young enough to experiment with new

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 1986: Dabur becomes a public Limited company through reverse merger with

Vidogum Limited, and is re-christened Dabur India Limited.

 1989: Hajmola Candy is launched and captures the imagination of children and

establishes a large market share.

 1992: Dabur enters into a joint venture with Agrolimen of Spain far manufacturing

and marketing confectionery items such as bubble gums in India.

 1993: Dabur set up the oncology formulation plant at Baddi, Himachal Pradesh.

 1994: Dabur India Limited comes out with its first public issued at a premium of

Rs.85 per share. The issue is subscribed over 21 times.

 1994: Dabur enters the oncology (anti-cancer) market with the launch of Intaxel

(Pacitaxel). Dabur becomes only the second company in the world to launch this product. The Dabur Research Foundation develops the unique eco-friendly process of extracting the drug from the leaves of the Asian Yew Tree.

 1995: Dabur enters into a joint venture with Osem of Israel for food and Bongrain of

France for cheese other dairy products.

 1996: Dabur launches Real fruit juices, which heralds the company's entry into the

processed food market.

 1997: The foods division is created, compromising of real fruit juices and Homemade

cooking paste to form the core of this division's product portfolio.

 1998: Project STARS (Strive to Achieve Record Successes) is initiated by the company

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strategic, structural and operational changes to enables efficiencies and improves growth rates.

 1998: The Burman family hands over the reins of the company to a professional, Mr

Ninu Khanna join Dabur, as the Chief Executive Officer.

 1999-2000: Dabur achieves the Rs.1000 crores turnover mark.

 2001-2002: Launched Amla Light, new flavors in Real Juices-grapes, guava, apple

active, orange active, homemade pappad, Vatika- an anti-dandruff shampoo.

 2002: New launches homemade coconut milk (in south), Tang, Tomato puree, Vatika

light.

 2003: Dabur achieves Rs.1, 232 crores turnover mark with an increase of 6 per cent.

Turnover of FMCG reaches to Rs l048.5crores, which shows a profit of Rs. 72 crores. Turnover of pharmaceuticals reaches to Rs 184 crores with a profit of Rs.13 crores.

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Corporate Philosophy

Knowledge is the key to growth in today's world. Whatever be the industry, it is the knowledge, which provides cutting edge to individual and organisations. For more than a century nature has been a rich source of knowledge for DABUR. Nature has not only gives it the ingredients for all its products but also has taught it how to create a harmony within and outside the organisation. Nature has inspired DABUR in all its acts. Ayurveda - the science of life is based on principles of nature. All

Ayurvedic preparation has their ingredients derived from nature. Dabur has

converted the healing properties of natural ingredients and the age-old knowledge of Ayurveda into contemporary health care to eliminate health problems of its

consumers.

Dabur is committed to expand the reach of its age-old knowledge of Ayurveda and Nature through web. Through web the aim is to overcome the physical boundaries to take Ayurvedic way of life to global frontiers. Dabur India limited understands its responsibility as a corporate house. It has not only set a sight on increasing turnover and profitability of the company but also on propagating Ayurveda - The Indian System of Medicine.

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Locations of Operations

Head office: Sahibabad, Ghaziabad (U.P.)

Regd. Office: Asaf Ali Road, New Delhi

Corporate office: Kaushambi, Ghaziabad (U.P.)

Sales & Marketing: New Delhi

OFFICES:

Chandigarh (H.P.), New Delhi (Delhi), Jaipur (Rajasthan), Kanpur (U.P.), Patna (Bihar), Ahmadabad (Gujarat), Indore (M.P.), Cuttack (Orissa), Mumbai (Maharashtra), Hyderabad (A.P.), Chennai (Tamil Nadu), Bangalore (Karnataka), Kochi (Kerala), Guwahati (Assam), Kathmandu (Nepal), Russia, U.K.

FACTORY:

Baddi (H.P.), Ghaziabad (U.P.), Alwar (Rajasthan), Daburgram (Bihar), Kalyani& Narendrapur (West Bengal), Katni (M.P), Birgunj (Nepal), Egypt.

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Clearing & Forwarding Agent (C&Fa):

Jammu, Chandigarh (HP) Ambala (Punjab), New Delhi (Delhi), Ghaziabad (U.P.),

Dehradun (U.P.), Lucknow (UP), Ranchi, Patna (Bihar), Guwahati (Assam),

Calcutta (West Bengal), Jaipur (Rajasthan), Ahmadabad (Gujarat), Indore (M.P.)

Raipur (M.P.), Bhubaneswar (Orissa), Cuttack (Orissa), Mumbai (Maharashtra),

Hyderabad (A.P.), Chennai (Tamil Nadu), Bangalore (Karnataka), Cochin

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The Companies Business Activities Comprises of;

HEALTH CARE PRODUCTS: Markets a range of OTC health care: products based on Ayurveda,

some of its products like Chyawanprash, Hajmola, Hajmola Candy, Pudinhara are market leaders with over 65 per cent market share in their respective categories.

PERSONAL CARE PRODUCTS: It includes hair care, oral care and honey. Dabur Amla as a brand

has made its mark beyond India; it is a leading hair oil brand in Middle East and Africa. Other well-known brands are Vatika, Dabur Lal Dant Manjan.

AYURVEDIC SPECIALITIES: There is a range of over 400 Ayurvedic medicines. It has vast range of

classical Ayurvedic drugs and priority Ayurvedic medicines developed by own R&D.

PHARMACEUTICAL DIVISION: It includes a range of natural ethical products like Livfit, Lionitus,

Legal etc., and angel of contract media and gynaecological. This division has a major presence in Anti-thrombolytic, Anti-migraine therapy and radio opaque dyes.

ONCOLOGY: The formidable range includes brands such as Intel, Docetaxel that were

manufactured in India for the first time by Dabur. The company is a market leader in this category in India and plans to establish itself as a general Oncology player in selective global market.

BULK DRUGS AND CHEMICALS: Dabur manufactures synthetic and semisynthetic bulk

pharmaceutical substances, bulk natural compounds and intermediaries. Isolation of pure natural compounds and custom synthetics are focus areas.

FOODS DIVISION: One of the youngest divisions of the company markets a range of sauces,

ethnic pastes and foods. Real fruit juices gave Indian consumer for the first time, fruit juices with nothing artificial, no preservatives, no colour and no flavours added. Launched two years back, the range includes Real Juices and cooking pastes under the brand name Home Made.

NATURAL GUMS: This division manufactures and process Guar gums, Gum Karaya, tamarind

based gums and psyllium husk. The division produces a range of industrial and grade natural gums to meet the customer specifications.

AYURVEDIC VETERINARY: It deals exclusively in animal hea1thcare. Markets safe and non-toxic

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Dabur World Wide

Dabur's mission of popularising a natural lifestyle transcends national

boundaries. Today there is global awareness of alternative medicine,

nature-based and holistic lifestyles and an interest in herbal products. Dabur has been

in the forefront of popularising this alternative way of life, marketing its

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About FEM

Fem is trusted brand known throughout India since 1982. The company

markets bleach, liquid soaps and hair removing creams under the ‘Fem’ brand.

In house R&D: innovative products like Oxybleach (premium cream bleach),

Fem Stratum (hair conditioner), Saka (men’s bleach) and Botanica (skin firming

& anti-wrinkle cream) introduced in the last few years. It has a range of fabric

softeners and stain removers under the brand ‘Bambi’. Markets a range of

pharmaceutical products in dermatology and other segments. Distributions

reach covering 1, 25,000 retail outlets; also covers 25,000 parlours directly.

Manufacturing facilities in Nasik and Baddi (HP); Baddi unit which was set up in

2006 enjoys both excise and IT benefits. Exporting to UAE, Yemen, Oman,

Maldives, Mauritius, Malaysia, Sri Lanka, Bangladesh, Myanmar and Nepal.

Owns the brand ‘Jaquline’ which markets women care products (bleach and

hair removing creams) in US and Middle East. Highly profitable company with

gross margins of over 60%.

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Acquisition of Controlling Stake in Fem Care Pharma Ltd by Dabur India Ltd

(DIL)

 Dabur India Limited signed an agreement to acquire 72.15% stake from the existing promoters.

 The transaction values FCPL at an equity value of Rs 282.4 crores.

 Dabur to make an open offer to acquire further 20% of the FCPL’s equity share capital.

 Specialty chemicals division and some other investments will be bought over by promoters at book value or market value whichever is higher.

 Acquisition to be funded through internal accruals of Dabur India Ltd.

Acquisition Rationale

Revenue Synergies

 Brand provides access to DIL into fast expanding skin care market at mass price points

 Higher reach/penetration for FCPL portfolio through DIL’s distribution network

 Potential for extending FEM brand into other related skin care categories.

 Potential in International markets: FEM & Jaquline brands have presence in GCC/Middle east markets which can be expanded.

 FCPL’s parlour outreach to be leveraged for promoting Dabur’s personal care portfolio.

Cost Synergies

 Combined business to unlock synergies : Sales & Distribution, Marketing, Supply Chain, Sourcing & Manufacturing

 FCPL’s Baddi unit synergistic with DIL’s own skin care plans

 Greater efficiencies possible in trade and distribution

 Combined Adpro spends can be leveraged to reduce media costs

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Fem Care Pharma Ltd, which has a leadership position in the fairness bleach category and a strong market position in hair removal and liquid soap category. The other brands in its portfolio include Oxybleach cream, SAKA men’s bleach and Bambi fabric softeners. Acquisition of Fem Care Pharma is in line with strategy to aggressively expand Dabur’s scale of operations and strengthen its presence in the fast moving consumer goods (FMCG) space. This transaction would give Dabur an entry into the high-growth skin care market with an established brand name ‘FEM’. Further, Dabur also has the potential to extend the brand into newer and related skin care categories.

But since the acquisition has taken place, Dabur has not been able to concentrate much on the distribution and promotion aspect of FEM. FCPL which continued to keep the distribution of FEM products in OFOs and Kirana Shops while Dabur has taken over the distribution of FEM products in Modern Trade. I was given the task of identifying loopholes that exist in the Distribution and Promotion strategy of FEM across all national and regional chain modern trade stores in Delhi and NCR.

Part 1 of the project

First part of the project is to study the gaps in distribution, assortment and MBQ levels of FEM product in modern trade stores within the product category naming;

 Bleaches

 Liquid Soaps

 Hair Removal Cream

Since sales and distribution are one of the most important areas of a company, this problem has to be seen from all the angles before coming to any conclusion. To study the problem of MBQ levels and Assortment, I had visited some branches of modern trade retails stores and their distribution centre. Interview was conducted with the store managers, departmental heads and Dabur’s promoters in these chains about the problems faced related to

distribution strategies because of company or retail house.

List of Modern Trade Retail Chains where FEM products supplied are:

 Big Bazaar

 Big Apple

 Vishal Mega mart

 REI 6TEN

 Surya Healthcare

32  Guardian Pharmacy  Religare  Spencer  H&B Store  Home Store

Part 2 of the project

Second part of the project is study of the promotion mix being done by the competitors which will increase the sale of the above mentioned 3 FEM products without causing any disturbance in the various channels of distribution.

Since promotion not only leads to increase in the sale of the product but also increase brand awareness among the buyers, promotion has become a significant tool being used by the marketers for not just survival but also leading this highly competitive market.

There are different kinds of promotional schemes used by different companies to market their products. While some companies depend on monetary schemes other use non-monetary schemes very significantly. To test which one of them is mostly preferred by the consumers, I conducted a survey to see what kind of scheme makes a consumer inclined towards buying that product.

Methodology Adopted

For 2nd part of this project, the method available was to get enough information through personal interaction with the people visiting the stores with the aid of a questionnaire. The collection of primary data requires considerable time. In this research, the Primary data were obtained by actual working in the market and interacting with the buyers.

Questionnaire containing 21 questions was prepared. In total 152 people were interviewed who visited the different stores at different locations.

33 Stores Visited for Research

1. Big Bazaar – Raja Garden 2. Big Bazaar – Vasant Kunj 3. Big Bazaar – Wazirpur 4. Big Bazaar - Noida

5. Vishal Mega Mart – Tilak Nagar 6. Religare – Dwarka

7. Big Apple – Rajouri Garden 8. Big Apple – Lajpat Nagar

People were asked questions about their preference when it comes to choosing a product under scheme, what kind of scheme they prefer monetary or non-monetary, then what kind of monetary or non-monetary schemes do they prefer. People were also asked if these schemes really influence their buying behaviour. Other questions include through what mode of communication they got to know about FEM, rate the current promotional strategy of FEM, etc.

Scope of the Project

A Training Program of 60 days in any organization provides information to all students like. i) Current organisation work-culture.

ii) Industry practical knowledge. iii) Gives Professional touch.

iv) Better awareness about market competition.

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35

Fairness Bleach

Fem Fairness Bleach is the undisputed leader in the bleach market in India and has gained the trust and confidence of millions of users over last 2 decades. It doesn’t just give fairness by oxidizing the facial hair to match with the skin tone but also helps the skin to breathe a new life by removing dead cells & unclogging the pores. Fem Fairness Bleach is a fast and safe way to get a fairer and healthier skin. Just 15 minutes of application provides 15 days of radiant looking skin. It is available in consumer packs of 9g / 25g / 50g & parlour pack of 100g / 250g.

Material Description

Size

MRP

Fem Fairness Creme Bleach Apple & Peach 26.4 gram 35.00

Fem Fairness Creme Bleach Apple & Peach 52.8 gram 55.00

36

Perfumed Blue Bleach

Fem Perfumed Blue Bleach is milder bleach specially formulated for those having a sensitive skin. The advanced formulation of Perfumed Bleach liberates nascent oxygen in a controlled manner to provide extra fairness that lasts up to 30 days. The perfumed activator of the Blue Bleach also gives a wonderful aromatic experience to users. It is available in consumer packs of 9g / 25g / 50g & parlour pack of 100g.

Material Description

Size

MRP

Fem Fairness Creme Bleach Milk, Pearl &

blueberry 26.4 Gram 39.00

Fem Fairness Creme Bleach Milk, Pearl &

37

Oxybleach

Oxybleach is the healthiest bleach in the world today. Oxybleach provides you a fairer, healthier radiance that too with many times more Oxygen. It comes with unique pre-bleach cream that forms a protective shield for even the most sensitive skin, and gives you a safe and enhanced bleaching experience. It is available in a 25g retail pack as well as 300g parlour pack.

Material Description

Size

MRP

38

Herbal Bleach

Fem Herbal Bleach Contains 16 precious herbs : Keshar, Chandan, Lodhra, Patang, Raktachandan, Agru, Walaa, Manjistha, Jesthmadh, Temaalpatra, Padmakastha, Kamal, Kosth Kolinjan, Halad, Laakh & Daruhalad, Which make Kumkumadi Thilam, a proven ancient Ayurvedic formulation for

fairness.Natural and Safe, Fem Herbal Bleach is a blend of nature's best. This makes it perfectly safe for all skin types, especially sensitive skin. It is available in a 15g retail pack

Material Description

Size

MRP

39

Saka Oxygen Bleach for Men

Fem a company with a reputation as the innovators in the skin care category has launched Saka - Oxygen bleach for men. The skin care experts have formulated Saka to gently work wonders in just 15 minutes. It works with a three-pronged action * Bleaching to remove suntan, * Cleansing to remove dirt, bacteria, dead cells and provide extra oxygen to the skin, and * Nourishing to unclog pores. So you can give dull, lifeless skin a total lift, and an instant boost of life.

Material Description

Size

MRP

40

Hair Removing Cream in Flavours

Fem Hair Removing Cream

is gentle and painless way to remove unwanted hair from arms and legs. It provides silky, smooth skin within minutes. Its unique formulation not only removes hair from the root but also delays the re-growth of unwanted hair. It is available in 40g of Jar pack and in 25g of Tube pack in pleasant fragrances of Lemon, Chandan, Rose, and Blossom.

Material Description

MRP

Size

Fem Hair Remover System Rose (Jar) 40 Gram 35.00

Fem Hair Remover System Blossom (Jar) 40 Gram 35.00

Fem Hair Remover System Lemon (Jar) 40 Gram 35.00

Fem Hair Remover System Chandan (Jar) 40 Gram 35.00

Fem Hair Remover System Rose (Tube) 40 Gram 35.00

Fem Hair Remover System Blossom (Tube) 40 Gram 35.00

Fem Hair Remover System Lemon (Tube) 40 Gram 35.00

Fem Hair Remover System Chandan (Tube) 40 Gram 35.00

Fem Hair Remover System Rose (Tube) 25 Gram 25.00

Fem Hair Remover System Blossom (Tube) 25 Gram 25.00

Fem Hair Remover System Lemon (Tube) 25 Gram 25.00

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Liquid Hand Wash

Fem Soft Gentle Soap

is the only liquid soap made from pure coconut oil that leaves your hands and face soft, supple and smooth after every use. One pearly drop of this unique liquid is enough to give you a complete cleansing experience. It is available in five lingering fragrances of Lemon Dew, Chandan, Blossom, Bouquet and Peach. It is available in dispenser pack of 250ml and refill packs of 1 litre and 5 litres.

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Material Description Size MRP

Fem Hand Wash Bouquet 250 ML 59.50

Fem Hand Wash Lemon 250 ML 59.50

Fem Hand Wash Chandan 250 ML 59.50

Fem Hand Wash Peach 250 ML 59.50

Fem Hand Wash Blossom 250 ML 59.50

Fem Hand Wash Refill Pouch Blossom 200 ML 30.00

Fem Hand Wash Refill Pouch Lemon 200 ML 30.00

Fem Hand Wash Refill Pouch Peach 200 ML 30.00

Fem Hand Wash Bouquet Refill 1 Litre 149.50

Fem Hand Wash Lemon Refill 1 Litre 149.50

Fem Hand Wash Chandan Refill 1 Litre 149.50

Fem Hand Wash Peach Refill 1 Litre 149.50

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44

FEM faces competition from various national and international brands for its product range. Fem Care has a leadership position in the fairness bleach category and a strong market position in hair removal and liquid soap category.

Bleach

In the bleach category there are 2 major players;

 Jolen

 FEM

Jolene

It Camouflages facial hair, Cleans Skin. It has unique gas flushing action to cleanse skin pores. Strong antiseptic to prevent infection. Quick & Convenient. It is suitable for all types of skin.

Available in 9g, 18g, 35g, 140g & 300g

SKU MRP

9 Gram 24.00 18 Gram 42.00 35 Gram 75.00

45

Hair Removal Cream

In hair removal categories there are 3 major players are;

 Veet

 FEM

 Anne French

Veet

Range from Veet creams - suitable for each skin type. Now whether you have normal, dry or sensitive skin there is a Veet especially for it. Plus with its special skincare ingredients- it will leave the skin feeling soft and super smooth.

Available in 2 sizes: 25g and 60g at Rs 39.00 and 69.00 respectively.

Anne French

Anne French hair remover available in four different fragrances available - sandal, rose, lavender and lemon.

Available in 2 sizes: 25g and 40g at Rs 33.00 and 39.00 respectively

SKU MRP 25 Gram 39.00 60 Gram 69.00 SKU MRP 25 Gram 33.00 40 Gram 39.00

46

Hand Wash (Liquid Soap)

In the hand wash category there is a lot of competition being built in the last few years. Existing players in this category are;

 Dettol  Lifebuoy  FEM  Palmolive  Santoor Dettol

Dettol introduced the Liquid Hand Wash in 1994. It was known that many consumers use Dettol Soap for cleaning hands. Dettol Liquid Soap gave the consumers a soap in a more modern and convenient format for hand wash.

Available in pump packs of 250ml and 135ml. Refills available in 185ml, 475ml and 900ml

SKU MRP

250ml (pump pack) 55 135ml (pump pack) 38 185ml (Refill) 40 900ml (Refill) 164

47 Lifebuoy

Positioned on a ‘protection from germs’ platform it carries the tagline of ‘have no fear’ in the Liquid

handwash segment too. Lifebuoy Hand Soaps offer hospital-strength germ protection, with a unique

formulation that generates a rich lather.

Palmolive

Palmolive launched handwash in October 2003 with a premium pricing and imported stocks. While the brand is supported by promotions mainly in the modern trade, it is not active on air. SKU MRP 200ml (pump pack) 40 180ml (Pouch Refill) 25 900ml (Refill) 125 SKU MRP 250ml (pump pack) 55 250ml (Pouch Refill) 35 1000ml (Refill) 150

48 Santoor

As a strong player in the bar soaps market and with a high market‐share in the South, Santoor launched the Liquid Hand Wash in January 2007, along with media support

SKU MRP

250ml (pump pack) 55 180ml (Pouch Refill) 27 1000ml (Refill) 150

49

50

Structure in Sales and Marketing

M an ag e m e n t Tr ai n ee s SB U H e ad H e ad o f M ar ke ting H e ad o f Sal e s Cat e go ry M an ag e r Zo n al Sal e s M an ag e r Se n io r Pr o d u ct M an ag e r R e gi o n al Sa le s M an ag e r Pr o d u ct M an ag e r A re a Sal e s M an ag e r

Marketin

g

Sal

es

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PROJECT ANALYSIS

Part 1 - Identify gaps in distribution, assortment and MBQ levels of FEM products.

53

First Part

In the first part we will be analysing various gaps that exist in the distribution, assortment

and MBQ levels of FEM products in modern trade. We will only be concentrating on the skin

care category of FEM i.e. Bleach, Liquid Soaps and Hair Removal Cream.

Modern Trade

Modern trade as opposed to traditional retail shops refers to a range of sale methods based on marketing techniques: for instance in self-service shops you have no more sales

attendants behind the counter; now the customer can touch the articles. The more expensive goods will be ready at hand whereas you will have to bend to reach goods with less add value for the store. A few articles will be offered at rock bottom prices with much publicity in order to attract as many customers as possible. The display of goods is very important and needs an elaborate know-how.

Modern Trade Stores where FEM products supplied are:

 Big Bazaar

 Big Apple

 Vishal Mega mart

 REI 6TEN  Surya Healthcare  Apollo Pharmacy  Guardian Pharmacy  Religare  Spencer  H&B Store  Home Store

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Distribution Network at Dabur

CONSUMERS

The above diagram it shows channel of distribution of Dabur, here first the products are manufactured and from Manufacturing plants the packed goods are supplied to Clearing And Forwarding Agents(C&FA) and from here the goods are then further supplied to number of Stockiest or Distributors, from here goods reaches to large number of Retailers and it is the duty of Stockiest to take orders from retailers and then supply the goods to them, this work is generally done by stockiest salesman through ready stock or by taking orders first and then placing the order. From here the goods finally reaches to Customers. Customer purchases the product from retailers.

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This was the basic Channel of Distribution used by Dabur, now I will throw light on each channel of distribution of Dabur.

MANUFACTURING PLANT:

The manufacturing facility is at Manakpur, Post- Nalagarh, Dist. – Solan, Himachal Pradesh. This is in a tax-free zone under Central Government Scheme. It is about 50 kms from Chandigarh on State Highway, about 20 kms from Kalka (Haryana) Railway Station.

Manufacturing facility complying to international GMP standards are under set up to manufacture Pharmaceutical products and Cosmetic Creams & Lotions.

Four manufacturing set ups with the capacity of 3600 kg per shift can be undertaken. There will be a facility of jar, aluminium tube and lami tubes filling with automatic labelling and online packing of the products. There will also be a facility for pouch filling and pillow packing of tubes.

PROCUREMENT & TRANSPORT:

 Getting the raw material and packaging material requirement from the production unit in charge.

 Constant updates on the procurement of materials and transport details.

 Production details and ingredient content information from the different personnel and coordinating this activity.

CLEARING AND FORWARDING AGENTA (C&FA)

 From manufacturing plant the stock is transported or supplied to clearing and forwarding agents.

 Clearing and Forwarding Agents is a third party and Dabur gives contract to them, so company has nothing to do in building the relationship with them.

 Here C&FA keep or stock the goods with them.

 They charge Dabur for stocking the good and even Dabur don’t mind doing so as it is a measure of cost cutting as well as there is no need for go downs and maintenance.

 For Ghaziabad, Meerut, Delhi NCR there is one C&FA whish is situated in Mohan Nagar, here all goods which Dabur foods hare kept here.

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STOCKIEST OR DISTRIBUTORS

 Stockiest store the products in their godowns, C&FA supplies the goods to them as per their order.

 Stockiest has some sales men working under him, they are known as stockiest sales man. Their work is to place the products in the market and take order from retailers and then supply goods to them.

 Sales man either takes ready stock with them or they first take orders and then supply goods later on.

 There is a beat which is a schedule route of sales man, means sales man has to daily cover the route as mention in the beat.

 Merchandising, making products visible, pasting posters, putting banners, and seeing that goods are properly placed in the retail outlets is also the duty of stockiest sales man.

 Companies’ sales officer keeps a check on the stockiest and monthly report is also prepared which is further analysed by ASM & ZSM.

 In Noida Dabur has 1 stockist, and in Ghaziabad 1

RETAILERS

 Retailers are backbone of the company as they are the one who can take the product on new heights or can bring it down to toes.

 Stockiest supplies goods to retailers and tries Persuading retailers to give the brand special displays (using merchandising tools) to get affective brand presence, and arranging it in more noticeable manner.

 Classification of outlets in different type of markets is different according to their sales volume.

TYPES OF RETAILS OUTLETS

Class Average Monthly Business

A Above 10,000

B 5,000-10,000

C Upto 5,000

Margin of retailers is always higher than stockiest.

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Distribution Process or Supply Chain of Dabur in

Modern Trade

Process at Distributor Level

 CFAs keep receiving goods from the Manufacturing Unit as per the production of goods.

 Manufacturing Unit produces goods according to the Sales Forecast done.

 Sales Forecast for FEM is done on the basis of last 3 months sales.

 Data from various modern trade chains is collected to calculate the sale of FEM products and accordingly considering the demand and sales figure, sales forecast for the coming 3 months is made and the manufacturing unit is asked to produce the required quantity.

 Dabur’s distributors maintain at least 15 days of inventory with them.

Clearing and Forwarding Agent sends required order to the stockiest or distributor.

Distributor receives goods as per the order placed and enters the same in his stock book.

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Process at Store Level for Order regeneration

Counting of Current Stock available at the store

Raising a purchase order to the vendor by the category (In head office and zonal office)

Purchase order generated is sent to the distributor or the Dabur Merchandiser.

Dabur Merchandiser further sends it to the Distributor.

 Counting of the stock present in the store in done by the Dabur Promoter who are present in the store or by the Dabur Merchandiser.

 After going the through the stock available in the store. Dabur representative places order with the Department Head in case order is placed through Centre Distribution Centre and through store manager or the department manager when the order is placed from the Store itself.

 MBQ level are generally decided by the Centre Distribution Centre or the Store Manager.

 Purchase Order generated is send to the Dabur Distributor.

 Replenishment takes place within 3 days from the dispatch of the purchase order.

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Delivery of the required (negotiated) stock from the distributor’s end to the store or ware house by the help of transporter (at company’s expense)

Receiving of the material at the store with all the required documents

Receiving of the material at the central ware house (C.D.C.) Indore

Dewas naka

Document check by the security at the gate and in ward register is maintained by following all the rules of S.O.P.

Weighing, counting of cartoons, generation of I.R. no. by putting information on SAP

Compare the material with the documents, stamp the documents, write information with signature of the security and then unload the truck

Stamp on P.O.D. copy and return to the transporter

Transfer of the material to the store ware house Segregation of the material (M.C. wise and category wise)

Send the stock to the floor as per the requirement Racking of the material by giving location to the rack as well as to the box (for the maintenance of the W.M.S. sheet)

Out warding of the material from central ware house to the store, after receiving S.T.O. from the store.

Receiving of the material at the store against S.T.N.

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DATA PRESENTATION AND DATA ANALYSIS

To study the gaps that are prevalent in the Distribution system of Dabur for FEM products, I visited 70 Modern Trade stores and their Distribution Center (DC) of different Chains in Delhi and NCR Region.

There I just orally asked them few questions related to the SKUs that are being kept by them, what is the MBQ Levels of different FEM product, what are the deciding factor behind setting up of MBQ level, how is the fill rate of FEM, how is the distribution system of FEM, how much time it takes for replenishment, are they satisfied with the margin provided by the company, are they satisfied with the Dabur as a company, etc.

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Satisfaction as regards to Distribution of FEM products.

Satisfaction

Yes 45

No 25

Interpretation:-

It is quite evident from the chart that out of 70 outlets and distribution centres visited by me, 45 of them feels that distribution system of Dabur is satisfactory while 25 of them are not satisfied with it. Some of the reasons given were margins offered by the company, fill rate being low, credit issues with the company etc. But at the same time Positive feedback about Dabur was that since Dabur has taken over FEM, there has been a drastic

improvement in the distribution of FEM products.

0 5 10 15 20 25 30 35 40 45 Yes No 45 25 Series1

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Various fast moving and slow moving SKU’s of FEM.

Quantity sold is till 15th of June.

Source – Vijman India

Item Name MRP Size UOM

Quantity Sold in May and June

Fem Fairness Creme Bleach Apple & Peach 26.4 g 32 25 GM 508 Fem Fairness Creme Bleach Apple & Peach 52. 8 g 51 50 GM 777 Fem Fairness Creme Bleach Milk, Pearl & blueberry 26.4 g 39 25 GM 688 Fem Fairness Creme Bleach Milk, Pearl & blueberry 52.8 g 63 50 GM 629

Oxy Bleach 60 25 GM 1,159

Saka Bleach 30 15 GM 660

Fem Herbal Bleach 40 15 GM 1,032

Fem Hair Remover System Rose (Tube) 25 25 GM 144 Fem Hair Remover System Lemon (Tube) 25 25 GM 110 Fem Hair Remover System Blossom (Tube) 25 25 GM 4 Fem Hair Remover System Blossom (Tube) 29 25 GM 44 Fem Hair Remover System Chandan (Tube) 29 25 GM 4

Fem Hair Remover System Chandan (Jar) 35 40 GM 112 Fem Hair Remover System Chandan (Jar) 37 40 GM 92

Fem Hair Remover System Rose (Jar) 35 40 GM 78 Fem Hair Remover System Lemon (Jar) 35 40 GM 108 Fem Hair Remover System Rose (Tube) 35 40 GM 276 Fem Hair Remover System Rose (Tube) 37 40 GM 187 Fem Hair Remover System Blossom (Tube) 35 40 GM 87 Fem Hair Remover System Blossom (Tube) 37 40 GM 199 Fem Hair Remover System Blossom (Tube) 37 40 GM 189 Fem Hair Remover System Lemon (Tube) 35 40 GM 113 Fem Hair Remover System Lemon (Tube) 37 40 GM 124 Fem Hair Remover System Chandan (Tube) 35 40 GM 75 Fem Hair Remover System Chandan (Tube) 37 40 GM 120

Fem Hand Wash Bouquet 59.5 250 ML 152

Fem Hand Wash Lemon 59.5 250 ML 66

Fem Hand Wash Blossom 59.5 250 ML 238

Fem Hand Wash Refill Pouch Blossom 30 200 ML 24 Fem Hand Wash Refill Pouch Lemon 30 200 ML 102

Fem Hand Wash Refill Pouch Peach 30 200 ML 23 Fem Hand Wash Bouquet Refill 149.5 1 Ltr 24 Fem Hand Wash Lemon Refill 149.5 1 Ltr 42 Fem Hand Wash Chandan Refill 149.5 1 Ltr 30 Fem Hand Wash Peach Refill 149.5 1 Ltr 74 Fem Hand Wash Blossom Refill 149.5 1 Ltr 34

Fem Hand Wash Lemon Refill 555 5 Ltr 4

Fem Hand Wash Peach Refill 555 5 Ltr 1

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Total SKU 39

Fast Moving 7

Slow Moving 32

Interpretation:-

As we see in the above list of FEM Products, there is a total of 39 SKUs but only 7 of them are fast moving products rest of the SKUs are slow moving. When asked various retailers that why they are not keeping all the SKUs, the reason given was only fast moving products are preferred because the slow moving product does not have high sales and they only occupy shelf space in the store.

All the bleaches of FEM are highly fast moving while Hand Wash and Hair Removal are not at all sold in comparison to Bleach. According some of the retailers Bleach’s demand is so high that the supply always fall short of it, whereas in case of Hand Wash and Hair Removal it’s the opposite, stock for them is kept on the shelf for more than 25-30 days without any sale in small modern trade stores.

That is why out of 39 SKUs registered with almost all the Modern Trade stores, most of the Chains keep only around 20-25 SKUs. Majorly bleach of all SKUs, Hair Removal Cream of 40 gram Tubes in all variants and Hand Wash 250ml sprays.

0 5 10 15 20 25 30 35

Fast Moving Slow Moving 7

32

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Fill Rate of FEM products ordered.

Fill Rate – Sales order processing measurement that quantifies the ability to fill orders. There are various ways of measuring fill rate. Line fill compares the number of line items shipped complete to the total number of lines ordered ( 95 line items shipped complete out of 100 lines ordered would result in a 95% line fill rate). Order fill compares the number of orders shipped complete to the total number of orders shipped.

Now to calculate fill rate, I have taken few examples of Purchase Orders and Supply against them. For this I have collected POs of Big Apple and what has been the supply against it for the month of May. This will not only tell us the Fill Rate of the company but also time gap between order placed and goods replenished.

Party 1 - Express Retail Service (Modern trade chain known as Big Apple) Party 2 – Vijman India (Distributor of Dabur India Limited)

Case 1

First Purchase Order (See Annexure 1)

Date 03.05.2010 PO No. 272/10

Net Bill Amount – Rs. 169925

Supply Bill (See Annexure 6)

Date 06.05.2010 Invoice No. A0000036 Net Amount – Rs. 92907

In this Fill Rate will be calculated value wise.

For First PO Fill Rate is 55%. Other than this of the 10 SKUs of FEM that are placed in the order only 7 are supplied. And of those 7 as well some orders are not fully supplied. Goods are replenished within 3 days from the date of placing of order.

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Case 2

Second Purchase Order (See Annexure 2)

Date 10.05.2010 PO No. 330/10

Net Bill Amount – Rs. 213547

Supply Bill (See Annexure 7)

Date 20.05.2010 Invoice No. A0000061 Net Amount – Rs. 169416

For Second Purchase order Fill Rate is 79% (calculated value wise). Of the 7 FEM SKUs that were ordered only 5 were supplied. Other than the fill rate issue, the order was sent on 10.05.2010 whereas the goods against them have been supplied on 20.05.2010; there was a gap of 10 days between order and supply.

Case 3

Third Purchase Order (See Annexure 3)

Date 20.05.2010 PO No. 426/10

Net Bill Amount – Rs. 100780

Supply Bill (See Annexure 8)

Date 22.05.2010 Invoice No. A0000062 Net Amount – Rs. 83782

For Third order Fill Rate is 83% (calculated value wise). Out of 4 FEM SKUs that were ordered in the PO, 3 of them were supplied. Replenishment was very good for this order; the goods were supplied within 2 days from the placing of order.

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Case 4

Fourth Purchase Order (See Annexure 4)

Date 27.05.2010 PO No. 490/10

Net Bill Amount – Rs. 76936

Supply Bill (See Annexure 9)

Date 30.05.2010 Invoice No. A0000077 Net Amount - Rs. 70131

For fourth order Fill Rate is 91% (calculated value wise). All the SKUs which were ordered have been supplied as well. 2 of the SKUs are there in which the whole quantity demanded is not supplied. In one of them 60 pieces and in other 90 pieces were ordered but 36 and 66 respectively have been supplied against them.

We discussed 4 purchase order and supply against them of the same company in the month of May. While in the 1st PO, fill rate was too low, it kept increasing with high variation from 55% to 79% to 91%. In the second PO it was observed that with the fill rate, even

replenishment of order took too long. IN the third PO fill rate and order supply date was fine but 0 quantity of one of the SKUs was supplied, this means that fill rate line wise was 80% in this case. There was almost nothing wrong in the fourth PO, it can be called as a perfect purchase order and supply against it. We had 4 cases with 4 different situations.

Cases:

1. Low Fill Rate value wise

2. Too much time taken in Replenishment 3. Low Fill Rate line wise

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Another case of Fill Rate;

Party 1 – Future Value Retail (Modern trade chain known as Big Apple) Party 2 – Vijman India (Distributor of Dabur India Limited)

Purchase Order (See Annexure 5)

Date 02.05.2010 PO No. 4504419715 Net Bill Amount – Rs. 7255

Supply Bill (See Annexure 10)

Date 05.05.2010 Invoice No. B0000273 Net Amount – Rs. 2836

In this case Fill Rate is 39% calculated value wise. Of the 13 SKUs of FEM which were ordered only 5 SKUs were supplied. Replenishment date was within the time limit.

One of the other things I observed in this Purchase Order is that purchase order was

generated on 02.05.2010 which is being 1 week of the month. So while I was there in the Big Bazaar store for Interview, I noticed that there large amount of people who come in the first week of the month as compared to rest of the weeks. When confirming with the authorities I got to know that footfall is 30-35% more in first week of the month as compared to rest of the weeks. This is due to the reason that most of the service class people get their salaries in first 10 days of the month and that is the time when the purchasing power of an individual is the most.

Since first 10 days of the month are very crucial from the sale point of view, there should not be any miss in the SKUs supplied in these particular days. Because unavailability of products can result in not only losing the sale at that point of time, but the customer may also switch to some other brand thereby we as company loose a loyal customer as well.

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MBQ Levels

To keep a steady stock watch for the reorder of basic goods is time consuming and vital to profits. Different stores have different criteria to compute what the MBQ level of an item should be. The retailer can use past sale data of last month or last 3 month’s sale or in some cases where product is seasonal or has a demand in particular season; MBQ levels are decided season wise as well. This profit-enhancing feature uses sales history to calculate scientifically what and when to reorder, with less paperwork and less guesswork. MBQ (minimum base quantity) methodology has been used for efficiently handling the inventory based on past sales track.

While interviewing the outlets and distribution centres of retail chain, when asked about how they are deciding the MBQ level, a lot of inputs came as regards to the factors that they consider while deciding the MBQ level of an item; the same has been put on graph to see what are the factors that are most considered by retails chains.

MBQ level deciding factor

Past Month Sale 27

Past 3 Months Sale 11

Stock in Hand 7

Footfall 21

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Interpretation:-

As we see in the chart that most of the outlets or modern trade chain prefer deciding their MBQ level on the basis of past month’s sale, they have the highest preference with 38%. Next is footfall in a particular outlet, now this depends on various sub factors like what kind of people are actually in and around that area where the outlet is located, the type of income level of people in that area and various other demographics. Footfall got 30% preference while deciding the MBQ level of a particular product. Past 3 months sale of a product got 16% while 10% are in favour stock in hand in that particular store, this factor is considered most by those chains whose inventory management is centrally controlled. And the last with 6% preference is Season. According to me this got the least percentage

because of a limitation that Season factor is considered most in seasonal products and since this question was asked keeping in mind the FEM products not many people preferred this option. 38% 16% 10% 30% 6%

Past Month Sale Past 3 Months Sale Stock in Hand Footfall Season