CBD Overview _ by Shri - Copy

8/10/2019 CBD Overview _ by Shri - Copy

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CBD Overview

V. Sridharan


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CBD : The engine of P&G !


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Customer BusinessDevelopment

A multi-functional strategy

to deliver Co. brand volume & profits

by partnering with our Customersto build their sales, shares & profits

Selling is the core of CBDbuilding P&G business with external

customers and managing customerrelationships


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CBD Purpose

To win at the FMOT by delivering sustainedcompetitive advantage for our brands at retail sothat P&G brands become the brands of choice forshoppers

Winning will mean two things

Winning in the store

Winning the store


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What does winning the FMOTmean?

Distribution

Visibility

Retailer Recommendation

Packaging

Sizing/pricing

Speed / quality of execution

Information feedback


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South West

North East

1030 MMPopulation

29 States & 6 Union

Territories

28% Population

in Urban India

THE TWO DIVISONS


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P&G Organization


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CBD

CustomerBusiness Development

Distributor

Stores


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But First, a Bit of History always helps..

P&G officially enters India in 1989

We understood quickly that mastering the

complex Distribution game was critical to itsbusiness strategy

So How did we go about doing that?

Well, by following what everyone( including themarket leader) was doing. Of course!!


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But First, a Bit of History always helps..

So we followed the Stockist Model

Appointed 3000+ stockists over the next 8 years..And did everything that the existing players did to

build distribution And the result?

We ended playing the game the wayCompetition wanted us to- play to theirstrength

Average HLL stockist was 7 times the size ofP&G stockist


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Distributor Evolvement

COMPLEXITY : 3400 STOCKISTS

27 WAREHOUSES

4 DISTRIBUTION CENTRES

21 MANUFACTURING LOCATIONS

LARGE & SCATTERED INVENTORIES

POOR LOGISTICAL EFFICIENCIES & HIGH COSTS

INFLEXIBILITY :

16000 ORDERS PER MONTH

LOW TRANSPORT RELIABILITY

LONG LEAD TIMES

HIGH STOCKIST INVENTORY (25 - 30 DAYS)

REDUCED CAPABILITY TO INVEST IN COVERAGE EXPANSION &

FUND VOLUME GROWTH


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Distributor Evolvement

NON FUTURISTIC : NO LOGISTICAL EFFICIENCIES

NOT DESIGNED TO SURVIVE THE ENTRY OF LARGE EFFICIENCY

BASED VOLUME DRIVEN MULTI-NATIONAL RETAILERS

NON-STANDARD : LOW STOCKIST VOLUME

UNABLE TO LEVERAGE PROVEN GLOBAL INITIATIVES LIKE SLOG

/ EDR / IDS etc.

LOW-CAPABILITY ORGANISATION STOCKIST STRUCTURE NOT CAPABLE OF DELIVERING UNIFORM

& HIGH QUALITY SELLING EFFORT

LARGE CUSTOMER BASE RESTRICTS P&G INTEVENTION AT

EACH STOCKIST TO A NARROW LEVEL


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SOLUTIONPROJECT GOLDEN EYE

IMPLEMENT ASIAN DISTRIBUTOR MODEL CREATE A NETWORK OF LARGE LOGISTICALLY

EFFICIENT SIZED DISTRIBUTORS

IMPLEMENT DISTRIBUTOR MANAGEMENT PROCESSESBASED ON REGION BASED CBAs

CREATE A MULTI FUNCTIONAL P&G CBD

ORGANISATION TO TRAIN & MANAGE THE

DISTRIBUTORS

CREATE A HIGH PERFORMING DISTRIBUTOR SALES

ORGANISATION TO CONSITENTLY DELIVER RPS


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OPTIMISE P&G PLANT TO RETAILER

SUPPLY CHAIN RESTRUCTURE THE P&G NETWORK TO DRIVE

EFFICIENCIES CREATE RELIABLE TRANSPORTATION CAPABILITY

CREATE STRONG INFORMATION LINKAGES BETWEEN

ALL LOCATIONS FROM DISTRIBUTOR TO P&G PLANT &

GO

IMPLEMENT REGIONAL CBAs ON SUPPLY CAHIN

PROCESSES (OSB / EDR)


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IMPLEMENT AsiaDistributor Model

OPTIMISE P&GSUPPLY CHAIN

IN A WAY THAT

1. LEVERAGES P&G GLOBAL EXPERTISE & TECHNOLOGY

2. PROCESSES ARE SIMPLE, STANDARD & MECHANISED

3. CREATES & LEVERAGES SCALE OF OPERATIONS

4. DELIVERS COMETITIVE ADVANTAGE AT RETAIL THRUCONCEPTUAL SELLING

5. INTEGRATES SUPPLY CHAIN & LINKS DISTRIBUTORS THRUTO THE PLANTS

6. ACCELERATES OUR SPEED TO MARKET

7. DRIVES NON-VALUE ADDED COSTS OUT OF THE SYSTEM.


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DISTRIBUTOR MODELP&G Level of Engagement

P&G PVPCBAs

ProcessesOperating Model

DistributorCreativityInnovation

Local ExpertiseLocal Realities


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GOLDEN EYE - VISION

We will deliver RPS of availability &visibility sustainedly in all covered stores

We will deliver competitive advantagethrough conceptual selling

We will be the preferred supplier for trade


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Distributor CWP, selection &P&G support

Distributor core work processes

Distributor Profile, Evaluation and Selection

P&G level of engagement

Training


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DISTRIBUTOR MODELP&G Distributor Strategy

Deliver sustained competitive

advantage for P&G brands at retail by

establishing a viable Sales coverage

and distribution network for all stores

under coverage through Distributors.


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DISTRIBUTOR MODELP&G Distributor Strategy

Strategic elements

CBD Multifunctional Teams

Simplified, Standardized Systems and Technology

Training and Management Tools


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DISTRIBUTOR MODEL

Distributor Definition

P&G Distributor is a Strategic Business Partner who

delivers Sales fundamentals (RPS of availability and

Visibility ) in all stores within specific geography .

They provide an efficient and cost effective means to

reach the retail outlets in order to achieve superior

instore presence and deliver strong business results.


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DISTRIBUTOR MODEL

Distributor DefinitionP&G Distributor - Multifunctional interdependent entity.

Global standard - Large & efficient

Efficient - Size of Operation, processes

Technologies - IDS, SLOG, Trade terms

Reinvestment - Building Organization- Logistics efficiencies

- Expand Coverage


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DISTRIBUTOR MODEL

Distributor Roles and Responsibilities

Effective Trade coverage

Excellent execution of Proactive selling,

efficient logistics and customer service

Leverage local market expertise

Multifunctional skilled organization

Sound financial management and control


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WHAT THE DISTRIBUTORWILL DO FOR P&G

BUILD BUSINESS

ENABLE TOTAL SUPPLY CHAINEFFICIENCY


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BUILD BUSINESS THROUGH

HIGH QUALITY Sellers

EQUAL PERFORMING CALLS

DELIVER 100% RPS

CREATE OUTSTANDING (GOLDEN) STORES

>95% HIT RATE ON INITIATIVES


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DISTRIBUTOR MODEL

WINNING IN THE STORERPS, Superior Volumes and Profits

WINNING THE STOREPreferred supplier status

DISTRIBUTOR CORE WORK PROCESSES

FINANCE HR SALES LOGISTICS SYSTEMS

P&G CORE WORK PROCESSES

CONCEPTUAL SELLING

WINNING ORGANIZATION


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DISTRIBUTOR MODELHow will distributor build business

Increase Volume

Incremental callage

Incremental Productivity

Reduced Out of stocks

Incremental On hand Distribution

Improved In-store Presence

Improved Initiative execution

Better information Availability for business decision


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DISTRIBUTOR MODELHow will distributor build efficiencies

Reduce costs

Logistically efficient buying

Cost effective Quality Coverage

Leverage Scale

Leverage Technology

Multi skilled multi functional organization


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HOW DO WE DESIGN ADISTRIBUTOR

QUALITY COVERAGE PLANNING

INFRASTRUCTURE

FUNDING

ORGANIZATION


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QUALITY COVERAGEPLANNING (QCP)

WHICH OUTLETS

HOW TO REACH

AT WHAT COST

PROFITABILITY SUSTAINABILITY

MAN POWER

INFRASTRUCTURE

ANSWER IS QCP


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OBJECTIVES &PRINCIPLES

MAXIMISE QUALITY &

PROFITABLE

COVERAGES

DESIGN SUSTAINABLE

OPERATION

PROFITABLE

OUTLETS/MARKET

REINVEST EXTRA

PROFITS

100% COVERAGE BY

DSES

STOCKS SUPPLIED BYDISTRIBUTOR


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QCP - 7 STEP PROCESS

1. FIXED ADMINISTRATION COST

2. COST PER DAY FOR ANY MODE OF COVERAGE

3. POTENTIAL SALES/CALL/MARKET

4. COVER 95% ACV OUTLETS ( 50%STORES=95% ACV)

5. ESTABLISH TOTAL COST STRUCTURE FOR ROI

6. INFIELD VALIDATION OF ASSUMPTION

7. DRAW FINAL QCP


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COVERAGE PLANNING

COVERAGE IS PLANNED ON THE BASIS OF PROFITABILITY

OF THE CUSTOMER TO ENSURE A SUSTAINABLE

OPERATION

TOOL USED FOR COVERAGE PLANNING IS CALLED QCP -

QUALITY COVERAGE PLANNING

QCP WILL ENABLE US TO ARRIVE AT THE FOLLOWING :

WHICH OUTLETS TO COVER

WHAT SHOULD BE THE COVERAGE PATTERN VIZ.

FREQUENCY / VEHICLE ETC.


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DISTRIBUTORINFRASTRUCTURE

WAREHOUSE

DELIVERY VAN

OFFICESPACE

COMPUTING EQUIPMENT


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Distributor Funding

The QCP will throw up the

Working Capital &

The cost to service the area.

Based on this and the minimum Debt : Equity

ratio, the distributor will arrange for funds to

purchase fixed assets Viz. computers, Vans,

furniture, office equipment & working capital to

run his daily operations


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Evolved QCP

QCP as the Financial Engagement Tool Principle Based Collaborative effort by MFT

Elements of QCP

Gross Margin (Sales History) Health Care8%

Rest of P&G + GIL5%)

Discount (Discount History)

Sales & Distribution Cost - Variable Overheads Van to be hired based on Volume of the route

Admin CostFixed

Depreciation

Bank Charges


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Evolved QCP

Investment (Debt Equity Ratio 1:1)

Average Inventory Less payable to P&G / GIL

P&G2 Days Credit

GIL13 Days Credit

Average AR MR21 Days

India 1 / 2A7 Days

W/Sale7 Days

India 2B / 2C > 75015 days UpcountryVisit to Visit (India 1, 2A, W/S, 2B/2C>750)

Average Other Working Capital Claims

Float


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P&G Support to distributor

Damage Fixed % off the invoice

BRS (Branch Replenishment Subsidy)

ActualReviewed Time to time

DCFS (Distributor Coverage Fee Support)

Pay for performance (NOS growth) / efficiency(Cost & Investment reduction)

Variable (19% - 29%)


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Distributor Organization

Multi-functional team comprising of Sales, MS,

Finance & Logistics

Supported & trained by P&G multi-functional

organization. Recruitment based on identified profile for each

function

R & R and measures well defined

S&B in line with specific market realities

Rewards & Recognition to distributor employees


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Distributor

BE HFS DHRE BE MRD SysAdmin

DLEDFE

STLA/c Mgr.

HFS

India 1DSE

India 1VTL

VCCrew

DSEWs/2A

/2B/2C

A/c Mgr.MR

BRO CSOA.

DHREADFE

Accountant

Cashier

ADLE

DLO

DB

A. SysAdmin

IDSS

MTL Seller

Merchandisers

ABRO

Helper

BranchManage

r

BranchIn-

charge

Driver

VC &JVC

Ws/2A/2B/2C

Sub DSeller

In-store/ DailyMerchandisers

Distributor Organization


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So What Changed?


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So What Changed.?


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So What Changed??

Pre GE Post GE

# Customers 3500+ 30

Avg. FY Business 7 300

Avg. Inventory Days 45+ 8


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So What Changed??

In a Nut shell, :

1. Scale (Distributor biz 150 Crs to 600 Crs)

2. Quality of the call

3. Distribution via wholesale

4. Information & Goods flow


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Break


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CBD

CustomerBusiness Development

Distributor

Stores

India How it compares


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IndiaHow it compares

India China Morocco Philippines

Total Area (sq. km) 3,166,414 9,596,961 458,730 298,171

Population (MM) 1,130 1,321 33 91

Per Capita ($) 2,700 5,300 3,800 3,300

Urban-RuralPopulation Split

30%-70% 44%-56% 50%-50% 50%-50%

Store Universe (M) 8500 7000 66 600

Average P&G

Throughput incovered stores($ p.m.)

87 342 425 138

Predominant Rural

Population

Fragmented Trade

(only 6% of outlets

sell

> 1000/month)

Retail StoreThroughput at$48/month only


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India Channel Split

Channels# Stores P&G Coverage HUL Coverage Est.

Universe Covered% Business

Salience Covered% Business

Salience

Super/Hyper* 2.5 M 2.5 M 9% 2.5M 9%

Wholesale 80 M 63 M 53% 75M 48%

Provision 7500 M 425 M 16% 1030M 20%

Pharmacy 328 M 120 M 11% 140M 13%

Emerging 30 M 14 M 11% 20M 10%

TOTAL 8 MM 620 M 100% 1270M 100%

Total FMCG Market size in India - $6.8billion

Urban India 66% of total FMCG

Wh t i I di 123?


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India 1/2/3 are Consumer Segmentsthat will help us

delight consumers better via customized go-to-marketapproaches and initiatives

Current$130 MM

09-10 - $272 MM

Current - $74 MM

09-10 - $186 MM

Current$261 MM

09-10 - $529 MM

What is India 123?

India 1 India 2 India 3

India 123 GTM Strategy/Key Interventions


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India 1 Super/

Provision/Drug

India 1 Emerging

India 2 a Super/Provision/

Drug/Emerging

India 2 b Provision/Drug

India 2 c Provision/Drug

India 3 Provision/Drug/Uncovered

Uncovered Retailers

through wholesale

Strategy

Dominant in-store presence

Efficient Reach

Efficient Reach

Golden Uncovered

Stores

Amazing Shopper Experience via

Consultative Selling

Enhanced Call Time,Separate Selling & Merchandising

Account Manager +

Responsive delivery

Enhanced Call Time,

Merchandising supervision

Merchandiser with seller,

Power SKU selling

Low Cost Coverage Model,

Merchandising solutions

Low Cost Coverage Model,

Merchandising solutions

Promoter for sell through,

Enhanced Call Time

Store Clusters

Fi ff h CBD $ 1 b R d


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Develop True Interdependent

Distributors

World Class DistributorDistributor ProfitabilityDistributor SystemsDistributor Capability

Build a Winning Organization

CBD UniversityBeauty CapabilityMulti functional Capability

Persuade India 123

shoppers across Channels

Shopper persuasion frameworkto develop the right touch pointswith the consumerInvest behind Channel KBDs and

Corporate programs

Explode Distribution

Cover a million stores throughwinning coverage models Expand branch network to 400branchesHave a Total Supply Chain Network

Goal - $1Bn+.

First off - the CBD $ 1 bn. Roadmap

I di DE S


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India DE Story Quantity of coverageWider, Deeper

Quality of coverageCapacity, Capability Distributor High Performing organizations

Pre-GE Stockist

Model

GE Model Start Up

GE Model Current

Distribution

Extension

Quality of coverage, HPO

Q

n

t

y

o

C

a

g

R

h

Distributor Model Evolution


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the elbow supports the wrist

Wrist Sub Distributors

Elbow Branch

InterdependentdIstributors

Coordination role

Stronger DLT


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Strengthening the elbow

Increases number ofcontrol points

Better quality of coverage

Higher coverage

Have one stl per branch

Increase frequency andtrade terms at top end

Exploding coveragethrough sub d

Improve controls Smaller catchments of 25km


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Class Sales/ town Throughput Stores / Town

1 1349926 5102 265

2 360424 4931 73

3 177766 4515 39

4 93020 3542 26

5 59549 2560 23

6 63250 2807 23

Sample of 7 site data

Coverage, Fundamentals and Revenues keep dipping with class of town

As much to do with Potential of town as to do with our Coverage structure

Distribution of Key Brands still ahead of coverage footprint indicating latentdemand

Current retail landscape


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GE start-up

CBD Overview _ by Shri - Copy

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