next gen distributor management model jan 2007

Module 3GT Learning Series

4

The Practical D&E Guide to the Next Generation Distributor Model

2007

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�Introduction

01Introduction

�Introduction

01IntroductionDear Unilever Colleague,

The Win @ POP team has been giving special focus on enhancing our capabilities in the Developing & Emerging Markets of Asia AMET, Latin America & CEE. To Win with Customers we need to win everywhere.

Why this booklet?One of the business strategies of Unilever in D&E is to serve all consumers & shoppers whether rich or poor, whether at the top or the bottom of the pyramid. With the increasing GDP growth across D&E and the emergence of more discerning shoppers our Distributors & RTM partners have to extend beyond just making our products available to winning @ pop in a holistic manner.

This booklet gives practical guidance on realizing this new capability requirement in our Go To Market operations.

Apart from this Guide, this learning series on The Next Generation Distributor model consists of:

Toolkits which will help you to analyse the maturity profile of your distributor system.

“Rapid” Action Learning Modules which can be rolled out in your country with actionable output

E-Learning materials which colleagues can use at their own pace for personal capability enhancement.

This Series is to help serve better the 4.7 billion shoppers which Unilever D&E is privileged to cater to.

We look forward to your use of this Guide and the Toolkits to enhance your business performance and achieve outstanding growth in the D&E markets.

Mark Barnard SVP CD Asia AMET On behalf of CDLTSeptember 2006

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Contents

Introduction 03

Why Do We Need The Next Generation Distributor Model 13

Essence Of The Next Generation Distributor Model 19

Appendix: Essence Of The Next Generation Distributor Model 25

Channel Goals 43

Appendix: Channel Goals 59

Key Performance Indicators (KPIs) 93

Appendix: KPIs 109

Organisation 135

Appendix: Organisation 145

Systems 191

Appendix: Systems 203

Case Study: HLL India – The Next Generation Distributor Model 223

Contributors 246

Introduction

04Introduction

05Introduction

04Introduction

05Introduction

Unilever has a large presence across geographies in the Developing & Emerging (D&E) markets with historically strong positions in leading categories, as shown below. Unilever has been present in many of these geographies for decades.

The success of Unilever in D&E has been founded on our deep local insights and global scale on one side and our excellence in Customer & Channel Management on the other.

As Customer Development professionals our role is to ensure that this overwhelming superiority is sustained and built upon with newer and / or enhanced capabilities in all aspects of Customer & Channel Management.

With this end in mind four booklets are being created to enable us to further update our capabilities in managing General Trade and Route to Market.

These are:

Module 1 Unilever Route to Market Strategy and Design GuideModule 2 The Practical Guide to Shopper Defined Channel Management Module 3 The Practical Guide to Next Generation Distributor Management Module 4 The Practical Guide to Extending Reach through Route to

Market (RTM) Management

The ultimate objective of these Guides is to help us Win @ POP in hybrid markets.

Background

Leading Positions in Key Countries

India S. Africa Indonesia Thailand Turkey Brazil

F Cleaning

Hair Care

Face

Skin Cleansing

Deos

Tea

Savoury

Ice

06Introduction

07Introduction

Manufacturers and Retailers have begun to refocus attention on store level, and execution at the POP. It is “in store” and “at the shelf” that the most important activity for the retailer and supplier occurs: selection and purchase by the shopper!

The POP is any place where shoppers can find and purchase our brands. These venues will vary widely across and within markets. There are numerous channels and types of outlets / formats where our products can be found. In addition to traditional outlets such as Grocery Stores, Super Centres, Discounters and Cash & Carry outlets, there are convenience stores, drugstores, speciality stores, mini marts, and lots more! The common characteristic of all these different locations is the fact that shoppers will go there and will make their purchase either to buy our products or a competitors’ one. They may also decide to satisfy their original need with a product from an adjacent category, or even to delay the purchase if the desired item is not available for purchase.

In all the above locations, or in any new kind of POP that may emerge in the market in the future, our goal is to influence the shopper’s decision and make them buy our product, without delays or substitutions, by optimising on shelf availability, and ensuring that our Brand strategies are executed brilliantly.

The POP is the place where the three most important business variables: Brand, Customer / Channel, Shopper – meet.

As Customer Development (CD) professionals our job is to ensure

Achieve targeted levels of agreed range and distribution of SKU’s

Achieve recommended on shelf brand positioning and location

Manage Price on shelf effectively & ensure “right” price in every channel

Achieve adequate and appropriate promotional merchandising

Achieve quick speed to shelf for Innovation

The starting point in good POP programs is good understanding of Category Channel Strategy (output of Category Strategy and National Category Building Plan) and its implications to our local markets (covered in Module 2, The Practical Guide to Channel Management).

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•

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•

•

The Strategic Role Of Point Of Purchase (POP)

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06Introduction

07Introduction

As CD professionals, once we group POP by Channel, we are able to:

Understand more about different types of shoppers in order to better satisfy their needs.

Assess the size and growth potential of each channel.

Evaluate the competitive position of Unilever and competitors in each Channel.

Based on these insights, we will:

Maximize the use of our resources.

Develop the most appropriate organizational structure to satisfy Channel Servicing needs.

Determine the Strategy for each Channel with the adequate investment.

Define the most appropriate RTM Strategy and Design to maximize our availability & visibility through proper use of Distributors or other Route to Market (RTM) available to us.

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RTM Strategy Outline...Category Channel Strategy Development Process

ChannelAnalysis

• Channel Knowledge

• Channel Definition

• Channel Architecture

• Share / Channel

• Outlet Mapping

• Understand shopper and outlet environment

• Group outlets

• Channeldifferentiation

• What channels are our customers

OpportunityAssessment

• What are the opportunities

• What improvementcan we make

• Unilever / Competitorperformance

ChannelPrioritization

• Which channel do we need to drive

• Size of the prize

• How difficult is it to penetrate new channels

• Channel Prioritization

StrategyDevelopment

• Our objectives by channel

• Which are the 6ps directions that we need

• How can we better supply these channel given the Obj & Strategies

• Access external world

• Channel Strategy

• RTM Design (the Pricing& RTM requirements)

• Positioning

• Product Assortment

• Packaging

• Price

• Promotion

CategoryChannel Plans

• Channel Blueprint

2 43

Out

puts

Key

Que

stio

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eps

Source: Asia / LatAm Channel Strategy Documents

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Category Channel Strategy supports CD objectives, orienting decisions regarding product availability

08Introduction

09Introduction

A few points to remember…

Channel Analysis

This is the process of identifying shopper defined channels that exist in a market and helps define the channel architecture...

Channel ArchitectureThe most relevant way to understand and structure the market is by looking at the purchase and consumption behaviour of consumers.

1.

Restaurant

Catering

Leisure

Cafe / Bar & Licensed Trader

Hotel / Trader

Non-FoodOoh Outlets

Drug Stores

Non-Food Retail Outlets

NeighbourhoodGrocery

IndependentGrocery

Small IndependentTraders

Hypermarkets

Supermarkets

Discounters

Club Stores

Direct - Internal

Impluse On Premise Vending

Petrol

CTN / Kiosk

Convenience

Take away outlets

Level 3 of the architecture clusters consumertouch points operating within the defined business models and are shown here.

Further sub-clusters are defined at market level and reflect local variants.

Leve

l 2Le

vel 1

Leve

l 3

Non GroceryRetail Outlets Traditional Grocery Modern Grocery

In Home Out of Home

08Introduction

09Introduction

2. Opportunity Assessment

It is important to assess the potential of each channel & the outlet numbers in the given geography. Given below is an example of a bubble chart which graphically shows the relative importance of a channel based on its turnover, Unilever market share and outlet numbers. The bubble tool is part of the Practical Guide to Channel Management. This analysis helps to identify the top prizes and the size of each prize.

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10Introduction

11Introduction

3. Channel Prioritisation

It is then necessary to do a channel assessment to understand the jobs to be done by channel and prioritisation of the most attractive channels.

Given below is an example of a typical channel prioritisation in a GT environment:

The sources of data for this exercise will be available from syndicated research sources such as AC Nielsen and from internal company data. This will be covered in detail in the Practical Guide for Channel Management

Channel AssessmentSource

Total (Benchmark)

Hypers & Large Supers

Small Supers

Convenience Store

HPC – Street storesPC

– Street stores

HPC Market storesPC

– Market stores

Skin – Market

storesB2C via

B2B

Women’s Salons

Urban Rural Urban Urban Rural Urban Urban Premium Standard

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

Size of Channel (kg) Internal Total 8,273,852 359,886 186,859 11,146 1,549,448 1,125,579 20,410 1,990,883 1,606,405 1,258,840 138,540 15,418 3,773 6,667

Rank of Channel Internal 6 7 11 3 5 9 1 2 4 8 10 13 12

Our Sales Volume (kg) / Year Internal Sunsilk 1,504,967 66,219 27,842 2,831 325,384 213,860 4,286 322,523 305,217 203,932 27,708 1,033 1,132 3,000

Rank of Channel Internal 6 7 11 1 4 9 2 3 5 8 13 12 10

Channel Objectives

Increase Share Retail Panel

3% 5% 10% 10%

Incremental Volume (Ton) Internal 8.0 – 6.1 – – – – – – – – 0.8 0.4 0.7

Maintain Share Internal x x x x x x

Target – Increase Distribution % (W) Internal 0% 4% 1% 7% 32.0% 29.0%

Incremental Volume (Ton) Internal 13.7 – – – 1.6 4.9 0.0 – 7.0 – 0.1 – 0.0 0.0

Target – Reduce OOS % (W) Internal 0.5% 2.3% 0.5% 2.3% 0.2% 0.2% 0.7%

Incremental Volume (Ton) Internal 12.9 0.56 0.29 0.02 2.42 1.75 0.03 3.10 2.50 1.96 0.22 0.02 0.01 0.01

Marketing Activities Growth (Ton) Internal 12.9 0.58 0.29 0.02 2.42 1.75 0.03 3.10 2.50 1.96 0.22 0.02 0.01 0.01

Outlet Growth (Ton) Internal 69.3 6.62 6.43 0.17 15.40 10.66 0.35 11.65 14.32 3.06 0.43 0.01 0.09 0.15

Total incremental volume from what we can change (Ton)

Internal 39.7 – 6.1 – 1.6 4.9 0.0 12.9 7.0 2.0 2.0 0.8 0.7 1.6

Total incremental + outlet + marketing activities driven growth

Internal 122.0 7.2 12.9 0.2 19.4 17.3 0.4 27.7 23.8 7.1 2.6 0.8 0.8 1.7

10Introduction

11Introduction

4. Strategy Development

From Channel Prioritisation will emerge our strategy on the 6Ps. Given below are two typical examples on Channel Coverage & Price Forming Objectives:The Strategy development phase will highlight the RTM design requirements as well.

Category

Channel

Hyper Super CVS Covered Markets

Street Stores

Hair 100% 100% 40% 90% 85%

Skin 100% 100% �0% 65% 60%

Fabric Cleaning 100% 100% 15% 95% 95%

Oral Care 100% 100% 15% 90% 90%

Deos 100% 100% 40% 50% 50%

HHC 100% 100% �0% 90% 90%

Savory 100% 100% 75% 80% 85%

Beverages 100% 100% 90% 75% 75%

Coverage Objectives

Pricing Objectives (Benchmark Index vs Competitor)

Hair Channel

BrandHyper Super CVS Covered

MarketsStreet Stores

Sunsilk Bottles 95 95 100 100 100

Clear Bottles 105 105 105 105 105

Lifebuoy Bottles 80 80 80 85 90

Lux Bottles 100 100 100 95 95

Sunsilk Sachets 100 100 100 100 100

Clear Sachets 100 100 100 100 100

Lifebuoy Sachets 100 100 100 100 100

Lux Sachets 100 100 100 100 100

1�Introduction

5. Category Channel Plans

Finally as part of the BMP & CMP process, Channel Category plans covering the 6Ps will be drawn up with detailed activity calendars for Field Execution.

The above will be covered in greater detail in Module 2 and is covered here only as a background so that the preeminent importance of POP in our entire RTM design is not under emphasised.

This D&E Practical Guide will focus on the Next Generation Distributor Model.

1�Introduction

Why Do We Need The Next Generation Distributor Model

15

The Next Generation Distributor Model:

Why do we need it?

With growing affluence and changing shopper needs the trade structure across D&E is changing rapidly & Unilever needs to be prepared for increasing hybridization of our markets with the entry of MT formats including global customers.

In the new context, excellence in customer service to trade is critical for Unilever to remain as the most preferred supplier.

With higher level of innovation in the market place and lower level of product differentiation in many categories, speed & quality of execution that bring our brands to life @ POP are important variables for market share growth.

In an economic environment of attractive alternative business opportunities for our RTM partners, a richer quality of partnership with our distributors is required to build a sustainable & profitable business for the distributor & Unilever

In addition, our competitors (both local & international) are replicating our model & in many instances “building upon” & improving on our model

Given Unilever’s strength in the D&E markets it is always to our advantage to leverage a consistent approach across the region on the distributor model using our “One Unilever” strength.

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4.

5.

6.


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No matter what our market type, given the vast outlet universe which we serve as Unilever, in the foreseeable future we cannot manage without Distributors in a large portion of the D&E world.

In addition, no matter where our distributors sit in the 6 business models given below there is a need to manage them in a professional manner to enhance our competitive advantage over our competitors.

Given our long history in this region, there has been a tendency to stay rooted to the practices which have served us so admirably in the past. However, with the changing retail landscape of increased hybridization and inroads by our competitors into what where hitherto white spaces for them, it is imperative to revisit our processes and update them to current realities. Unilever Operating companies who have done this in the recent past have reaped big rewards.

Next Generation Distributor ManagementIn D&E we are not operating in a homogenous market. Our markets are diverse and the challenge of reach efficiency is enormous. Unilever has identified 6 key market types across the world as shown below and all 6 exist in D&E.

Type 1: Highly

Fragmented Market

Type 2: Traditional Trade

Dominated Market

Type 3: Forming Hybrid

Market

Type 4: Advanced Hybrid

Market

Type 5: Organised

Market

Type 6: Concentrated

Market

100% General Trade (GT)

Up to 10% MT & 90% GT

UP to 25% & 75% GT

Up to 50% MT & 50% GT

Up to 75% MT & 25% GT

Modern Trade (MT) > 75%

Highly fragmented market with no clear retail or wholesale structure in channel or geographic penetration.

Distributors and wholesalers dominate distribution penetration. They service wholesale markets, wet / open markets, Over-The-Counter and small self service stores.

These stores are supplied on a cash basis. Ranging is limited to best sellers, focusing on small pack sizes.

Pricing and margins are stable, with limited promotions visible.

Larger supermarkets starting to evolve in key cities. They can be serviced directly by manufacturers.

Modern Trade = 1 to 10% of business.

Most supermarkets are still serviced through Distributors.

Wholesalers are still key to sales growth and market coverage, although pricing pressure is starting in key cities where Modern Trade is focused.

Modern Trade uses price promotions to attract shoppers.

Large formats (hyper / super) start to dominate in key cities. Small chains / groups are evolving. Majority of new Modern Trade outlets are serviced by Distributors.

International retailers are entering. Key Customers influence price forming in the market. Some convenience stores are now visible in key cities.

Wholesale channel is consolidating but declining in key cities. Some wholersalers operate own supermarkets.

Pricing in key cities is distruptive due to increased price promotion activities, and is effecting surrounding cities / areas.

Supers & hypers dominate key cities and start to expand to secondary cities. Retail chains are well established, with several international retailers operating. DOB’s are entering.

Some traditional stores have upgraded to small supermarkets.

Top 5 customers = up to 25% of business. Key Customers lead market behaviour. Convenience stores are wide spread.

Wholesalers continue to decline. Distributors are moving either to logistic servicing or to central purchase units.Disruptive pricing in marketplace with parallel trade increasing.

Top 5 customers = up to 50% or more of business, following further consolidation and acquisition of local retailers.

Key Customers are driving agenda and influencing industry. Store level control is reducing as retailer headquarters centralise decision marking. Key customers start to seek cost efficiencies.

Shopper channels are new well defined.

Remaining distributors focus primarily on servicing small supermarkets with limited wholesale opportunity.

Most categories contain a DOB offer.

Top 5 customers are up to or more than 75% of the business and dominating the agenda.

Wholesalers have almost all disappeared. A limited number of independent supermarkets are operating.

International retailers or major national retailers dominate through their market share.

Decision making is highly centralised and centrally controls stores in place.

Retailers are focusing equally on cost reduction activities and price competitiveness.


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Given the 6 market types mentioned earlier which are all related to the ratio of MT and GT and Unilever’s strength in a market, generally Unilever’s Distribution system can be classified into one of the 6 models given below.

Exclusive DistributorsIn a highly-fragmented market with high share, the turnover & work level justifies exclusive distributors of Unilever. They do not have any other distribution house or distribution of any other company. However, they may have other businesses, but not in the related line. The exclusivity ensures complete involvement and better focus to the business and the high dependence of the distributor on Unilever, gives a fair amount of control & bargaining power.

Non-exclusive DistributorsIn a highly-fragment market with average market share, Unilever distributors tend to have distribution of other company, but not in the same categories. The cost sharing model helps the distributor earn the expected take home & ROI. Besides, they may have other businesses. This model helps reach out to places which will not justify an exclusive distributor. However, along with the costs, the focus & involvement also gets distributed and the bargaining power diluted.

WholesalersWholesalers are the best channel in a highly fragmented market with low share & turnover. This is the best way to reach out in markets, where the business is small / inviable and the relative cost of servicing is unjustified. A wholesaler may or may not be into further distribution, but a major contribution is through next level of re-sellers.

Un

ileve

r sh

are

of

tota

l

HExclusive

distributors

Exclusive distributorsDirect / KA

Channel service providers

Direct / KA

MNon-exclusive

distributors

Non-exclusive distributorsDirect / KA

L Wholesalers

L M H

Modern Trade as % of total


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The channel is limited to the benefit the organization can offer and is vulnerable to substitution and shifting loyalties. It is not a long term or binding channel.

Exclusive Distributors, Direct / KAIn a medium level of organised market where we have high shares, we have exclusive distributors (explained above) for GT & Directly serviced customers / Key Accounts for big Modern / Organised trade partners. The two may have overlapping channels. The Direct / KA ensures direct touch with the customer and the format gives a lot of opportunity for activation, interaction with customer and to build brands with consumers.

Non-Exclusive Distributors, Direct / KAHowever, where the share of pie is low, the distributors may be non-exclusive (explained above) for GT while organized trade may be serviced directly. The format gives flexibility to reach in GT and have stronghold on the key contributors. The service levels get reduced where the Modern store format is not viable as a direct customer and has to be serviced indirectly through non-exclusive distributor. This format ensures availability but offers limited avenues for brand building.

Channel Service Providers Direct / KAIn a sophisticated, organized market with high share we have channel partners and directly serviced chains / KAs. This is a concentrated and focus approached with high customer service. The format gives opportunity for high customer interaction, joint business planning and greater avenues for building brands through consumer. Winning at the point of purchase is the key. However, the channel is demanding and easily accessible to all. No matter where our distributors sit in the 6 business models given above there is a need to manage them in a professional manner to enhance our competitive advantage over our competitors.

This Practical guide will focus upon the Distributor model and explore the various dimensions which need to be managed for a robust, competitive & modern Distribution system.

At the heart of the Distribution model is the objective of Winning @ POP.A good distributor model is only one of the elements to Win @ POP.


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Essence Of The Next Generation Distributor Model

�0 �1The Next Generation Distributor Model

�0 �1

In 2005, the Indian business which is one of the largest Unilever businesses employing Distributors, realizing the need for change made a very successful transformation of its distribution model. This is documented as a case study in this guide.

At the same time another Citadel business of Unilever which is the Indonesian business embarked on their Back to Basics programme which again accelerated the growth rate of this already very successful company.

Distilling the Indian & Indonesian models, the next generation distributor model can be divided into 4 parts viz Channel Goals, KPIs, Organization & Systems. No matter where we are in the world this model can serve us most effectively.

In this model there are clear deliverable from our RTM partner as well as clear deliverable from us as Unilever to make this happen effectively.

Given below are the requirements from our Distributors & RTM partners.

Unilever needs to provide the necessary strategic & technical input to make the operations effective.

1. Channel Goals 2. KPIs

• Effective Distribution• Merchandising• Activation• Customer / Channel Program Execution• SLAs

• EDGE Metric• QOC / QOP• Performance Linked TTS• Distributor ROI• Distributor CCFOT• EQ (Trade)• Quality of Engagement (HR)

4. Systems 3. Organization

• IT : DMS / HHT• CRS / VMI• TPM• CVA / OPSO• Standard Operating Procedures by Channel• Warehouse Management• JBP

• Scale Requirement• Sales / Activation Structure / Profile• Roles & Responsibility• Remuneration (PLP)• OTJ Training

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The first step for you to do is a self assessment using the Maturity Profile tool given in this Practical Guide to understand where you are now and develop your journey plan to implement the Next Gen Distributor Model.

We need to be honest while doing this and ensure we have sufficient evidence to support our assessment to get the maximum benefit.

A questionnaire / checklist for the country maturity profile is in Appendix A.

A software based toolkit is also available for you to do the profiling.

1. Channel Goals 2. KPIs

• Category / Brand Strategy • EDGE Metric

• Channel strategy • QOC / QOP Targets

• RTM / Distributor Strategy • Performance Linked TTS

• Channel Assortment Srds • Distributor ROI Benchmark

• Channel Merchandising Stds • EQ (Trade)

• Activity Calendars

4. Systems 3. Organization

• IT Strategy • UL Governance Structure

• CRS / VMI Platform • Distributor Selection Process

• CVA / OPSO Training • Distributor Scale Requirement

• Ops Manual • Recruitment / Rem Policy

• R & R • Training Plans

• Finance • Contact Norms

• Warehouse • Infrastructure / Finance Norms

• TPM Training

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Next Generation Distributor: The Basics from Unilever


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In the next few chapters we will cover this model in detail.

A key question which may be asked: Is this applicable to all distributors within your country or can it be applied selectively or extended to all over a period of time?

There is no simple answer for this and has to judged at individual country level on how fast you should go. However, having said that, the principles are universal and can be applied to all distributors and in all market situations.

China

Malaysia

Vietnam

Philippines

Thailand

Indonesia

Sri Lanka

Bangladesh

Pakistan

India

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

CHANNEL GOALS KPIs

ORGANIZATION SYSTEMS

OVERALL

Given below is an example of maturity profiling done in Asia


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If choices are to be made then there are two good practice approaches:

You should cover all distributors who contribute from 70% to 80% of your turnover so that the impact is meaningful.

In a large country with different market conditions and hence distributors with different turnover size, you can divide your distributors into different “types” and start by applying minimum mandatory standards for each type. Guidelines for this is given below.

See Appendix B for an example of India’s Distributor Maturity profile

1.

2.

Description Type 1 Type 2 Type 3 Type 4

Population Size

Key Cities e.g., Capital / Provincial Capital / Big Metro Cities

Other Large Cities Other Cities Rural

Market Characteristic

Presence of Self Service Formats, Multiple Shopper defined channels, large wholesale market

All of Type 1 but to lesser degree of evolution

Fewer Shopper defined channels, active wholesale

One or two channels, small wholesale

Demographics

Income, literacy, durable ownership, internet connectivity above National Average

Income, literacy, durable ownership, internet connectivity above National Average but lower than Type 1

Income, literacy, durable ownership, internet connectivity at or slightly below national average

Income, literacy, durable ownership, internet connectivity below national average

Population Density & Infrastructure

High Density vs National Average & High accessibility

High Density vs National Average & High accessibility but lower than Type 1

Density & accessibility in line with National Average

Low Density & remote locations with poor infrastructure

Competitive Pressure High High Moderate Moderate to Low

Minimum Mandatory Standards

Full Next Generation Model as per phased roadmap

Full Next Generation Model as per phased roadmap

Optional Items: Channel Focused Coverage, Trade CCFOT, Full Sales Organisation, Sales Force Automation, CRS / VMI, JBP, CVA / OPSO, SOP by Channel, TPM

Optional Items: Channel Focused Coverage, Trade CCFOT, Full Sales Organisation, Sales Force Automation, CRS / VMI, JBP, CVA / OPSO, SOP by Channel, TPM, Performance Linked Remuneration


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Appendix: Essence Of The Next Generation Distributor Model

�7

Appendix

Appendix A: Country Maturity Profile Checklist

Appendix: Essence Of The Next Generation Distributor Model

There are four sections viz. KPIs, Channel Goals, Organisation & Systems. For each of the section we have to evaluate UL & the distributor organisation. Every question has been broken into four statements. Go through each of the statements. Put ‘1’ against the statement that is most applicable for your organisation & your distributors

Scoring is done as follows(example)

Statement Score

We do not have a GT Scorecard 0

We have a GT Scorecard but it is not reviewed regularly

1

We have a GT Scorecard & it is reviewed quarterly

2

We have a GT Scorecard & it is reviewed monthly

3

Calculate the total of all the scores for each of the sections For each of the sections, calculate the percentage out of the maximum possible score for the section

�8 �9Appendix: Essence Of The Next Generation Distributor Model

CHANNEL GOALS

UNILEVER INPUTS SCORE COMMENTS1 We do not have a documented RTM strategy

We have a RTM strategy, but it is not updated

We have updated RTM strategy for a few categories

Our RTM strategy is reviewed annually

0

2 We have not done work on shopper insights or establishing channel platforms

We have done work on shopper insights & establishing channel platforms in the past, but the same has not been updated

We have updated shopper insights & channel platforms for a some of the categories

Shopper insight & channel platforms are updated annually

0

3 We do not have annual channel marketing plans including promotions & activation

We have channel marketing plans including promotions & activation, but the same have not been updated

We have updated annual channel marketing plans including promotions & activation for some of the categories

We regularly update the channel marketing plans including promotions & activation (Please indicate frequency)

0

4 We do not have documented Channel assortment standards

We have documented Channel assortment standards in terms of must have SKUs, but the same has not been updated

We have updated documents on Channel assortment standards in terms of must have SKUs

We annually update & document Channel assortment standards in terms of must have SKUs

0

5 We do not have documented Channel pricing standards

We have documented Channel pricing standards in terms of fast moving SKUs, but the same has not been updated

We have updated documents on Channel pricing standards in terms of fast moving SKUs

We annually update & document Channel pricing standards in terms of fast moving SKUs

0

6 We do not have documented Channel visibility standards

We have documented Channel visibility standards in terms of priority SKUs, but the same has not been updated

We have updated documents on Channel visibility standards in terms of priority SKUs

We annually update & document Channel visibility standards in terms of priority SKUs

0

�8 �9Appendix: Essence Of The Next Generation Distributor Model

UNILEVER INPUTS SCORE COMMENTS

7 We do not have channel coverage target for the year

We have a channel coverage target for the year, but the same has not been updated

We have an updated channel coverage target for a few categories

We regularly update channel coverage target for the year for all categories

0

8 We do not have a dedicated merchandiser organisation

We have a dedicated merchandiser organisation for a few locations / channels / categories

We have a dedicated merchandiser organisation for few locations for all channels / categories

We have a full fledged merchandising organisation across all locations / channels / categories

0

9 We do not have formal Service Level Agreements (SLAs) with our distributors

We have formal Service Level Agreements (SLAs) with our distributors for a few items, but not reviewed regularly

We have formal Service Level Agreements (SLAs) with our distributors, but the same is not reviewed regularly

We regularly review our Service Level Agreements (SLAs) with the distributors

0

DISTRIBUTOR INPUTS SCORE COMMENTS1 Distributors do not have channel wise break up of the number of outlets to be covered

Distributors have channel wise break up of the number of outlets to be covered, but the same has not been updated

Distributors have channel wise break up of the number of outlets to be covered, but the same is reviewed infrequently

Distributors have channel wise break up of the number of outlets to be covered & it is reviewed regularly (Please indicate frequency)

0

2 Distributors do not have annual channel coverage targets

Distributors have channel coverage target, but the same has not been updated

Distributors have channel coverage target, but the same is reviewed infrequently

Distributors have channel coverage target & the same is reviewed frequently (Please indicate frequency)

0

3 Distributors do not have channel wise break up of turnover by category

Distributors have channel wise break up of turnover by category, but the same have not been updated

Distributors have channel wise break up of turnover by category, but the same is reviewed infrequently

Distributors have channel wise break up of turnover by category & is reviewed infrequently

0

4 Distributors salesmen do not have channel wise effective coverage targets

Distributors salesmen have channel wise effective coverage targets, but it is not updated

Distributors salesmen have channel wise effective coverage targets, but it is reviewed infrequently

Distributors salesmen have channel wise effective coverage targets & reviewed regularly (Please indicate frequency)

0

5 Distributors salesmen do not have channel wise bill productivity targets

Distributors salesmen have channel wise daily bill productivity targets, but the metric is not updated

Distributors salesmen have channel wise bill productivity targets, but it is reviewed infrequently

Distributors salesmen have channel wise bill productivity targets & is reviewed frequently (Please indicate frequency)

0

30 31Appendix: Essence Of The Next Generation Distributor Model

DISTRIBUTOR INPUTS SCORE COMMENTS6 Distributors salesmen do not have channel wise lines per productive calls targets

Distributors salesmen have channel wise daily lines per productive calls target, but the metric is not updated

Distributors salesmen have channel wise daily lines per productive calls targets, but it is reviewed infrequently

Distributors salesmen have channel wise daily lines per productive call targets & is reviewed frequently (Please indicate frequency)

0

7 Distributors do not have channel visibility standards

Distributors have channel visibility standards, but the metric is not updated

Distributors salesmen have channel visibility standards, but it is reviewed infrequently

Distributors salesmen have channel visibility standards & is reviewed frequently (Please indicate frequency)

0

8 Distributors do not run promotions by channel

Distributors sometimes run promotions by channel, but do not follow UL guidelines completely

Distributors run promotions by channel & occasionally follow given UL guidelines completely

Distributors run promotions by channel as per given UL guidelines

0

9 Distributors frequently run promotions on ad hoc basis

Distributors sometimes run promotions on ad hoc basis

Distributors at times run promotions on ad hoc basis

Distributors never run promotions on ad hoc basis

0

Max. Score Possible: 54 54

Your Score: 0

% Score: 0%

Minimum Mandatory Standard: 80%

KPIs

UNILEVER INPUTS SCORE COMMENTS1 We do not have a GT Scorecard

We have a GT Scorecard but it is not reviewed regularly

We have a GT Scorecard & it is reviewed quarterly

We have a GT Scorecard & it is reviewed monthly

0

2 Our KPIs are not in line with EDGE metrics

Some of our KPIs are in line with EDGE metrics

Our KPIs are in line with EDGE metrics

Our KPIs are in excess of EDGE metrics

0

3 Our TTS structure is not linked to performance

Our TTS structure is partly linked to performance

Our TTS structure is completely linked to performance

Our TTS structure is completely linked to performance & is reviewed at least once in two years to reflect business priorities

0


UNILEVER INPUTS SCORE COMMENTS4 We do not have a Joint Business Planning (JBP) process

We conduct a JBP but it is not reviewed

We conduct JBP & review it quarterly

We conduct JBP & review it monthly

0

5 We do not measure distributor coverage increase

We expect the distributor to increase coverage but we do not review it on a regular basis

We measure distributor coverage increase on quarterly basis

We track distributor coverage increase every month

0

6 We do not measure effective distribution on an on going basis

We expect the distributor to ensure effective distribution but we do not measure it on a regular basis

We measure effective distribution by the distribution once every quarter

We track effective distribution by distributor every month

0

7 We do not measure lines per productive call

We expect the distributor to focus on lines per productive call, but we do not review it

We measure effective distribution of the distributor once every quarter

We track effective distribution of the distributor every month

0

8 We do not measure bill productivity

We expect the distributor to focus on bill productivity, but we do not review it

We review bill productivity every quarter

We review bill productivity every month

0

9 We do not have merchandising standards in place

We have merchandising standards, we expect the distributor to implement it in the market, but we do not measure compliance on regular basis

We measure distributor wise merchandising standard compliance once every quarter

We measure distributor wise merchandising standard compliance every month

0

10 We do not have activation plans in place

We have activation plans, we expect the distributor to implement it in the market, but we do not review the same

We measure distributor wise activation plan compliance at the completion of the activity

We measure distributor wise activation plan compliance for all activities every month

0

11 We do not review distributor working capital

We expect the distributor to manage working capital, but we do not review it on a regular basis

We review distributor working capital management every quarter

We review distributor working capital management every month

0

3� 33Appendix: Essence Of The Next Generation Distributor Model

12 We do not review distributor stocks

We expect the distributor to manage stocks properly, but we do not review it on a regular basis

We review distributor stocks every quarter

We review distributor stocks every month

0

13 We do not review distributor credit to his customers

We have guidelines on distributor credit extension to his customers, but we do not review it on a regular basis

We review distributor credit to his customers every quarter

We review distributor credit to his customers every month

0

14 We do not review distributor ROI

We have distributor ROI structure, but we do not review it on a regular basis

We review distributor ROI every quarter

We review distributor ROI every month

0

DISTRIBUTOR INPUTS SCORE COMMENTS

1 Distributors do not have KPIs for their sales team

Distributors have KPIs for their sales team, but it is not updated

Distributors have updated KPIs for their sales teams, but are reviewed infrequently

Distributors have updated KPIs for their sales teams and is reviewed at least twice a month (Please indicate the frequency)

0

2 Distributors do not have visual performance monitoring board

Distributors have performance monitoring boards but the same is not updated

Distributors have updated performance boards, but is reviewed infrequently

Distributors have updated performance boards and frequent review is done (Please indicate frequency)

0

3 Distributors salesmen do not have effective coverage KPI

Distributors salesmen have effective coverage KPI, but it is not updated

Distributors salesmen have effective coverage KPI, but it is reviewed infrequently

Distributors salesmen have effective coverage KPI & reviewed regularly (Please indicate frequency)

0

4 Distributors salesmen do not have bill productivity KPI

Distributors salesmen have daily bill productivity KPI, but the metric is not updated

Distributors salesmen have bill productivity KPI, but it is reviewed infrequently

Distributors salesmen have bill productivity KPI & is reviewed frequently (Please indicate frequency)

0

5 Distributors salesmen do not have lines per productive call KPI

Distributors salesmen have daily lines per productive call KPI, but the metric is not updated

Distributors salesmen have daily lines per productive call KPI, but it is reviewed infrequently

Distributors salesmen have daily lines per productive call KPI & is reviewed frequently (Please indicate frequency)

0

3� 33Appendix: Essence Of The Next Generation Distributor Model


5 Distributors salesmen do not have lines per productive call KPI

Distributors salesmen have daily lines per productive call KPI, but the metric is not updated

Distributors salesmen have daily lines per productive call KPI, but it is reviewed infrequently

Distributors salesmen have daily lines per productive call KPI & is reviewed frequently (Please indicate frequency)

0

6 Distributors do not have visibility KPI

Distributors have visibility KPI, but the metric is not updated

Distributors salesmen have visibility KPI, but it is reviewed infrequently

Distributors salesmen have visibility KPI & is reviewed frequently (Please indicate frequency)

0

7 Distributors salesmen do not have NPI KPIs

Distributors salesmen have NPI KPIs, but the metric is not updated

Distributors salesmen have NPI KPIs, but it is reviewed infrequently

Distributors salesmen have NPI KPIs & is reviewed frequently (Please indicate frequency)

0

Max. Score Possible: 63 63

Your Score: 0

% Score: 0%


Organisation

UNILEVER INPUTS SCORE COMMENTS1 We do not have supervisory roles by channel or geography

We have supervisory roles by channel or geography but the same are not fully enforced

We have supervisory roles enforced by channel or geography

We have supervisory roles enforced by channel or geography & the requirements are reviewed regularly

0

2 We do not have supervisors for merchandising & activation

We have supervisors for merchandising & activation, but not used effectively

We have supervisors for merchandising & activation, but a few are used effectively

We effectively use our supervisors for merchandising & activation

0

3 Company sales force pay is not linked to performance

Company sales force pay is linked to performance, but it is not fully enforced

Company sales force pay is completely linked to performance

Company sales force pay is completely linked to performance & reviewed regularly

0


UNILEVER INPUTS SCORE COMMENTS5 We do not have any guideline for distributor FF remuneration & reward

We have company guideline for distributor FF remuneration & reward, but the same is not fully enforced

The distributor FF remuneration & reward is as per company guideline

The distributor FF remuneration & reward & revision of the same is as per company guideline

0

6 We do not have any guideline for minimum size of turnover for appointment of distributor

We have company guideline for minimum size of turnover for appointment of distributor, but the same is not fully enforced

The company guideline for minimum size of turnover for appointment of distributor is fully enforced

The company guideline for minimum size of turnover for appointment of distributor is fully enforced & is regularly reviewed

0

7 We do not have any guideline for distributor infrastructure including warehouse, vehicles etc.

We have company guideline for distributor infrastructure including warehouse, vehicles etc., but the same is not fully enforced

The company guideline for distributor infrastructure including warehouse, vehicles etc. is fully enforced

The company guideline for distributor infrastructure including warehouse, vehicles etc. is fully enforced & is regularly reviewed

0

8 We do not have any guideline for IT equipment at distributor

We have company guideline for IT equipment at distributor, but the same is not fully enforced

The company guideline for IT equipment at distributor is fully enforced

The company guideline for IT equipment at distributor is fully enforced & is regularly reviewed

0

9 We do not have any training policy & calendar for Distributor sales force

We have company guideline for training policy & calendar for Distributor sales force, but the same is not fully enforced

The company guideline for training policy & calendar for Distributor sales force is fully enforced

The company guideline for training policy & calendar for Distributor sales force is fully enforced & is regularly reviewed

0

10 We do not have any FF manual which outlines the roles & responsibilities of company staff

We have FF manual which outlines the roles & responsibilities of company staff, but the same is not fully enforced

The FF manual which outlines the roles & responsibilities of company staff is fully enforced

The FF manual which outlines the roles & responsibilities of company staff is fully enforced & is regularly reviewed

0

11 We do not have a documented policy on productivity KPIs from Company sales force

We have a documented policy on productivity KPIs from Company sales force, but the same is not fully enforced

Productivity KPIs from Company sales force is documented & fully enforced

Productivity KPIs from Company sales force are fully enforced & reviewed regularly

0

4 We do not have any guideline for distributor FF recruitment

We have company guideline for distributor FF recruitment, but the same is not fully enforced

The distributor FF is recruited as per company guideline

The distributor FF is recruited & requirements reviewed as per company guideline

0


13 We do not have capability officers

We have capability officers only in select locations

We have capability officers but only a few are being utilized effectively

Our capability officers are effectively utilized

0

DISTRIBUTOR INPUTS SCORE COMMENTS1 We do not have documented policy on profile requirement for distributor FF

We have documented policy on profile requirement for distributor FF, but the same is not fully enforced

We have documented policy on profile requirement for distributor FF that is fully enforced

The policy on profile requirement for distributor FF is fully enforced & is reviewed regularly

0

2 The distributors do not have performance linked pay for their staff

The distributors have performance linked pay for their staff but not in line with company guidelines

The distributors have performance linked pay for their staff as per company guidelines

The distributors have performance linked pay for their staff as per company guidelines & the same is reviewed regularly

0

3 We do not have any documented guidelines for roles & responsibilities of distributor sales force

We have documented guidelines for roles & responsibilities of distributor sales force, but the same are not enforced

The guidelines for roles & responsibilities of distributor sales force is fully enforced

The guidelines for roles & responsibilities of distributor sales force is fully enforced & is regularly reviewed

0

4 We do not have a structured on the job training program for distributor sales force

We have a structured on the job training program for distributor sales force, but it is not fully enforced

We have a structured on the job training program for distributor sales force & it is fully enforced

The structured on the job training program for distributor sales force is fully enforced & is regularly reviewed

0

Max Score Possible: 51 51

Your Score: 0

% Score 0%


12 We do not have a documented contact norms for company sales force

We have a documented policy on contact norms for Company sales force, but the same is not fully enforced

Contact norms for Company sales force is documented & fully enforced

Contact norms for Company sales force are fully enforced & reviewed regularly

0


Systems

UNILEVER INPUTS SCORE COMMENTS

1 We do not have a documented IT strategy

We have documented IT strategy but it is not fully operational

IT strategy is fully operational

IT strategy is fully operational & the requirements are reviewed regularly

0

2 We don’t have a DMS system

The DMS system is not backward intergrated with Company transaction system

The DMS system is backward intergrated with Company transaction system

The DMS system is backward intergrated with Company transaction system & the requirements are reviewed regularly

0

3 We do not have a FF automation policy

We have a FF automation policy, but the same is not fully operational

FF is fully automated

FF is fully automated & the requirements are regularly reviewed

0

4 We do not do any VMI/CRS with our distributors

The VMI/CRS with our distributors is not fully operational

We follow VMI/CRS with our distributors

We follow VMI/CRS with our distributors & review requirements regularly

0

5 We have not done CVA of our distributors in terms of gold, silver & bronze

We have done CVA of our distributors but not used it for business benefits

We have completed CVA of our distributors & used it partly for business benefits

We have fully implemented CVA & effectively use it for business benefits

0

6 We do not have a differentiated policy for different distributors depending on size & importance

We have a differentiated policy for different distributors depending on size & importance, but it is not fully operational

We have a differentiated policy for different distributors depending on size & importance & it is not fully operational

We have a differentiated policy for different distributors depending on size & importance & it is reviewed regularly

0

7 We do not analyse OPSO for promotions

We analyse OPSO for big promotions but not use it for business benefits

We analyse OPSO for big promotions & use it for business benefits

We analyse OPSO for all promotions & use it for business benefits

0


8 We do not follow any TPM measures

We have TPM measures but we do not follow it fully

We fully follow TPM measures

We fully follow TPM measures & TPM requirements are reviewed regularly

0

9 We do not have any training for company sales force on CVA & OPSO

We have training program for company sales force on CVA & OPSO, but it is not fully operational

We have training program for company sales force on CVA & OPSO & it is fully operational

We have training program for company sales force on CVA & OPSO & the requirements are reviewed regularly

0

10 We do not have FF manual which outlines Std Operating Procedures( SOPs)

We have FF manual which outlines SOPs but is not fully operational

The FF manual which outlines SOPs is fully operational

The FF manual which outlines SOPs is reviewed regularly

0

11 We do not have a documented damage & obsolete policy

We have a documented damage & obsolete policy, but it is not fully operational

The damage & obsolete policy is fully operational

The damage & obsolete policy is fully operational & the requirements are reviewed regularly

0

12 We do not have legal contracts with our distributors

We have legal contracts with our distributors, but not with all

We have legal contracts with all our distributors

We have legal contracts with all our distributors. The contract requirements are reviewed regularly

0

13 Our contracts do not have performance linked conditions

Our contracts have performance linked conditions, but it is not fully operational

Our contracts with performance linked conditions are fully operational

Our contracts with performance linked conditions are fully operational & requirement reviewed regularly

0



1 Our distributor FF do not use HHT

Our distributors have HHTs but is not being used properly

Our distributors FF use HHTs as per company guidelines

Our distributors FF use HHTs & the requirement are reviewed regularly

0

2 Data from HHT is not used for future planning or improving performance

Data from HHT is sometimes used for future planning or improving performance

Data from HHT is frequently used for future planning or improving performance

Data from HHT is always used for future planning or improving performance

0

3 Our distributors do not use company DMS

Our distributors do not use company DMS exclusively

Our distributors use company DMS exclusively

Our distributors use company DMS exclusively & it is reviewed regularly

0

4 We do conduct internal audits of our distributors

We conduct internal audits at our distributors to check compliance with policy, but the audits are not regular

We regularly conduct internal audits at our distributors to check compliance with policy

We regularly conduct internal audits at our distributors to check compliance with policy. We regularly review the same

0

5 Supply chain does not conduct periodic distributor warehouse audits

Supply chain conducts periodic distributor warehouse audits, but not in line with documented norms

Supply chain conducts periodic distributor warehouse audits, in line with documented norms

Supply chain conducts regular distributor warehouse audits, in line with documented norms

0

Max Score Possible: 54 54

Your Score: 0

% Score: 0%



Appendix B:

Distributor Maturity Profile Checklist – IndiaA standard tool to develop forward plans with the DistributorsMarket Type: 1 Unilever Market Position: StrongKey Challenge: Ensure consistency of approach and instill discipline of execution across all Distributors

Please answer the following questions by ticking on any of the multiple alternatives mentioned herein.

With respect to identifying new opportunities of growth in my geography, at my RS point

No structured process exits, opportunities come as & when new outlets open

Some processes are in place, but are irregular

Some regular structured process are in place

A clear set of formal processes are in place that identifies new growth opportunities. Specific people have been employed for that purpose

With respect to account management in my geography, the following is true

All outlets are treated equally, no special focus given to any one

Large Wholesalers and key accounts are given more attention than others

A formal process exists to develop and manage the large Wholesalers and key accounts by focusing on their business needs and key actions are taken accordingly

A formal joint agreement is made between me and the large Wholesalers and key accounts to build sales and relationship by focusing on elements like sales, merchandising, product freshness etc..

With respect to the Distributor Salesmen Call Planning Process in my geography, the following is true

No standard process for the RSSM call exists

Distributor Salesmen visits all scheduled outlets and books orders by using the trade service card

Distributor Salesmen all scheduled outlets, uses stock norms from the trade service card for booking orders

Distributor Salesmen visits all scheduled outlets and follows all the edge procedure like store check, order booking, merchandising, call closure etc..

1.

a.

b.

c.

d.

2.

a.

b.

c.

d.

3.

a.

b.

c.

d.


With respect to the Stock Management Process in my geography, the following is true

I review my closing stocks once in a month and take necessary actions

I review my closing stocks every week and take necessary actions by focusing on slow moving packs

I review my closing stocks every week, follow First in First out my stock point and take necessary actions by focusing on slow moving packs

I review my closing stocks category wise every day, follow First in First out my stock point and take necessary actions by focusing on slow moving packs

With respect to the Warehouse Management in my geography, the following is true

Products are stored without any stacking norms and stock taking is done once in a month

A definite warehouse layout plan exists and stock taking is done once in a week

A definite warehouse layout plan exists, FIFO is implemented and stock taking is done once in a week

A definite warehouse layout plan exists, FIFO is implemented, Warehousing KPIs like %damages, TAT etc. are monitored and stock taking is done once in a week

With respect to Market Credit Control in my geography, the following is true

All outlets are treated equally, no special credit terms given to any one

Large Wholesalers and key accounts are given more credit terms than others

A formal channel wise credit terms have been negotiated with the outlets which is in line with the JBP discussions

A formal joint agreement is made between me and the dealers to build sales and relationship by mutually arriving at credit terms that would suit the individual business needs of my dealers

With respect to Market Credit Collection in my geography, the following is true

No formal process of credit collection, it is a major issue in my market

A standard process of credit collection with 100% manual (cash or cheque) collection done by the Distributor Salesmen

4.

a.

b.

c.

d.

5.

a.

b.

c.

d.

6.

a.

b.

c.

d.

7.

a.

b.


A standard process of credit collection with 100% manual (cash or cheque) collection done by the Distributor Salesmen by following negotiated channel wise credit terms with the outlets

A standard process of credit collection with 100% manual (cash or cheque) collection done largely by myself following the formal joint agreement on credit terms made between myself and the dealer.

With respect to Managing my own people in my geography, the following is true

All reviews with my salesmen are usually conducted by the company officials

I take part actively in the daily review process with my salesmen

A structured formal process exists for recruitment, training and performance evaluation of my salesmen

A structured formal process exists for recruitment, training, performance evaluation along with monetary and non-monetary rewards and recognition for all my salesmen and other staff members

With respect to Unify (Distributor Information Management System) at my RS point, the following is true

Unify is still not fully functional at my distributor point

Unify is fully functional and occasionally helps me in my daily review process with the salesmen

Unify is fully functional and helps me in my daily review process with the salesmen

Unify is fully functional and helps me in my daily review process along with finalizing category-channel wise business plans for future

c.

d.

8.

a.

b.

c.

d.

9.

a.

b.

c.

d.

4�Next Generation Distributor Model

4�

Channel Goals

44 45Channel Goals

44 45

Unilever’s RoleBased on the National Category Building Plan each operating company would have Channel Category & Brand Plans.

This will determine Unilever’s Channel & RTM Strategy and will be the starting point of determining the Channel Goals.

Channel Goals

Category Channel strategy – MS, distribution etc.

RTM / Distributor Engagement

Channel standards – Assortment, Merchandising

Activity Calendars –To meet channel goals

Channel focused coverage

Effective distribution –ECO, LPC and BP

POP managementAssortment, Merchandising

Channel / Customer Activation

Unilever – What Distributor – How

Broad Overview

NCBP BMP CMPDistribution

Strategy

Channel Goals

46 47

Channel Category StrategyThis is the ability to translate the category goals into actionable Distribution network goals for the organization. Current category & brand penetration as well as the future ambitions in terms of penetration & share (e.g., Rural) would also determine the kind of distributor network required.

A Good practice on this from Unilever Bangladesh is given in the Appendix C.a.

RTM / Distributor Engagement StrategyThe Outcome of a RTM / Distributor Engagement Strategy would be the ability of the Distributor management structure / framework to be supportive of and aligned to the Distribution strategy in driving volume, NPS, Business efficiency or customer focus.

A comparative analysis of direct & indirect distribution versus our key competitors would give a good benchmark in terms of our current gaps. Distributor network decisions such as number of distributors or outlet coverage gaps versus competition can then be identified and addressed.

Given below is the example of a country which has used the Channel Value Assessment (CVA) tool to identify its gold, silver & bronze distributors and then devise annual business plans in line with category plans for each segment of its distributor network.

Bronze*40

Silver17

Gold11

NorthEast

SH Haiyan

RG Xinnuo

HZ Simei

SH Xinjiajia

NB Zapu

SZ ZhongliHN Baihuo

NJ Weibai

CS ZhongliYW Zhongli

ZJ Guoshi

Bronze*75

Silver6

Gold4

SJZ Zhongshan

BJ Shunxin

BJ Ruifengyuan

BJ Yishang

Bronze*101

Silver10

Gold5

Bronze*65

Silver7

Gold3

WestSouth

HaiKou Zhangtian

QZ Shengda

WH Dongyang

ShenzhenWanzhe

FZ Jiechang

KM Baihuo

Siduan Baihuo

YC Yuandian

Segment by region

Channel Goals

46 47

Below is an example of possible outcomes from the segmentation:

By

Mat

uri

ty P

rofi

le

Goal What?

Gold Silver Bronze

• Manage growth above market average growth

• Manage growth at market average growth

• Manage distributor for average profit level

• Build sustainable collaboration with DT

• Enhance DT capabilities to capture major growth opportunities

• Enhance DT capabilities to capture all growth opportunities

• Cultivate candidates for DT consolidation in future

Characteristics How?

• Highly aligned with UL strategy

• Willing to grow UL business

• Low alignment with UL strategy

• Sustainable growth in history and future

• Median alignment with UL strategy

• Actively share market insight and own development

• Potential in exclusive relationship with UL

Resource Implications

How?

• Apply JBP to enhance joint business development

• Apply CBP to enhance DT business development and strategy alignment with UL

• Optimise investment

• Invest more financial (e.g., BB fund) and human resources (e.g., DSR investment)

• Focus on operation efficiency

• Timely review on operation efficiency

For the distributors to perform effectively in the market place, the Channel, Category & Brand strategy will allow you to deliver the following:

1. Assortment Standards by Channel

Not every item can be sold everywhere. It is important for the Distributor to be given guidance by channel on what SKUs are “Must Have” for the Channel & what are “Potential” & “Nice to have”.

Channel Goals

48 49

Typically, ”Must Have” SKUs are those which contribute 75% to 80% of the value of the Brand in the channel.

“Potential SKUs” are those which as of date are not large value or volume contributors but are of strategic importance to Unilever.

Some examples are Hair Conditioners or Deodorants in some countries. In a well-run distributor operation, potential SKUs would be tracked and coverage ensured in the target channels.

“Nice to Have” SKUs have the lowest priority and should not be the key focus of a sales call.

Imagine the power of having clarity on what needs to be carried out from the Headquarters down to the frontliners. It gives more focus on winning @ the channels.

2. Merchandising & Visibility Standards by Channel

Based on the classification of Must Have & Potential SKUs by channel, merchandising & visibility standards have to be set for each channel. The Merchandising strategy needs to be differentiated by channel depending on shopper profile & the brand’s job to be done.The standards would also include the type of Merchandising Material to be used as well as the location within the outlet.

Given below is an example from a Type 1 market (Bangladesh) having a differentiated Merchandising strategy & tools for every channel.

Ch

ann

el V

alu

e A

sses

smen

tH

igh

Market StallsMom & Pop

[40%]

Cosmetic StoresSmall SMs

Family Grocers[100%]

Low

KiosksMom & Pop

Rural Market Stalls[20%]

Rural Cosmetic Stores[50%]

Basic EvolveChannel Description

Merchandising standards revolve along the 3 pillars of:

Position

Presentation

Inventory

•

•

•

Channel Goals

48 49

It is key to differentiate the channel programmes with the ultimate aim on enhancing the shoppers’ experiences.

Linking the category or brand objectives to the channel objectives and shopper insights will deliver the winning channel programmes.

It is important to differentiate the approach and programmes to stay out of the big middle.

It is only through this differentiation, which is always linked to channel and shopper insights, that Unilever can leverage the channels for value-creation – our leading edge.

A standard process, as a way of working, should be set up to sustain the channel strategies and implementation plans.

Another example of the approach is shown below.

Study Brand Shopper Profile

Study Channel Merchandising Innovation Potential

Study Channel Merchandising Scale

Right POP Materials

Channel Merchandising Strategy

Right POP Coverage

Optimise investment to maximise benefit

It is important that our frontliners do the following:

Maximize the use of Point of Purchase (POP) materials

Obtain the best location

Display following the Unilever Vertiplay (vertical blocking of our Brands) technique

Obtain a (better than ) fair share of space

•

•

•

•

Identify Must Have and Potential SKUs for the Channel

Identify Focus Channels By Brands

Channel Goals

50 51

3. Activation & Promotion Calendars

For the Distributor to plan flawless execution, sufficient planning needs to go into activation & promotion campaigns.

In Good practice companies, there is an annual plan based on the BMP & CMP which is updated quarterly & monthly to ensure a smooth execution.

Unilever China has created a simple but practical integration of category activities by channel, following the steps of the Brand Marketing Plan (BMP) so the resources in the areas of execution and focus are achieved.

An example of a Think Tight output follows:

Annual Activity Plan with measurable target

After the Think Tight step is the Integration as demonstrated by the example below:

Channel Based Activity Calendar

Gold Customer Initiatives are considered

All activities have qualification of output and requirement

Jan Feb Mar Apr May Jun July

Media Plan

Innovation Allure launch

Customer Channel Related

Key customer initiatives

400ml BPC4

prelaunch

Suguo 10th Anniversary

Hymall Theme Activity

Hyper In-store merchandising

stocking Goods)

POSM (GE / normal self)

400ml BP

100% Increment = 4.5m NIV

LS BA (Top 300), test hair�00 stores, 4 m� TG, 800 stores, �m� TG

Pillar decoration (300–800 outlet)

SS

POSM self in

mixcase �00ml + Paper Bin

1. Sell in package (must have SKU sell in)

�. �00ml consumer Promotion (8ml sachet)

400ml BP + mini-shelf

CVS �00ml Promotion + POSM sell in

G / K

mixcase �00ml + Paper Bin

mixcase (1� packs must have SKU, free 3 bar)

DTR conference

Promotion suitcaseWS Merchandising – � sets of sachet

hanger pack 8ml

WS conference

Distribution build – 3 months DSR support

•

•

•

100% Incremental = 4.5m NIV


80% increase in the top 300 outlets (national top 1000) = 1.5m)

80% increase in the top 300 outlets (national top 1000) = 1.5m) 50% increase in the top

300 outlets (national top 1000) = 1.5m)


�00 RMB / outlet x �500 outlets – 0.5m NIV�00 RMB / outlet x �500 outlets – 0.5m NIV



100% Incremental = 1.3m NIV100% Incremental = 1.3m NIV

Channel Goals

50 51

Distributor’s Role

The Unilever Distributor will deliver the following in return:

1. Channel focused distribution

This is the ability of the Distribution network to be aligned with and be supportive of the channel strategy.

In a leading edge CD organization there would be a clear understanding on processes to formalize Distributor management structure in line with overall channel objectives. Measurements would be agreed and monitored to assess the effectiveness of the network in delivering the Channel objectives.

This would be in 4 areas:

Direct Coverage of Outlets within a Channel

Sales Force Deployment by Channel

Sales force deployment by Category

Service Standards by Channels (covering frequency, beat size named either as route or section – & team type)

1.

2.

3.

4.

Integration

Integration is an important “Gate Keep Step” to ensure company strategy can be implemented through CD team with optimized investment.

The following tools have been developed for this step:

Category Priority in Channel / Regional / Customer

Sales Capacity Status

TG / DM availability Check list

•

•

•


Media Plan


CustomerChannelRelated

Keycustomerinitiatives

400ml BPC4

prelaunch



Hyper Instoremerchandising

stockingGoods)

POSM (GE/normal self)

400mlBP

100% Increment = 4.5 m NIV

LS BA (Top 300), test hair200 stores, 4 m2 TG, 800 stores, 2m2 TG


SS

POSMself in

mixcase200ml + Paper Bin


2. 200ml consumer Promotion (8ml satchet)


CVS 200ml Promotion + POSM sell in

G/K


mixcase (12 packs must have SKU, free 3 bar)

DTR conference

Promotion suitcaseWS Merchandising – 2 sets of sachet

hanger pack 8ml

WS conference



200 RMB/outlet x 2500 outlets – 0.5m NIV200 RMB/outlet x 2500

outlets – 0.5m NIV

200 RMB/outlet x 2500 outlets – 0.5m NIV


100%Incremental = 4.5m NIV


Ice-creamJan Feb Mar Apr May Jun July

Media Plan




400ml BPC4

prelaunch




stockingGoods)


400mlBP




SS

POSMself in






G/K



DTR conference


hanger pack 8ml

WS conference










Media Plan




400ml BPC4

prelaunch




stockingGoods)


400mlBP




SS

POSMself in






G/K



DTR conference


hanger pack 8ml

WS conference










Media Plan




400ml BPC4

prelaunch




stockingGoods)


400mlBP




SS

POSMself in






G/K



DTR conference


hanger pack 8ml

WS conference










Media Plan




400ml BPC4

prelaunch




stockingGoods)


400mlBP




SS

POSMself in






G/K



DTR conference


hanger pack 8ml

WS conference









Hair

Laundry

Tea

Ice-cream

National Channel Activity Plan(Across all Categories)

Channel Goals

5� 53

Given below is an example of Sales Force Deployment planned by Channel / Customer type...

Proposed structureBy outlet type

DescriptionDSR split by outlet typeIndividual DSR focuses on specific type (s) of storeNew role of DSS set to manage small store DSRs

••

•

SDSR SDSRSDSRSDSR

Sub-DT DSSWDSR

KDSR DSS*

UL SR

Grade 1

Grade 2

Grade 3

Current structureBy territory

UL SR

DSR DSRDSR DSR

DescriptionDSR serves all types of storesDSR split by territoryAll DSRs managed by SR directly

•••

Structure change

DSR type

Big storeDSR (KDSR)

Wholesaler DSR (SDSR)

Small store DSR (SDSR)

DSR supervi-sor (DSS)

1.2.

3.

4.

5.

Outlet type covered

Hyper marketLarge super Department store

Wholesalers

Small superConvenience store (CVs)Kiosk

Manage small store DSRs

••

•

••

•

•

Applied to all tier 1 & tier 2 citiesSimpler structure applied to tier 3 cities given small store dominance

••

USR = Unilever Sales Representative DSR = Distributor Sales Representative

DSR management structure changed from territory focus to outlet type focus

The focus of DSR redeployment will vary due to local channel and customer mix

Cu

sto

mer

mix

DT

N / ARedeploy DSR by outlet type

(e.g., Chongqing)

Redeploy DSR by outlet type and focus on

wholesaler markets (e.g., Wenshou)

Bal

ance

d

Redeploy DSR by outlet type (e.g., Beijing)

Redeploy DSR primarily by outlet type and

also consider territory requirement

(e.g., Hangzhou) N / A

KC

Redeploy DSR by outlet type

(e.g., Shanghai)

Maintian DSR deployment by

territory (e.g., Wuxi)

MT Balanced GT

Channel mix

Characteristics of city type

Channel mix In a certain city, which channel plays major or dominant role in UL-related business, MT or GT

Customer mix In a certain city, which kind of customer plays major dominant role in UL business, DT or KC?

•

•

1

1

1 3

2

4

Channel Goals

KC = Key Customer DT = Distributor

...and tailored to suit different distributor territories given the development of Modern Trade.

5� 53

The Coverage Standards would also include Professional Account Management which means identifying key customers such as large wholesalers or large retail customers (including Modern Trade format customers) and creating a differentiated service level for them including tailored customer marketing programs. Scientific call planning (also a part of Coverage Standards) refers to the ability to deploy resource to maximize reach & category sales at the lowest cost.

A good practice from Unilever Bangladesh is in Appendix C.b.

2. Effective distribution

Effective Channel focused Distribution encompasses 3 areas:

Effective Coverage (ECO) by channel which essentially is a measure of the % of the defined universe who have bought our products at least once in the preceding 4 week cycle.

Bill productivity (BP) by channel which measures the % productive or effective calls in a given day in a designated route (also called Beat or Section)

Lines per productive call (LPPC) by channel which measures the average number of lines sold per invoice. The combination of these 3 are defined as Field Capability and measurement of the same is called Field Capability Score (FCS)

Please see Appendix D

The starting point in designing the effective distribution map is to do a retail census or an assessment using relevant benchmarks on the number of outlets that exist in a designated area.

The methodology to conduct a census or estimate number of outlets has been given in detail in the Practical D&E guide for increasing reach through RTM.

Please see Appendix C.c for the Retail Census Survey and Appendix E for Urban coverage expansion.

The overall outcome of this should be an increase in weighted distribution and a reduction in trade out of stocks. The definition is available in the appendix on EDGE.

a.

b.

c.

Channel Goals

54 55

3. Merchandising as per Unilever Requirement

Once guidelines are received through the Merchandising Standards, the Merchandisers (who can belong to our Distributor or a 3P) need to bring these standards to life in the designated channels.

In addition there will also be event based merchandising such as a new product launch, a re-launch or a large promotion / activity. In such cases the Distributor will deliver the merchandising requirements.

Merchandising in the field is also aided by merchandising tools such as sachet hangers, detergent stands, Skin Care Cabinets etc..

Some examples on Pond’s.

The Distributors merchandisers need to ensure that these assets are deployed as per guideline and are maintained properly through their estimated life cycle.

4. Effective Activation in shop (when required)

While a large proportion of in market activation is done through 3rd party agencies, occasionally Distributors can be used to conduct activation programs especially in less developed markets.

Depending on the sophistication of a particular market, many activation approaches are available from the very basic such as skin cabinets with samples to medium complexity activities such as sampling, demonstration & redemption in-store using temporary or permanent promoters to more evolved activation methods using shopper insight.

MERCHANDISING TOOLS

POND’S Red Frame

VitrineInformation Board✔ ✔

✔

O

O

Customized by store

Counter Display

Island Display

Channel Goals

✔ Must Have

O Optional

54 55

Given below is an example from India on activating in a shop based on shopper insight on different zones in a shop.

STORE ZONES

The Distributor is required to identify these shops and manage the interface on behalf of Unilever.

5. Customer / Channel Program Execution

Depending on the sophistication of a particular market, many approaches are available from the very basic such as Display contests to the very evolved shopper insight based Channel platforms.

A Display Contest is usually a short term program where retailers are incentivise to display selected products from our company and prizes are given either on the quantity displayed and / or the creativity shown.

Orientation Zone Orientation Zone Orientation Zone

Browsing Zone Hunter Zone Fast Zone

Channel Goals

56 57

Given below is an example from a Type 1 market.

One effective Channel Program employed in most countries which is a step ahead of regular “unpaid” in-shop merchandising & Display contests is “one look” merchandising programs which run on a permanent annual basis and are based upon clear guidelines agreed between the shop-owner, the Distributor & Unilever. Usually these programs are formally agreed through signed contracts and have a financial reward for the outlet.Examples of this are Star Club (Vietnam), Unilever Bonus Club (Thailand) and POP HITS program (Philippines) to name a few.

Please see Appendix F for Merchandising Program details.

Given below are some examples of the “One-Look” program implemented in the Market Stall channel in the Philippines:

Display Contest

Channel Goals

56 57

At the highest level are shopper insight based channel programs such as Super Value Stores in India or Try & Trust Stores in Vietnam. The Distributor needs to provide differentiated service levels to such customers and ensure high levels of customer satisfaction.

Channel Program Roadmap

Channel Program differentiation can be a journey depending on the market and channel development of the country. At any level, the aim is always win at the channel and POP.

This will be covered in greater detail in The Practical D&E Guide for Channel Management and Outlet Leadership.

Ch

ann

el D

evel

op

men

t

“One look” by Channel

Integration of Channel &

Shopper Insights

Long-term Value adding Shoppers’

ExperiencesBasic Merch-Standard

Shopper-linkage

Channel Differentiated Programs

Basic Intermediate Advance

Channel Goals

58

6. Customer Service to his customers as per standard service level agreements

A distributor will have different types of customers in his designated area. In Hybrid markets these can vary from Self service stores to outlets in Municipal markets to neighbourhood grocery stores. These customer types will have different service level requirements in terms of the order to cash process and the next generation distributor must be in a position to provide this differentiated service as per channel & customer characteristics.

Channel Goals

58

Appendix: Channel Goals

60Introduction

61

60Introduction

61

Appendix C

a. Channel Category Strategy – BangladeshA Distribution improvement exercise resulting from the Channel StrategiesMarket Type: 1 Unilever Market Position: StrongKey Challenge: Increase Distribution of channel – relevant SKUs

Background

Aiming to achieve best in class availability across channels, Unilever Bangladesh Ltd, embarked on developing Channel Strategies for the identified key channels.

Dependence on ACN Retail Store Audit, for Distribution readings, only gives an indicative figure and hard to base the decisions on.

Opportunities through “Channel Category Strategy” and “Distribution Improvement Drive” were tapped.

Objectives

Identify distribution opportunities through a robust and agreed pack size standards

Drive distribution improvement and focus

How it worked

•

•

•

•

•

Step – 1

Result – 1

Step – 2

Result – 2

Step – 3

Result – 3

Step – 4

Result – 4

Channel contribution for the category

Key Channels for the category

Pack size contribution in Key Channels

Opp. Pack size to drive

Pack size wise Relative MS % of UBL SKUs

Category Strategic Choice

Strongest / Weakest SKU to Drive Mkt.

Distribution status of opportunity SKUs

Distribution Target


6� 63

Looking into the Hair Care category to explain the process in greater detail:

The process starts with identifying the key channel(s) for each of our categories. This is done by looking into the channel contribution to the category market.

Then for the key channels the most important pack-size is identified, again based on pack-size contribution to channel.

ChannelContribution RSA

(Total HC Cat)

Urban Wet-Grocer 12%

Urban General Store 15%

Urban Neighbourhood-Grocer 15%

Urban HPC tong 4%

Urban Cosmetic 3%

Urban Others 7%

Rural Wet-Grocer 9%

Rural Neighbourhood-Grocer 26%

Rural Others 9%

ChannelContribution

RSA (Total HC Cat)

Channel Contribution

Large Pack

Medium Pack

Small Pack

Total

Urban Wet-Grocer 12% 32% 25% 43% 100%

Urban General Store 15% 39% 24% 37% 100%

Urban Neighbourhood-Grocer 15% 16% 16% 68% 100%

Urban HPC tong 4% 11% 5% 84% 100%

Urban Cosmetic 3% 74% 22% 4% 100%

Urban Others 7% 62% 25% 13% 100%

Rural Wet-Grocer 9% 12% 19% 68% 100%

Rural Neighbourhood-Grocer 26% 2% 7% 91% 100%

Rural Others 9% 24% 25% 51% 100%

Total 100% 22% 17% 60% 100%


6� 63

At the end of this stage two different strategies are taken depending upon the nature of the category. If the category is mature, market share gain becomes the priority and drive the weakest SKU for each opportunistic channel-pack size combination. On the other hand, for growing categories the mission is to grow the whole pie by driving the strongest SKU in the high-opportunity channel-pack combination.

To illustrate:

Taking the example of Hair Care Category would be an ideal one. In Bangladesh the sachet market is undergoing explosive growth while bottle market shows attributes of a matured category. As per the above strategies, for sachets, Sunsilk 4ml is taken for driving the market growth. On the other hand, for bottles, where our mission is to grow share, All Clear 200ml – a relatively weaker SKU for driving share gain, is taken.

MaturedCategory

Share Gain

Thru Driving Weak SKUs

Growth Category

Market Growth

Thru Driving Stronger SKUs

Category

ChannelLarge Pack Medium Pack Small Pack

AC200 SS 200 AC100 SS100 LBS 100 AC SS LBS

Urban General Store 16% 27% 25% 36% 7% 19% 57% 5%

Urban Neighbourhood-Grocer 25% 30% 25% 45% 5% 21% 62% 6%

Rural Neighbourhood-Grocer 25% 25% 25% 38% 0% 7% 75% 11%


64 65

Once the priorities are identified, then the current situation of distribution can be measured. This time, instead of depending on the third party retail data, a look into the SKU-wise average monthly outlet penetration, is done. The outlets which have purchased the particular SKU at least once a month as per the set placement norm, are considered to be penetrated. Our mission is to increase this penetration realistically depending upon the baseline.

Once current status is known, the next challenge is to set the distribution improvement target. For target setting – the following formula is use.

Baseline Penetration Target Penetration 50%+ 85% 30% – 50% 75% 15% – 30% 60% <15% 25%

Distribution Improvement Drive – The frontline execution:

Step 1: Pick Opportunity Channel from Target Sheet

Step 2: Pick Opportunity SKU within target channel

Step 3: Arrange a weekly briefing session for DSRs in the beginning of the week.

Step 4: At the end of the week, Evaluate each channel’s achievement against the target SKU.

•

•

•

•


64 65

Key Results & Benefits:

The success of any business process is depicted in the results. The first phase delivered significant improvement in direct distribution for the targeted SKUs:

Achieved alignment across the business on the priority SKUs by channel

Measurement of result is now a regular process

•

•

•

Category Brand / SKU Priority ChannelBaseline Q-3, 2006

Number of Outlet

PenetrationNumber of

OutletPenetration

Fabric Wash

WLS 135g UNG 25,795 59% 34,285 78%

WWP 500gRNG 7,135 30% 12,056 51%

UNG 21,244 48% 33,007 75%

WWP 200gRNG 8,242 35% 13,085 56%

UNG 22,089 50% 32,769 74%

SXL 500g UWMG 4,098 25% 6,256 38%

WPW 25g UNG 7,243 16% 21,937 50%

Personal Wash

Lux 90gRNG 9,549 41% 15,594 67%

UNG (metro only) 11,503 63% 15,958 87%

LBG 85g UNG 18,967 43% 30,000 68%

HHC VIM Bar 325g UWMG 4,742 28% 9,891 59%

Hair Care

AC 200mlUGS 1,365 20% 3,606 53%

SC / CS 1,140 32% 2,556 72%

LBS 100ml UNG (metro only) 131 1% 1,396 8%

Sunsilk 7ml RNG 12,321 53% 10,604 45%

LBS 4ml RNG 4,346 19% 4,016 17%

OralC UP 150g UGS 1,845 27% 4,412 65%

PGC 200g UGS 1,271 19% 4,249 63%

Tea

Taaza JP 50g UWMG 332 2% 5,519 33%

TZ DD 400RNG 553 2% 1,813 8%

UNG (metro only) 2,247 12% 5,776 32%

Skin

FAL AM 25g UNG (metro only) 6,213 34% 7,363 40%

FAL AU 50g UNG (metro only) 5,977 33% 9,941 54%

FAL 25g RWMG 5,728 32% 11,405 64%

FAL 10g RNG 7,263 31% 9,910 42%

Pond FW 50g UGS 2,235 33% 4,347 64%

DEO Rexona Deo Roll On UGS 394 6% 2,064 31%


66 67

Appendix C

b. Coverage Standards – BangladeshChannel strategy towards resource optimizationMarket Type: 1 Unilever Market Position: StrongKey Challenge: Ensuring the right coverage standards to match the channel goals

BackgroundChannel is defined as a common group of POPs satisfying a certain set of consumer / shopper needs or characteristics. Realignment of direct coverage by channel is one of the key projects that Unilever Bangladesh embarked on in 2005-2006 as one of its major strategic thrusts.

ObjectivesIt is best for customer management to service and manage every POP individually. But in reality, it would not be feasible or cost-effective. Besides, this would not allow our brands to reach their full potential which in turn would make UBL susceptible to competition. Therefore the next best option UBL considers for effectively and efficiently managing the POPs is to divide and manage them in groups that are defined by certain criteria like shoppers’ behaviour and profile, channel characteristics and types of products sold. Other important objectives for bringing this change in UBL coverage strategy include:

Change the One-Size-Fits-All strategy: one of most important reasons for re-shaping coverage by channels is to bring change in the conventional strategy for all types of POPs. It was needed to divert the focus from “outlet needs” to “shoppers’ needs”. Moreover, this would allow differentiation and effective servicing for different groups of POPs in terms of availability, trade spend, promotions, merchandising, activation etc.

Increased focus on different Brands / SKUs: rather than emphasizing on every brands / SKUs in every outlet, coverage by channels would give UBL space to rationalize focus on different brands, pack size or SKUs in different types of outlets divided in groups.

UBL Channels:UBL defines its channels depending on 4 criteria as follows:

Location

Shoppers’ Profile and purchase behaviour

Types of Products sold, and

Structure of Outlet (Permanent / temporary)

1.

2.

3.

4.


66 67

Priority Channels:

Urban Channels: 1. Urban Wet Market Mudi (Grocer) 2. Urban Neighbourhood Grocer 3. Urban General Store 4. Urban HPC Tong

Rural Channels: 1. Rural Wet Market Grocer 2. Rural Neighbourhood Grocer

Emerging Channels: 1. Urban Cosmetics Shop / Shopping Complex 2. Key Accounts 3. Rural Cosmetics Store

How it WorkedChannel wise coverage re-alignment planning was done in a 2-step process:

Coverage audit i.e., collecting required information / data for planning and

Re-organization Plan according to the standards decided upon. The table below displays the total picture at a glance:

Direct Coverage Principle: The most important principle followed in coverage strategy setting was to take 80% value contributing outlets into consideration. This data was acquired from coverage audit.

Coverage Audit: Apart from the 80% value contributing outlets, coverage audit also provided with guiding numbers like total universe of outlets by channel, current coverage and its value contribution. Based on these figures RTM decisions were taken.

1.

2.

Channels UniverseCurrent

CoverageValue Cont.

RTM Cov gap Beat size Portfolio Frequency

Urb Wet Mkt Mudi 33,137 87% 17% 100% Direct Dist 4,308 40 Split – Category / Brands 3 – 4

Urb Ngh Grocery 102,488 65% 28% 90% Direct Dist 25,622 35 Split – Category 4

Urb General Store 18,974 70% 8% 100% Direct Dist 5,692 30 Split – Category 2 / 3

Urb HPC Tong 37,364 33% 3% 70% Direct Dist 13,825 50 Combined 1

Rur Wet Mkt Mudi 74,341 49% 9% 70% Direct Dist 15,612 40 Split 2

Rur Ng Grocery 244,958 16% 3% 50% Direct Dist 83,286 30 Limited portfolio 1

Rural Comestic Store 4,372 64% 1% 80% Direct Dist 700 30 Combined 1

SC / Comestic Shop 7,032 73% 3% 100% Direct Dist 1,899 25 PP 2

Key Accounts 65 100% 1% 100% Direct Dist 4 Combined 2 – 3


68 69

Reorganization Plan: Once the Direct Distribution percentage or “Coverage Target” was determined, reorganization plan followed considering 3 important parameters:

Coverage gap: the difference between Coverage Target and Current Coverage.

Beat Size: Determining Standard Beat Size for each channel is one of the most impacting factors that were to be decided upon. Judgment was applied keeping in mind the following points:

Average ideal time to be spent per outlet (by channel)

Location of outlets

Channel wise average value contribution per beat etc.

Portfolio / Split Principle and Frequency: Depending on the channel needs and some other crucial factors like value contribution of category “Split Principle” i.e., brand / category portfolio norms were determined which is shown in the table below:

Channels Mix Beat 1 Beat 2 Beat 3 Beat 4

Frequency 4UWMG DT: 65%, PP:35% FW + HH PW + Tea OC + SC + HC + Deo FW + PW

UNHG DT: 52%, PP:48% FW + HH PW + Tea OC + HC SC + Deo

Frequency 3UWMG FW + HH PW + Tea OC + SC + HC + Deo

UGS DT:35%, PP:65% Detergent + Tea OC + HC SC + Dep

Frequency 2 ALL CHANNELS Detergent + Tea PP

Here DT-PP mix shows the average value contribution of the category. Below is the timetable for implementation.

Sl no Steps Time

1 Coverage Audit X

2 Reorganization Plan X +1 month

3 Business Case for Distributor X + 2 months

4 Beat and frequency finalization in UWMG and UGS X + 4 months

5 Beat and frequency finalization in All Channels X + 8 months

1.

2.

•

•

•

3.


68 69

Appendix C

c. RETAIL CENSUS: Outlet Information Database – BangladeshPutting science into the way of workingMarket Type: 1 Unilever Market Position: StrongKey Challenge: Add robustness, through a scientific tool, in designing coverage standards

BackgroundTill 2003 Unilever Bangladesh used to calculate the POP universe based on assumptions or extrapolation. This extrapolation is done in two ways:

AC Nielsen audits in a small geography and then extrapolates the findings with the population data.

TM / ASM prepares a survey format in line with what the company prescribes.

DSRs / Supervisors goes with that format to markets that are known to them only.

More often than not this type of extrapolation is inaccurate as the survey provides a limited version of the total picture. The universe of the base remains unknown. Therefore the Coverage Gap could never be accurately identified. What was possible then was to estimate the total outlet depending on the basis of total population data of an area extracted from Statistical Bureau Reports.

Hence, the need of a POP / outlet database that is authentic and could act as a backbone of a scientific coverage strategy.

What is Retail Census Survey (RCS) Retail census is a database of outlets that contain a range of information about an outlet. This survey is done within the geographic boundary of Bangladesh by SOMRA (a 3P agency) including all outlets found operating at the time of the survey. Initially a questionnaire is prepared for the survey.

Relevant pieces of information that helps in formulating a solid coverage strategy are:

Name, address and location of outlet

Retail / wholesale ratio

Channel definitions

Total product range

Value per outlet for all categories not only Unilever categories

1.

2.

3.

•

•

•

•

•


70 71

There are two main reasons as to why value per outlet for all the products is significant rather than just value per outlet for Unilever products.

It is very difficult to get correct information about a company’s business from a particular outlet.

Finding out the opportunistic outlets and opportunistic channel for Unilever to improve in the channel where Unilever is weak. All the data is by distributor so that it can be used at town / distributor / territory / regional level.

Once census is completed, the following are made available:

Total Universe of Outlets – where they want to go

Total direct coverage – where they currently are

Total number of outlets not serviced by UBL – the Coverage Gap – How far they were from the destination

With the help of the above chart, Unilever finds out the optimal coverage. Initially, a small percentage of outlets generate more value but as the number of outlets increase the curve starts to become flat. This is because more and more marginal outlets come into the equation. Unilever take that point as the cut off point from where incremental coverage do not yield proportionate incremental value

1.

2.

1.

2.

3.

Pallydut Coverage110000

Direct Coverage after RCS 215000

100959085807570656055504540353025201510

50

% V

alu

e

% Outlets

Feasible Coverage Optimal Coverage

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100


70 71

This is at a national level. Once UBL knew the optimal coverage targets, then judgement is applied to find a realistic coverage target considering the following factors:

Dispersion of outlets

Cost to serve

Key Results & Benefits

Base for Coverage Expansion / RTM Reorganization: From RCS database, actual coverage gap could be identified which in turn provided with a base for coverage expansion plan. In 2004, the largest reorganization in UBL history took place, which was done solely depending on the RCS. Without a database like RCS a reorganization of this scale might not have been possible. Unilever’s coverage increased from 165,000 to 215,000.

Base for Distribution Correction: Gives not only the number of outlets Unilever is not currently covering, RCS could also supply with the number of outlets where Personal Wash products of competitors, for example, are present but Unilever’s PW products are absent. From this information, Distribution Correction Plan for different category / brands could be developed with a reliable tool.

Rural Mapping – Base for Coverage by Freelance DSRs: One of the most significant benefits of RCS is that it helped identify the actual coverage gap in the deep rural areas where direct distribution is not feasible / profitable. The idea of UBL’s successful project Pallydut was generated to address this issue, which would not have been possible without a firm direction that was indicated by RCS.

Limitation: However, there are limitations. It includes outlets which are found operational at the time of survey. However, by the time the company planned the re-organization based on the RCS data, few outlets (mainly marginal outlets) in the database could not be found when physically verified. It is recommended to utilize RCS data as soon as it is ready otherwise it loses relevance.

•

•

1.

2.

3.


7� 73

How it Worked

4 Step Action Process to be followed for implementing RCS:

Sorting out 80% value contributing outlets

Desk Verification

Field Verification

Planning Phase

Step: 1 Sorting Out 80% value contributing outlets:

Use RCS to sort 80 % value contributing outlets

Export the data to Excel file

Exclude all outlets which don’t sell our categories i.e. drug store / fertilizer outlets / fruits shop / hotel / tea stall etc.

The outlet database derived in this fashion will be termed as “Mother List”.

Step: 2 Desk Verification

Verify the list of covered outlets (previous outlet survey ) with the mother list in order to locate 80% value contributing outlets that are currently uncovered:

Step: 3 Field Verification:

After sorting out 80% value contributing outlet which are not being covered, the next step is to verify the same through field visit by involving the DSRs / Supervisors in the process.

•

•

•

•

1.

2.

3.

4.

Previous Outlet Survey List which is currently being covered

Outlets currently being covered but non existent in the Mother list: Don’t Worry, keep covering

80% Value Contributing Outlet List / Mother List

80% value contributing outlets which are currently not being covered: Area to concentrateCommon Outlets: No Problem

Note: circles not according to scale


7� 73

For simplicity, the verification can be initiated thana or section wise. The following format can be used for field verification:

80% Value Contributory Outlets which are currently

not being covered

Field Verification

NC NF BC NC AC OC OT

NC: Not Covered, NF: Not Found, BC: Business Change, NC: Name Change, AC: Address Change, OC: Other Change (Channel, Type etc); OT: Other Territory

Step: 4 Planning Phase

After physical verification, the new outlets that will be identified as uncovered, will be grouped under the following heads:

Existing Route New Route

The uncovered outlets that have been identified within the existing routes or adjacent route can be tagged with the existing section through section resizing

For outlets that can’t be covered under any existing route have to be covered by creating new routes.

Detail planning regarding additional logistics, manpower etc. to support coverage expansion.

Key Results

Accelerated growth: Since the implementation of RCS in 2004 UBL has enjoyed accelerated growth as shown in the following chart:

1.

2.

1.

Growth

2004 2005 YTD 2006

25

20

15

10

5

0

14

2021


74 75

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Highest ever coverage expansion in UBL’s history. In 2004 UBL’s direct coverage via distributors increased from 165000 to 215000. Another 110000 outlets came under coverage in 2004 and 2005 by Pollyduts (Free Lance Sales Representative).

Both numeric and weighted distribution of most of the UBL skus increased.

RETAIL CENSUS: The Questionnaires – Bangladesh

RETAIL CENSUS DATA COLLECTION FORM

2.

3.


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��

��

��

��

��

��

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Thank Respondent and Close Interview


76 77

Appendix D

Field Capability Score (FCS) – IndiaComputing for Field Capability ScoreMarket Type: 1 Unilever Market Position: StrongKey Challenge: Standardization of Field Force market performance

Effective coverage (ECO) 90% 90% of the outlets under coverage must be invoiced at least once in a cycle

Bill Productivity (BP) 65% 65% of the scheduled calls must be productive

Lines per productive call (LPC) 15 15 lines must be sold in every productive call.

Total outlets 100 Scheduled calls 400 weekly coverageECO Target 90 90 outlets must make at least 1 invoice in the cycleBP Target 260 = 400 X 65% Salesman should make a bill for at least 260 outlets

LPC Target 3900 = 15 lines X 260 O / L Salesman should sell at least 3900 lines

The distributor salesman gets a score of 100 for each parameter that he achieves. He has to achieve all 3 parameters i.e. score of 300 achieve FCS.


76 77

Appendix E

URBAN COVERAGE EXPANSION – IndiaRevisiting the gaps to tap opportunitiesMarket Type: 1 Unilever Market Position: Strong Key Challenge: Increasing outlet coverage

ObjectiveIncreasing urban coverage is usually not so much about expanding ‘boundary’ of coverage (as is in the case of Rural Expansion) but more about ascertaining the “gaps” in the already present coverage.

The process of increasing urban coverage for an ASM is a simple 3-step process.

How it Worked

Step 1: Do I have the adequate amount of coverage?

At the first instance it will be important to understand whether there is a weakness in the existing coverage and if there is a need for this exercise at all. And if indeed a gap is discovered, it is important to understand the extent of this gap.

The robustness of coverage can be measured by a variety of economic indicators but one of the simplest has been found to be the metric of ‘Population’.

Each area has a standard number of outlets per unit of population. For example in India the standard has been found to be:

Outlet norms Per Unit of Population

Heavy Urban Area 300 0.1 million

City 250 0.1 million

Small town 220 0.1 million

Village 180 0.1 million

The table above indicates that for a large Urban Metropolitan area in India, say Mumbai, there must be about 3000 outlets per million people. Hence if the census data for a geography is available, it will be able to see what the shortfall in coverage is.


78 79

Step 2: I know I have a coverage problem but how do I gain coverage?

Having quantified the extent of the problem the next stage would be an outlet audit. If population statistics are available for smaller units of the city (such as postal areas, wards, etc.) then the problem areas can be isolated and the audit can be done only on the focused problem areas.

An audit is ideally carried out by a professional agency and the information they provide can be tailored by you. A handy checklist of information you might like would be:

Name of the Outlet

Address of the outlet

Total monthly turnover

Key brands stocked in your focus categories

Whether competition has put up visibility in the outlet

Step 3: I have the audit results – how do I proceed?

Once you have the audit results you will need to go through the list with a fine-toothed comb. You will not cover all outlets in the list provided as all outlets may not stock the relevant categories you are interested in. Moreover, there will also be a threshold turnover, below which any outlet covered would work out inviable for your distributor. For example you may choose to explore all outlets stocking any brand of soap and having a turnover of $40 per month.

Having fine-tuned the projected list of outlets, you can sort these out basis geography and hand the list over to the relevant sales in-charge. The sales rep will then have to physically visit this outlet, verify the findings of the agency and enroll the outlet under the distributor’s coverage.

This verification should ideally take about a week. At the end of the period you would need to check if the additions have been incorporated into your coverage by cross-checking the modified beat plans. The new beat plans should list these new outlets as part of the salesman’s beat.

You might want to carry out this activity every once a year or once every two years as a dipstick of coverage hygiene in your area.

•

•

•

•

•


78 79Appendix: Channel Goals

Appendix F

a. One-Look Program – PhilippinesAchieving the same look across outlets by channelMarket Type: 2 Unilever Market Position: MediumKey Challenge: Ensure a common merchandising – look at the channels

BackgroundOne Look program started in 1995 focusing on the Public Market channel

Results were successful and encouraged competition to follow

The program was revisited to ensure that channel understanding and shopper insights are incorporated

Objectives

Align with channel definitions and cover key channels

Update standards incorporating shopper insights, category / brand and channel strategies

Integrate all shop score components

Align with EDGE metrics

•

•

•

•

•

•

•

80 81

Ensure ease of execution for the sales force

How it worked

Start with a POP vision to get the basics right

POP vision is supported by POP hits and score as shown in the framework below:

•

•

•

A summary of merchandisinghits at POP, taking a specific

look at the ff POP drivers:

1) Assortment2) Pricing3) Planogram4) Merchmats

All except POP Promotions!

An audit process, both internaland external, that measures

the stores in terms ofadherence to the POPHits.

V i s i o n

h i t s s c o r e

POP hits are defined as follows:•

POPHits

Assortment OSA

Shelf Capacity

Product HK

Pricing Pricing

Planogram Brand Location

SOS >= SOM

Sequencing

Segmentation

Merchmats Must-have

Add-on


80 81

Translating the POP hits into the channels mean the following:•

How do hits translate to GT?

POPHitsGT

DSOTC PM SSS

Assortment OSA MKLs (set per channel cluster)

Shelf capacity N/A

Product HK Clean, Intact, Upright and Facing the shopper

Pricing Pricing min LPATmax SRP

min LPATmax LPAT + 2% (if RTM) or SRP (if non-RTM)

min LPATmax SRP

Planogram Brand location Middle of cabinet Full frontal hangerGlass cabinet

SOS >= SOM Glass cabinet min 35%

Hanger 50-75-100% of store frontageGlass cabinet: none

Segmentation N/A

Sequencing Brand / Variant

Merchmats Must-have All DSOTC i. Full Frontal Display only

ii. Full Frontal Display with ULP Glass Cabinet

iii. Duplo Module

i. Full Frontal Display with ULP Glass Cabinet

ii. Full Frontal Display only

Add-Ons

It is not a menu of what can be done in a channel...IT OUTLINES HOW THE TOTAL STORE SHOULD LOOK LIKE WITH OUR PRODUCTS!


Some examples of the Hit number 1, which is the assortment by channel (Mom & Pop)

•

Sari Sari Store

8� 83Appendix: Channel Goals

Hit number 2 is on Pricing to ensure compliance is according to the pricing strategy•

Hit number 3 is on planograms by channel. Below are some examples:•

Sari Sari Store

Sari Sari Store

8� 83Appendix: Channel Goals

Sari Sari Store

Sari Sari Store

84 85

The last Hit is on Merchandising materials defining the Must Have and Add-on tools.

Some examples follow:

•

•

Execution at the channel is measured by both self-audits of the Field force and a Third Party audit

Measurement becomes a way of working at all levels(from Unilever managers, the Distributor managers and salesmen

•

•

Sari Sari Store

Sari Sari Store


84 85

Key Results & Benefits:

...allowed us to dominate Mom and Pop stores...

...allowed us to highlight priority brands...

Point 1Hanging / Frontage Display

Point 2What’s New Display

Point 1Hanging Display


Plus Highlighting of Close Up and Surf


Point 2Counter Top Display


86 87

...allowed us to highlight priority brands...


Plus Highlighting of Close Up and Surf


Point 2Counter Top Display

Point 2What’s New DisplayPoint 3

Glass Module

Point 4Pyramid Module


...allowed us to include other merch materials...


86 87

...allowed us to extend it to Foods...

...DOMINANCE in public markets...

One Look Merchandising

Point 2Counter-Top Display





88 89

...DOMINANCE...

...DOMINANCE...




Highlighting of Close Up

Ponit 3Glass Module Display


Highlighting Surf and Close Up




Merchandising ProgramsStar Club – VietnamGoing for high-impact and long term merchandising programsMarket Type: 2 Unilever Market Position: StrongKey Challenge: Stand out of the clutter in the most efficient and permanent way

Background

With strong Unilever brands in the market, competition is also very active.

Merchandising is always a tough battleground and materials are easily matched or out-merchandized by competition

The channel’s (Market Stalls and Mom & Pop) outlet owners welcome innovative and functional materials.

Objectives

•

•

•

CLB

“SAO TRUNG

BAY”CLB

“SAO TRUNG

BAY”

Off-takeBuilder

Salesdriver

CompetitorsDefeater

LoyaltyBuilder

Brandingat POP

Star Club

STAR-CLUB using Merchandising for leveraging at POP

OBJECTIVE


How it worked

Designed merchandising tools which serve as functional tools for the channel (e.g., plastic shef-in-shelf, hangers for sachets, plastic standees with rollers and glass cabinets)

Developed basic merchandising standards for each channel outlining the presentation of the brands and planograms, position of the brands in the category and inventory of the products and merchandising materials.

Presented and agreed with the outlet owners the merchandising standards and sealed the agreements with annual contracts.

Incentivised the outlet owners with gifts as long as the standards and inventory of Unilever products are maintained always.

Developed a 5-star rating to qualify the outlets to five (5) different levels, 5-star status being the highest and most coveted.

Directed both the Distributors’ sales force and a Third Party Agency to self-audit and check the quality of execution.

•

•

•

•

•

•


STAR-CLUB using Merchandising for leveraging at POP

Pictures

Key Results & Benefits

Implemented and sustained in 20,000 outlets

Big factor in owning the channels (Market Stalls and Street Stores)

Sales in these outlets increased to at least 35%

Market Share in all categories of the participating channels higher than non-Star Club members

Space share increased by a minimum of 10%

•

•

•

•

•

9�Introduction

9�Introduction

Key Performance Indicators (KPIs)

94Introduction

95

94Introduction

95

Broad Overview

KPIs

EDGE Metrics

Performance linked / Differentiated TTS

Distributors ROI - % & cash

Customer Satisfaction Score ( EQ)

FCS, SAI, Debtor days, stock level, QOC & QOP

Focusing on service excellence

Cost benchmarks

Trade CCFOTEDGE Metrics achievement


Once we have established the Channel Goals for our Distributors, the next step is to put in place relevant KPIs & enablers such as Terms of Trade to drive strategic goal alignment with our Distributors.

This would mean the following:

1. Cascade & monitoring of the EDGE (Every Day Great Execution) metrics (that relate to our distributors.)

The EDGE metrics is a comprehensive set of metrics that measure our effectiveness at POP.


96 97

Given below is the scope of EDGE.

1. What are we trying to achieve?

ImproveBusiness Performance

• GSV• Turnover• USG• TMI• CC• Debtor

Availability Visibility Price Promotion

On shelf Visibility(MT-SOS >= SOM)

(GT-Forward)

Off shelf Visibility(MT – secondary display

visibility)(GT– Display visibility)

Price vs. Competitor(GT & MT – Price Index)

Promotion Effectiveness (GT & MT

Promo pressure)

Promotion ROI (GT & MT – ROI)

Stock Availability at customer & distributor

(MT – CCFOT)(GT – SAI FCS)

On-shelfAvailability

(MT-OSA & NOOS)(GT-OOS)

Relevant Assortment Distribution(GT & MT – Weighted

Distribution)(GT & MT – Brand Devt Index)

New product (MT – NPI speed)

(GT-NPI speed primaryGT-NPI speed secondary)

Regular(MT void B)

Market share growth Financial Improvement+

The key EDGE metrics that relate to our Distributors are:

Field Capability Score which is the combined measure of effective Coverage, Bill Productivity & Lines per Productive call.

a.


2. How?

96 97

FCS has now been integrated into the EDGE metrics and measures % complianceTo improve FCS standard Operating Procedures have been documented and available in the EDGE Guide.

Stock Availability Index which measures stock vs norm and includes stock days

Debtor Days which measures the Distributor’s debt with Unilever

New Product Introduction (NPI) speed

Forward stock compared to Market share in GT stores & Share of Shelf vs Share of market in MT Stores

% Out of Stock in GT stores & % On shelf availability in MT stores.

Improvement in these KPIs will lead to improved business performance. Leading Edge companies would have documented Standard Operating Procedures to accelerate improvement in the metric scores.

Details of EDGE metrics & Glossary is given in the Appendix G.

Given below is a Regional Framework of how EDGE is brought to life and integrated with CD KPIs.

b.

c.

d.

e.

f.

EDGE

Availability Visibility Price Promotion Customer Satisfaction

• Numeric Distribution• Weighted Distribution• On Shelf Availability• Out of Stock• Nearly Out of Stock

• Forward Stock• Share of Shelf

• Price Index • Numeric Dist• Weighted Dist• Market Share

• eQ Score – CSS

EDGE Metrics

KPIs

• Sale Out• FCS• Focus Packs• CCFOT & OOS

• Channel Plan• Visibility

• Price Variance • Focus Pack• OPSO & ROI

• ROI• NCC• CCFOT• OOS• Distributor Stock

(in wk)


98 99

2. A revisit of our Current Trade Terms Structure to ensure that the terms of trade drive performance of our Distributors.

Our Distributor trade terms in most countries are “flat” discounts / commission or mark up with low co-relation with business performance aligned to Unilever’s strategic goals.

The most critical part of the Distributor Management Process is the establishment of Distributor Terms of Trade.

In essence there are two components to GT TMI as shown below. The objective of the Distributor Terms of Trade is to manage the “transactional” part of TMI.

TTS VS COUNTERPART

TRADE TERMSBusiness Building

Efficient OperationOther Terms

COUNTERPARTPromotionActivation

Extra VisibilityTrade Communication to Consumer

• Benefits which Customer get by selling UL brands.

• Transparent between Customers.• “Value Given Value Received” basis so benefit can be seen instantly.

• Benefits which Customer get by developing UL brands.• Different for every Customer to reflect our strategic intent with each customer.• On “Investment” basis so benefit can be seen in the long term.

The Terms of Trade need to allow the Distributor a reasonable return above their cost of doing business and to drive the Opco distribution strategy.


98 99

A leading edge Opco would have Terms of Trade which are fair, equitable, transparent and reward the Distributor (above the cost of doing business) on a “Value Given Value Received” basis.

In the Next Generation distributor model, trading terms need to be redefined on a “cost plus” basis incentivising the right “behaviours” from our Distributors.

Given below is an example of how this can be done in a Type 1-2 or Type 3-4 market.

Type 1 & 2 Example

Distributor Trade Terms – India

Distribution Models CSP RDRS

(Urban / LAB)

RS(CIDC)

Trade Discount % 1.50% 3.00% 0.80% 0.80%

Selling & Distribution Cost % 1.20% 2.31% 1.96% 2.46%

Interest Cost % 0.32%

RS Margin % 0.50% 1.45% 2.00% 1.50%

Unnati Program % (Variable for RS)

0.50%

Gross Margin %* 4.02% 6.76% 4.76% 4.76%

* Only HPC without wheel

Legend:CSP = Channel Service ProviderRD = Rural DistributorRS = Redistribution Stocklist (Urban Distributor)LAB = Leadership Across Business (Rural)CIDC = Combined Indirect Coverage (Rural)


100 101

Low

Bu

sin

ess

Res

ult

KPIs for UL distributorSales volumePriority category salesNew product quick listingCoverage

1.2.3.4.

UL

Polic

y C

om

plia

nce

Promotion executionPrice controlCustomer serviceNo goods return

5.6.7.8.

DT

Op

erat

ion

R

eso

urc

es

Stock levelEarly paymentInformation sharing

9.10.11.

Imp

act

on

DT

Beh

avio

ur

DT’

s be

havi

our

coul

d be

ea

sily

cha

nged

if t

rade

te

rms

appl

ied

on it

•

Driven by trade terms

Driven by BB Fund

Relative importance to ULImportance to drive UL growth profitability and operation efficiency

•

1

2

10

8

3

6

5

9

11

4

7

High

HighLow

KPIs prioritisation

Covered by current trade terms

Not covered by current trader terms

Type 3 & 4 Example

Trade terms should be applied to prioritised DT KPIs

The most comprehensive example in this area resides with Unilever Thailand and a copy of the Thai TTS can be found in the Appendix H.


100 101

3. Quarterly Quality of Contribution (QOC) & Quality of Performance (QOP) targets.

What is QOC?In addition to measuring Top line Growth, a measure termed as Quality of Contribution (QOC) has been designed to ensure holistic execution at POP. It consists of metrics that are:

Basis factors within the control of people being measured &

Drives long term health of the system

These metrics are also:

Consistent across channels, population strata & branches / regions

Involve a limited amount of manual or automated data collection

Has relevant “importance” or “materiality” weights for the people being assessed &

Is clearly linked to the SIA plan.

•

•

•

•

•

•


10� 103

Rewards & Recognition

These metrics are used to::

Decide on quarterly / monthly bonus for CEs / AEs / TSIs

They are also to ensure optimum performance consistently throughout the year

Determine RSSM variable pay (FCS)

Decide on quality of FF basis QOC results

E.g., RSSM are rated A / B / C on the basis of FCS achievement

Please see Appendix I for examples of JC incentive scheme and Quarterly incentive scheme

•

•

•

•

•

•

QOC components

RS RSSM TSI AE CE ASCM

Businessperformance

Value (basis QOP) Value (basis QOP) Value (basis QOP)Value – Channel specific (basis QOP)

QOP

AvailabilityECO target (selected packs) Depth target (RR uplift)

ECO target (selected packs) Depth target (RR uplift)

ECO target (selected packs) Depth target (RR uplift)

Visibility Visitrack Visitrack Visitrack (AE avg)

FCS% FCS achieved by his RSSM

achievement% FCS achieved by his RSSM

FCS% FCS achieved (TSI average)

Execution Efficiency

PNC (N-2)Activity efficiency score

Capability development

% improvement in bottom box RSSM TSI evaluation by ASCM TTSSI scores

Infrastructure infra kundali Infra index

RS SM = Redistribution Stockist Salesman (Distributor Sales Rep)TSI = Territory Sales In Charge (Unilever Sales Rep)AE = Activation ExecutiveCE = Capability Executive (Field TrainerASCM = Area Sales & Channel Manager (Unilever Field Sales Manager)


Given below is an example from India where it was first introduced which details standard QOC components:

10� 103

KPIs

KPIs

Value delivery

KDSM / KDSM Supervisor

KDM FSM / RM / GSM

MR / MR Supervisor

FAM / TM SC / Commercial

Week & Month Target Focus Pack (Depth)

Week & Month TargetFocus Pack (Depth)

Month Quarter TargetFocus Pack (Depth)

Month & Quarter Target

Month target*Quarter Target*

Availability Focus Pack (Width) FCS

Focus Pack (Width) FCS

Focus Pack (Width) FCS

CCFOTOOS / SAI

Visibility Merchandising Score

Merchandising Score

Merchandising Score Activation Score

Merchandising ScoreActivation Score

Price Price Index Price Index

Promotion Focus Pack (D&W)#

Focus Pack (D&W)#

Focus Pack (D&W)#

Channel Plan Channel Plan ROI / OPSO Budget Compliance

Customer satisfaction

NCCROI

NCCROI

NCC^ NCC^ NCCClosing Stock

* Sale in for SC# Promo Pack to be part of Focus Pack^ Trade NCC for activities / channel plans (Customer Marketing)

Delivering QOC through EDGE

EDGE SOPs aim to improve in QOC metrics:

Availability (ECO, FCS)

Through selling through replenishment

Ensuring range through scientific stock norms

By rigour in lineselling

Visibility (Visitrack)

Standard operating procedures

Resolution process

Capability Development (improving bottom boxer RSSM)

Mandating ways of working in the market place base on best practices

Given below is an example from AMET in the same area defining clear KPIs, line of sight & weightage.

•

•

•

•

•

•

•

•

•

•


104 105

KDSM / KDSM Supervisor

KDM FSM / RM / GSM

MR / MRSupervisor

FAM / TM SC / Commercial

Value delivery

Week Target

Month Target Month Target*

Quarter Targets Quarter Target*

Focus Pack (Depth)

AvailabilityFocus Pack (Width) CCFOT

FCS OOS / SAI

VisibilityMerchandising Score

Activation Score

Price Price Index

Promotion Focus Pack (Depth & Width)# Channel Plan

Channel Plan ROI / OPSO

Budget Compliance

Customer satisfaction

NCC^

ROI Closing Stock

* Sale in for SC# Promo Pack to be part of Focus Pack^ Trade NCC for activities / channel plans (Customer Marketing)

Line of Sight


104 105

What is QOP?QOP stands for Quarterly operating plan and is a sub-set of QOC. It measures your achievement of Secondary volume & value targets.

This is a quarterly plan which is broken up into 3 cycles and weightage is given for both monthly & quarterly achievement.

A composite scorecard is used to measure both QOP (subset of QOC) & QOC.

An example from India on QOP is given below:

QOP:Derived Secondary Nos. after taking into account stock reduction based on BSSSFirm estimates to add to QOP Commitment RM / RSM to carry primary sales targets

Performance of RM / RSM: 100% on QOP.

Performance for ASM: 50% on JC and 50% on QOP achievement

Performance for TSI / SO: 50% on JC and 50% on QOP achievement

Performance against key Ops – 5 Key Ops with clear uplift targets.Action Standards:

Achieve target in all 5ops packs: 5 points

Achieve target in 4 ops packs: 4 points

Achieve target in 3 ops packs: 3 points

Achieve target in < 3 ops packs: 0 points

RM = Regional ManagerRSM = Regional Sales Manager (HPC or Foods or Corporate)ASM = Area Sales & Customer ManagerTSI = Territory Sales In ChargeSO = Sales OfficerBSSS = Brand Secondary Sales Strategy

Given in Appendix J are some examples of QOC scoring sheets and Appendix K are QOP measurements.

•

•

•

•

•

•

•


106 107

Risk vs Return

Competitor X Distributor

Unilever Distributor

Stocks

Real Estate

Treasury Bills

Risk Free Rate of Return

(Market) RiskHighLow

Note: With risk we mean the volatility of financial returns over time

ROI of an asset

High

Low}

Corporate Bonds

Q: What ROI is the competition offering to their distributors?

Q: How does the ROI we offer our distributors compare to alternative investment options?

4. Distributor ROI

A key philosophy in the Next Generation Distributor model is to treat the Distributor as a Business Partner. This means ensuring that the Distributor has an attractive cash return on his business as well as a good Return on Investment%. In terms of Cash Return, the Distributor should get a return which is in the top quartile for FMCG distribution in his market and a return on investment% which is a minimum of 2.5 times the Minimum Bank Lending Rate (MLR)

Excessively high ROI % is not desirable as well and any return on investment exceeding MLR by 4 times should be examined carefully.

Cost Modelling of Distributors is a good practice to ensure that distributor costs are constantly monitored and kept at optimum levels.

In the Appendix L a toolkit for calculating ROI is demonstrated. This toolkit enables you to calculate Distributor’s ROI in a standardized manner.


106 107

5. Trade CCFOT

This is the most difficult and desirable part of the Next Generation Distributor model. This refers to the ability to work on replenishment basis with his customers and to be able to measure his CCFOT to his customers. The higher the CCFOT to his customers, the lower the Out of Stock of Channel standard assortment leading to increase in Market Share. This is truly possible in an environment where SFA (Sales Force Automation) is fully integrated backwards into the Unilever ERP system.

Trade CCFOT for 100% of the universe while ideal is difficult to do. It is recommended that Trade CCFOT be measured for Gold Customers and / or channels.

The objective of Trade CCFOT is to reduce loss of sales and increase market share.

6. Customer Satisfaction Survey (eQ Score)

The most important measure in terms of KPIs is an external customer satisfaction survey. For example, Unilever uses AC Nielsen in Asia AMET to conduct detailed Customer Satisfaction Surveys (branded as eQ Survey) once every two years among its distributors, wholesalers, retailers & modern trade customers. The objective of Unilever is to be the No. 1 supplier and to consistently improve its eQ scores vs its competitors. This is only possible where the Unilever distributor is operating at peak efficiency.

Given below is an example of a summary eQ score from Vietnam:

eQ™ Index Vietnam

important weighting Unilever P & G Nestle Colgate

2002 1998 2000 2002 1998 2000 2002 1998 2000 2002 1998 2000 2002

eQ Index 85 88 91 75 77 79 – 71 72 66 71 72

image 79 88 90 94 75 76 79 – 71 73 65 70 72

Product Marketing / trade

Support

71 89 93 95 77 79 82 – 72 74 65 68 71

63 65 89 92 72 76 79 – 67 67 62 69 68

Profitability order / delivery & billing

serviceBuilding Trade

59 81 81 87 71 72 76 – 65 67 63 69 71

52 82 87 89 79 82 81 – 79 78 75 80 78

53 83 87 91 76 78 79 – 73 75 79 74 74

Partnership 43 86 76 68 68

Base: All who gave an answer 364 363 367 289 344 367 319 367 145 354 357


108Introduction

108Introduction

Appendix: KPIs

110Introduction

111

110Introduction

111

Appendix G

Every Day Great Execution (EDGE) Metrics GlossaryMeasuring our effectiveness at the POP

Metrics SourceLevel of Requirement

Country Level Product Level

BUSINESS PERFORMANCE

Finance Data as reported in carat* / as per manual report

GSV (in Euro m) Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

Turnover (in Euro m) Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

USG% Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

TMI% Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

CC% Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

Debtor Days Carat (National) / Country Report (GT-MT Split) National GT - MT Corporate Corporate

Market share (AC Nielsen) AC Nielsen National GT - MT Category Brand

AVAILABILITY

CCFOT% (as per country report) Regional supply chain (national - corporate) / Country report (GT - MT split & category data)

National GT - MT Corporate Category

Brand Development Index (AC Nielsen) AC Nielsen National GT - MT Category Brand

%Wtd Distribution (as per AC Nielsen report)

AC Nielsen National GT - MT Category Brand

AVAILABILITY GT

%OOS GT (as per AC Nielsen report) AC Nielsen GT Category Brand

SAIGT Compliance (distributor report) Country report (distributor system) GT Corporate Category

%FCS GT Compliance (country distributor report)

Country report (distributor system) GT Corporate Category*

% Assortment as per AC Nielsen report AC Nielsen GT - MT Category Brand

NPI Speed GT (primary) Country report (distributor system) GT Category

NPI Speed GT (secondary) Country report (distributor system) GT Category

AVAILABILITY MT

Void B Country report (Local Field Audit Check) MT Category

OSA MT Compliance Country report (Local Field Audit Check) MT Category

NOOS MT Compliance Country report (Local Field Audit Check)

NPI Speed MT Country report (Local Field Audit Check) MT Category

VISIBILITY

% Forward Stock GT (as per AC Nielsen report)

AC Nielsen GT Category Brand

MT Linear SOS >= SOM Compliance Country report (Local Field Audit Check) MT Category

Display Visibility Score GT Country report (Local Field Audit Check) GT Category

Secondary Display Visibility Score MT Country report (Local Field Audit Check) MT Category

PRICE

Price index (as per AC Nielsen report) AC Nielsen (based on Unilever standard of price rates against competitor)

GT - MT Brand

PROMOTION

Promo Pressure Finance data GT - MT Category Brand

ROI Finance data GT - MT Category Brand

Appendix: KPIs

11� 113

Measure Description of KPI How to calculate

GSV Sales Value to third party customers arising from the sale of products in the course of the company’s ordinary activities, before any deductions are made. Value is based on country list price or price before any discounts.

Total Value sold based on country list price or price before any discounts

Turnover Net sales value derived from GSV deducted by Trade Marketing Investment

GSV – Trade Marketing Investment

USG% Underlying sales growth. This is like for like growth.

(TY T / O – LY T / O) / LY T / O%

TMI% Trade Marketing Investment over Turn Over. Trade Marketing Investment in customers includes Efficient Operations, Business Building, and Other Terms.

(Efficient Operation (EO) + Business Building (BB) + Other Terms (OT)) over TurnOver

CC% Customer Contribution over Turnover TurnOver deducted by

Supply Chain Cost, Trade A&P, Trade Mktg research and CD Indirect, divided by TurnOver.

1.2.3.4.

Debtor Days Debt owed by Customer Number of actual days outstanding to collect cash from sales invoiced to customers

Market Share This measures our position in the market vis a vis our competitors on certain SKU, brand, or category

Value of product sold to the market over total value of particular product in the market

CCFOT This measures our ability to service demand of our primary customers (large accounts / distributors) on a per order basis. This is a key driver of customer satisfaction

No of cases ordered captured No of cases invoiced captured No of case delivered (subset of (2)) on time as per service level agreements is captured CCFOT is (3) as % of (1)

1.2.3.

4.

% FCS FCS is a composite measure of front end selling efficiency of distributor salesmen as measured by 3 parameters

Bill productivity (% of outlets billed on a day out of total calls made, Effective coverage / ECO (% outlets of total planned universe billed

1.

2.

Target for distributor salesman for a month is 65% Bill productivity, 90% ECO & 15 LPPC On achieving each of the targets he get 100 points and hence maximum possible is 300% FCS score measure the % of distributor salesmen achieving score of 300 in the market

1.

2.

3.

Appendix: KPIs

11� 113


Brand Development Index

This helps us determine headroom opportunity in a channel for brand(s). This is an index of market share of brand(s) in GT versus market share of the same brand(s) overall, all channels put together. Hence if the index is below par, the headroom is determined

(Market share of selected brand(s) in GT) / (Market share of selected brand(s) overall (all channels combined)). If this is < 1, it indicates an opportunity.

Weighted Distribution

This metric gives us an idea of the “relevance” of the distribution from a category context

Percentage of total sales value of the category from the shops that has stock at the time of audit for a particular brand to the total category value in all shops that has stock for the category

Stock Availability Index

This measure helps us determine if the distributor has adequate stock cover across SKUs to service POPs w/o loss of sale

A safety stock norm is defined for the distributor depending on service frequency and sale rate of SKU Value of all SKUs is added, ignoring the value which is in excess of the safety norm for that particular SKU The value thus arrived at is

1.

2.

3.

% SKUs OOS This indicates the gaps in SKU assortment availability in key outlet types for critical brands

The audit identifies SKUs by outlet which are not available and calculates this as a % of relevant outlet-sku combinations which exist

%SKUs NOOS This indicates the gaps in SKU assortment availability in key outlet types for critical brands

The audit identifies SKUs by outlet which are available in a very small quantity as compared to the rate of offtake & will soon be out of stock (leading to loss of sale) and calculates this as a % of relevant outlet-sku combinations which exist

Void B Void B – indicates the gaps in SKU already listed with the number of SKU actually placed on shelf (according to price tags available)

VOID B – The audit identifies the number of SKU’s placed in shelf (according to price tags available) vs. number of SKU that has been listed.

% On Shelf Availability

This indicates the gaps in SKU assortment availability in key outlet types for critical brands

The audit identifies SKUs by outlet which are not available and calculates this as a % of relevant outlet-sku combinations which exist

Appendix: KPIs

114 115


Speed to Distributor

This measures the speed at which reach action standards have got met in case of NPI

In order to ensure NPI speed to outlet, it is important that the new product reaches distributor point as per the agreed norms. The % of distributors receiving NP stocks as per the agreed norms is the NPI primary speed to distributor

Speed to Shelf


Every NPI needs to have a targeted no of outlets and sell in norm by SKU by outlet classification The % of outlets meeting sell in norms (ECO) is monitored as per milestones set for the NPI Time taken in no of days to meet targeted ECO is the SKUs

1.

2.

3.

Speed to Shelf


Every NPI needs to have a targeted no SKUs by account classification The first measure is the no of days to obtain listing of the SKUs by account The second measure is the no of days to make the SKUs available by account on shelf

1.

2.

3.

Forward Stock Share

Indicator of our on shelf presence Vs market share

% of total forward stock of the brand(s) / sku(s) to the total category forward stock

Linear Share of Shelf

This measure volume displayed against market share

The audit identifies number of SKU’s displayed on the shelf vs. actual market share

Visibility Score

Indicates how visible we are against competitor

A competitor is defined for each category. There are 5 sizes of secondary display XL, L, M, S, XS with points (6, 4, 2, 1, 0.5) for each display in store. Activity done during the month for each store get additional 2 (big one) & 1 (small one).

1.

2.

3.

Price versus Benchmark

Absolute and relative pricing (wrt to competition) is a key driver in wholesale and there is a need to comply to the agreed pricing strategy. This measure indicates degree of compliance to the same

Starts with defining key SKUs (including competition), for which price at wholesale is critical and clearly articulating the benchmark prices every month as per the pricing strategy AC Nielsen audit picks up the actual prevailing prices of these def

1.

2.

Appendix: KPIs

114 115

Appendix H

Trading Term Structure – ThailandGrowing with our business partners – the DistributorsMarket Type: 3 Unilever Market Position: MediumKey Challenge: Bringing the TTS framework to action with our Distributors

Fundamental income for CCN which aims to cover its operating costs and profit.

To drive business result which align to UTT strategy

To maximize growth of key brand and maximize contribution of key GT channel

Other income for CCN• Trip Incentive• Merchandising Blitz Incentive

4 Others

• Category / Channel Devt Fund• Optimum CCN Business

3 Category / Channel Development Fund

• NPS Achievement• UBC • Effective Outlet

2 Strategic Alignment

• CCN Fee1. Unilever Growth Fund

Unilever Growth Fund

Contents : CCN Fee Payment Rate : 6% of NIV before VAT Payment Method : On- Invoice

CCN = Distributor

I.

Appendix: KPIs

116 117

Strategic Alignment (NPS Related)II.

Contents Payment Rate Evaluations and ConditionsPayment Method

NPS Related

1.1 Achieved 100% of IOP target by cycle and by BU

• HPC1• HPC2 – Hair • HPC2 – Others • Foods

1.

12,000 Baht per cycle12,000 Baht per cycle14,000 Baht per cycle12,000 Baht per cycle(50,000 x 12 = 600,000 B)

1. Measured by actual NPS vs target set per cycle

2. Evaluate from 2nd sales at the end of each cycle

C / NC / NC / NC / N

1.2 Achieved 100% of IOP quarterly target for all BU’s

• HPC + Foods 35,000 Baht per quarter(35,000 x 4 = 140,000 B)

1. Measured by actual NPS per quarter

2. Evaluate from 2nd sales at the end of each quarter

C / N

1.3 Achieved 100% of IOP yearly target by BU

• HPC1• HPC2 – Hair • HPC2 – Others • Foods

25,000 baht per year25,000 baht per year30,000 baht per year25,000 baht per year(105,000 x 1 = 105,000 B)

1. Measured by actual NPS per year

2. Evaluate from 2nd sales at the end of the year

C / NC / NC / NC / N

Payment Rate compared to %NPS

% NPS < 95% 95% 100% 105% 110% 115% 120%

PMT Rate 0 0.75 1 1.15 1.3 1.4 1.5

Appendix: KPIs

116 117

Strategic Alignment (Non-NPS Related)

Contents Payment Rate Evaluations and conditionsPMT method

Non NPS Related

2.1 UBC Merchandising Scheme

• UBC RK HPK• UBC RK HPS• UBC RK Foods /

Wet Mkt

2.

3,000 Baht per quarter3,000 Baht per quarter3,000 Baht per quarter (*Start on Q2’06)(9,000 x 4 = 36,000 B)3,000 Baht / quarter

1. Same evaluations an conditions as UBC Scheme

2. UTT reserves the right for changing formula or ways of working during the year

C / NC / NC / N

2.2 Achieved Effective Outlet

• RK HPK 80%• RK HPS 80%• RK Foods 70%

(Q1’ 06) 80% (Q2 – Q4’ 06)

• RF 80%

3,000 Baht / quarter3,000 Baht / quarter3,000 Baht / quarter(12,000 x 4 = 48,000 B)

*Formula: (average 3 cycles)

no. of effective outlets of HPKno. of outlets in PJP

* Payment Ratio

C / N

Achieved

PMT Rate (times) BahtFoods HPK, HPS, RF

< 70% (Q1 ‘06) < 80% (Q2 ‘06 – Q4 ‘06) 75% (Q1 ‘06) 80% (Q2 – Q4 ‘06) 80% (Q1 ‘06) 85% (Q2 – Q4 ‘06)85% (Q1 ‘06) 90% (Q2 – Q4 ‘06)90% (Q1 ‘06) 95% (Q2 – Q4 ‘06)

<80%80%85% 90%95%

– 11.151.301.50

03,0003,4503,9004,500

2.3 Distribution Drive

• RK HPK (2)• RK HPS (2)• RK Foods (2)• RF (2)• RF Platinum (1)

6,000 Baht / cycle (3,000 baht / SKU)6,000 Baht / cycle (3,000 baht / SKU)6,000 Baht / cycle (3,000 baht / SKU)6,000 Baht / cycle (3,000 baht / SKU)6,000 Baht / cycle (6,000 baht / SKU)(30,000 x 12 = 360,000 B)

* Formula:

no. of outlets buying distribution SKUno. of outlets in PJP in previous cycle

* Payment is only made when achieving the distribution target (HIT OR MISS)

C / N

Market Share Open Trade in 2006

3. 1. Every 0.1% of increasing Open trade market share from 2005, get 50,000 baht

1. Measured by Open Trade market share2. Evaluated by estimate market share DJ-ON ‘053. Market share information is from AC Neilsen4. Maximum payment is 1,000,000 MB / CCN

C / N

Appendix: KPIs

118 119

Other TermsIV.

Contents Payment Rate Evaluations and conditions PMT

2 Starter Incentive Payment 2.1 HPS 2.1.1 Incentive Payment for HPS 2.1.2 Guarantee Profit 1.5% of

HPS NPS 2.1.3 HPS Incentive

2.1.3 HPS Incentive

100,000 baht for new CCN with HPS route additional 100,000 baht if HPS route is Pre-order1.5% of Actual GPRemark:** Break Even point = Sales 600,000 B.** Break Even point + Profit + sales 800,000 B

By cycle Achieved C / N PMT 100% 0.80% 110% 1.10% 120% 1.50%

By quarter 100% 0.20% 110% 0.30% 120% 0.50%

** For 2006 new CCN or CCN with additional sales area only

** 2nd sales per route <800,000 B per cycle** Achieved HPS target 80% or more

** Payment will start on Cy7 ’05 to Cy6 ‘07, 2 years total period

** Measured by % Achieved compared to actual performance by cycle and quarter

** Payment will start on Cy7 ’05 to Cy12 ‘06, 1.5 years total period

C / N

C / N

C / N

Appendix: KPIs

Contents Payments Evaluations and conditions PMT

1 Increase MPR contribution in 2006

1. Every 1 % MPR contribution increased, receive 50,000 baht

1. Measured at the end of the year 2006 (Dec, 31st 2006) from Solomon Report

2. Maximum payment 500,000 baht / CCN3. IOP 100% achievement is required

C / N

2 Achieved 100% from 2nd sales IOP Target for all BU’s 1) HPC12) HPC23) Foods

One pick-up truck; maximum valued 500,000 baht (Toyota or Isuzu)

1. Measured from actual NPS vs target set 20062. The given pick-up truck must be used for UTT business at

least 5 years

N / A

Channel / Category Development FundIII.

118 119Appendix: KPIs

Appendix I

Distributor Incentive Schemes – BangladeshRewarding and recognizing our DistributorsMarket Type: 1 Unilever Market Position: StrongKey Challenge: Engaging our Distributors to grow with Unilever

BackgroundAs UBL considers its distributors as “Business Partners” and Integral Parts of it growth journey it always puts a significant effort into ensuring their wholehearted commitment towards achieving company’s targets and goals on one side and continuously improving their capacity and financial health to facilitate those achievements on the other. UBL’s Incentive Schemes for Distributors are developed for this purpose. Currently there are two types of schemes:

JC incentive Scheme

Quarterly Bonus Scheme

In order to rationalize the scheme all distributors are divided into 3 groups according to their contribution to UBL business.

Group Contribution

A >=1.6%

B 1.5% to 0.75%

C < 0.75%

1.

2.

2

1.5

1

0.5

0

-0.5

0% 10% 20% 30% 40% 50%

0.01

0.75

1.6

Distributors Cont Group

Contribution of Group

Cu

t o

ff P

oin

t (C

on

t %

)

1�0 1�1Appendix: KPIs

Objectives

JC Incentive Scheme:

Encourage distributors’ direct involvement in improving the quality distribution

To reward distributors on achieving:

Value Target (by month): Minimum, Stretching & Outstanding

Distribution Improvement Target Achievement

Volume target achievement of Focus Brands and SKU of the JC

SKU Productivity / LPC Target achievement

Basics:Incentive to be calculated on Total Secondary Sales Value

Four parameters / targets to be considered for incentive:

Total Value target (secondary)

Distribution Improvement Targets (Channel – specific)

Focus Brands’ / SKUs’ volume target of the JC

SKU productivity / LPC Improvement target

Incentive to be given on each parameter individually upon achievement

•

•

a.

b.

c.

d.

•

•

a.

b.

c.

d.

•

Parameters Achievement % Group A Group B Group C

DMS Non-DMS DMS Non-DMS

i) Total Value

Minimum: 90% of target 0.2% 0.2% 0.15% 0.15% 0.1%

Stretching: 100% of target 0.4% 0.3% 0.2% 0.2% 0.15%

Outstanding: 110% of target 0.6% 0.4% 0.35% 0.3% 0.25%

ii) Distribution Improvement

100% Distribution of All SKUs (As per the town-wise target) 0.2% 0.2% 0.2%

100% Distribution of 80% SKUs 0.1% 0.1% 0.1%

iii) 5 Focus Brands Individual volume 0.02% per brand for DMS+ towns & 0.04% for Non-DMS+ Towns 0.1% 0.1% 0.2% 0.1% 0.2%

iii) SKU Productivity / LPC 30% Increase from Avg. Q1 ’06 base 0.2% 0.2% 0.2%

Total Maximum 1.1% 0.9% 0.55% 0.8% 0.45%


PARTICULARS PARAMETERS POINTS

1. Secondary Sales Growth• 20 – 25% YTD over SPLY Minimum• 25.1 – 30% YTD over SPLY Stretching• 30.1% + YTD over SPLY Outstanding

152550

2. Annual Business Plan implementation within the timeline: Any three from Parameters to be selected & clear target with time line to be agreed

• Section reorganization within time• Manpower deployment within time• Vehicle procurement within time• Durbin Implementation• Godown & Office Renovation• Working Capital Investment

Total for ABP Implementation

555555

15

3. Ensuring QOG (quality of growth) through Brand focus

• All brands above OPs Vol Growth Target• 90% brands Above OPs Vol Growth Target• 80% brands above OPs Vol Growth Target• 70% brands above OPs Vol Growth Target• Less than 70% brands above OPs Vol Growth Target

252015100

4. Discipline: Adherence to Distribution FundamentalsSource: Once a quarter joint audit by non-supervisorTM will check the Group C distributorsASM will check the Group B distributorsRSM will check the Group A distributors

Distributors’ Operations Management Audit Report

10

Objectives

Quarterly Incentive Scheme:

To encourage high performance distributors to perform even better

To boost up potential but currently low performers in improving their performance

Basics:

Evaluation to be made on a 100 point scale

Four parameters / targets to be considered for incentive:

Growth Target (on a cumulative basis)

Individual Brand Growth Targets

Annual Business Plan Implementation

Adherence to Distribution fundamentals

Incentive to be given on each parameter individually upon achievement

Point Matrix:

•

•

•

•

a.

b.

c.

d.

•

1�� 1�3Appendix: KPIs

Reward System:Based upon total points achieved, top 3 distributors from each group will be awarded cash prizes.

Group A B C

Total No. of Distributors 17 25 74

No. of Distributors to be awarded 3 3 3

Award % of Total Secondary sales of the group 0.051% 0.054% 0.058%

1�� 1�3

Appendix J

QOC Scoring sheets – India

RSSM (Distributor Salesman) TSI (Unilever Supervisor)

AIM Market share Market share

FACTORS WITHIN HIS SPAN OF CONTROL

Selling in – assortments / width / replenishment / compliance to the EDGE way of selling

Managing RSSM & RS to achieve sales

KPI: Business Performance KPI: Business Performance

METRIC Monthly Value Target (basis QOP) Monthly Value Target (basis QOP)

MEASUREMENT Secondary sales report (Unify) Secondary sales report (Unify)

KPI: Availability KPI: Availability

METRIC Range: 4 selected packs Range: 4 selected packs (4+4 for an HPC TSI)

MEASUREMENT ECO target (Unify) ECO target (Unify)

METRIC Assortment sell in (Range) Assortment sell in (Range)

MEASUREMENT Bundle ECO from Unify – 1 assortment per MOC

Bundle ECO from Unify – 1+1 (for HPC) assortment per MOC

Bundles should be pre-defined and put into the system. Unify should throw up reports stating %of ECO achieved & task ahead (incomplete bundles, etc.)

An average of the bundle ECO score achieved by his RSSM

METRIC NPI / Seasonal pack – Speed to shelf (can be merged with ECO target for the 4 selected packs)

NPI / Seasonal pack – Speed to shelf (can be merged with ECO target for the 4 selected packs)

MEASUREMENT ECO (Unify) ECO (Unify) – average score of his RSSM

METRIC % Near out of stock % Near out of stock

MEASUREMENT External Audit of key SKUs (can be part of visitrack)

External Audit of key SKUs – average score of his RSSM

KPI: Depth KPI: Depth

METRIC Target uplift of RR (4 packs + 1 selected assortment)

Target uplift of RR (4 packs + 1 selected assortment)

MEASUREMENT Secondary sales (Unify) Secondary sales (Unify)

KPI: Maximizing Customer service KPI: Maximizing Customer service

Appendix: KPIs

1�4 1�5

METRIC %FCS – (1) ECO to be a TDP measure (90%) (2) Bill productivity also to be basis TDP (65%) (3) LPPC by channel: FG – 25; MR – 15.

% FCS – (1) ECO to be a TDP measure (90%) (2) Bill productivity also to be basis TDP (65%) (3) LPPC by channel: FG – 25; MR – 15.

MEASUREMENT Unify MIS report (outlet universe to be frozen)

Unify MIS report – average score of his RSSM

KPI: EDGE SOP Compliance KPI: EDGE SOP Compliance

METRIC Call Procedure compliance Call Procedure compliance

MEASUREMENT 3P area audit done on quarterly basis (quarterly bonus to be linked to this)

3P area audit done on quarterly basis (quarterly bonus to be linked to this)

UNIFY = Distributor Management SystemMOC = Monthly Operating CycleBUNDLE ECO = Assortment ECO

Appendix: KPIs

1�4 1�5

MERCHANDISER ACTIVATION EXECUTIVE

AIM Market share Market share


Optimum brand communication – putting up & maintaining high quality visibility on time & with full adherence to set templates

Management of key channels (availability, visibility, activation). Putting up & maintaining high quality visibility on time & with full adherence to set templates as per plan across all channels

KPI: Business Performance KPI: Business Performance

METRIC Monthly Value Target (basis QOP)

Monthly Value Targets as per channels that they manage – SVS / Vijeta, etc.

MEASUREMENT Secondary sales report (Unify) Secondary sales report (Unify)

KPI: Visibility KPI: Availability

METRIC Share of Shelf (SOS >= SOM) Range: Selected packs in the relevant channels

MEASUREMENT Visitrack: Share of shelf to be built in – with no. of units to be defined per type of outlet (SVS, SLO, LLO, Unicare, Fancy, etc.)

ECO target (Unify)

METRIC Template adherence – paid / unpaid

Assortment sell in (Range) – in the relevant channels – SVS, AE outlets, etc.

MEASUREMENT Adherence to set visibility templates in an outlet – measured through Visitrack

An average of the bundle ECO score achieved by his RSSM

% DSM facing shopper & / or eye level

NPI / Seasonal pack – Speed to shelf (in SVS / AE outlets / Wholesale) – can be merged with ECO target

METRIC Visitrack ECO (Unify) – average score of his RSSM

MEASUREMENT

Product Availability in Visibility Windows

% Near out of stock in key channels

METRIC Visitrack External Audit of key SKUs (can be part of visitrack)

MEASUREMENT

KPI: EDGE SOP Compliance KPI: Visibility

Call Procedure compliance Share of Shelf (SOS >= SOM)

Appendix: KPIs

1�6 1�7

METRIC 3P area audit done on quarterly basis – will include SOP compliance & rigor of following resolution procedures

Visitrack: Share of shelf to be built in – with no. of units to be defined per type of outlet (SVS, SLO, LLO, Unicare, Fancy, etc.)

MEASUREMENT

Template adherence – paid / unpaid

Adherence to set visibility templates in an outlet – measured through Visitrack

METRIC

MEASUREMENT %DSM facing shopper & / or eye level

Visitrack

METRIC Product Availability in Visibility Windows

MEASUREMENT Visitrack

KPI: Channel Activation

Implementation Efficiency

Evaluation of timely & quality implementation of all activation tasks in monthly AWP

KPI: EDGE SOP Compliance

Call Procedure compliance

3P area audit done on quarterly basis (quarterly bonus to be linked to this)

Appendix: KPIs

1�6 1�7

AREA SALES MANAGER

AIM Market Share


Implementing plans, policies & activities of his area by managing his team and his customers

KPI: Business Performance

METRIC Monthly Value Target (basis QOP)

MEASUREMENT Secondary sales report (Unify)

Market Share Target

METRIC AC Nielsen

MEASUREMENT

KPI: Availability

METRIC Composite score

MEASUREMENT A calculation based on his TSI & AE Availability scores – biannual

Assortment Availability

METRIC AC Nielsen – biannual

MEASUREMENT

KPI: Maximizing Customer service

METRIC % FCS – (1) ECO to be a TDP measure (90%) (2) Bill productivity also to be basis TDP (65%) (3) LPPC by channel: FG – 25; MR – 15.

MEASUREMENT Area Score

KPI: Visibility

METRIC Composite score

MEASUREMENT Visitrack

KPI: Channel Activation

METRIC Implementation Efficiency

MEASUREMENT Average AE score for his area

KPI: EDGE SOP Compliance

METRIC EDGE SOP compliance

MEASUREMENT 3P area audit done on quarterly basis

Appendix: KPIs

1�8 1�9

CAPABILITY OFFICER / EXECUTIVE

AIM Develop capabilities among FF to ensure superior execution


Mandate & tools to do capability building

METRIC TSI capability building

MEASUREMENT % of bottom 25% TSIs reaching the previous quarter QOC average for branch

METRIC RSSM capability building

MEASUREMENT Average FCS of all TSIs in area

METRIC Delivery on planned activities

MEASUREMENT CEWP completion

METRIC EDGE SOP compliance

MEASUREMENT 3P area audit done on quarterly basis

– Call procedure compliance

– RS infrastructure compliance

Appendix K

QOP Measurement – India

RSSM (DISTRIBUTOR SALESMAN)

QOP Measurement Weights Scoring Data Source

QOP (monthly targets)

20 98 – 100% achievement

100

DMS95 – 98%

achievement80

90 – 95% achievement

60

< 90% achievement 0

Availability

10 All 4 packs 100

DMS3 packs 60

< 3 packs 0

Ops Packs

10 All 4 packs 100

DMS3 packs 60

< 3 packs 0

Assortment (Bundle ECO)20 All 2 assortments 100

DMS1 Assortment 30

FCS

40 ECO: 90% 100

BOCS / DMSBP: 65% 100

LPPC:15 100

(All 3 have to be achieved)

QOP = Quarterly Operating Plan

Appendix: KPIs


Merchandiser


QOP (monthly targets)


100

DMS


80


60

< 90% achievement 0

Visibility – Share of Shelf (SOS >= SOM) defined as per outlet type

20 Weighted score 75 + 100

VisitrackWeighted score 60 + 80

Weighted score 50 + 60

Weighted score < 50 0

Visibility – Template adherence (paid & unpaid)





Visibility – Product Availability in visibility windows





EDGE (resolution process Compliance)

20 Green 100 Quarterly 3P audit results – areaAmber 40

130 131

TERRITORY SALES IN-CHARGE


QOP (monthly targets) 20 98 – 100% achievement

100

DMS


80


60

< 90% achievement 0

Availability 10 All 4 packs (4 + 4 for HPC)

100

DMS3 packs 60

< 3 packs 0

Ops Packs 10 All 4 packs (4 + 4 for HPC)

100

DMS3 packs 60

< 3 packs 0

Assortment (Bundle ECO) 20 All 2 assortments 100DMS

1 Assortment 30

EDGE (Call Procedure Compliance)

20 Green 100Quarterly 3P audit

results – areaAmber 40

% RSSM achieving FCS 20 75% RSSM 100BOCS / DMS

50 – 75% RSSM 80

TSI = Unilever Sales Representative

Appendix: KPIs

130 131

ACTIVATION EXECUTIVE


QOP (monthly targets) – in his relevant channel


100

DMS


80


60

< 90% achievement 0

Availability – in his relevant channel

10 All 4 packs 100

DMS3 packs 60

< 3 packs 0

Assortment (Bundle ECO) – in his relevant channel

10 All 2 assortments 100 DMS

1 Assortment 30

Activity Efficiency 20 100% achievement 100

Activity Tracker95% achievement 80

90% achievement 60

Visibility – Share of Shelf (SOS >= SOM) defined as per outlet type

10 Weighted score 75+ 100

VisitrackWeighted score 60+ 80

Weighted score 50+ 60

Weighted score <50 0

Visibility – Template adherence (paid & unpaid)





Visibility – Product Availability in visibility windows





EDGE (call & resolution process Compliance)

10 Green 100 Quarterly 3P audit results – area

Appendix: KPIs

13� 133

CAPABILTIY EXECUTIVE


Improvement of bottom box 25% RSSM

25 % of bottom reaching last QTR avg

100 HR Helpdesk / Branch Database

TSI Contact Form Eval 20 If 90% TSI at level 3 100 ASM’s quarterly eval of TSI

If 75% TSI at level 3 65

If 60% TSI at level 3 35

EDGE (Call Procedure Compliance)

20 Green 100 Quarterly 3P audit results – area

Amber 40

%RSSM achieving FCS 20 75% RSSM 100 BOCS / DMS

50 – 75% RSSM 80

CEWP completion 15 100% achievement 100 HR Helpdesk / Branch Database

95% achievement 80

90% achievement 60

RS = Redistribution Stockist (Distributor)RS SM = Redistribution Stockist Salesman (Distributor Sales Rep)TSI = Territory Sales In Charge (Unilever Sales Rep)AE = Activation ExecutiveCE = Capability Executive (Field Trainer ASCM = Area Sales & Channel Manager (Unilever Field Sales Manage

Appendix: KPIs

13� 133Appendix: KPIs

Appendix L

Return on Investment (ROI) calculationA standard way of achieving ROI (software available)

An illustration...

ROI CALCULATIONINVESTMENT

NORM in Days NORM in ABS VAL ACTUAL in VAL ACTUAL in Days

Credit 5 166667 200000 6

Stock 14 466667 500000 15

Claims + Damage 2 66667 70000 2.1

OD from Bank 200000 200000 6

Credit by OPCo. 14 466667 500000 15

Own Investment 33333 70000 2.1

REVENUE (PER MONTH)GROSS T / O % MGN REVENUE

Turnover per month 1000000.0 4.8% 48000.0

Wholesalers 100000.0 4.0% 4000.0

Channel 1 (Hyper / LSM) 50000.0 4.0% 2000.0

Channel 2 (SSM) 50000.0 4.0% 2000.0

Channel 3 (CVS) 400000.0 5.0% 20000.0

Channel 4 (GT) 200000.0 5.0% 10000.0

Channel 5 (GT) 200000.0 5.0% 10000.0

Gross Revenue 48000.0

134Appendix: KPIs

COST

NO.OUTFLOW per

HEADCOST

Wholesale RSSM 1.0 2000 2000

Channel 1 (Hyper / LSM) RSSM

2.0 3000 6000

Channel 2 (SSM) RSSM 1.0 1000 1000

Channel 3 (CVS) RSSM 2.0 1000 2000

Channel 4 (GT) RSSM 2.0 1000 2000

Channel 5 (GT) RSSM 1 1000 1000

Supervisor 1 4000 4000

Manager 1 5000 5000

Comp Operators 1 1500 1500

Acountants 1 2000 2000

Others 1 1000 1000

Total No. of Heads 14.0 1964.3 27500

RSSM vehicle and fuel 5 1000 5000

Service charges for merchandisers

5 500 2500

Delivery charges including. Loading / unloading

5000

Godown maintenance charges

1500

Office Costs 2000

Others 750

Bank Interest 12% 2000.0

Total 46250

ROI

NORM ACTUAL

Net Take Home 1750 1750

Indicative % Net Margin on own investment (ROE)

5% 2.5%

Indicative ROE 63% 30%

Indicative % Net Margin on gross investment (ROI)

0.8% 0.6%

Indicative ROI 9.0% 8%

134

Organisation

136 137Key Performance Indicators (KPIs)

136 137Organization

Organization

UL Governance Structure

Distributors selection – Process & Scale

Guidelines– Recruitment, profile

Capability – Training

Distributors Organization

Clearly defined Roles & Responsibilities

On the Job training

Performance linked pay


Norms –- Contacts, Infrastructure, Financial

}

Broad Overview

Channel Goals & the KPIs to measure our effectiveness in meeting channel goals has to be supported by the right Distributor Organization.

This will start from Unilever’s side with:

1. The UL Governance Structure

This is essentially the supervisory organization which Unilever deploys to oversee the Distributor operations. This consists of 5 functional streams: Customer Development, Finance, Supply Chain, HR and IT Business Partner.

In the Customer Development function under the Field Sales Manager there are essentially 3 distinct roles

Creating availability & visibility

Delivering activation and

Creating capability through Training both on the job and in classroom setting

1.

2.

3.

138 139Organization

The Next Generation Field Manager

ASM

Capability Activation Availability

Capability Exec Activation ExecTSI

Driving EQ Driving Share Driving Coverage

In a large Unilever operation these roles could be separate while in a smaller organization this could be combined.

138 139

Generally, the skill sets required for doing a role in this area are as per the guidelines given below for Distributor & Field Management:

Purple Squares indicate CD Professional Skills at FULLY OPERATIONAL level per CD Role

UNILEVER CUSTOMER DEVELOPMENT ROLES

ACCOUNT / CHANNEL

MANAGEMENT

DISTRIBUTOR MANAGEMENT

FIELD MANAGEMENT

TRADE CATEGORY

MANAGEMENT

CUSTOMER MARKETING

CD OPERATIONSCUSTOMER

SERVICE

UN

ILEV

ER C

UST

OM

ER D

EVEL

OPM

ENT

SKIL

LS

Mastery of Customer Development Essentials

Developing the Customer Channel Investment Strategy

Developing the Customer Channel Business Plan

Optimising Promotion Sell-out

Leveraging Strategic Customers

Understanding and Applying Shopper Insights

Developing Integrated Brand Communications

Category Management

Developing the Customer Service Strategy

Developing the Customer Service Plan

Managing Customer Service Operations

Implementing the Customer Channel Business Plan

PoP Execution and Monitoring

Developing the CD infrastructure & Organisation

Developing Customer Relationships

Third Party Management

Organization

140 141Organization

Unilever has operated the “Diamond” model with Modern Trade Customers for a number of years. The Next generation distributor model needs the Diamond model to come alive in General Trade as well.

The Diamond Model in summary:

Collaborative relationship

Value-added focus – winning with consumers

Integrated processes / data sharing

Many functional points of contact

Finance ensures the proper administration of Channel Value Assessment tool, the OPSO tool, the correct TTS structure to drive growth and manages the internal audit system.Supply chain ensures replenishment based primary sales and brings in expertise on TPM & scientific warehouse management.

HR helps to embed formal processes to screen, recruit & retain Distributor sales force while IT helps to ensure front end IT technology is in place.

2. Distributor Selection Process

Distributor selection will have to be looked at from 3 different perspectives:

Based on the Company Category Strategies the level of distribution reach required down the population strata

A geography cut based on economic cost to serve to determine number of Distributors required and the further RTM interventions to be used.

Based on market sophistication the profile of distributors required. As the markets move from a highly fragmented to an organized level, the distributor structure evolves accordingly from a basic distribution to a service provider & business partner.

The 6 business models given earlier in this Guide is a good indicator on the type of distributor required.

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140 141

3. Scale Requirement

Deciding the Distributor’s size is the most complex of all the elements in the Next Generation Distributor model.

The Three Key Filters to be considered are:

Filter #1 The Investment required to provide the required infrastructure. The Unilever requirement on Coverage, Warehousing standards, profile of sales force, stock & credit norms will determine the minimum working capital & fixed asset requirements for the Distributor

Filter #2 ROI & Cash Income. Typically the ROI required should range between 2.5 times to 4.5 times of MLR (Mean Lending Rate) while the Cash income should be in the top quartile of FMCG distributors in his area.

Filter #3 Cost to Serve for Unilever. In addition, drop sizes & distance from Unilever Distribution centres as well as accessibility conditions such as terrain will be the 3rd filter on the spread of the Distributor network.

A ROI Tool called the Size Calculator has been developed to determine Turnover requirement based on required cash profit. This toolkit is available separately

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Organization

Un

ileve

r sh

are

of

tota

l

HExclusive

distributors

Exclusive distributorsDirect / KA

Channel service providers

Direct / KA

MNon-exclusive

distributors

Non-exclusive distributorsDirect / KA

L Wholesalers

L M H

Modern Trade as % of total

14� 143Organization

Distributor TO per Year Corrected for PPP

Given below is the Indonesian EXCO Roadmap which is a good example of RTM choices made on the basis of scale requirements.

Desired Minimum

n Turkey n Philippines n Thailand n Indonesia

n Malaysia n China Vietnam n Sri Lanka

n Egypt n Bangladesh n Pakistan n India

25

20

15

10

5

0

12

22

5

12

3 3 4

86 6

2 2

Type 2-4 Mkts

Type 1-2 Mkts

TO per Yr

TO RP 50,000 per call

< RP 75,000 per call

RP 100,000 per call

RP 125,000 per call

RP >125,000 per callcoverage

> 720 OutletsBIG

DISTRIBUTOR DISTRICT > 5

> 570 – 719 Outlets

MEDIUM DISTRIBUTORDISTRICT 2-3

361 – 569 Outlets

SMALLDISTRIBUTORDISTRICT 1-2

180 – 360 Outlets

SERBU TEAM

SUT TEAM

CORPORATE TEAM

SPLITTEAM

25 – 179 Outlets

STOCK POINT

A study of typical Type 1-2 & Type 3-4 markets on purchasing power parity basis shows wide variance of turnover per distributor in different countries. However, it is safe to assume a minimum cut off of 4m Euro pa (for Type 3 & 4) & 2m Euro pa (for Type 1 & 2)

14� 143

4. Recruitment & Remuneration Policy (Distributor & Distributor Sales force)

In the past recruitment & remuneration of Distributor sales force has often been left to individual distributors. This has led often to high turnover owing to low pay scales or poor profiles which have hindered growth. It is imperative in the Next Generation Distributor model to have a documented policy on the profile required for Distributor sales force, the remuneration & incentive standards and transparency on the performance of the sales force.

The Thai & Indian Salary Recommendation & a Salesman profiling tool used in India are given as good practice in the Appendix M.

5. Training Plans

Standard D&E training material in Basic Call Procedure (6 x 9) needs to be mandatory to improve the performance of Distributor Sales Force in both Type 1-2 & Type 3-4 markets.In addition structured training plans need to be available for training on category knowledge and general field skills such as coverage expansion, merchandising etc.Basic training material of Basic Call Procedure is provided in the Appendix N.

6. Contact Norms

Clear Contact norms need to be set as guideline for Unilever staff in terms of frequency of visits & tasks to be accomplished through a field operation manual.Standard Contact norms, roles & responsibilities are given in the Appendix O.

7. Infrastructure & Finance Norms

Critical for the Distributor operations is guidelines on the infrastructure required as well as the finance required to allow smooth operations at the distributor.

The important characteristics as identified in the Next Generation Distributor model are given below:

Organization

Coverage

RSSM

MarketWorking

Merchandisers

Field Capability

Score

FF Efficiency

Credit

Quality of Stocks

DeliveryCapacity

Godown

Stretch

Quality of Service

Hum

an R

esou

rces

Financial and Operational Health

Logi

stic

s an

d St

ocks

ROI

144Organization

8. Standard Operating Procedures by Channel & Role

Unilever also needs to document standard call procedures for different channels as well as clear roles & responsibilities for Distributor staff. This ensures uniformity of operations across distributors. Examples from India & Indonesia are given in the Appendix P.

Distributor’s Role

1. The Distributor Organization Structure

The Distributor Organization structure should be an outcome of the Unilever Category channel strategies and would need to cater for the coverage, merchandising & activation requirements that emerge from the channel strategy. This includes the number of people to be employed, their educational qualifications & experience as well as their remuneration standard.

This can be no longer left to the Distributor to decide but should be the outcome of Unilever policy & standards.

2. Roles & Responsibilities

Each individual on the Distributor payroll will have a clear position in the organization structure and clearly documented roles & responsibilities including KPIs.

A comprehensive example from Unilever Bangladesh is available as guidance in the Appendix Q.

3. Performance Linked Pay

In many countries distributor sales force remuneration policy is left to the individual distributors to decide and in some countries there is no incentive linked payment. As a result Unilever Distributors often end up paying less than our peer group and do not incentivise growth. This can lead to below standard sales force and high turnover of the competent individuals who leave for higher paying jobs. Given the importance of the POP interface, it is critical to give documented guidance to distributors on remuneration & incentives. In Good Practice companies, typically 65% to 70% form base pay and another 35% to 45% forms incentives. This allows high performers to earn more than the 100% of recommended salary when they do well.

Good practice examples can be found in the Appendix R.

4. On the Job Training

The other important factor is a philosophy of continuous improvement in capability through disciplined on the job training. In good practice companies on the job training is not a once-off but a regular process. Regional tools such as 6 X 9 & Field Coaching Module should be used to make on the job training a way of life.

Given in Appendix S is an example from Unilever Bangladesh

144

Appendix: Organisation

146Introduction

147

146Introduction

147

Appendix M

a. Salary Structure – ThailandAligning the structure for sustainable growthMarket Type: 3 Unilever Market Position: MediumKey Challenge: Ensuring a competitive salary structure to deliver growth

2006 Trading TermCCN Sales Standard income structure

CCN Sales team

Standard salary

Incentives (CDM)Total

CCN PMTIncentives

(UTT)Total

IncomeSalary /

total incomeSalary PMT

Sales – RF

Total

Supervisor 12,000 5,075 5,075 17,075 5,075 22,150 70%

Sales - RK 8,500 3,750 3,750 12,250 3,750 16,000 69%

Sales - RF 7,500 0 3,000 3,000 10,500 2,000 12,500 71%

Driver 5,000 2,533 2,533 7,533 2,533 10,067 66%

Helper - RK 4,400 1,867 1,867 6,267 1,867 8,133 70%

Helper - RF 4,400 0 0 4,400 1,867 6,267 100%

Merchandising Blitz 6,000 3,000 3,000 9,000 0 9,000 67%

PMT = Channel ARF = Channel BCCN = DistributorUTT = Unilever Thailands

Organisation

148 149

b. Distributor Salesmen Profiling Tool – India

Getting the right people for the right jobsMarket type: 1 Unilever Market Position: StrongKey Challenge: Correct high attrition rates and prepare the organization for growth delivery

Distributor Name: ___________________________________________________________

Distributor Salesman Name: ___________________________________________________

Instructions:All 20 questions have to be answered as Yes or No. For every yes, give 1 mark & for every No, give a ‘0’ mark. Count the marks out of 20.

Also calculate the FCS score of the salesman for the last 6 operating cycles. Based on the Profiling – FCS Matrix, rate the salesman.

Sr Question

1 Is the physical appearance tidy and is the individual smartly dressed?

2 Does the individual have required education qualification?

3 Does the individual have relevant experience (FMCG industry / Channel) of at least 2-3 years?

4 Can the individual read & write elementary English / Official language?

5 Is the individual proficient in the local language?

6 Is the individual reasonably comfortable with numbers and is able to do elementary analysis with numbers?

7 Is the individual able to do simple multiplications, divisions with speed & accuracy?

8 Is the individual able to handle simple commercial problems of profit & loss?

9 Does the individual present his case in a persuasive manner? Can he express his views logically?

10 Does he have the ability to assert himself? Can he cite instances where he has done that in the past?

11 Does the individual show the ability to handle objections effectively without becoming either too defensive or too aggressive?

12 Does the individual display drive for achievement based on his past achievements? Does he present himself (based on past experience) as an individual who excels in achieving stretched targets?

13 Can the individual quote instances from his experience where he has displayed specific care for customers? Does he demonstrate instances where he is interacted with people sensitively & respectfully?

14 Does he have good knowledge of the product category he has handled in the past?

15 Is the individual aware of different types of promotion activities?

16 Does he have good understanding of the market where he has operated in the past? Does he have understanding of local market & retail behaviour / responses?

17 Is he aware of merchandising inputs in trade?

18 Can the individual analyse competitor activities vis a vis his own company’s activities in the market that he has been operating in?

19 Does the individual display the ability to identify differential trade needs & modify his sales call accordingly?

20 Is the individual reasonably aware of current affairs?

Organisation

148 149

Profile ScoreNo of Cycles In Which FCS Score was Met

All 6 5 out of 6 4 out of 6 <4

>= 15A

(Star Salesmen: Retain)

A(Develop)

A(Develop Skills)

B(Watch)

11 to 14A

(Groom)A

(Groom)

B(Borderline:

Intensive Inputs)

C(Separate)

< 11B

(Intensive Inputs)B

(Intensive Inputs)C

(Separate)C

(Separate)

Variable salary components Metro Non Metro

Basic Salary (Rupees) 3500 2500

Daily Allowance Rs 20 per day Rs 20 per day

Lines target achievement Rs 250 Rs 200

Bills productivity target achievement Rs 250 Rs 200

ECO target achievement Rs 250 Rs 200

Value target achievement 100 % Rs 400 Rs 400

Value target achievement 98% Rs 300 Rs 300

New Product Target Achievement Rs 250 Rs 200

Credit limit under agreed norm Rs 10 per day N.A.

Average Salary Rs 5550 Rs 4100

Maximum Salary Rs 6050 Rs 4700

Distributor Salesmen Salary Structure – India (Linked to KPIs, an example)

Basic salary

New salesmen without experience start with a basic salary (Rs 3000)

Metro: Experienced salesmen: Rupees 3000 / 3500 / 4000 depending on experience / last job / last salary.

NON-Metro: Experienced salesmen: Rupees 2000 / 2500 / 3000 depending on experience / last job / last salary.

Variable component of salary.

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150 151

Appendix N

Basic Call Procedure (BCP)Calling on the outlets in a standard way to achieve efficiency and effectiveness

Sales Tools

Sales form / Invoice or HHT

Call sheet / Retailer card.

Presentation Materials / Tools

Merchandising Materials.

Sales priority list.

Sales Organizer.

Sales form / Invoice or HHT

Additionally depending on requirement one can have Good Return Form (i.e., forms authorizing take backs from trade).

Participation forms for trade programs. i.e., Loyalty / competition etc..

Call Sheet

It’s a history of customer’s purchases, for all customers.

Benefits:

Serves as a permanent record. Assists in checking movements.

Good tool for inventory management.

Helps increase range selling.

Maintain record of customer grievances.

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Presentation Materials / Tools

Sales aids. i.e., product samples, catalogue, current advertising materials, anything that helps highlight the features and benefits of the product and gives a better feel of the products to the customers.

Benefits:

Assist in gaining attention of the customer

Maintain interest.

Emphasize benefits

Handle Objections

Assist in closing

Tips of Using Sales aids

Memorize the contents of the aid, so that you don’t have to read it.

Hold the aid facing the customer, so that the customer has a clear view.

Show the customer one thing at a time and emphasize the important points.

Ask questions to verify his / her understanding.

Keep the aid in good condition. It shouldn’t get dirty.

Merchandising Materials / Tools

Point of Sales Materials that help in activating products at POP.

Examples: Shop board, dispensers, hanger, shelf talker, poster etc..

Other materials like twine, scissors, tape, punch machine, hammer, nail etc.. are also part of this group as these are tools that can be used in putting up product displays.

Sales Priority List

Determines the call order of SKU. Priority is determined by RCDMs / FSMs.

Some examples of call order determinants

New Product Innovation (NPI)

Promotion / Activity SKUs etc..

Sales Organizer

A bag or portfolio to carry the above tools.

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Summary of 9 Steps of call.

Review Plans

Do a fast review of your preparation before entering the outlet

Value and distribution objectives.

Merchandising objectives

Collections

Review results of last call using retailer card.

Any issues / grievances of the retailer that remained unaddressed during the previous visit.

Do a quick check of the selling tools / equipment.

Opening the call

Greet the owner / buyer. Warm, sincere and courteous.

During the meeting mention your name and the name of Unilever. Observe stall appearance.

Ask permission to enter the store and check the store.

If the store has an outstanding, leave the invoice with the owner / buyer for processing.

Be professional: You are there to assist him increase his turnover, so be courteous but be also objective.

Don’t start talking about particulars if the owner / buyer is entertaining a customer.

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Opening the call

Store Check

Collections

Sales Presentation

Close

Records & Reports

Merchandising

End & Evaluate

1 2 3 4 5 6 7 8 9

Organisation

15� 153

Store Check

Objective

Inventory

Merchandising

Competitor status

Product quality check

The “To-Dos”

Check shelf space and position.

Check for availability of SKUs / Brands

Check about performance of competitor (inventory is smaller / larger) and their activities.

Record comments / observations in retailer card.

Promo packs inventory.

Check Inventory status.

Is the retailer following FIFO.

Are there old (seasonal/ close to expiry) products

Collection (if the store is a cash customer then skip this step)

The objective is to clear all receivables from the customer. Be firm and tactful.

Have all necessary documents ready before you enter the outlet.

Always have a uniform credit policy (consult KDM/ FSO for details)

If a customer is unable to pay

Evaluate the risk, consult with KDM/ FSO.

Identify opportunities to assist the customer to pay. Liquidate old stocks (if any) etc..

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Sales Presentation.

What are you selling to the retailers?

Prioritise your presentation. Call order of SKUs should be determined by FSO / FSM and to be followed in every outlet. Use your sales priority list. Start with something that is interesting that will attract the attention of the retailer.

Use sales aid for NPI, discuss SKUs you want to include in the order.

Take down the order in the order sheet or HHT.

Readout the order to the retailer, for the retailer to agree or challenge.

Benefits of writing down the order in the order sheet or HHT first;

Helps organize your sales presentation.

Easier to handle objections. (You can tackle one objection at a time)

Helps generating push sales.

Steps to design a sales presentation.

Analyse the situation.

Plan what you want to do. (E.g. write down the order first etc..)

Explain your plan to the customer.

Reinforce the benefits of your proposal.

Handling Objections.

Objection is the customer’s way of saying he / she still has not understood the benefit the product will bring him / her.

Examples of common types of Objection.

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Yourself Products The Company

Organisation

154 155

Objection Type Brief Description

Need Objection: “I have one of those already.”, “I have no space for any more.”, “Sorry, I just don’t want it.”

Price: “How much?”, “Your competitors sell a better product for less money.”

Features: “It is too big”, “It is not good enough quality”

Time Objection: “I don’t know. I need to think about it”, “I won’t have the money until next month.”

Source: “How do I know if what you are saying is correct?”, “I heard that your company treated its workers badly.”

Objection Handling Technique•

Ask appropriate questions, watch for body language. Open ended questions to bring forth alternatives and Close ended questions to verify Learning.

When the reason for objection is clear. And you are certain about what the response to your different suggestions / questions are going to be. Now that you

Listening helps develop rapport. Demonstrates your interest in their grievance. Hence show interest, listen carefully.

Is the reason for the objection clear, or is there a hidden reason. Should the objection be handled now or park it for later. Can I address it or should I wait for my superiors etc..

Check whether the objection has been addressed. Ask if there is any more concerns.

Listen

Question

Think

Handle

Check

Close

Closing a sale is asking for order.

When do you try to “close a sale”?

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156 157

When you receive a buying signal like;

Retailer agree to the benefit of the plan

Agree with an answer to an objection

Asking price, terms etc..

Asking probing questions

A pause which indicates weighting of decisions. etc..

How do you Close? (Examples of Closing Technique)

Ask for the order directly. Shall I bring 20 cases?

Offer a choice. So 50 pieces of CUP and 200 pieces OMO or 50 PCS CUP and 100 PCS Lux 140g.

Use an open ended question. May I write down 200 pieces for you

Don’t be afraid about closing. Ask for order.

Close based on situation.

Don’t linger on a decision already made.

Close as many time as you deem necessary or as many time, you address an objection.

Once you have taken the order prepare stocks for delivery.

When preparing for delivery remember to mix colours / variants.

Ensure safe turnover of the stocks to the customer. Sometimes, ask the customer to count the stocks, in front of you. Or you count the stocks in front of the customer.

Collect Cash

Records and Reports

Update retailer record sheet. Listing invoice details and comments.

Update any other form or additional record sheet.

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Merchandising

Ensure adherence to in-store merchandising guidelines.

UNL products should be displayed in category locations with names and features distinctly visible.

Assist in stock rotation: Assist retailer so that sell-out follows FIFO. (First In First Out)

Look for opportunities to improve visibility.

Assist in sell-out.

End and Evaluate

Excuse yourself and bid good bye to the customer.

Inform him of your next scheduled call.

If he had queries / objection which are unanswered remind him that you will revert with the reply.

Ensure that your transactions have been completed.

Evaluate the call

What were your objective you had set for the call.

What have you achieved?

What are the objective of the day? How much is achieved, and how much is left. What do you have to do?

End of the day

Activities.

Deposit cash in the bank

Reconcile stocks from the van.

Deposit sales sheet / HHT for uploading to Ultra.

Prepare summary sheet.

Fill-in the appropriate numbers on the team board in the KD office.

Review: Performance vs target set during the beginning of the day. Seek answers to questions like;

Did I meet my days targets, if not, why not? What should have been done differently.

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158 159

Where am I in context of my months target / weeks target.

What have I done today to improve my productivity in the section?

What objections’ queries do I have to handle when I service the question again?

Planning for the next day.

Set objectives for the next day.

Prepare materials required for the next day.

Prepare so that you can make an early start for the market and be the first one in the market. (You may want to prepare the stocks etc..)

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Summary of 9 Steps of call.

Review plans

Opening the call

Store Check

Collections

Sales Presentation

Close

Records & Reports

Merchandising

End & Evaluate

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Organisation

158 159

Appendix O

Standard Contact Norms – BangladeshAchieving efficiency in the fieldMarket Type: 1 Unilever Market Position: StrongKey Challenge: Ensuring a standard way of working for the field force

BackgroundPermanent Journey Plan (PJP) is the schedule of DSR’ / ADSR’s weekly service or Section Calling Plan. It is designed as a part of distributor’s Operating Process for redistribution. Though it can be revised based on re-organization plans it is called permanent because it is generally programmed for a whole year.

Scope: Usually PJP is devised for DSRs to schedule their daily Section Order Booking in a week along with the delivery plan. Therefore, PJP in other words is the job itinerary of both DSRs and ADSRs. Also, PJPs are made for Distributor Sales Supervisors (DSS) and Contract Merchandisers (CM).

Objectives

To have a handy Customer / Section Service Plan

To regularize field forces’ sales / service calling jobs

To better manage and utilize distributors’ Logistic resources

To keep customers informed of UBL service dates so that they can plan their own purchases and thus to exploit their full purchase capability.

To ensure better and confirmed service to the customers with planned resources having considered other companies’ service schedules

To develop Contingency Service Plans in advance in case of situations arising from natural / artificial calamities

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How it worked

Inputs:• Coverage Target• Reorganization plan• Channel Strategies

Considerations:• Routes and Frequency Table• Delivery Profile (Category / Brand Mix)• Distance of Routes

Considerations:• Routes and Frequency Table

Considerations:• Logistic Plan• Other Companies’ PJP

Resource Planning: Determine the resources required:A No of DSRs required (No of section / Working days per week)

•

Journey Planning: Designing DSR – Order Day Table: a Sections to book orders from by DSRs

Responsibility:RSM / ASM / TM

Responsibility:ASM / TMDistributor

Responsibility:ASM / TMDistributor

Responsibility:ASM / TMDistributor / DSS

Coverage Planning: Determine the Frequency of service:No. of Sections to be covered•

Resource Planning: Determine the resources required:No. of Vehicles needed to support coverage:

Mechanized vehiclesNon-mechanized vehicles

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1

2

3

4

Sl. Routes ChannelNo of

OutletsSections

Delivery Group

Order Day

Delivery Day

Name of DSR

Name of

ADSR

Vehicle No

1 A UWMG 35 A -G1 Det - 1 Sat Sun Mr. X Mr. P Pick Up - 1

2 A - G2 Det - 2 Sun Mon Mr. X Mr. P Pick Up - 1

3 A - G3 PP - 1 Tue Wed Mr. X Mr. Q C.Van - 3

4 A - G4 PP - 2 Thur Sat Mr. X Mr. Q C.Van - 3

PJP Planning:

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160 161

Day DSR

Sat Sun Mon Tue Wed Thurs

Mr. X Sec: A – G1 Sec: A – G2 Sec: B – Det Sec: A – G3 Sec: B – PP Sec: A – G4

Outlet: 35 Outlet: 35 Outlet: 40 Outlet: 35 Outlet: 40 Outlet: 35

Del Group: Det-1 Del Group: Det-2 Del Group: Det Del Group: PP-1 Del Group: PP Del Group:PP-2

Del Day: Sun Del Day: Mon Del Day: Tue Del Day: Wed Del Day: Thurs Del Day: Sat

ADSR: Mr.P ADSR: Mr.P ADSR: Mr. R ADSR: Mr. Q ADSR: Mr. R ADSR: Mr. Q

Vehic: P / U-1 Vehic: P / U-1 Vehic: P / U-2 Vehic: C.Van-3 Vehic: C.Van-1 Vehic:C.Van-3

Mr. Y Sec: C – G1 Sec: D – Det Sec: C – G2 Sec: D – PP Sec: C – PP Sec: C – Com

Outlet: 37 Outlet: 39 Outlet: 37 Outlet: 39 Outlet: 37 Outlet: 42

Del Group: Det-1 Del Group: Det Del Group: Det-2 Del Group: PP Del Group: PPDel Group:

Combined (DT + PP)

Del Day: Sun Del Day: Mon Del Day: Tue Del Day: Wed Del Day: Thurs Del Day: Sat

ADSR: Mr. S ADSR: Mr. P ADSR: Mr. Q ADSR: Mr. R ADSR: Mr. Q ADSR: Mr. S

Vehic: P / U-2 Vehic: P / U-3 Vehic: P / U-1 Vehic: C. Van-1 Vehic: C. Van-2 Vehic: P / U-2

At a Glance: Handout for the Field Force

Organisation

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Appendix P

Unilever Roles & Responsibilities – IndonesiaAchieving role clarity towards delivering growthMarket Type: 3 Unilever Market Position: StrongKey Challenge: Aligning the Distributors’ organization with Unilever’s strategies and needs

Regional Sales Manager (RSM)

Main Duties:To build short-term and long-term strategies to achieve the following targets:

Secondary Sales = Primary Sales

Distribution Development

Coverage Extension (Urban / Rural)

1.

2.

3.

CC Dir

GSOM

MSOM

AMSOM

RSM

ASM

TSS

AIM

AO

Organisation Structure:

Organisation

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Work Process:

To build short-term and long-term strategies to achieve Secondary Sales = Primary Sales target:

1.1. To plan Secondary Sales = Primary Sales target:

• Receive BBS from Customer Director.

• Receive BBP from Customer Director.

• Receive CSS from MSOM.

• Analyse each area’s Secondary Sales performance.

• Build strategies for sales target achievement.

• Make breakdown of individual area’s annual target.

1.2. To achieve Secondary Sales = Primary Sales target:

• Give suggestions to GSOM and MSOM for the effectiveness of marketing plans and proposes recommended changes.

• Give suggestions and solutions particularly on sales issues in his / her respective area as well as issues on logistics, administrations and matters relating to daily sales practice to the sales management.

• Evaluate the effectiveness of sales activities and make recommendations for necessary changes.

• Supervise the updating of ‘Wall Report’, ‘Retailer Card’ and ‘Communication Book’ as a requisite in assessing and evaluating quarterly sales results.

• Monitor OB Replenishment by volume and NPS per week.

• Approve or reject delivery of Order Bookings to Distributors with payment problems.

• Approve or reject Allocation proposed or urged by MSOM.

• Approve or reject sales reward payment.

• Coordinate ASM in achieving Secondary Sales = Primary Dales target.

• Evaluate Area Work Plan submitted by ASM on a monthly basis.

• Evaluate Customer Business Development Profile and maintain good working relationship with distributors.

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• Approve or reject ASM suggestions to change distributors’ area by:

• increasing or decreasing the number of districts.

• shifting districts among distributors.

• combining districts among distributors.

• combining distributors’ operating area.

• Approve or reject suggestions to terminate or appoint prospective distributors.

• Approve or reject the issuance of Distributor Appointment Agreement (PPSD[s]).

• Approve or reject ASM suggestions to:

• Increase or decrease Bank Guarantee value

• Give extra credit

• Postpone payment due dates

1.3. To give approvals of the execution of launching / re-launching / CEA activities in regions / areas to GSOM / MSOM / AIM.

1.4. To give approvals of the execution of merchandising activities in region / area to AIM.

To build short-term and long-term strategies for distribution development:

To make recommendations on selling method to anticipate changes in distribution channels.

To make recommendations on selling method to anticipate market growth.

To make recommendations on distributors’ sales distribution system for each product Category.

To build short-term and long-term strategies with the objective to achieve Extension Coverage (Urban / Rural):

To receive Coverage Target from Customer Care Director.

To approve Coverage Target proposed by ASM.

To coordinate the planning and implementation of Extension Coverage Road Map in Area.

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Customer Relationship Management:

• Coordinate the implementation of mandatory procedures in Area.

• Approve or reject suggestions and or changes of sales method policies in the Area.

• Maintain good relationship with Distributors in Areas.

Area Sales Manager (ASM)

Main Duties:To plan and achieve the following targets:

Secondary Sales = Primary Sales

Distribution

Coverage

Merchandising


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GSOM

MSOM

AMSOM

RSM

ASM

TSS

AIM

AO

Organisation

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Work Process:

1.1 To plan and achieve Secondary Sales = Primary Sales target:

1.1.1 To plan Secondary Sales = Primary Sales target:

a. Receive CSS from MSOM.

b. Receive launching / re-launching activities from RSM.

c. Receive promotional activities and activity plans from MSOM.

d. Receive annual primary sales target from RSM in November.

e. Analyse each distributor’s secondary sales performance based on volume and value.

f. Develop strategy for annual sales target achievement.

g. Break down annual target for each TSS.

1.1.2 To achieve Secondary Sales = Primary Sales Target:

a. Ask reports of order bookings by quantity, fiberite and value from ACA.

b. Monitor the quantity of daily orders and orders to be delivered the following day and take action, when the need to do so arises.

c. Ask debtor – monitoring report from ACA.

d. Approve or reject SPO submitted by distributors through TSS.

e. Make SPO for non-Order Booking SKU Replenishment.

f. Suggest RSM to decide approval for delivery of Order Booking in case distributor is having payment problems.

g. Suggest to RSM to:

Increase / decrease Bank Guarantee value (2 RPP + 25%).

Give extra credit.

Defer payment due date.

h. Monitor actual order quantity and value per day and take action if needs be.

i. Suggest to RSM to change (reduce / increase) allocation of new product to be conveyed to CSOG / MSOM.

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j. Monitor and take necessary actions to achieve weekly and monthly primary targets.

k. Monitor remaining primary target and take action if necessary.

l. Evaluate monthly activities carried out in Area.

m. Monitor daily Secondary Sales and takes action if needs be.

n. Evaluate the achievement of Secondary Sales’ weekly target.

o. Evaluate the achievement of Secondary Sales’ monthly target.

p. Make policies on monthly sales activities (sales brief for distributors).

q. Ensure the update of Wall Report to evaluate the achievement of HK, BP, Lines and point targets as a requirement to determine SLD and Distributor sales commission within his / her Area.

r. Check the completion and use of Retailer Card as a supporting selling tool by Distributor’s Salesmen in his / her Area.

s. Make use of ‘Communication Book’ as working document for ASM concerned, TSS and Distributor to be followed-up on every sales call.

t. Ensure the completion of Coverage Road Map, Exco Road Map per Distributor, Territory and Area.

1.1.3 To coordinate TSS in achieving Secondary Sales target:

a. Evaluate Territory Work Plan reported by TSS on a monthly basis.

b. Evaluate Customer Business Development Plan submitted by TSS on a quarterly basis.

c. Evaluate profit, NPBT, ROI, and Cash Flow Distributor quarterly.

d. Coordinate cooperation between TSS and the relevant sales administration staff.

e. Control Company’s equipment and facilities within the Area.

f. Monitor competitors’ activities within the Area and takes action if necessary.

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g. Control and evaluate the implementation of sales reward for each Distributor.

h. Ensure that Distributors’ Selling Prices are in accordance with the applicable Selling Prices.

1.1.4 Customer Relationship Management:

a. Mandatory Procedure: Evaluate and suggest changes in the implementation of

mandatory procedures to RSM to be subsequently conveyed to CSOG and MSOM regarding the following:

Running Rate

Top 50 SKUs

New Products

Other SKUs recorded in OBR

Stock Norm:

Newly launched items: additional 0.5 – 1 week (3.5 – 4 weeks)

High Profit Not Bulky: 3 RPP + 0.5 (Skin, Deo & Royco)

Fast Moving & Bulky: 3 RPP – 0.5 week (Powder, Pepsodent 75gr)

OBR (see MP)

Allocation (see MP)

Market Intelligence:

Inform GSOM-MSOM-RSM of competitors’ activities being conducted in the Area:

Trade promotion

Consumer promotion

Merchandising promotion

Activation

Distribution system

Etc..

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Maintain good relationships with key customers in the Area:

Top 5 Distributors

Top 5 Second Dealers

Top 10 Strategic Retailers

External Relation:

Maintain good relationships with all Partners in the Area.

Maintain good relationships with the Regional Government, relevant Ministries and community in the Area.

1.2 To plan and achieve distribution target:

1.2.1 To plan distribution target:

Receive annual distribution target for individual brand from MSOM as specified in the Category Sales Strategy and subsequently exercise the following process:

1. To determine appropriate shop type according to individual brand’s distribution target.

2. To determine locations for distribution sampling.

Receive monthly distribution target from MSOM as specified in the Sales Brief and subsequently exercise the following process of dividing distribution targets by volume and type of shop for individual territory.

1.2.2 To achieve distribution target:

1. To evaluate distribution checklist done by TSS, on a regular basis.

2. To conduct local activities for territories in which distribution check samples are below the target.

1.3 To plan and achieve Coverage target:

a. To suggest Coverage Target to RSM in December for approval.

b. To make Area Coverage Road Map.

c. To suggest RSM the subsidy amount for coverage development

d. To set coverage target for each TSS

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e. To coordinate outlet survey and outlet mapping to be done by TSS and DSS

f. To make coverage development plan (Area Extended Coverage Road Map) by:

Increasing or decreasing the number of districts

Shifting districts among distributors

Combining districts among distributors

Combining distributors’ operating area

Terminating and appointing Prospective Distributors

g. To get the approval from RSM on the above.

h. To evaluate coverage target for every TSS.

1.4 To plan and achieve merchandising target:

1.4.1 To plan merchandising target:

a. To accept merchandising brief from MSOM.

b. To accept targeted display participants and display planogram from MSOM.

c. To accept POS materials allocation from MSOM.

d. To accept outdoor materials allocation from AIM.

e. To collect market data from each TSS.

f. To break down targeted display participants by market size, total universe outlets and market potential.

g. To break down the quantity of POS materials according to market size and number of outlets within each territory.

h. To approve appointment of distributor merchandising staff who will control the administration and implementation of giveaways delivery.

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1.4.2 To achieve merchandising target:

a. To give briefing on executions to TSS and AO at book month meeting.

b. To do random field check regarding the implementation of display activities and installation of POS materials.

c. To evaluate quality and quantity of display participants and POS materials installation coordinated by TSS and AO. Territory Sales Supervisor (TSS)

Territory Sales Supervisor (TSS)

Main Duties:

To plan and achieve the following targets:

Secondary Sales

Distribution

Coverage

Merchandising

To conduct training and provide coaching for distributor team in two formats i.e., On the Job Training and Off the Job Training


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AO

Unilever

ASM

TSS

Distributor

Owner

OM

DSS

SLD

Merchandising3rd party

SPV

MUT

Organisation

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Work Process:

1.1 To plan and achieve Secondary Sales target:

1.1.1 To plan Secondary Sales target:

a. Accept final annual sales target from ASM in December.

b. Break down annual target into monthly, weekly and beat targets.

c. Make RPP report based on value and volume that includes the following three figures:

Last 13 weeks’ RPP

Year To Date RPP

Previous Year’s RPP

d. Analyse sales trend by volume, value, category, brand and SKU.

e. Analyse potential of each distributor and each SLD.

f. Make sales target estimation based on outlets covered, product distribution, districts’ potentials and promotional activities.

g. Divide sales target per SLD, Brand and SKU based on volume.

h. Convert volume target into Rupiah target (Shop Price + VAT).

i. Confirm to ASM if there is discrepancy between volume target and Rupiah target.

1.1.2 To Achieve Secondary Sales Target:

a. Daily Sales Target

Morning Briefing TSS / OM / DSS sets his / her own individual SLD target based on:

RPP beat against last three weeks’ actual recorded in wall report.

Ongoing promotional activities (see current month’s activity monitoring board).

Daily target negotiation:

At the least equals to the day’s RPP beat ➔ Target = 100%.

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Ongoing promotional activities are capable to boost sales by few percent above last 13 weeks’ RPP or last three weeks’ actual.

The remaining promotional budget can be allocated to increase daily sales target by 10% – 20%.

Afternoon Briefing

Daily sales evaluation:

Sales actual < 100% ➔ check Sales summary.

See sales invoice (BP) quantity (whether < sales invoice (BP) target).

Identify non buying shops.

Reasons for not buying:

Price is cheap ➔ report it to ASM.

Stock shortage ➔ SPO.

Market is dull:

Compare with the others.

Find out competitors’ activities.

Find out top 50 SKU sales distributions.

Find out promotional item sales.

To break down and carry forward the unachieved target to the following day in the week.

b. Weekly Sales Target

TSS / OM to make weekly target based on:

Average Weekly Sales (RPP) ➔ last 13 weeks’ sales average.

Last 3 weeks’ sales average.

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Ongoing promotional activities: The estimation of weekly target calculation: (a+b) < = RPP ➔ increase allocation of promotional

activities

(a+b) > RPP ➔ reduce allocation of promotional activities

(a+b) + c = Weekly Target

Allocate the unachieved target to the following week.

Re-allocate promotional activities among Distributors, ASM’s approval must be secured first.

Ensure completion of Wall Report to evaluate achievement of HK, BP, Lines and point targets as a requisite to claim for SLD and Distributor Sales Commission.

Check the completion and use of Retailer Card as a selling tool.

Make use of “Communication Book” as a working document when meeting Distributor to be followed-up on every sales call.

c. Customer Relationship Management:

Stock and Sales Report

Incoming goods must be consistent with OBR (Final Order). If there is inconsistency, immediately report it to ACA / ASM for next week’s OB process.

If warehouse stock (on hand) + OBR – current week’s sales < 1 week, immediately make an SPO.

Check RPP for Order Booking against RPP reported in LP3; proposes recommended changes to ASM in case of discrepancy or data error.

Suggest to ASM to stop delivery of allocation product if Distributor’s stock on hand > 3 weeks cover.

Suggest to ASM to change New Product allocation if supply is not consistent with mandatory procedures.

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Top 50 SKU:

Continuously monitor the development of Top 50 KSU to be reported to ASM in case of:

Inconsistency with mandatory procedures.

Sales trend going downwards or upwards (± 10%).

Market Price < Shop Price – Volume Discount – Promotion.

HET (Maximum Retail Price) > RSP.

Trade Relationship:

Maintain good relationships with Key Customers (top 10 Second Dealers) and retailers strategic to outperform in the marketplace.

Offer quick response to and provides the right solution of complaints from shop owners and reports such to ASM for solutions beyond TSS capacity. Report to ASM in case TSS finds competitor’s new product or activity.

d. Reports to ASM:

TWP on a monthly basis.

Customer Business Development Plan on a quarterly basis.

Distributor Profitability on a quarterly basis.

1.2 To plan and achieve Distribution target:

1.2.1 To plan Distribution target:

a. Accept annual distribution target per brand from MSOM as specified in the Sales Brief and thereon exercises the following process:

Determine the right kind and type of outlets.

Determine locations for distribution sampling inside or outside the market.

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b. Accept monthly distribution target from MSOM as specified in the Sales Brief and thereon exercises the following process:

Divide monthly distribution target based on individual SLD’s number of outlets.

Make distribution target estimates per SLD based on shop type relevant to the demanded product.

1.2.2 To achieve Distribution Target:

a. Annual Distribution Target:

Make distribution checklist every month for brands determined by ASM.

Take distribution sampling from inside and outside the market.

Evaluate distribution gap between distribution actual and distribution target.

Make distribution target estimated.

Make product allocation in case of distribution decline in his / her territory by giving allocation priority to shops that run out of stock or have not been carrying out our products for long.

Give distribution priority to retailers (not second dealers) and give such priority to Area experiencing tight competition in case there is a short of supply.

b. Monthly Distribution Target

Monitor daily and weekly achievements of each SLD.

Evaluate weekly achievement and makes SLD target re-allocation to achieve territory target.

Approve target achievement for administrative purposes if SFI is offered.

Report to ASM to discuss monthly target achievement at book month meeting.

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1.3 To plan and achieve Coverage target:

1.3.1 To plan Coverage target:

a. Accept coverage target per Area from ASM in January.

b. Ask for population data from ASM.

c. Make coverage gap analysis to compare shops covered with shops not yet covered based on the population within his / her territory.

d. Conduct outlet survey to identify outlets not yet covered.

e. Coordinate outlet survey conducted by DSS.

f. Make mapping of outlets covered and not covered.

g. Develop coverage extension plans (Exco Road Map).

h. Secure ASM approval.

1.3.2 To achieve Coverage Target:

a. Draw new district map.

b. Revisit district if necessary.

c. Develop PJP.

d. Make operational team cost estimates.

e. Calculate ROI to analyse distributor profitability.

f. Discuss implementation detail with distributors.

g. Redistrict may be done only if it does not harm distributor’s profitability; however, if it harms distributor profitability, TSS should propose subsidised cost to add approved team(s) (SERBU, SUT, SDK).

h. Secure ASM approval.

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1.4 To plan and achieve Merchandising target:

1.4.1 To plan Merchandising target:

a. Receive Merchandising Brief from ASM in the form of Mechanism, Budget & Planogram.

b. Receive Corporate Display Targeted Participants and Budget from ASM.

c. Receive Divisional Display Targeted Participants and Budget from ASM.

d. Receive Hair Display Targeted Participants and Budget from ASM.

e. Receive allocation of POS Materials and GIFTS from ASM.

f. Receive allocation of Merchandising Team from AO approved by ASM.

g. Translate Display Targeted Participants into Merchandising Team’s PJP.

h. Integrate POS Materials / GIFTS allocation with Merchandising Team’s PJP.

i. Select and propose to ASM the appointment of Distributor’s Merchandising Staff to control the administration and implementation of giveaways.

1.4.2 To achieve Merchandising Target:

a. Give Briefing and hand in display target to Distributor’s MUT – SPV.

b. Check the update of MUT Card.

c. Check the update of MUT and SPV Wall Report.

d. Make use of Merchandising Communication Book among TSS-AO-SPVE-MUT-SLD-DSS provided at Distributor.

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e. Approve request for collection of allocated POS giveaways according to the PJP.

f. Assess display target achievement according to PJP MUT-SPV on a quarterly basis for third party’s administration, accounting and personnel purposes and AO as the person in charge of third party personnel reporting to ASM-RSM.

g. Propose to ASM additional Display Participants.

h. Propose to ASM Display Participant’s reallocation.

i. Propose to ASM change of or additional MUT-SPV.

Conducts training and provides coaching for DSS and SLD in two formats i.e., On the Job Training and Off the Job Training

2.1 On the Job Training:

TSS must provide On the Job Training in the form of tandem selling (minimum of two days in a week) and Coaching for DSS and SLD who have substandard performance. Steps to be taken:

a. To review wall report on DSS / SLD not meeting current month’s target.

b. To call and provide coaching for DSS / SLD concerned.

c. To monitor DSS / SLD concerned performance.

d. To do tandem selling if they fail to improve their performance.

e. To inform the owner if those re-trained DSS / SLD are still unable to achieve target in order to decide the next action.

2.2 Off the Job Training

a. To develop training plan (time, materials, venue, etc.).

b. To conduct two-hour training at distributor’s office, at the least once every quarter.

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Appendix Q

Distributor Roles & Responsibilities A common way of working for the Distributors

Distributor Sales Supervisor (DSS)

Prime Responsibility:

1. To Supervise the DSRs to help them achieve

Sales Target (Value and Volume)

Other Field Capability Scores like Bill Productivity and LPC

Distribution Improvement Target

JC Competition targets

To Supervise Contract Merchandisers (CM) to ensure

Maintenance of PJP

Plan-o-gram Implementation at CM’s Outlets

Proper utilization of merchandising materials at POP

To train and develop current and new DSRs and CMs.

To help distributor and Territory Manger achieve Coverage Target

To supervise DSRs and assist TM to manage Trade Loyalty Programs

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TM

DSS

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Distributor / Owner

House Manager

Supervisor

DSR / CM

Territory Manger

Organization Structure:

Work Process:

Supervising DSRs: To Achieve Sales and Distribution Targets

Planning:

Receive JC Value / Distribution Improvement / Focus SKUs’ volume targets from TM

Extract Data from DMS + / Sales Records to determine the route / DSR wise contribution of a certain base period – benchmark contribution

Distribute the targets among routes and DSR according to benchmark Contribution

Distribute Monitoring Sheets devised by TM

Determine weekly and daily targets for DSRs and brief on them

Determine Channel wise distribution targets for DSRs (no of outlets) with the help of TM and inform DSRs with monitoring sheets

Execution and Review:

Check daily scores of DSRs – value, SR and LPC and record them in daily monitoring sheets to prepare weekly reports.

Accompany poor performers in the markets for demonstration and On the Job Training

Review performance weekly and feedback on them, re-allocate targets according to remaining target.

Check and review channel wise / DSR wise performance of distribution improvement on weekly basis.

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Reports and Evaluation:

Prepare weekly performance reports to share with DSRs and to be submitted to TM

Prepare JC performance reports for JC competition and submit to TM.

Supervising CMs: To Ensure Visibility and Utilization of POP Materials:

Assist TM to select channel wise CM outlets for each CM considering their profile and performance (for channel wise CM deployment) and to develop PJP

Ensure CMs are maintaining their PJP properly and regularly calling selected outlets

Accompany each CM at least once a week to check his works and give feedback to TM.

Accompany new CMs to train them on UBL visibility norms and develop their skills, also to get them introduced with the traders.

Check CM’s Daily Beat Report in line with his PJP and randomly check at field level.

Allocate POP materials to routes considering channel and no of shops and distribute them to DSRs / CMs for utilization in the markets.

Training and Development of DSRs / CMs:

Analyse DSRs’ JC performance reports and determine poor performing DSRs.

Sit with Distributor / Manager / TM to discuss on corrective measures.

Accompany poor performers on job and help them learn Basic Call Procedure and other selling techniques by demonstration and counselling.

Check and review performance after coaching and give feedback to the respective DSRs and TM.

Train new DSRs / CMs on and off the job and help them develop their skills.

Assisting to Achieve Coverage Target:

Conduct the outlet survey by DSRs

Coordinate the survey and collate the reports

Compare the survey with current coverage and determine the coverage gap

Determine the Beats / Routes to be resized, new routes to be created

Help Distributor / TM develop the reorganization plan and new PJP based on coverage gap.

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Assisting to Manage Trade Loyalty Programs:

Get the briefing from TM on the programs’ modality.

Debrief to the DSRs / CMs

Determine the number of possible participants based on any previous program and / or sales contribution of outlets.

Allocate route wise participation target to DSR and distribute the Program brochures

Ensure each possible outlet is properly communicated on the program

Check participation status at field level randomly

Check and review DSR wise participation target, ensure maximum and judiciary participation.

Monitor each outlet’s achievement, ensure DSRs are properly updating scorer at trade level.

Periodical feedback to DSRs / Trade on achievement.

Collate the Program-end performance and prepare the final report.

Distribute gifts / prizes to the winners

JC = Journey CycleTM = Terrority ManagerDMS = Distributor Management SystemDSR = Distributor Sales RepresentiveCM = Contract Merchandising

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Appendix R

Performance Linked Pay – BangladeshRewarding great performanceMarket Type: 1 Unilever Market Position: StrongKey Challenge: Ensure reward is linked with performance

Background

DSR’s remuneration policy in Bangladesh is composed of two components:

Performance Link Pay (financed by Distributor)

Incentive (financed by UBL)

Performance Link Pay

PLP (Performance Link Pay) is a pay structure where monthly salary of distributors’ field staff is directly impacted by their month’s performance.

It ensures competitiveness among the DSR, ADSR and Supervisors through rewarding the performers.

Objectives

To accentuate the importance of achieving target

To boost up non-performers and encourage high fliers to do even better

To uplift the standards of performance

How it worked

PLP StructurePerformance Link Pay = Fixed Salary + Variable Salary

Fixed Salary equals 70% of current salary. The variable part is determined through multiplying the rest 30% of the salary by 2. The variable part solely depends on the month’s performance.

The parameters of variable salary are Value productivity, Call Productivity, and LPC. Other parameters can be added if necessary. The shares of different parameters are-

Value Productivity : 50%Call Productivity : 20%LPC : 30%

Note: For any parameter, achievement less than 100% is not taken into account. But for achievements more than 100% will reward on pro rata. Again, individual parameters are independent in case of getting reward on that parameter.

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PLP calculation: Let, a DSR is currently receiving a salary of Tk. 3000. His value target for the JC is Tk. 50000, Call productivity target is 75% and LPC target is 12. Now with a couple of examples, let’s see how PLP calculation is done for different achievements.

Example 1: He achievesValue – 50000 Tk, Call productivity – 75% and LPC – 12

That is Value achievement – 100% Call achievement – 100 % LPC achievement – 100 %

Calculation: Fixed Salary = 3000 X 70% = 2100 Variable = (3000 X 30%) X 2 = 1800

In that case his Variable Salary = (Value Achieved. X Variable X 50%) + (Call Achieved. X Variable X 20%) + (LPC Achieved. X Variable X 30%)

Variable Salary = 100% X 1800 X 50% + 100% X 1800 X 20% + 100% X 1800 X 30% = 900+360+540 = 1800

PLP = Fixed Salary + Variable salary = 2100 + 1800 = 3900

Due to achieving all the targets he is getting 900 tk more.

Example 2: He achievesValue – 50000 tk, Call productivity – 65% and LPC – 12

That is Value achievement – 100 % Call achievement – 86 % LPC achievement – 100 %

Calculation: Fixed Salary = 3000 X 70% = 2100 Variable = (3000 X 30%) X 2 = 1800

In that case his Variable Salary = (Value Achieved. X Variable X 50%) + (Call Achieved. X Variable X 20%) + (LPC Achieved. X Variable X 30%)

Variable Salary = 100% X 1800 X 50% + 0 X 1800 X 20% + 100% X 1800 X 30% = 900+0+540 = 1440

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PLP = Fixed Salary + Variable salary = 2100 + 1440 = 3540

As he has achieved only the value and LPC targets, he is to get 540 Tk more.

Note: If he can’t achieve any target than he will get the fixed salary only.

2. Incentive for Distributors’ Field Force

BackgroundIn every JC UBL runs an incentive program for distributors’ field force. This donation, from distributors’ standpoint, is a support extended to them for rewarding the high fliers among the sales representatives. Exploitation of this incentive has been proved to be a good fit in achieving UBL’s KPIs. Objectives

To ensure achievement of value

To achieve Distribution correction targets

To enhance the LPC (Lines per call)

To enhance call productivity (strike rate) of the DSRs

To improve the delivery of stocks

To focus volume of strategic SKUs

How it worked

Common attributes and modality of a typical Incentive ProgramAt the beginning of each JC (month), distributors are given targets on KPIs like Value Target, LPC, Volume target for focus SKUs, SKU penetration target, etc. These targets are then cascaded down on individual DSRs as their target.

Incentive on Value target: Different Prize money is provided ranging from Taka 200 to Tk. 700 for achievement of 90% to 110% over value target respectively.

Incentive on SKU target: In each JC, usually 5 SKUs are set as focus SKUs. There is a prize money for achievement of volume target of each SKU.

Incentive on LPC (Lines per Call) Target: Award are there for achievement of LPC Target (usually improvement up to 40%). Strike Rate (Call Productivity) of at least 75% is held as a precondition for getting this prize money.

Incentive on Distribution (SKU Penetration) Target: A set of 18-25 SKUs (the number varies for different regions) are predetermined at the beginning of a Quarter. DSRs get an incentive of Tk 500 for meeting the target for his markets.

Note that these features are mostly common to distributors’ incentive program also.

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Organisation

186 187

Prize for Outstanding PerformanceThe outstanding performers often get an added reward. For example, a lottery is held in each sales area among the top performers in terms of value or LPC productivity to reward the 3 among the best players with a big prize money.

Incentive for ADSRsReward for delivering stock of 90% to 100% Cash Memo without any alternation (any addition or deduction of stock)

MechanismTMs to communicate the modality at the beginning of the month, set target for individual DSRs & ADSRs, evaluate the results and award the prizes to the individual at the end of the month.

Distributors to instantly pay the prize money to the winners and then claim the amount endorsed by the copy of the results and money receipt.

DSR = Distributor Sales RepresentativeADSR = Assistant Distributor Sales Representative

•

Organisation

188 189

Appendix S

Project Gladiator – Bangladesh

A capability building program for DSRsMarket Type: 1 Unilever Market Position: StrongKey Challenge: Developing the capabilities of the Distributor’s field force

BackgroundUBL has around 1200 plus DSRs across the country who actually fight the front line battle for Win @ POP. As the market dynamics changes, they are the first one who have to face the challenges to serve the customer needs. In order to groom them up that way and to equip them with the UBL weapons for the battle, a capability program enabling them to upgrade their quality and motivation level and thereby increase their productivity was felt needed. Keeping that in mind Project Gladiator was designed and rolled out.

Objectives

To address the development needs of the DSRs and train them in a unified way so that their quality as a salesman improves the way UBL wants across the country

To enhance the Motivation level of the DSRs

To improve DSRs’ filed productivity scores

To develop DSRs as future sales supervisors and trainer of newly recruited DSRs

How it workedProject Gladiator is a Certification Program encompassing there broad areas:

Class room training followed by written exams

Field Application Test

Productivity Performance – KPIs

The DSRs will be evaluated on these areas and at the end of their successful completion of the program, the successful DSRs will be acknowledged be the company.

The program will initially run in the Territory Headquarters (50% DSRs contributing to 62% of total sales) as quality learning can be ensured with the direct supervision of the Territory Manager. Based on successful implementation of the program in the Territory HQ, the program will be rolled out nationally. Assuming that each year 25% of the DSRs will successfully undergo the program therefore we plan to implement the entire project within 4 years.

•

•

•

•

•

•

•

Organisation

188 189Organisation

Project Architecture:

Roll Out By STMTrain the Trainers: brief TMs in each region

Cascading Down By TMsBrief distributors and DSRs on the project, its purpose and benefits

Classroom TrainingTraining Modules to be supplied by STMTMs to discuss on the modules in DSR classroomModules to be rolled out on fortnightly basis

•••

Written Test

Question paper from STM TMs to take the exam and evaluate the papers for 40% marks

•

•

Field Application TestTMs to accompany DSRs at least once a JC and evaluate their job application of the modules on 25% marks basis

Productivity ScoringTMs to rate DSRs’ Productivity Scores – Value, Strike rate and LPC – on 35% weight after Job Application Test

EvaluationFinal Evaluation on total 100 marks:Below 40% – Fail / Retake40% to 60% – 3rd Division60% to 80% – 2nd DivisionAbove 80% – 1st Division

Score Sheet Circulation

TMs to send DSRs’ evaluation sheet to STMSTMs to circulate the National Score Sheet

•

•

Final Result Publication

After completion of all 10 modules and collating all score sheets STM will publish the final Score Sheet and the names of Gladiators

•

Rewards / Awards

Course Completion CertificateAward from ChairmanA TK 1000 per month for next 1 yearA Selection for Supervisor Rank

••••

190Organization

190

Systems

19� 193Organization

19� 193

Channel Goals KPIs

Next Gen Distributor Model

Organization

What How What How What How

Systems

CRS VMI

SFA billing package

SOPsJBPCVA OPSO

TPM

The Distributor organization has to be backed up by strong Unilever Systems & processes.

The key deliverable here would be:

1. SFA (Sales Force Automation) & Billing Package

In Good practice organizations, IT capabilities are leverage to increase execution excellence in the field.

Essentially, this means the distributor has implemented information system integrated to OpCo. The system is advanced & provides real time access to OpCo.

In leading edge distribution systems all 3 critical elements of the use of Customer Development IT would be present:

Sales Force Automation

Distributor Information Management Systems

Distributor to Unilever Reporting Systems

Distributor Loyalty Management Packages

•

•

•

•

Systems

Broad Overview

194 195

DistributorsSales Force

DistributorsSales Force

Building capability & a modern effective organization – IT infrastructure

Transaction System

Demand Planning System

Data WarehouseDistributor Web Portal

GT VMI

Channel Development

Trade Fund Management

MT VMI

MT HHT

Intranet DMS / HHT GTS

Customer Profitability Mngmnt

Sales force automation refers to the ability of the Distributor’s sales force to use Hand held terminals in the capture and transmission of orders.

Distributor Information system refers to the Distributor having set up an information management system in line with Unilever specifications. Typically, the functionality would be in the areas of sales records, inventory management, account receivables / payables & tax management.

Reporting to Unilever would involve providing the OpCo with standardized reports on a weekly, monthly and annual basis covering the critical areas of the Distributor operations in line with both contractual & Business Plan requirements.Some Standard Reports are given in the Appendix T.

2. Continuous Replenishment System / Vendor Managed Inventory

The Sales Ordering System plays an important role in ensuring demand creation happens through a systematic order procedure which could be ready stock or pre-order but meets the assortment requirements of Channels & Customers.

The best sales ordering system would be IT based and using a continuous replenishment system (CRS) or Unilever managed VMI system. Some leading edge Unilever organizations are already using these systems either across their distribution network or

Systems

A typical CD IT architecture would look like this:

194 195

selectively among their top distributors. The principles behind these systems is to ensure optimum availability of stock without Distributor overload and reduction in trade out of stock. The process of moving from manual ordering system to an IT based model requires fair amount of pre-work on infrastructure, people & processes.

The Process for moving from Manual ordering to automated CRS is given in the Appendix U.

Where a manual ordering system is used, the system should be based on current rate of sales, forecasted growth rates & NPI activity and convert into a Basic stock cover norm based on the safety stocks planned. Stocks should be replenished strictly as per the Basic stock cover norm and should only be overrode in the case of a NPI or promotion allocation.

Demand creation is also done through the proper management of NPI, Promotions & Activation at the right customers & channels. It is also the result of proper forecasting of demand to ensure minimum out of stock at the Distributor and on the delivery unit (in the case of ready stock delivery).

3. Channel Value Assessment

Using the CVA tool is now mandatory to identify priority channels by geography & category. This allows Unilever and our distributors to focus on top prizes and leverage our scale. Given below is an example of a CVA in Thailand. Bubbles represent the channel with a clear distinction of the Route to Market (e.g., Makro).

Item No.

Product Description

NSV Base Stock Norm

(A)

Uplift / Down

– lift (B)

Safety Stock (C=

AXB)

Opening Stock (D)

Stock Received During

the Cycle (E)

SIT (F)

Total Stock

(G= D+E)

Secondary Sale (H)

Closing Stock

(I= G-H)

Suggested Order

(J=C-F-I)

Final Order

Systems

196 197

HairCategory

in Thailand

The Solution (Outcome)

1

Bronze Silver Gold

B

F

D

A

C

K

N

M

I

P

O

L

E

G

H

80%

60%

40%

20%

0%20% 30% 40% 50% 60% 70% 80%

J

Route to M

arket

Deg

ree

of

Ch

alle

ng

e

Healthy Opportunity

Circle size represents Turnover

The CVA tool is described in detail in the Appendix V.

Systems

196 197

4. Optimising Promotion Sell Out (OPSO)

A large proportion of TMI expenditure in the past has been on small promotions with only tactical short term volume uplift objectives in mind. In the Next Generation Distributor model, Promotions are an important lever to improve market share. The focus at an organizational level would be on “fewer, bigger, better” and in a good practice company this would be drilled down to Distributor level. The OPSO Lite tool allows the Organisation to understand the performance of different promotions by channel and the profit ROI from each and the volume uplift. This then helps in focusing promotions over a period of time by “successful” promotion types, ”gold” customers & channels for different types of promotion and a clear understanding of what works and what does not.

Example of use of OPSO Lite tool is given in the Appendix W

5. Joint Business Plan

The Distributor Business Plan is at the heart of the Distributor operations. This is the bridge between the OpCo strategy, the Distributor’s goals and the retail / wholesale customers serviced by the Distributor.

Typically the Business Plan consists of a review of the previous year and a business plan with specific focus on Customers, Channels & Infrastructure requirements for the forthcoming year.

In a leading edge OpCo the customer / channel segmentation will reveal a clear understanding of opportunities & gaps and also the focus areas for bringing the OPCO Go to Market Strategy to life.

In the best case scenario the Business Plan will be a joint exercise taking into account the overall Go To Market Strategy, the market challenges and the Distributors capabilities. This annual business plan would be jointly reviewed on a frequent and periodic basis for course correction.

Given below is a suggested process and example of items covered in a Joint Business Plan.

Systems

198 199

DT JBP process

Objectives of UL• NIV• Investment efficiency

2.1Objectives of DT• Working capital efficiency• Profit

2.2

Annual business review1

Correction and improvement initiatives6

Joint business objectives• Sales target (incl. strategic categories• SKU distribution and coverage• DT ROI target• Resources planning

3

Action plan and execution4

JBP tracking and review (quarterly / monthly)

5

Description

1 • Review DT performance in past year• Review DT JBP compliance in past year

2 • Set UL objectives for DT business in coming year• Understand and review DT objectives in coming year

3 • Mutually understand and align objectives of both UL & DT• Set joint business objectives and targets

4 • Develop action plans to realise the joint business objectives and targets• Executive plans

5 • Track plans execution• Review action plans execution and performance monthly• Review JBP execution and effectiveness quarterly

6 • Identify the gap, issues and root causes in JBP execution• Develop correction and improvement initiatives to achieve JBP targets

Typically the JBP will have two parts:

The Business Needs &

Infrastructure / Resource Requirements

1.

2.

Systems

198 199

Annual joint business objectives

Objectives of UL Objectives of DT

Business resource plan Business management plan

• DT business resources requirement- Working capital- Warehouse- Vehicles and transportation facilities- Staff

• DSR investment

• Sales-related target and performance - NPS - Strategic categories - Coverage & SKU distribution• Operational target and performance - Inventory and logistics - Customer services (including UL serving DT

and DT serving outlets)• DSR target and performance• DT ROI target and performance

Action Plan

Scorecard and review documents

DT JBP templates

The JBP Toolkit software is available separately.

6. Warehouse Management

Warehouse management refers to the process of managing the distributor warehousing space and inventory while ensuring product freshness. This involves warehouse layout planning & control in line with established stock classification agreed jointly between Customer Development & Supply Chain. Regular monthly or quarterly physical stock taking is undertaken to ensure that inventory accuracy is upward of 95%.

In addition Warehouse hygiene needs to be maintained as per guidelines from supply chain including palletisation, warehouse ventilation, fire & pest control etc.Warehouse Audit System is given in the Appendix X.

7. Finance Management

This is The ability of the OpCo to manage Accounts Receivables from Distributors in line with the OpCo payment policy. The payment policy is jointly drawn up between the OpCo CD & Finance functions and ratified by the Company Management Committee. It takes into account the organization’s own cash flow requirements, the prevalent financial risks in the market and the access to finance for Distributors.

a.

Systems

�00 �01

It also is the ability to pro-actively predict the working capital requirements of distributors to fund business growth and to ensure distributors bring in a regular flow of capital either from retained earnings or through other forms of financing including bank borrowing.

Risk management also has to be ensured through the Credit Limit, Security Deposit & EPD policies.

In addition there is Financial risk in the Distributor’ management of stock which could be in the form of write-offs owing to high stock levels leading to damages or slow & obsolete stocks as well as risk owing to losing business opportunity because of lack of stocks. This needs management through rigorous KPIs and monitoring of Distributor stocks at periodic intervals including physical stock checks.

The final area where Financial risk exists is in the area of overall business performance through such areas as imbalance between primary & secondary sales, misreporting of secondary sales & stocks etc..

This whole area of Financial risk management falls in the preview of CD, Finance & Supply chain functions.

A summary of the risks and steps for mitigation are given below:

b.

c.

Risk

Order to Cash Stock Business Performance

• Overdue• Bad Debt

• Stock Levels• Slow & Obsolete• WH Damage

• Poor Sales• Poor Customer Service• Fraudulent Sales

• Investment Monitor• Credit Limit• Security Deposit / Adv• Early Payment Discount

• Stock Norm by SKU• Replenishment Norms• IT based DMS• Distributor Insurance

• Contractual KPIs• Joint Business Plans• IT based DMS

KRA

Financial RiskM

itigation

Managing Financial Risk

Systems

�00 �01

8. TPM

What is TPM?TPM is a set of tools and a practice of serious methods originally pioneered by the Japanese to maximize the effectiveness of facilities that are used within a business.

TPM = Total Performance Management

In the context of a Distributor operation:

Total

All Distributor Sales Force

Elimination of all losses / waste in Time & Effort

Performance

Increased Productivity of the Distributor Sales Force

Better Customer Service

Management

Managing the Distributor & Market effectively for higher return.

Typically if we take the example of a mathematical equation. This is about increasing the value of a Numerator & decreasing the value of a denominator. The higher the numerator and lower the denominator the higher the return.

In a distributor organization the numerator would be the sales turnover while the denominator would be cost & time. Good TPM practice would help to identify losses which could be reduced to either increase turnover or reduce loss or both. The ultimate result would be higher sales, customer satisfaction & ROI.

Typically, this exercise should be first piloted in a few key distributors with the help of our Supply Chain Colleagues, benefits documented and then rolled out.

•

•

•

•

Systems

�0�Systems

�0�

Appendix: Systems

�04 �05Systems

�04 �05

Appendix T

Standard ReportsA common way of reporting

Daily Reports

Daily Sales Report

Daily Sales Report Mon Tues Wed Thurs Fri Sat SunSales Target

Sales Achievement

Scheduled Beat

Actual Beat

Scheduled Calls

Actual Calls

% ECO

No of Productive

% Bill Productivity

Total Lines Sold

Lines Per Productive Call

Key Activity Target

Key Activity Achievement

New Product Launch Target

New Product Launch Achievement

Weekly Reports

Weekly Sales Report

a.

a.

Item No.

Product Description

NSVOpening Stock (A)

Stock Received During

the Cycle (B)

SIT (C)Total Stock

(D = A+B)

Secondary Sale (E)

Closing Stock

(F = D-E)

Stock Norm (G)

Stock Gap (H = G-F)

Appendix: Systems

�06 �07

Monthly Reports

Stock Control

Item No.

Product Description

NSVOpening Stock (A)

Stock Received

During the Cycle (B)

Total Stock(C= A+B)

Secondary Sale (D)

Closing Stock

(E= C-D)

Performance Report

Quarterly Report

1. Overall Performance

LY Actual

Qtr Sales Target

Qtr Sales Achievement

Qtr on Qtr Growth

YTD Target

YTD Achievement

YTD Growth

2. Key Category Performance

Category 1 Target

Category 1 Achievement

Category 2 Target


Category 3 Target


Category 4 Target


Claims

Damage & Shortage Proposal

Pending claims & Nil Claim Certificate

Credit from the Company vs Credit norm

a.

b.

c.

d.

e.

f.

Appendix: Systems

�06 �07

Quarterly Report

Quarterly Report Qtr 1 Qtr 2 Qtr 3 Qtr 4

1. Overall Performance

LY Actual

Qtr Sales Target

Qtr Sales Achievement

Qtr on Qtr Growth

YTD Target

YTD Achievement

YTD Growth

2. Key Category Performance

Category 1 Target


Category 2 Target


Category 3 Target


Category 4 Target


3. Coverage Report

Coverage Plan

Actual Coverage

Coverage Gap

4. Infrastructure Report

Point 1 Plan

Point 1 Achievement

Point 2 Plan

Point 2 Achievement

Point 3 Plan

Point 3 Achievement

Appendix: Systems

�08 �09

Appendix U

Transition Process (Manual Order to CRS)Automating the Ordering System

Transitional process from Manual ordering to automated CRS

Back End

Std Billing Package

ERP System / IT Infra

CRS Order Portal

MIS Generator

Infrastructure

Design firm dispatch plans

Distributor computer + OS

Data EntryInfrastructure

Training

Develop Anchors

Train the trainer

Train Depot Staff

Pre-Work

Revisit Stock Transit Time

Design firm dispatch plans

Clean up Item / Plan codes

Define Order Template

Rigorous Rolling Forecast

Define Stock Norms

Define Uplifts / Down lifts

Define Upward & downward

order lock

MIS: Order confirmation report, Order generated report & OTIF report

SOP: Critical Stock defined when stock holding is less than 3 day of the normShortage pack / CP packs will be equitably distributed as order generated as a percentage of stock availability

Any value order confirmed to be serviced on PDPNo non-CRS to distributor with more than 2 PDPs in a weekIn case of Distributor OTIF < 75%, non PDP automatically granted

Train Distributor Operator

Appendix: Systems

�08 �09Appendix: Systems

Appendix V

Channel Value AssessmentDetermining the size of the opportunityKey Challenge: Assess and determine the priority channels.

BackgroundOnce the channels are identified, it is imperative to service and leverage these channels with great focus. Determining the priority channels should be made objectively.

Objectives:

Assess the size of the prize (Channel attractiveness)

Rank the channel priorities and opportunities

Process for transiting from Manual ordering to automated CRS

How it worked:

Step 1: Critical Success Factors

•

•

SuccessfulImplementation

Simple

Measurable

ActionOriented

Flexible

Balanced

Aligned toStrategy

�10 �11

A1 Draw up initial customers / channels list

A2 Collect information

A3 Eliminate customers / channels

A4 Finalise the lsit of customers / channels

A Identify customers / channels

C1 Collect data to define attributes

C2 Finalise assessment

C3 Feedback

C Run the assessment

D1 Allocate to strategic groups

D2 Ensure conherence

D3 Feedback

D Group strategically

E1 Develop an operating framework

E Apply to the business

B1 Select attributes

B2 Weight attributes

Step 2: The Framework

Step 3: Stage A – Identification

A1Draw up Initial List

A2Collect Information

A3Eliminate Customers /

Channels

A4Finalise List

Broad Approach

Turnover, Unilever History

Reduce to Between 7 and 25

Include Strategic and Emerging Customers

Appendix: Systems

B Define attributes

�10 �11

Attribute Definition

Selection Weighting

Two Dimensions

HealthyOpportunity?

Degree ofChallenge?

Step 5: Define Attributes – Healthy Opportunities

Required Attributes

Size Growth Future GrowthRelative

ProfitabilityAlignment

Healthy Opportunity?

ECR CapabilityMarketing

SophisticationIndustry /

Technology Leadership

Optional Attributes

Step 4: Stage B – Define Attributes

Appendix: Systems

�1� �13

Required Attributes

DependencyReliance on

Trade Management

StyleCommitment to

Degree of Challenge?

SpreadCollective

ManagementPower

Trade TermsNew Market

EntryOrganisational

Stability

Optional Attributes

Step 6: Define Attributes – Degree of Challenge

100%

0 100%Healthy

Deg

ree

of

Ch

alle

ng

e

Can be expressed as a Cluster or Quadrant Chart

Step 7: The Matrix

Appendix: Systems

�1� �13

C1Collect Data and

Agree Scoring

C2Finalise Assessment

C3Feedback

Quantitative and Qualitative,Based on Relative Rankings

Combine Healthy Opportunityand Degree of ChallengeScores to Create the Data

for the Matrix

Qualitative, JudgmentalAssessment from Teamto Eliminate Errors and

Validate

Step 8: Stage C – Run the Assessment

Step 9: Stage D – Group Strategically

D1Allocate to Strategic Groups

D2Ensure Coherence

D3Feedback

From Cluster Chart andStrategic Judgment

Need to Link Global, Regionaland Local Assessments

From Cross-functional Team,Sense and Understanding

Checks

Appendix: Systems

�14 �15

Step 10: D1 Allocation to Strategic Groups

100

80

60

40

20

00 �0 40 60 80 100

Bronze

SilverGold

Deg

ree

of C

halle

nge

Emerging

Emerging Emerging

Customer G

Customer B

Customer ICustomer A

Important points

Emerging customers / channels are included at end of assessment

The size of the bubbles is based on an agreed KPI, usually NIP

The positioning of the lines between the three groups is partly judgmental based on goal definitions

The slope of the lines reflects the fact that the ideal combination is high opportunity, low challenge

Important to monitor movements from one group to another over time

•

•

•

•

•

Appendix: Systems

�14 �15

Step 11: Strategic Definitions

Bronze Silver Gold Emerging

Goal

Maintain Share, Improve Profitability

Growth in line with Marketing Objectives

Above average growth

In line with Portfolio Development

CharacteristicsLow AlignmentMixed Growth

Record

Less Attractive set of Attributes

Strategically aligned Sustained growthForward thinking

Scale

Unrealised Opportunity

Strategically Aligned

Resource Implications

Optimise Investment Focus on EfficiencyIncreased

InvestmentDirected Towards

Key Activities

Step 12: The Quadrant Chart

0% 10% �0% 30% 40% 50% 60% 70% 80% 90% 100%

100%

90%

80%

70%

60%

50%

40%

30%

�0%

10%

0%

Deg

ree

of

Ch

alle

ng

e

Appendix: Systems

�16 �17

Step 13: Channel Segmentation

Sales&

Profit

TACTICALResponsive Demand Planning

Efficient EngagementWin / Win Initiative Selling

(Informal)

STRATEGICCross-Functional Collaboration

Strategic AlignmentValue Chain Innovation

Custom Initiatives(Collaborative 8 Step CM)

TRANSACTIONALDisplay Initiatives

Maintain StandardsMinimize Costs(Price-based)

INNOVATIVESelective InvestmentCreate Best PracticesTest New Concepts

(3 Step CM)

Strategic AlignmentSize

of b

usin

ess,

Gro

wth

, Pro

fitab

ility

Step 14: Stage E – Apply to Business

Appendix: Systems

Step 15: Strategy into Action

Roles and Responsibilities

Action Plans andMeasurements

Must be Clearly Definedand Harmonised at Global, Regional and Local Level

Key Metrics

• Turnover Growth• Relative Profitability• Market Share• Cost Reductions• Customer Service Levels• Demand Accuracy• Retail Execution• Average Debtor Days• Deduction Management• Speed to Shelf

Agreed Roles andBenefits

Selected KPIs

Sales and Profit Targetsfor Each Customer / Channel

Develop anOperating Framework

Plans for Changes toStrategic Positioning

�16 �17

Appendix W

OPSO Lite ToolImproving the efficiency & effectiveness of promotions

BackgroundAn Excel tool developed in conjunction with IT from best practices around the regionThe tool captures:

Pre & post individual promotion evaluation (multiple products or single product in the promotion)

Quantitative measures & KPIs ROI%, Forecast Accuracy, Incremental Turnover Growth

Qualitative Assessment based on marketing / promotional objectives

Total Weighted Score (combined score of ROI and Qualitative Assessment)

Trade Profitability worksheet and analysis

Consolidated summary of promotions & reports by brand or channel / customer driven by Master data

ObjectivesOPSO aims to improve the efficiency and effectiveness of our promotional investments with our customers.

By applying OPSO we will be able to achieve:

A greater transparency around our investment and the return on this investment by brand or channel / customer

Continuous improvement based on learning and insights build up over time.

Increased confidence of promotional choices.

Improved promotion management by optimising resources.

How it workedOutput generated from this tool:

Quantitative results: Financial KPIs such as ROI % and Incremental Growth% are calculated to assess the promotion from the financial view point.

Qualitative results: The efficiency of the promotion from a qualitative point of view is anticipated based on the answers from a list of questions.

Total Weighted score: An average percentage is taken between the two results in order to assess the overall promotion efficiency both financially and qualitatively.

•

•

•

•

•

•

•

•

•

•

1.

2.

3.

Appendix: Systems

�18 �19

Inputs required

Marketing Objective

Promotional Objective

Promotion Mechanism

Baseline volume before, during and after promotion

Promotion volumes during and after promotion .

Variable TTS description and value for each promoted item.

Advertising & promotions description and cost. This refers to any specific or incremental A&P spend in trade / customer for the promotion

•

•

•

•

•

•

•

Appendix: Systems

�18 �19

Appendix X

Warehouse Audit System – VietnamHelping the Distributors manage warehouse space inventoryMarket Type: 2 Unilever Market Position: Strong Key challenge: Optimising warehouse space

Do’s & Don’ts

Basic

a. Warehouse should have adequate space

i. Clearly demarcated space for Food items & non food items

b. It should be properly lighted & ventilated

c. It should provide adequate protection from rain, moisture, seepage, dust etc.

d. The warehouse should hygienic & treated against rodents, termites etc. The surroundings should be clean.

e. Basic safety measures should be taken

i. Fire extinguishers & fire exits should be provided.

ii. First aid box should be there.

f. Local laws / guidelines should be adhered to.

Stacking

a. Wooden / Plastic pallets should be provided at the base of the stack

b. Gangways should be provided & there should be 15 cm gap from the walls. There should be no blockage / loose stock in the gangway.

c. Each SKU should be stacked separately

d. Brick layering / Honey comb pattern of stacking should be followed

e. Right side up stacking

f. Stock should be stacked up to the level as recommended to avoid damage. However, the height should not be more than 5 ft for safe physical handling.

1.

2.

Appendix: Systems

��0 ��1

g. Racks should be provided in case of layered stacking

i. In case of layered stacking on racks, lifters should be provided for safe loading / unloading.

ii. Heavy SKUs to be stacked in the lowers shelves & lighter ones on the higher shelves

Layout

a. Stocks should be arranged based on the A, B & C product classification.

i. Fastest moving SKUs to be closest to loading point

ii. Damaged stock should stored separately with a clear sign “Not for Sale”

iii. POSM should be stored separately but properly.

Warehouse Audits need to be conducted by Supply Chain on a periodic basis and the results of the audit shared with Distributor including improvement plans and agreed with Field Sales Management

Distributor Warehouse Audit

Score Definition Description

30Clearly sufficient No or only minor deviations from standards noted

Meet LV standards Equivalent to 90 – 100 % achievement / implementation

20 Below LV standardsMajor deviations noted

Equivalent to 60 – 90 % achievement / implementation

10Defective system Critical deviations noted – particularly wrt product safety

Far below LV standards Equivalent to 20 – 60 % achievement / implementation

0Nothing in place

Equivalent to 0 – 20 % achievement / implementationUnacceptable

Score Interpretation

90% to 100% Very Good

80% to 90% Good

60% to 80% Satisfactory

40% to 60% Unsatisfactory

Less than 40% Poor

3.

Appendix: Systems

��0 ��1

Name of the Distributor: ______________________________________________________

Address of the Distributor: ____________________________________________________

Name of the Auditor: ________________________________________________________

Audit Date: _________________________________________________________________

Sr. Description Rating Score Out Of0 10 20 30 30

1 Building 30

1.1Warehouse space is adequate for the size of business

30

1.2Warehouse must be strong enough to avoid collapsible

30

1.3 Warehouse must be well lighted 30

1.4Warehouse must be properly painted. Walls show no signs of water leakage or seepage

30

1.5Adequate ventilation. Controlled humidity / temperature

30

1.6Warehouse roof must be in good condition, roof show no signs of water leakage

30

1.7 Exclusive warehouse for Unilever products 30

Building Total 210

2 Hygiene

2.1There must not be rodent, cockroaches, ants and termites in warehouse

30

2.2Quarterly pest control contract, record & keep evidences

30

2.3Warehouse must be clean and dry, surface pooling of water avoid, there is no dust & rubbish under pallet

30

2.4 Warehouse must not have dust or cobwebs 30

2.5Not allow to park motorbike, cycle etc. in the warehouse

30

2.6No empty outer cases in warehouse to prevent birds, rodents from gaining access into the building

30

Hygiene Total 180

Appendix: Systems

��

3 Palletisation / Stacking

3.1 Have to use pallet or plastic sheets to prevent humidity

30

3.2 Maximum number of layers as in annex 30

3.3 The distance between top layer and ceiling must be at least 1 meter

30

3.4 Stock away from the wall 20 cm to avoid humidity from walls

30

3.5 Stock follow branch of products to FIFO practice easily

30

3.6 Space between stacks for way in & out 30

3.7 Honey comb stacking (annex) to prevent collapse of outer case.

30

3.8 Separate room or wood partition for tea product

30

Palletisation / Stacking Total 240

4 Product handling

4.1 FIFO must be carried out 30

4.2 Do not throw stock on the floor or trucks 30

4.3 Stacking of cases should be right side to prevent product leakage or outer case damage on the pallet

30

Product handling Total 90

5 Damaged stock / expiry stock

5.1 Damaged, leaking, dirty stock should not be mixed with good stock

30

5.2 Separate area should be identified for quantity of expiry stock

30

5.3 Damaged stock segregated 30

5.4 Damaged stock / expiry stock Total 90

6 Safety

6.1 No inflammable and hazardous materials stored in warehouse

30

6.2 Presence of good fire extinguisher in the warehouse, checklist for controlling

30

6.3 Electrical wiring and equipment are in good condition

30

6.4 No smoking in the warehouse 30

Safety Total 120Grand Total 930Percentage Score

Appendix: Systems

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Case Study: HLL IndiaThe Next Generation Distributor Model

��4Introduction

��5

��4Introduction

��5

Hindusthan Lever Ltd was the pioneer in setting up the Distributor model in Asia Amet around 1940s. The model was based on an “arms length “ availability philosophy with small sized distributors across the country.

When set up this made absolute sense given the general” media darkness” making a ‘pull” system difficult to establish and poor road conditions which made the cost of extended distribution by large distributors unenviable.

However, the landscape in India and across Asia AMET has changed over the years. TV has extended reach, people are more affluent with increasing GDP per capita, more retailing formats are available with the entry of large western & regional retailers.

Why Next Gen Distributor Model?

Low GDP per Capita

Fighting CommodityLow Channel DifferentiationLow MTLow Service Level Expectations

Fighting CompetitionPremiumisation / ChoiceMultiple ChannelsLower Share of WalletHigh Service Level Expectations

Increased GDP per Capita

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Case Study: HLL India – The Next Generation Distributor Model

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The primary task of a distributor has evolved from distribution to creating pull at the point of purchase. The shopper has many brands to choose from at the point of purchase and brands which have their assortment, merchandising & activation “right” enjoy a distinct advantage over others. This is all about winning @ POP.

In 2005 the team in India decided to fully revamp their Distribution network and bring it in line with the rapid economic changes taking place in India and across the region.

This was forced upon the Indian team in the context of poor performance by HLL vis a vis industry growth & GDP growth.

On introspection HLL as a business realized that markets had changed, customer expectations had changed and Distributors in the FMCG industry were looking for a richer Win-Win relationship. This was clearly evident in Customer Satisfaction Surveys which were conducted.

Key elements of the change in the environment were:

The Shopper was coming more affluent & sophisticated and was looking for retail solutions

To cater to this changing shopper, differentiated channels had emerged and had specific needs.

The expectations of Retail trade had also dramatically changed influenced by other companies such as L’Oreal, P&G, Nokia etc..

The Indian Model: What is it?

Bigger more professional distributors that were channel aligned

Replenishment based Customer service organization

Unilever CD organization with new roles & responsibilities and defined ‘line of sight’ through clear KPIs

A knowledge based organisation

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3.

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The objective of the next generation distributor model is to Win @ POP. The Indian CD team identified 5 aspects which needed attention within the organization to achieve this goal and call this the “PRIDE” model.

The move toward the next generation distributor model is not a journey accomplished in a day.

1st Pillar: People – Engaged & Passionate

The very first step taken was to move “Primary Sales” & Order booking from the Sales Force to supply chain using a continuous replenishment system (CRS).

Depot officer gone

CSO – Customer Service Officer

Primary Sales to commercial (PTC)

100% of orders untouched by hand

24 hour backend process

Allocation process – no manual allocation

Well understood rules of engagement

Rigorous management of uplifts & base stock norms

70%+ of orders confirmed w/o change

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Win @ POP

P R I D E


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Parameter Before After

Orders untouched by hand 0% 100%

No of lines in an invoice 22 52

% of distributors on CRS 35% 100%

Mal distribution index Not tracked 29%

Green % weeks HPC areas <50% 100%

MIS Manual excel sheet Real time HPC portal

RS Stock in Rs Cr 100 Cr 80 Cr

Simultaneously the Sales force was restructured under “Project Chrysanthemum” in line with the new roles and responsibilities. The primary task of the sales force now was to Win @ POP.

RM

RSM Dets

ASM

SO

TSI

RSM Rural

ASM

RSM PP

ASM PP ASM Spl

Dets Urban Rural PP Urban Speciality

SO SO SO

TSI TSI TSI

Old structure


��8 ��9

Key issues with the structure:

Driven by ‘availability’ mind-set.

No scope for running common HPC channel plans.

Smallest span of control in the industry at ASM level.

Focus on driving the top-end with scale and quality absent.

Career management at the field level difficult with just two levels.

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2.

3.

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5.

RM NSMU2

RSMU1

RSMRural

ASMU1

ASM U2ASMRural

AEU1

AE U2

SO

TSIDets

TSIPP

TSIU2 TSI

HPC Urban 1 HPC Urban 2 Rural

Key Principles:

Two distinct skill sets at the FF levels

Delayer the organisation by at least one level and raise productivity levels.

Bring HPC scale to all channel plans.

Focus at the top-end of the portfolio

Make the jobs richer, more empowered and with definite growth potential.

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�30 �31

Front End Sales Structure

Earlier...TSI Sales Officer ASCMA pure ‘distribution & primary sales’ focus

TodayCapability building, infrastructure & activation efficiency have assumed importancePositions have been created with clearly defined roles.TSIs also directly report to ASCM (creating a much wider span of control)

A clear shift!

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CLCE / COAE / AOTSI

Roles & Responsibilities

Effective Distribution & Capability

Building

Excellence in Activation

Execution

Capability Building

Quality Infrastructure

ASCM

The Objective: Winning @ Point of Purchase


TSI = Territory Sales In-ChargeAE / AO = Activation Executive OfficerCE / CO = Capability Executive / OfficerASCM = Area Sales & Channel ManagerCL = Cluster Leader (Senior TSI)

�30 �31

2nd Pillar: Channel Segmentation

Channel

Key Channel Themes Channel Prioritisation

Channel ‘Big Ideas’

Channel Strategies

Implementation

Shopper based channel segmentation

Historic Channels• Modern Trade• Traditional Trade

Shopper Based Channels• Supermarket• Supermarket (Evolving)• Discounter• Health & Beauty Store

• Family Grocer• Small Kirana• Kiosk• Chemist• Fancy Store


�3� �33

3rd Pillar: Superior IT Capability

General Trade – Indian Context

700K retailers covered through a network of around 4,000 stockists.

Contributes 90% of the total revenues of HLL in year 2005

Amongst the largest channel base in Asia Pacific (no. of retailers, geographical reach, sales volumes).

GT IT Capablity Requirement

Implement the next generation distributor program to improve capability to execute at POP.

Win @ POP by delivering Every Day Great Execution

Deliver best in class service to retail trade

Develop and implement customer / channel marketing programs across channels

Deliver better promotions effectiveness by better targeting in GT (OPSO change program)

Realize cost savings in servicing GT customers

Key high level IT capabilities required for addressing the above priorities:

Common transaction package for stockists – billing, collections, stock & sales; relay information to HLL

Product, pricing and scheme information to be published centrally and pushed to the stockist system

Enable pull-based replenishment (CRS) – dispatches based on stock norms and secondary sales

Local reporting capability for stockists to monitor sales, targets and salesman productivity

KPI & Sales reporting - central collation, automated KPI & exceptions based on business rules

Standard process for claims processing enabled by the standard transaction package at the stockist

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Project Unify covers the entire General Trade segment within India and comprises of multiple initiatives.

700K retailers covered through a network of around 4,000 stockists.

Contributes 90% of the total revenues of HLL in year 2005

Amongst the largest channel base in Asia Pacific (no. of retailers, geographical reach, sales volumes).

Unify Component Objective

Core UnifySet up a standard transaction package for distributor with master data integration with UL

Abacus (MIS)Leverage information on secondary sales at channel level for better decision making

Any Time Money (E-claims)

Automate distributor claim process

Quantum (HHT)Enable RS sales force to work on standard sales process to drive field effectiveness

Everest (SAP / ICH) Seamless integration between the SAP and Unify masters, price data

4th Pillar: Execution Excellence

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Poor PerformanceNeeds to Improve

Poor PerformanceUnacceptable

Best Performance

Effort in Right DirectionResults should follow

High

QOC

Low

Low

QOPHigh

QOC & QOP – Performance Matrix


QOC = Quality of ContributionQOP = Quarterly Operating Plan

�34 �35

Target Setting & Responsibility follows “the line of sight” principle which measures performance of the individual based on what he can “directly” influence. A system of scorecards & Dashboards have also been put in place so that each individual can visually assess their own performance.

QOC – Easy View Line of Sight

Availability Visibility Depth FCS QOPMarket Rates

AWP Infrastructure

ASM ✔ ✔ ✔ ✔ ✔

AE ✔ ✔ ✔

TSI / SO ✔ ✔ ✔ ✔ ✔ ✔

In addition, HLL introduced the role of Activation Executives whose primary job was to bring brands to life at POP (Customer Marketing Execution) and a specialized sales force Urban 2 (U2) whose focus was top end customers and top end brands in the portfolio.

AE Structure

AE

Supported by a 3P Structure

AE Office

AE merchandisers and supervisors

Focused on AE OL

What is an AE OL?

Top 40% of OL contributing to 80% of TO in all AE towns

Focused on Anti Competition

Includes all H&B OL and Chemists OL (Top 40% for PP done separately)

Workplan focused on Activation, Visibility and Trade Relations

Activation and Visibility on AWP every MOC

SVS and Vijeta: 2 Channel Programmes

BA training run by TMO

Focused on ‘Sell Out’ rather than ‘Sell In’

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�34 �35

Similar approach has also been followed in Indonesia with the “Growth Engine (GE) Sales Team & Thailand with the HPS (High Potential Skus) sales team.

In the second half of 2005 HLL focused on rolling out two key channel programs – “Super Value Stores” addressing the Customer Marketing opportunities in neighbourhood grocery & “Vijeta” addressing the opportunity in wholesale.

By quarter 4 of 2005, the end to end integrated billing package called “Unify” connecting Distributors to the company ERP system was set up.

Achieving EDGE

Changing the Organization Structure

Alignment to SIA

Performance Management

Rewards & Recognition

EDGE SOPs

EDGE SOPs

Every Day Great Execution

Similar approach has also been followed in Indonesia, Pakistan, Sri Lanka, Bangladesh, Thailand & Malaysia to name a few others.

The EDGE Process – the importance of SOPsEDGE or Every Day Great Execution lies at the heart of what our Customer Development function aims to achieve: Winning at the Point of Purchase (POP) every time, every day and in every sales call that our front end field force makes. EDGE has defined a set of metrics, superior performance in which by CD and its partners will drive growth and market share.

The EDGE Standard Operating Practices (SOPs) are inputs that aim to drive improvement in the EDGE metrics by the sales system.

The SOPs are primarily aimed at improving:

Availability

Visibility

Issue resolution

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�36 �37

The 2 metrics that will get directly influenced by these SOPs are Visitrack (a 3P visibility audit) and FCS (Field Capability Score).

FCS is a simple measure very easily understood by the distributor salesman. It also covers all the parameters that need to be delivered at the end of the day to enhance ‘customer delight’ – one of our 3 ‘must win’ goals.

A Bill Productivity target ensures that the Sales System sells in only enough for optimum rotation to happen thereby ensuring (a) stock outs don’t happen (b) capital does not get locked in unnecessarily for long periods and (c) high levels of freshness.

An Effective Coverage target is aimed at making sure that a larger set of outlets get serviced on a regular basis. It works against a distributor’s tendency to leave out accounts that are small today.

The final parameter measured through FCS is LPPC or Lines per Productive Call. An LPPC target encourages the Sales system to work at increasing range at the outlet level. Today’s consumers want range – so that they have a whole gamut of choices to select from. New categories / SKUs may be small today, but they can become the growth drivers of tomorrow if nurtured through proper placement at an outlet level.

To achieve any plan that we may have in the market place, we need to execute through store owners. It is important that we become his supplier of choice and he considers the relationship as a partnership. This is only possible if we delight him with our service levels.

Research has shown that around 70% of purchase decisions are made by the shopper at the point of purchase. Thus it is here that the battle for market share will be won or lost. We need to own this space in order to make the desired impact and for that we need the partnership of delighted customers.

The SSMARTC ProcessOne of the key SOPs in EDGE is on distributor salesman behaviour in the market. The salesman is the face of the Company on a regular basis and our strategies are ultimately only as good as his understanding / execution of them.

These SOPs list down what he is expected to do in every store that he visits. It also puts down these actions in the desired sequence. Each SOP is customized channel wise to incorporate requirements of each channel.

The SMART acronym makes it easy for the salesman to remember / recall the SOP as well as making it crisp and easy to understand. It covers every part of the call process (interaction with the trade) in a comprehensive manner– from an opening salutation to call closing.


�36 �37

These SOPs are distributed to each salesman in the form of a small laminated card in the local language so that he can carry it with him to the market.

RSSM Call Procedure – SVS / UNICARE / STAR

Before starting the day:Stock norm for the quarter by outlet / SKUs to be put on TSR from report in Unify 2 weeks for category A SKUs and 4 weeks for other SKUs

S Salutation

S Store Check by SKU & Suggested order generation by SKU as per norms

MMerchandising visibility check correct visibility if needed. Give feedback to 3P merchandisers help desk

AAlways brief retailer on Ops. Plan and Always check on QOC packs before finalising the order

R Rigor in generating order by SKU (stock norm-stock) maximum not to exceed 4 weeks

T Take stock of damages and replace as per policy

C Collect cash and close the call

S SMART C

The SSMARTC process is basically all about replenishment selling and improving range available. It mandates use of a Trade Service Card updated with ideal stock norms (basis previous purchase history) for each SKU in each store. The salesman is expected to do a ‘store check’ where he takes note of the closing stock of each SKU since his last visit and uses the preset norm to arrive at a suggested order. He is also expected to go through the entire list of relevant SKUs for the store with the customer – so that no SKU gets missed out in the order.

The SSMARTC process also endeavours to make the entire call a more holistic one. It encourages the salesman to take ownership on the merchandising aspect by fixing what he can on the spot and escalating what he cannot to a help desk for speedy resolution. It also advocates a proactive approach towards damages. Each salesman is taught the damage policy in very simple terms so that he can communicate the Company’s position to each store in case any clarification is required.

ALERT ProcessThe ALERT process is all about handling objections / issues in a sensitive manner. Since the distributor salesman is the face of the Company as far as the store is concerned, it is important to train him on how best to deal with common questions from trade. Given below is the process as well as 2 sets of FAQs (1) HPC (2) Foods


�38 �39

Frequently Asked Questions: few examples

Q. Damages are lying with me. What should I do?

A: Sir, I understand this is a problem for you

L: You are a very important customer and we value our relationship with you

E: Sir, please our damage policy advises you that stock received by you in damaged or defective conditions should not be accepted by you but be sent back to the distributor immediately preferably with reasons clearly mentioned at the back of the invoice. The distributor will replace these stocks immediately. E.g., leaking sachets, empty cartons, etc..

R: Also we have been doing replenishment based selling for some time now. In fact we sell in only based on your averages. We are specifically instructed not to sell more to you than your average so that no damage is created. This is to ensure that such occurrences don’t happen.

T: I am sure that you have seen this in practice. Thank you for your understanding & support

Q. Bottle has broken / Pack has fallen down and burst / Tube is disfigured in shop / Rats have eaten the soap. Please replace.



E: Sir, we will replace stocks that have been delivered in a damaged condition. We cannot replace stock that has been delivered in good condition. Sir Please appreciate that we are replacing when the error is clearly at our manufacturing end, for other cases we request you to please excuse us. For example if one of your customers buys a glass bottle from you and drops it at home. I’m sure you will not be able to replace it free of cost. I hope sincerely that you appreciate it is the same with us.

R: Can we suggest putting railings and stacking the bottles properly to ensure that such situations don’t happen any more? May I also suggest that we help you tack the shelves so that there is no hurry in taking bottles out of the shelf due to which they may drop and become damaged.

T: Thank you for your understanding & support

Q. Your Launch Product is not selling. Please replace.

A: Sir, your feedback is valuable to us and we will convey it to our team.


E: However please have some patience. We have launched the product only two weeks ago. It is only after launch and ensuring that shops are carrying our new offering, do we start TV and Radio advertising. You must have seen our new advertisements. Soon demand will come for it. Please be reassured that demand will be created.


�38 �39

R: Also from time to time, we do take back stocks that have not sold across the state. We term these as ‘failures’ and take them back at significant cost to us since we value our relationship with trade. We are confident that this product will be a success, and request for some more patience from your side.


Q. Lot of empty cartoons (e.g., Red Rs.10 / Shortages in pack, CLDs. What do I do?

A: I understand this is a problem for you


E: Sir, if it is a Manufacturing defect, we will definitely reimburse you for the same.

R: However to ensure that in future such inconvenience is avoided; please check the stock at the time of delivery.

Also we are in the process of shrink wrapping every outer carton. Also every single factory does quality control check to ensure that this does not happen like weighing every outer bag etc..


Q. Quality of CLDs is bad. Hence I have more Damages than normal



E: Sir, we are a reputed company and follow international standards. All our packaging is tested as per the Indian Institute of Packaging norms. I assure you that our packaging meets all relevant standards and is best in class.

R: However you have a problem and it is my duty to assist you. May I suggest that you ensure your cartons are kept dry at all times and checked regularly to ensure no infestation.


PDF file on EDGE SOP is available separately.


�40 �41

5th Pillar: Delighted & Aligned CustomersTo be the most preferred & sought after company to partner with

Customer Caring Culture

Interlocked Business Processes

Best in Class Capabilities

3. Heart

2. Mind

1. Body

UnI connect

CRS UnifyUnI visionUnI star


Distributor engagement to achieve delighted and aligned customersThe CSMM Survey conducted in July 2005 with the HLL Redistribution Stockists (RSs) across the country revealed that nearly 60% our Detergent customers and 54% of our Personal Product Customers were feeling trapped or vulnerable in their partnership with HLL. The voice of those customers strongly pointed towards a biased arrogant approach of customer management with little focus given to team-coordination and capability building.

The UnI Initiative was thus born to bring back delight to customer management. The mission of this initiative is to provide best in class service and build a system that is truly service oriented, customer driven and strives for a long term win-win relationship.

The first amongst the UnI Programme was the UnI Vision initiative. The UnI Vision or the Joint Business Planning (JBP) programme is an attempt to create a win-win combination with a set of chosen large customers by freezing a mutually agreed plan that is aligned to the SIA requirements. The second major UnI initiative was the UnI Star programme.

�40 �41Case Study: HLL India – The Next Generation Distributor Model

The UnI Star programme had been rolled out with the objective of building a high quality relationship beyond profits with a set of chosen large customers by

Recognizing and rewarding outstanding performances

Building exclusivity in the treatment of those customers through special privileges

To migrate from a transactional to a quality leadership by building a culture of appreciation

The UnI Star programme was created on the basis of a set of simple, clear, specific and measurable set of criteria (captured in the UniStar Distributor Dashboard) leaving no scope for “another interpretation”.

Unistar RS Dashboard:

HEAD SUB-HEAD 5 POINTS 4 POINTS 3 POINTS

QOP 100% 98% 95%

QOC ECO

OPS PACK 5 Packs

5 Packs 4 Packs

4 Packs 3 Packs

3 Packs

FCS No of RSSM with 300 pt 75% 50% 30%

PNC N-2 Trade PNC 90% 80% 70%

Infra Kundli As per JBP 90% 80% 70%

Zero Bouncing is a pre-requisite to stay alive in the Unistar Programme

Basis the dashboard scores the RSs were categorized into the following groups:

7 star RSs – those RSs who get 4.5 points out of 5 or 90%

5 star RSs – those RSs who get 4.0 points out of 5 or 80%

3 star RSs – those RSs who get 3.5 points out 5 or 70%

** RS refers to Redistribution Stockists meaning direct distributors

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�4� �43Case Study: HLL India – The Next Generation Distributor Model

The detailed UniStar payout list has been given below. The payouts to the RSs could be classified under the following:

Benefits (like discount coupons on white goods etc.)

Recognition (Star pin at JBP, National meet with Chairman)

Capability building (advanced learning programs at a reputed institute)

Personal Excitement (Holiday trip to exotic locations)

Business privileges (Channel financing privilege, first right of refusals etc.)

7* RS 5* RS 3* RSFINANCE Discount booklet Discount booklet Gift Hamper

APPRECIATION National meet with Chairman National meet with VP Letter of appreciation

from RM

Star pin at JBP

IMPORTANCE Full page write up in E letter

Half page write up in E letter

Letter of reco for Visa / education

Letter of reco for Visa / education

Advance learning program at University

Advance learning program at University

Nomination for training at University

Best practices speaker / Faculty in University

Launch / relaunch product samples

Training / projects for their children in HLL*

Letter for recognition

EXCITEMENT Invite (with family) to a National Event

Invite (with family) to a Regional Event

BUSINESS Right of refusal for New Geo / PC / Channel

Right of refusal for New Geo / PC / Channel

Channel financing privilege

Channel financing privilege Channel financing reco

The Unistar Scores are published every month and payouts are calculated basis the quarter score which is a simple average of the monthly scores in that quarter. The annual score for the distributor is again a simple average of the 3 quarter scores in the year.

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�4� �43Case Study: HLL India – The Next Generation Distributor Model

In MQ 07, HLL is extending the Distributor variable incentive programme for the distributor salesmen as well. The process starts with having the right profile of salesmen (the desired profile of HLL salesmen has been given below), providing the right training inputs to them, doing performance appraisals on a regular basis and having a standard uniform monetary (reward) and non-monetary (recognition) payout structure. The salesman dashboard looks exactly similar to that of the distributor and the salesmen gets graded into a 7*, 5* and 3* salesmen basis his dashboard score. His ratings determine his variable payouts for that month.

Attributes Current Desired

Family Background / Profile Relative / Well known to RS Middle Class Graduate

Communication Skills Average Good

Aptitude for Selling Average Cutting Edge

Numerical Ability Average Cutting Edge

Basic Intellect Average Above Average

Integrity High High

Summary – 2005 The JourneyTo be the most preferred & sought after company to partner with

Real CRSDelighted Customer

Sales System Restructuring

M

FFLAEngaged People

QOC / FCSExcellence @ POP

AE StructureWin with Shopper

U2 Focus on Top

J

SVS / VijetaChannel Programs

RS consolidationProject Chrysalis

S

UNIFYIgniting Growth

DWin @ POP


2006 The Journey

Uni-vision

MQ

Uni-care

JQ

Edge Metrics

Uni Connect

EDGE SOPCascade

Uni-star

SQ

Project Victory(Fancy Channel)

Uni-versity

DQWin @ POP

Sales Force Automation is the last “major” capability builder to be tackled and this will be complete in 2007.

The Results so far...

12%

10%

8%

6%

4%

2%

0%2004 2005 Till Q3’06

HLL USG%

�46 �47IntroductionCase Study: HLL India – The Next Generation Distributor Model

Arijit Ghose (Lead) VP General Trade Development Asia AMET

Willian Dandrea VP CD Latam

Bong Dela Cruz Regional CD Director Asia

Rana Sengupta Regional CD Director AMET

Reazul Chowdhury VP CD Unilever Bangladesh

Noeman Shirazi VP CD Unilever Pakistan

Mizanur Rashid Unilever Bangladesh

Shoeb Assaduzzaman Unilever Bangladesh

Dheeraj Arora Unilever Singapore

Debjit Rudra Regional Manager HLL India

Milind Pant Regional Manager HLL India

Shoumyan Biswas HLL India

Sushmita Banerjee HLL India

Sarayut Jitcharoongphorn Unilever Thailand

Suphot Rittipichaiwat Unilever Thailand

Bambang Trisanto Unilever Indonesia

Wahyujati Obor Unilever Indonesia

Djohan Aminullah Unilever Indonesia

Medel Aviles Unilever Philippines

Doy Concha UInilever Philippines

Louis Lim Unilever Malaysia

Phan-Duc Binh Unilever Vietnam

Liaquat Ali Qadri Unilever Pakistan

Aruna Mawilmada Unilever Sri Lanka

Allen Bai Unilever China

Arif Hunashi Unilever Arabia

Contributors

�46 �47Introduction

Module 3GT Learning Series

This document may only be distributed within the Unilever group of companies (“Unilever”) and its agencies, to persons who need to be aware of the contents to carry out specific tasks requested by Unilever. This document must not be copied in total or partially, or distributed outside Unilever without prior agreement with the copyright owners. Any unauthorised use may lead to legal action. © Unilever 2007.

Module 4 GT Learning Series http://www.unilever.com