11-08-2012, 04:55 PM
DESIGNING LOYALTY PROGRAMME FOR ARVIND MILLS LTD
Textile_Arvind Mills.doc (Size: 1.81 MB / Downloads: 56)
BACKGROUND OF THE STUDY
Statement of the problem
“Designing a loyalty program for the channel partners of Arvind Mills Ltd”
Channel partners as a phrase is used to describe a company that partners with a manufacturer or producer to market and sell the manufacturer's products, services, or technologies— usually through an affiliate partner or reseller relationship.
Channel partners may be distributors, vendors, retailers, consultants, systems integrators (SI), technology deployment consultancies, and value-added resellers (VARs) and other organizations.
Importance of the problem
As mentioned above it is evident that channel partners are an integral part of the marketing value chain. For Arvind Mills, they serve as the bloodline as the channel partners especially the distributors serve as a major link between the customers and the company. If relations with the distributors and/or channel partners are strained then often the company shall face problems financially like lowered sales, low profit margins, etc in the short and long run and also lead to dissatisfied customers owing to lower or non-availability of products. This project intends at serving as an initiative to design and formulate a loyalty program for the channel partners to overcome the problems.
INTRODUCTION
About the company
Arvind Limited started with a share capital of Rs 2,525,000 ($55,000) in the year 1931. With the aim of manufacturing the high-end superfine fabrics Arvind invested in very sophisticated technology. With 52,560 ring spindles, 2552 doubling spindles and 1122 looms it was one of the few companies in those days to start along with spinning and weaving facilities in addition to full-fledged facilities for dyeing, bleaching, finishing and mercerizing. The sales in the year 1934, three years after establishment were Rs 45.76 lakh and profits were Rs 2.82 lakh.
In the mid 1980’s the textile industry faced another major crisis. With the power loom churning out vast quantities of inexpensive fabric, many large composite mills lost their markets, and were on the verge of closure. Yet that period saw Arvind at its highest level of profitability. At this point of time Arvind’s management coined a new word for it new strategy – Renovision. It simply meant a new way of looking at issues, of seeing more than the obvious and that became the corporate philosophy.
The national focus paved way for international focus and Arvind’s markets shifted from domestic to global, a market that expected and accepted only quality goods. Cottons were the largest growing segments. But where conventional wisdom pointed to popular priced segments, Renovision pointed to high quality premium niches. Thus in 1987-88 Arvind entered the export market for two sections -Denim for leisure & fashion wear and high quality fabric for cotton shirting and trousers. By 1991 Arvind reached 1600 million meters of Denim per year and it was the third largest producer of Denim in the world.
In 1997 Arvind set up a state-of-the-art shirting, gabardine and knits facility, the largest of its kind in India, at Santej. With Arvind’s concern for environment a most modern effluent treatment facility with zero effluent discharge capability was also established.
Year 2005 was a watershed year for textiles. With the muliti-fiber agreement getting phased out and the disbanding of quotas, international textile trade was poised for a quantum leap. In the domestic market too, the rationalizing of the cenvat chain and the growth of the organized retail industry was likely to make textiles and apparel see an explosive growth.
Arvind has carved out an aggressive strategy to verticalize its current operations by setting up world-scale garmenting facilities and offering a one-stop shop service, by offering garment packages to its international and domestic customers.
FINDINGS AND ANALYSIS
Based on the questionnaire as in Annexure 1, certain problems were identified from the end of the distributors. Some of the problems were generic and some specific to Arvind Mills. The main problems identified were
1. They have to collect the invoice from the company, whenever they place an order and have to make payments against them to the company. No system of delivering the invoice at their respective offices, and collection of the payments
2. Problem with the attitude of people working in the company like not picking up the phone calls, not attending the channel partners properly, not calling them back, etc
3. Confirmation needs to be taken about the given order very often with the company’s marketing officials because they modify it according to their availability of stock
4. New ERP system enrolled by the company - a number of problems have been occurring from the company’s side in terms of integration
5. Problems with the invoice - high level of difficulty is identifying the details of the invoice in terms of category number, font size, order details,
6. No clear policy for the sales return - Try to compensate it with the No Claim Bonus.
7. The fault of the marketing officials have to be borne by the distributor - For example Demand of a specific denim cloth is 150 tonnes, and if by mistake it is entered 1500 tonnes in the ERP system, a long procedure has to be followed to modify it again
8. Shortage of length - No one listens to the complaint regarding this issue. And if it has been considered, then a company official comes after 7 to 10 days to have a look at it, but again no action is taken.
9. Poor after sales service - For example: If suppose denim fabric gets wet in the rain before reaching it to the distributor, company does not held herself responsible and does nothings about it.
10. Sample size – Lack of focus on the sample size. More often than not, the distributors face the problem of shortage of samples which disrupts their functioning and leads to low demand from the distributors end.
11. No support from the company’s side on non-moving items – distributors are often faced with the problem of non – moving items as Arvind Mills does not provide any support in any way on that front.