Good Food, Good Life
Nestle
Nestl was founded in 1867 by Henri Nestl in Switzerland
Merged with the Anglo-Swiss Condensed Milk Company in
1905
Today it is the world's largest and most diversified food
Company, and is about twice the size of its nearest competitor
in the food and beverages sector.
Nestl employ around 250,000 people from more than 70
countries and have factories or operations in almost every
country in the world
Nestl Principle
Nestl is based on the principle of decentralization, which
means each country is responsible for the efficient running of
its business - including the recruitment of its staff.
Nestle India Products
Nestl India - Famous brand names
Milk Products & Nutrition
Beverages
Prepared Dishes & Cooking
Aids
Chocolates &
Confectionary
Nestle Milk Nescafe Classic MAGGI 2-MINUTE Noodles Nestle Kitkat
Nestle Slim Milk Nescafe Sunrise
Premium
MAGGI Imli Pichkoo Nestle Munch
Nestle Dahi Nescafe Cappuccino MAGGI Sauces Nestle Bar One
Nestle Bhuna Jeera Raita Nescafe Sunrise MAGGI Healthy Soups Nestle Milky Bar
Nestea Nestea Iced Tea MAGGI CUPPA MANIA Nestle Polo
Nestle Milkmaid MAGGI Vegetable
Atta Noodles
Nestle Eclairs
Nestle Everyday Whitener MAGGI Pazzta
Distribution System
Competitive edge over its existing rivals.
Nestl has its own distribution networks equipped with all
necessary transportation facilities.
They transport their products at major regional sales offices,
which are situated at different cities of India.
These sales offices (distribution centres) have their
own vans with sales people who sell and transport goods to
the small retailers.
Inbound Logistics
Raw Cocoa
Processing
Cardboard/Material
manufacturer
Packaging
Outbound Logistics
Packaging
Transportation
Wholesaler
Grocery Store Customer
Mother Godown
Carriage and Forwarding Agent
Distributor Super-Stockist
Wholesaler Retailer Re-distributor
Retailer
Nestle Distribution Channel
End Customer
Nestle Distribution Channel
Products are sent to the C&F Agents of the company from its
Manufacturing Unit.
Later it flows from the Manufacturing Unit to Distributor
and Super Stockist.
The Distributor is responsible to manage the availability of
products in his area
Super Stockist supplies the goods to the Re-Distributor who is
in charge of managing the availability outside the region of
the Distributor.
The Distributor and Re-Distributor, then supplies the products
to Wholesaler and Retail in their respective region or area.
Nestle Distribution Channel
C & F Agent
(Karnataka)
Distributors D1
(Bangaluru)
Distributors D2
(Mysore)
Super Stockist
Re-Distributors
(Gokarna)
Re-Distributors
(Kundapur)
Selection of Distributors
The Criteria followed are:
1. Capital Investment
Depends on both present and future capital investments by distributors
Amount vary from Area-wise to marketwise
2. Relevant experience
Prior experience in FMCG sector is preferred to save on training expenses
Distributor should not be dealing in Competitors product
Should handle entire range of Nestle products (Both fast and slow moving SKUs)
3. Infrastructure
Godowns / Storage space with appropriate refrigeration as per product needs
Delivery vehicles
Salesmen
4. Companys discretion based on markets served
Terms of Operation
Sales force of distributor is divided into 3 heads namely:
1. Milk Products
2. Chocolates
3. Other products
All the 3 teams visit the retailers once in a week on different
days
Sales force is complimented by a weekly visit to the district by
the sales executive of the company
Idea is to supplement the lags in the distribution by
wholesaler and in certain specific cases to push extra stock in
the market
Terms of Operation
Company policies
1. Credit Policy
Distributors are termed as Cash Distributors because
the company charges the distributors before the stock
is delivered
Company has connected the distributor online and
the transactions happen online
The distributor sells goods on credit; the period of
credit ranges from 1-2 week
The wholesaler allows discount of 1% on cash
payment (policy followed by the wholesaler)
Terms of Operation
2. Stock Policy
As per the company regulations the distributor is supposed to
maintain a stock of 3 weeks which in monetary terms equals to
Rs. 30 lakh for the distributor.
Stock is formalized by the company; the dealer can negotiate on
3-4 end days, the stock policy is formed for the month
Distributor to push in slow moving SKUs clubs them with fast
moving SKUs for the retailers
Company DUMPS significantly on the distributors, the distributor
has to mange the supply by the company
Terms of Operation
3. Lead period
Lead periods in providing stocks to the dealers differs from the
SKU and quantity ordered
Some SKUs like dairy products are delivered correspondingly
with taking order but some are sent from the warehouses
A higher quantity ordered has to be replenished from the
warehouse
4. Return Policy
Company follows a policy of return when the product has past its
expiry date, damaged or has a defect
Replenishment is done with cash and happens at the end of
every six months
5. Return on Investment
Company does not give any guarantee to the distributor
Terms of Operation
6. Storage policy
Distributor maintains Cold Storages and Deep Freezers for the
storage of the products
Distributor has to bear all expenses pertaining to Infrastructure
requirements
7. Sales Force
The remuneration and all other expenses for sales force are
borne by the distributor.
Incentives - Margins
Perfetti Cadbury Nestl Lotte Wrigleys Colgate
Super
Stockist /
Distributor 2.5 2
5.7
2.5 2 2
Re-
Distributor
/
Wholesaler 4 4
3.7
6 5 5.6
TOTAL 6.5 6
9.4
8.5 7 7.6
Incentives - Schemes
Specific schemes which spread over 2 ~ 3 months
Encourage specific target achievements
Targets are given as indexed growth rates based on weights
For e.g.
10% growth for distributor having sales of Rs. 20000 will different from
distributor having sales of Rs. 1 lakh
Prizes in form of additional margins
Certificate of acknowledgement for achieving the target
Motivation of Channel Partners
Proud to be Nestle Super awards for super achievers
Open to
Area Sales Managers
Sales Officers
Cash Distributors
Distributor Salesman
Merchandisers
How does it Work?
1. Qualifying Criteria
1. 100% achievement of internal target for 3
rd
quarter (Invoicing)
2. Min. 10% RDBN turnover growth over last year 2
nd
quarter
Motivation of Channel Partners
2. Ranking
All ASMs who fulfil above criteria are ranked on the basis of
Index.
Top ASMs(as fixed by the branch) win prizes
INDEX = %RD turnover growth * absolute value increase
The winning team comprise of;
All SOs in the ASM team
Two top ranked CDs in each SO Zone
(Index = %RD growth * absolute turnover increase)
Two distributor salesmen in each of the top two CD
One Merchandiser in each of the top two points ( Performance will
be assessed by S.O. on quality of merchandising achieved)
The Top ranked ASM team also wins a TEAM TROPHY and
certificates
Dealership in Practice (DIP) training
Training programs for C&F agents which includes modules on:
Nestle Quality System
Good Warehousing Practices (GWP)
Good Distribution Practices
Major aspects of the training program are;
1. Stacking as per norms
2. Good Warehousing practices
3. Accounting
4. Handling of Bad goods
5. Temperature control for chocolates and dairy products
Target setting
Target setting is a result of negotiation between Distributor and
Company
Mid month targets for next month are set around 5
th
-10
th
of that
month
Targets are set for Sales officers, ASMs and branch managers which
are driven down the hierarchy
Distributors can negotiate this targets in range of +/-10% by end of
month
Confirmed sales are set as weekly targets
Target setting
Responsibility
1. Branch manager : Co-ordinating targets of factories and individual
product managers
2. Sales officer : Focus is on the redistribution targets, also called
as secondary invoicing (from cash
distributor to the redistributors)
3. ASM : Primary invoicing ( From C&S to cash distributor)
is more relevant
4. Company : Primary as well as secondary invoicing
Channel conflicts
Conflicts due to:
1. Wholesalers
Wholesalers are not a part of the formal structure of Nestle
Indias distribution network
Make bulk purchases from the distributors directly thereby
leveraging on the margins
Typically the wholesaler gets a margin of about 2%-3% from the
distributor , of this he retains 1 % and passes on the remaining
2% as discount to the retailer
This discount induces the retailers to buy from wholesalers
2. Sales Officers
Account of invasion of anothers sales area by a companys sales
officer under pressure of sales target
Physical distribution system
Seven Manufacturing Facilities
1. Moga (Punjab)
2. Choladi (Tamil Nadu)
3. Nanjangud (Karnataka)
4. Samalkha (Haryana)
5. Ponda (Goa)
6. Bicholim (Goa)
7. Pantnagar (Uttarakhand)
Ownership Transfer
Factory
Mother Godown
C & S
Agent
C & S
Agent
C & S
Agent
CD CD CD
Stockist
Transfer Chalan
Transfer DA
Invoicing against payment
Logistics Structure
Logistics comprise of Road Transportation through Container trucks
Distribution from point of Distributor warehouse to Retailer shops /
Modern trade shops is handled by Distributor
Distributor has fleet of mix of transport vehicles right from refrigerated
vans to small tempos to supply to Pan shops
Company is connected to Distributor / Super Stockist through SAP for
online order booking and processing
Stock in Transit module is installed at Distributors network systemsf or
tracking the supply of goods
Thank you
