Evolving Distribution

The current structure popularized by the FMCG behemoths like HLL,ITC,Amul etc is multilayered going through various intermediaries before it reaches the consumers . At the last point of sale it fights for shelf space , share of investment of the retailer ,TOMA

The inventory levels of idle , in transit inventory are large. Typically any of the companies would at least have 3000 – 4000 retailers serving their products .

And all of them continue to struggle to develop world class infrastructure , services and all of them focused in increasing the pipeline of retail stock

The future is typically a scenario where product availability is not a USP any more . It is a given , one has to be available and it cannot be a point of differentiation.

Equipping the field force in this scenario requires superior training , better automated tools and higher point of sale communication targeted to the consumer

Consumer want fresh stocks for food items, for personal care products , for just about anything –Freshness is the buzzword. The days of inventory pumping are passé as dead / old inventory “from a consumer’s point of view “ are a strict , no-no

Uniformity of tax structures , better road infrastructure , reduced –efficient manpower will all lead to removal of the traditional structure of distribution.

The future will be lesser , efficient , intelligent more sophisticated distributors who are equally or more efficient than the best of FMCG companies . They have as their strengths , local knowledge , better warehousing , tighter networking , automation . From being distributors who are just involved with making the product available , they shall become logistics , marketing managers and future brand managers for their areas.

Organizations shall reduce the pipeline inventory of in-transit / godown –backroom stocks till the time comes when they become JIT and consolidate distributors . A typical situation of BAT in Bangladesh 8 / 10 years back was when their distributors were required to just go to a cntral warehopuse , order /pay for the stocks and they would be replenished by the evening . Inventory levels in their godowns was unheard of .The sales teams had small hand-helds to record retail inventory / factory ordering /replenishment norms.

Focus shall increase more on sell-out and less on selling –in and thereafter from a forecast based ordering of a sales team it shall be come demand led requirement from the consumers.

Tighter inventory shall result in lesser dead stock , higher margins and fresh rightly priced stocks to the consumer .