20-11-2012, 02:16 PM
DISTRIBUTION STRUCTURE OF PIDILITE INDUSTRIES
DISTRIBUTION STRUCTURE.doc (Size: 197 KB / Downloads: 144)
COMPANY BACKGROUND
Pidilite was established as a partnership firm, Parekh Dyechem Industries, in 1961 by Mr B K Parekh and his two brothers, SK Parekh and H K Parekh. It was converted into a private limited company in 1969. A group company Kondivita Industries was merged with the company in 1984. Its name was changed to PDI Chemicals Limited in 1988. In 1989, another group company. Pidilite Industries Ltd was merged with PDI Chemicals, and the name of the merged entity was changed to Pidilite Industries. M/s Triveni Chemicals, another group company, was also merged with Pidilite in 1992. While the Fevicol brand, launched in 1959, has been in existence for almost 40 years, Pidilite’s consumer products division was set up in 1984, when the company decided to build up a strong distribution network.
Pidilite is India’s largest manufacturer of adhesive. Pidilite’s mainstay of earnings is consumer & industrial adhesives and sealants, which contribute to 60% of turnover. Its other product lines are art materials, construction/ paint chemicals, industrial and textile resins and organic pigments & preparations. Its largest brand Fevicol is synonymous with the category itself. The company has in total 40 brands spanning 400 industrial and consumer products.
DESCRIPTION OF CHANNEL PARTNERS
C&F Agent
These agents have infrastructural and transportational facilities and are the responsible for the transfer of goods.No sale takes place at this level.These C&F agents get monthly emolumentsn from the company for their service.
WSS
The company appoints various wholese stockist who are a very important link between the C&f Agents and the retailers. The number of these stockist is not fixed and varies according to the sales potential and geographic size of the region.
Primary sale takes place at the Wholesale stockist. Hence their selection, motivation and evaluation becomes very important to the company.
SALES STRUCTURE: PIDILITE INDUSTRIES
These divisions are looked after by their independent National Sales Heads responsible for their respective divisions. Below these heads, their entire division is divided into zones headed by the Regional Sales Managers who are next in the sales hierarchy.
In our concerned division, i.e. FE , the entire country is divided into 6 zones headed by respective RSMs.
Next in line are the Area Sales Managers who report directly to the RSMs. FE division has a ASM per eight territories. Under them are the Territory Sales Incharge who act as an interface between the company, distributors and retailers. Every WSS has one TSI looking after their order and requirements. To supplement the TSI and ensuring closer monitoring of the retailers needs and payments, the distributors themselves recruit sales representatives called Interim Sales Representatives( ISRs). One distributor normally has 2-3 ISRs depending on the expanse and value of his territory.
Relevant Experience :
It is imperative that the distributor has had some prior experience as a channel member in the FMCG sector so that no training is required to be imparted to him on aspects of the business. The distributor should not be dealing in competitor’s products and should be able to function as a dedicated channel for Pidilite. Also, he should have atleast 2-3 years of experience as a distributor in the market. But most importantly the business should not be totally driven by his staff rather has complete self involvement of the WSS.
RATIONALE OF DIFFERENT MARGINS FOR WSS.
The basic logic of giving higher margins to lower class WSS is that as the business of the stockist is lower in terms of value, he may not be able to make up for his infrastructural costs which are accrued in storing and transportation.
In case of Class A wss,he is able to generate enough volumes to justify his infrastructural costs.Hence even though his margins are lower, he is able to generate very high volumes and meet his additional costs.
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EVALUATION
Once a distributor is appointed, the company generally does not take away business from him, except when the underperformance has been observed over long periods.
While evaluating his performance, his targets performance is studied relative to that of
other distributors in the nearby area (because growth patterns may by regions). Also,if a WSS is found guilty of Stock inflow,he is terminated.
TRAINING PROGRAMMES
WHOLESALE STOKIESTS :
The WSS prove to a very important channel partner for the company as they forward the goods to the retailers and make them aware about the same. Hence, product awareness becomes a mandate for this level so as to completely understand the product utility and application. Also the company has some policies which the small distributors may find difficult to understand and thus falter in implementation.
To avoid the above situation , the company sends distribution managers from the head office to brief them about the products and also give them the complete system and functioning description. They are also elaborately told about the schemes launched by the company because they would be further responsible to ensure that retailers are rightly aware of the schemes.
This training is mostly given to the B and C class WSS.
FORECASTING AND TARGET SETTING
Target setting is a result of negotiation between the distributor and the company.
Mid month targets for the next month are given by the company at around 5th -10th of a month. These are set for the RSM, ASMs and TSI in the hierarchy and driven down by them.
At the month end the distributor can negotiate these targets in the range of +/- 10%.However ,we see that the Pidilite products have many seasonal and cyclic variation,due to the very nature of the product and their usage.Alot of forecasting is done on the suggestions of the WSS ,as they are very experienced in these variations.
SEASONAL VARIATION IN DEMAND
Though forecasting is done at the ASM level, there is always an estimation put forward by the WSS depending on seasonal variations in demand. The following graph depicts the demand in various months for different products .