1. Ideas for today and tomorrow SIP Report Presentation Kolkata, July 29th 2015 India Region
2. Dr. Himadri Roy Chaudhury (Associate Professor, Marketing) IMI Kolkata Presented to: Dr. Rituparna Basu (Assistant Professor, Marketing, Retail and Entrepreneurship) IMI Kolkata Mentored by: Mr. Devnarayan Sarkar MBA, FMS Delhi Associate Director, Franchise Operations East and Goa PepsiCo India Holdings Pvt Ltd.
3. Introduction and Executive Summary Company Background Issues and Objectives of the Study Observations and Findings Analysis & Suggestions Q & A Todays Discussion
4. It is the peak of Summer, April-May Distribution Centers in Kolkata are bustling with activities to meet order targets --Some are doing well some are doing not so well Sub Distribution has been hit, a Customer Executive has resigned Slice Tetrapack is expected to arrive from the Facility in Bangalore A premium brand, Tropicana Slice Alphonso, an erstwhile exclusively online offering is being launched in the traditional trade channel -- A kind of product that competitors have no substitutes for -- Need for focus on pushing this new entrant Another new entrant is 7up Nimbooz Masala Soda Pepsi IPL is running in full flow --Schemes are being devised around it PepsiCo seeks a summer interns perspective on its Sales Operations Strategy
5. Introduction and Executive Summary Company Background Issues and Objectives of the Study Observations and Findings Analysis & Suggestions Q & A Todays Discussion
6. Entered India in 1989 as a wholly owned subsidiary of PepsiCo Has the same Mission, Vision and Value systems of PepsiCo Philosophy of Performance with Purpose Deep Pocket investor with strong brands Innovation driven and ever expanding portfolio of food and beverages Follows a model of Partnership with farmers for sourcing, 24000 currently Employment on the basis of Talent, currently employs around 2,00,000 Indians Care for the Planet, efforts on water conservation and reduction of carbon footprints Generates revenues of 1000 crore annually PepsiCo India Holdings Pvt Ltd.
7. Operates through a partly owned partly franchised operating model Varun Beverages Ltd. is their biggest franchise partner operating in East and North Competes against Coca Cola, Parle Agro and a new entrant RC Cola Headed by D. Shivakumar as CEO India Operations
8. Organizational Structure PepsiCo India Beverages FritoLay (Food & Snacks) Marketing HR Finance Legal Corporate Affairs R & D Owned Operations Franchise Operations GM Sales Regional Sales Head ASM CE Owned Operations PSR
9. Introduction and Executive Summary Company Background Issues and Objectives of the Study Observations and Findings Analysis & Suggestions Q & A Todays Discussion
10. Reviewing the Traditional Trade channel and its operating efficiency Distribution and Logistics Retailer Service IT Implementation Sub Distributor Operations What are the efficiencies and inefficiencies of the existing system? Are there opportunities to enhance the activities existing system? What are competitors doing differently? How satisfied are our existing retailers? What are they unhappy about? How to make them happier? How has IT been implemented in Traditional Trade? To what extent does it provide visibility? What does it miss out? How to capture the missing links? How are the sub distributors currently performing? How can they be connected better to direct distribution? How can the shared value creation be enhanced? Merchandising How do we merchandise What do our competitors do better? How can we improve? Inventory Management Is the current method able to capture all variability? Is the material handling going alright? How to move towards JIT?
11. Introduction and Executive Summary Company Background Issue and Objectives of the Study Observations and Findings Analysis & Suggestions Q & A Todays Discussion
12. The Distribution Channel for Traditional Trade PLANT CNF DCs Retailer SD Retailer Consumer Level 3 Distribution system Level 4 Distribution system
13. Distribution & Logistics Spatial Convenience Scalability Flexibility Relationship Building Waiting Time Assortment (Bundling) Security of Goods Flow of Reverse Logistics Visibility Availability to the consumer conveniently The models applicability to different regions Ability to capture seasonality and accommodate new products Offering an opportunity for the channel partners to build a good relationship with one another How long does the customer needs to wait in order to receive a product Ability to accommodate complements Ability to maintain a low damage rate of inventory while it moves through the channel Smoothness of the flow of reverse logistics Ability to track, monitor and control operations of partners Expectation Description Status Competitor CA CA CA Effect Distinctive CA CA
14. Retailer Satisfaction 53% SATISFIED 47% NOT SO SATISFIED Good system of Order booking Good relationship with the PSRs Margins are better than competitors IPL Tickets are given to us at times Often dont get what I order Items are often out of stock VISIs do not perform well, not repaired It takes a long time to get a VISI Sometimes it takes 2-3 days deliver Pending Claims, Transaction cost is 3-4 months on an average Dont get any extra benefits/gifts Damaged items are not recollected on time Often get stock that has expired or about to expire People dont buy as much from us like before, places like Big Bazaar provide lower prices
15. IT Implementation SAMNA Benefits Missing Links --Sales Automated Management for the New Age --Integrated Real Time IT system that captures all information pertaining to order booking --Uses small hand held devices for on field activities and computers in offices --Real Time update of stock levels and orders to everyone in the sales team --Centrally controlled communication of schemes --Automated generation of invoices --Facilitates data driven decisions --Sub Distributor operations are not integrated --Retailer operations not integrated --Market Information, such as listing of New Stores, deletion of closed stores often remains to be updated --Results in skewed metrics leading to faulty decisions Plant CNF DC SD Retailer Extent of Visibility
16. Merchandising What are we doing good? What are competitors doing better? What is Lacking? --Coming up with good promotional schemes --Planning innovative POP Displays for Mom and Pop Stores --Creating good merchandising schemes for retailers of new products such as Tropicana Slice Alphonso --Planogram for delivering similar experience to customers across stores --Deliver a VISI cooler to a new store/existing store needing replacement four times faster --VISIs are better performers and withstands a retail stores rigour well enough --Take special care to keep their VISI Coolers pure, 17 percentage points higher --Presence of VISIs are 21 percentage points higher --Have POP displays and in store branding about twice as much --Merchandise is more durable --Merchandise is forwarded to Trusted Channel partners with ease --Introducing intelligent SKUs --Use innovative POP Display tools; e.g. Hangers for 5 Maaza Pouches --Delivering Merchandised gifts to the retailers; e.g. T Shirts --Taking advantage of our weaknesses --Alignment of Timing --Effectiveness of Efforts --Trust on Partners --Communication of initiatives across the channel Needs Substantial focus
17. Inventory Management Ensure Least Stock outs Start Forecasting Better Start Moving Towards JIT PepsiCos Inventory Management Today Follows Base Quantity method; replenish stocks to maintain base quantity Stock outs are still common; occurs once in three sales calls (on the same retailer) Moving average method of forecasting is used Seasonality calculated on the basis of two years historical data Variability of Demand due to changes in schemes is not captured well enough Material Management needs to improve, stocks often expire in store, no systematic method of shipping Channel Partners (DCs) reorder based on heuristics Because lead time is short, 1 day, problems have remained hidden Model not sustainable when distances increase 1 2 3 PepsiCo Today
18. Sub Distributor Operations Key Questions How to measure their efficiency? Are they sustainable? Improve them or Remove them? Should investments be made on sub distribution? Broad Aspects to be Looked at Operational Efficiency Loyalty Methodology Adopted Factor Rating Method
19. Theoretical Framework OPPORTUNIST TRUE ENTREPRENUER NEEDS TRAINING INDIFFERENT EfficiencyofOperations LOW HIGH LOWHIGH Loyalty
20. Parameters RATO: Ratio CSMO: Comparison with Super Distributor's Modus Operandi CBPSM: Comparison with best performing sub distributors Metrics QUALR: Qualitative Ratings
21. Outcome 3 1 2 45 6 EfficiencyofOperations LOW HIGH LOWHIGH Loyalty OPPORTUNIST TRUE ENTREPRENEUR INDIFFERENT NEEDS TRAINING Guha & Roy Ent. Tara Maa Ent. Munna Stores. Saraswati Ent. Annapurna Agency Sunita Ent.
22. Introduction and Executive Summary Company Background Issue and Objectives of the Study Observations and Findings Analysis & Suggestions Q & A Todays Discussion
23. Where are we and how to move forward: Ideas for Today & Tomorrow Initiative Areas What is Needed How can it be done Distribution & Logistics Reduce Waiting Time for retailers Ensure Greater Security of Stock in Transit Plan logistics better, negotiate with DCs to invest in capacity Improve packaging material used Issue guidelines to all DCs to operate in a standardized manner Train Employees on better material