Hindustan Unilever Limited is Indias largest consumer goods company located in Mumbai, Maharashtra. It really is held by the British-Dutch company Unilever which manages 52 bulk stake in HUL. Its products include foods, drinks, cleaning agencies and personal maintenance systems.
HUL was made in 1933 as Lever Brothers India Small and happened in 1956 as Hindustan Lever Limited via a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Investors Ltd. It really is headquartered in Mumbai, India and has an employee strength of over 16, 500 employees and contributes to indirect work of over 65, 000 people. The business was renamed in June 2007 as "Hindustan Unilever Limited".
Lever Brothers started its actual businesses in India in the summertime of 1888, when crates filled with Sunlight soap pubs, embossed with the words "Made in England by Lever Brothers" were delivered to the Kolkata harbour and it started an era of marketing top quality FAST PACED Consumer Goods (FMCG).
Hindustan Unilever's distribution includes over 2 million shops across India straight and its products are available in over 6. 4 million stores in the united states. According to Nielsen general market trends data, two out of three Indians use HUL products.
We have examined the syndication network of HUL from this aspects:
Evolution of HUL's circulation network
Initiatives used for channel member management.
Field force management
HUL's syndication network has improved after a while. The first phase of the HUL distributionnetwork acquired wholesalers placing volume orders straight with this company. Large vendors also placeddirect orders, which comprised almost 30 percent of the whole orders accumulated.
The companysaleman grouped each one of these orders and located an indent with the Head Office. Goods were dispatched tothese markets, with the corporation salesman as the consignee. The salesman then gathered and distributed the merchandise to the respected wholesalers, against cash payment, and the money was remitted to the business. The emphasis of the second stage, which spanned the decades of the 40s, was to provide desired products and quality service to the company's customers. To be able to accomplish that, one wholesaler in each market was appointed as a "Registered Wholesaler, " a stock point for the company's products for the reason that market. The business salesman still protected the market, canvassing for purchases from the rest of the trade. Then distributed shares from the Registered Wholesaler through distribution units managed by the company. The Registered Wholesalersystem, therefore, increased the distribution reach of the business to a more substantial amount of customers.
The showcase of the third phase was the idea of "Redistribution Stockist" (RS) who changed the RWs. The RS was necessary to provide the syndication units to the business salesman. The next characteristic of this period was the establishment of the "Company Depots"system. This technique helped in transshipment, volume breaking, and since a stockpoint to minimise stockouts at the RS level. Recently, a substantial change has been the substitute of the business Depot by a system of alternative party Carrying and Forwarding Realtors (C&FAs). The C&Fas act as buffer stock-points to ensure that stock - outs did not take place. The C&FA system has also resulted in cost benefits in conditions of direct travel and reduced time lag in delivery. The main advantage has been increased customer service to the RS. The role performed by the Redistribution Stockists includes: Funding securities, providing warehousing facilities, providing manpower, providing service to vendors, employing promotional activities, extending indirect coverage, reporting sales and stock data, demand simulation and screening process for transit damages
The distribution network of HUL is one of the main element strengths that help it to provide most products to almost any place in the country from Srinagar to Kanyakumari. This includes, maintaining favorable trade relationships, providing innovative incentives to vendors and arranging demand technology activities among a bunch of other things. Each business of HUL collection has custom-made the network to meet its goals. The most obvious function of providing the logistics support is to get the company's product to the end customer.
HUL's products, are sent out through a network of 4, 000 redistribution stockists, covering 6. 3 million retail outlets reaching the entire urban populace, and about 250 million rural consumers. You will discover 35 C&FAs in the country who give food to these redistribution stockists regularly. The overall trade comprises grocery stores, chemists, low cost, kiosks and general stores. Hindustan Unilever provides tailor made services to each of its route partners. It is rolling out customer management and offer chain functions for partnering growing self-service stores and supermarkets. Around 2, 000 suppliers and associates provide HUL's 40 creation plants which are decentralized across 2 million square a long way of territory.
Schematic of HUL's Circulation Network
The company has taken all markets with populations of below 50, 000 under one rural sales organisation. The team comprises an exclusive sales force and exclusive redistribution stockists. The team focuses on building superior option of products. In rural India, the network immediately protects about 50, 000 villages, achieving 250 million consumers, through 6000 substockists.
HUL approached the rural market with two criteria the convenience and viability. To service this section, HUL appointed a Redistribution stockist who was simply responsible for all outlets and all business within his particular town. Inside the 25% of the accessible market segments with low business potential, HUL allocated a sub stockist who was simply responsible to gain access to all the villages at least once in a fortnight and send stocks to those marketplaces.
This substockist distributes the company's products to outlet stores in adjacent smaller villages using transportation appropriate to interconnecting roads, like cycles, scooters or the timeold bullock cart. Thus, Hindustan Unilever is trying to circumvent the barrier of motorable streets. The company together uses the inexpensive route, suitably ncentivising those to disperse company products. The most common form of trading remains the grassroots buyandsell setting. This allows HUL to impact the retailers stocks and shares and amounts sold through credit expansion and trade discounts. HUL launched this Indirect Coverage (IDC) in 1960s. Under the Indirect Coverage (IDC) method, company vans were replaced by vans owned by Redistribution Stockists, which serviced a go for band of neighbouring market segments.
Distribution of goods from the making site to C & F realtors happen through either the vehicles or rail roads with respect to the time factor for delivery and cost of travel. Generally the manufacturing site is located such that it covers a bigger geographical section of India. From your C & F real estate agents, the goods are transferred to RS's by means of trucks and the products finally make the 'last mile' based on the neighborhood popular and cheap method of carry.
Direct marketing: Providing products through direct working with consumers bypassing intermediaries.
Traditional methods: frigid calling, telephone advertising, and door-to-door calling, telemarketing, mail order, direct-mail offering, direct radio offering, magazine and Television advertising
The main benefits of selling direct are that there is no need to share income and the maker has complete control over the sales process. Products aren't sold local those of rivals either.
Specific market factors that could encourage direct selling are -
need for a specialist sales force, to show products, provide detailed pre-sale information and after-sales service
Unwillingness of retailers, distributors, retailers and other intermediaries to market the product
Clout of rivals over existing circulation channels
There are significant costs associated with selling direct which may be higher than the expenses associated with using an intermediary to generate the same degree of sales. However, there are several potential features of using an intermediary.
Greater efficiency in distribution logistics
Lower overall costs (even after including margins or commissions)
Variety seeking behavior of consumer at point of sale
Lack of resources / competence for manufacturers in immediate selling
It is the machine the marketer reaches the intended last user by using others. These resellers generally take ownership of the product, though in some cases they could sell products on a consignment basis (i. e. , pay just the supplying company if the merchandise comes). Under this technique intermediaries may be likely to assume many duties to help sell the product. The indirect methods include -
Under this technique the internet marketer engages another party who then markets and distributes right to the final customer. This is most likely to occur when the merchandise is sold through large store-based retail chains or through trusted online retailers, in which particular case it is referred to as a trade selling system.
This indirect circulation system gets the product moving through two or more distributors before reaching the final customer. The probably scenario is whenever a wholesaler acquisitions from the manufacturer and sells the merchandise to retailer
This model creates a symbiotic collaboration between HUL and its consumers. Started in the later 2000, Project Shakti had empowered Hindustan Lever to gain access to 80, 000 of India's 638, 000 villages. HUL's partnership with Self Help Organizations(SHGs) of rural women, is becoming a protracted arm of the business's procedure in rural hinterlands. Job Shakti has already been long to about 12 states- Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan, Maharashtra and West Bengal. The respective state governments and many NGOs are positively mixed up in effort. The SHGs have chosen to partner with HUL as a business venture, equipped with training from HUL and support from administration agencies worried and NGOs. Armed with micro-credit, women from SHGs become direct-to-home vendors in rural marketplaces.
The model contains sets of (15-20) villagers below the poverty series (Rs. 750 per month) taking micro-credit from banks, and using that to buy our products, which they will then immediately sell to consumers. Generally, a member from a SHG chosen as a Shakti business owner, commonly referred as 'Shakti Amma' gets securities from the HUL rural distributor. After being trained by the business, the Shakti entrepreneur then provides those goods directly to consumers and stores in the community. Each Shakti business owner usually service 6-10 villages in the population strata of 1 1, 000-2, 000. The Shakti business people are given HUL products on a `cash and take basis'.
To improve the efficiency of a process, business business by simplifying or eliminating
unnecessary steps, using modernizing techniques, or taking other techniques. To focus on the needs of the inaccessible market with high business potential HUL initiated a Streamline effort in 1997. Task Streamline is an progressive and effective distribution network for rural areas that focuses on extending circulation to villages with significantly less than 2000 people by making use of rural sub-stockists/Legend. Vendors who are located in these very villages. As a result, the distribution network directly protects as of this moment about 40 % of the ruralpopulation. Under Task Streamline, the products are distributed from C & F Providers to Rural Distributors (RD), who has 15-20 rural sub-stockists attached to him. Each of these sub-stockists / star sellers is situated in a rural market. The sub-stockists then perform the role of driving a vehicle syndication in neighboring villages using unconventional means of carry such as tractor and bullock carts. Project Streamline being truly a cross functional effort, the Star Vendor sells from detergents to personal products. Top quality servicing, in terms of rate of recurrence, credit and full-line availability, is usually to be provided to rural trade as part of the newdistribution strategy.
It is the business's arm in the Direct Selling channel, one of the speediest growing in India today. It already has about several lakh consultants - all independent business owners, trained and guided by HLN's expert professionals. HLN has already disperse to over 1500 towns and locations, covering 80% of the metropolitan population, guaranteed by 42 offices and 240 service centres in the united states. It presents a variety of customised offerings in Home & Personal Care and Foods.
The New Settlement arrange for HLN companions provides new enjoyable ways of getting substantive income in addition to offering rewards like income showing through the impressive idea of "pools" Mom Depot and with time System. To be able to rationalise the logistics and planning activity, an step has been the forming of the Mom Depot and Just with time System (MD-JIT). Certain C&FAs were chosen in the united states to act as mother depots. Each of them has a minimum volume of JIT depots fastened for stock requirements. All brands and packs required for the set of markets which the MD and JITs service in a given area are sent to the mom depot by all developing units.
The JITs pull their requirements from the MD on the weekly or bi-weekly basis. Leveraging It HUL customers are serviced on continuous replenishment. That is possible because from it connectivity across the extended supply chain of about 2, 000 suppliers, 80 factories and 7, 000 stockists. This complex network using its words and data communication facilities has linked more than 200 locations all over the country, including the head office, branch office buildings, factories, depots and the key redistribution stockists. They also have combined backend processes into a typical Shared Service infrastructure, which supports the units across the country. All these initiatives along have enhanced operational efficiencies, better the service to the customers and have helped bring us closer to the marketplace.
The RS Online initiative, launched in 2001, aims at joining Redistribution Stockists (RSs) via an online system. It now addresses stockists of the Home & Personal Health care business and Foods & Drinks in near 1200 cities and cities. Alongside one another they account for about 80% of the company's turnover. RS Net is one of the major B2B ebusiness initiatives ever performed in India. It offers linkages with the RS's own deal systems, permits monitoring of shares and supplementary sales and optimises RS's purchases and inventories on a daily basis through online discussion on purchases, despatches, information sharing and monitoring. The IT-powered system has been carried out to supply stocks and options to redistribution stockists on a continuous replenishment basis. Today, the sales system gets to know every day what HUL stockists have sold to almost a million retailers in the united states. Information on secondary sales is currently on RS Net every day. RS Net is part of Job Leap. Project Jump begins with the provider operates through the factories and depots and gets to up to the RSs. This ensures HUL's expansion by ensuring that the right product is offered by the right place in the right amounts and at the right amount of time in the most affordable manner. Jump also is aimed at minimizing inventories and bettering efficiencies right through the extended source string. RS Net has come as a make multiplier for HUL Way, the business's action plan to not only maximise the amount of outlets reached but also to achieve leadership in every wall socket. RS Net has enabled stockists to put orders on a continuing Replenishment System. This in turn has unshackled the field drive to solely give attention to extra sales from the stockists to sellers and market activation. It has also empowered RSs to provide better service to shops. Concurrently, HUL is servicing the rural market, key metropolitan outlets, and the present day trade as a single concern. In 2000, HUL determined improved supply string management as a critical business top priority and launched a comprehensive initiative, "Project Step, " tasked with increasing company/distributor responsiveness, lowering inventory buffers, and optimizing planning and arranging. HUL chose the Adexa iCollaboration collection for facilitating centralized monitoring of the SCM, live customer /company cooperation, and integrating demand and circulation planning with creation scheduling.
With the aggregated view of data provided by the iCollaboration collection, HUL could combine sales and syndication attempts on the diverse product lines, which led to significant cost savings on the price side for inventories and circulation. HUL updates inventory positions, shipments and customer requests on a daily basis with these software packages and can get a pulse on the market real-time.
Hindustan Lever Small (HUL) has two types of channel selling -
i. Regular (traditional) retail route,
ii. Direct Advertising Route in the name of Hindustan Lever Network (HLN).
HUL has a well entrenched high syndication model which comprises of C&FAs, Redistribution stockists, wholesalers and sellers (as shown previous). Hindustan Unilever's distribution network named one of its key advantages. Its focuses on Product availableness, Brand communication, and higher numbers of brand experience.
HUL's Sales Break up through different channels:
Sales Break-up Through Different Channels
Modern Retail :7%
General Urban Trade: 60%
Rural Areas: 33%
Typically, the goods produced in each one of the HUL's 40 factories are sent to a depot by using a carrying and forwarding agent (C&FA). The business has its depot in every state of the country. The C&FA is a third party and gets servicing charge for stock and delivery of the merchandise. In each town, there reaches least a redistribution stockist (RS) who needs the products from the C&FA and markets them to shops.
The HUL management came to the realization certain issues with the existing sales model. First, the model was not practical for small cities with small society and small business. HUL found it expensive to appoint one stockist entirely for each and every town. Second, the retail trend in the country has changed the pattern the clients shop. Large retail home service shops or modern trade shops were becoming commonplace.
In response to these problems, HUL redesigned its sales and circulation route and the new system is known as 'diamond model' in the company. At the top end of the diamond, there are the self service retail stores which constitute about 10% of the total FMCG market. The middle, fatter part of the diamond represents the profit-center founded sales team. In underneath of the pyramid is the rural marketing and syndication which makes up about 20% of the business. Due to the new distribution plan the company has planned to reduce the amount of Redistribution Stockists in small cities.
For example, the amount of redistribution stockists in Jharkhand have been reduced from 3 to at least one 1 last year.
Sales Margin: 4. 76% which includes cash discount, incidental expenses.
Modes of transportation used: Rickshaw, tempo.
Incentive techniques: Before 2000 vacation packages and travels but after 2000 no noneconomic incentive for RS.
Software systems and Information System: Synchronized daily and the system changes any information/ motivation plans / sales information etc to and from the common shared platform.
Areas of Procedures: Marked for each and every of the RS.
Selling Functions: RSs provides the goods toWholesaler (gets 1. 5 % maximum. discount from RS) Merchants (gets 1. 0% maximum. discount from RS)
To meet the ever-changing needs of the consumer, HUL has establish up a distribution network that ensures supply of all their products, in all shops, at all times. This includes, preserving favourable trade relations, providing innovative incentives to merchants and arranging demand generation activities among a web host of other stuff.
The important activities that HUL field sales power does are (i) concentrate on chasing and (ii) confirming on a daily basis. Account information is retained on palmtops given by HUL.
HUL has limited the network route reselling to categories of Home & Personal Attention (HPC) and Food products with exclusive brands for this channel. That is, these particular brands (products) are all exclusive to HLN, specifically developed for the Direct Advertising channel, and not available in the retail route. The overall trade comprises grocery store stores, chemists, wholesaler, kiosks andgeneral stores. Hindustan Unilever services each with a tailor made mixture of services.
HUL has considered the following initiatives to improve its circulation network: Setting up a full scale sales organisation composed of key bank account management and activation to impact, fully engage and service modern retailers as they emerge, Servicing Channel lovers and customers with continuous daily replenishment, leveraging level and building expertise to service Modern Trade and Rural Market segments, delayering of sales team to improve response times and service levels, revamping of its sales company in the rural marketplaces to fully meet the emerging needs and increased purchasing power of the rural human population. HUL's circulation network in rural India already directly protects about 50, 000 villages, reaching about 250 million consumers through about 6, 000 sub stockists.
Implementation of source chain system that links stockists across the country, and also contains a backend system connecting suppliers, all company sites and stretching right up to stockists. IT tools have been deployed for connectivity across the prolonged supply chains. Backend functions have been merged into a standard Shared Service infrastructure. Launching of Project Shakti through which the company can extend its functions in villages. HUL in addition has included several NGOs and express government authorities as the effort helps rural women to boost their budget. Launching of HUL Network to leverage the route of direct offering by showing customised offerings in 11 home and personal good care and food categories. Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer standardised services, good strategy to leverage the collateral of its brands through relevant services, finding out Innovative ways to attain out to its consumers, particularly in rural areas byleveraging nonclassic media like wall structure paintings, movie theater vans, weekly marketplaces (haats), fairs and celebrations.
Initiating the idea of Super Value Stores (SVS) in cities to partner traditional stores to provide a selection of services which range from managing their inventory to establishing POS (point of sales) banners. Furthermore, to improve up traditional retail in the face increasing inhighways made by large, modern retailing chains like Spencer's, Reliance Fresh etc (whereHUL is squeezed harder for discount rates), HUL began restructuring some of the chosen SVSs into the form of selfservice retail retailers a la modern retails. That is to protect & keep up with the competitive edge that HUL has over its biggest competitors in the other markets (e. g. , P&G), with its very deep syndication reach through traditional retail.
Launched the Unicare design with upmarket pharmacies and stores to sale its high grade brands. Starting several initiatives for traditional stations in order to boost its functions at the frontend by producing skills for stockists' sales force. Under 'Task Dronacharya', the FMCG major continually imparted training to over 10, 000 stockist salesmen.
Launching of several promotional plans for existing wholesalers and distributors. For instance, it has began the 'Vijeta Rishta Jeet Ka' structure this past year to provide a program for the wholesaler and HUL to grow the business enterprise by earning details and redeeming them.
Eventhough, the Source String has been detailed in a concise manner here, each of the levels may have a number of sublevels. In certain respects, the business has cut down on the amount of intermediaries by themselves as they discovered that maintaining a broad intermediary network is not fiscally feasible.
HUL has itself franchiseed certain products through dedicated stores like Pond's studio where the level of intermediaries are limited. Still, currently those products are in the prime segment.
HUL has started partnering with select store in "SuperValueShops" reducing all the intermediaries, but again reachability of the shops to the complete populace will be a concern.
In the hypothetical situation, where HUL retails all its product only through its existing network of SVS, it would be inconvenient and more costly for a huge range of consumers to buy from there if we include the conveyance charges incurred by the client. Moreover the customer wont have the ability to buy perishable products of the distance is very large since the product would get spoiled by enough time it grows to home.
HUL being the largest FMCG company in the country can't afford to reduce large geographies in the country anticipated to these reasons. It would want to reach out to every possible client. Within the first look, it appears that the product cost increases as the number of intermediaries increase, but due to the previously listed reasons of convenience and lesser visiting cost for end consumer, it will always be desireable to truly have a certain number of intermediaries.
We did research on a brand HUL and examined its marketing route structure and also the way the complete system works. In its network, we recognize that there are intermediaries and less of direct selling. This method became best for HUL which includes large penetration if it requires to work alone without intermediaries, it would lead to high inventory costs and hence price of goods also boosts.
Hence it is good for HUL to have a certain level of intermediaries to lessen the expenses on the company and stop that cost from being transferred to the consumers.
This report talks about HUL and its own marketing channel. It is a niche issue and HUL being one of the primary FMCG brands and a brandname operating for such a long time has streamlined the procedure. This limited out research scope. But established practices were comprehended and appreciated.
We been employed by only with FMCG sector and a particular brand. This may hold true for HUL but will never be applicable for other brands in neither same FMCG category nor in other categories. Many factors like penetration, amount of vendors, margins of distributors, inventory levels, product life time etc play a crucial role in determining costs incurred in the product. This study can be executed in others categories and sectors to understand the impact of middlemen on the price of the products. Hence a vast scope is designed for researchers upon this issue.