A competitive edge in sales and distribution network provides much needed muscle to the companies to compete in market place as has been epitomized by companies like HLL, Marico & ITC etc. Use of IT in sales and distribution promises to provide a consistent source of competitive advantage that can go a long way in enhancing the overall power of company in market place.
Sales and Distribution in India means a set of levels- wholesalers, stockists, transporters, retailers etc. Automation of S & D promises the reduction in storage costs, administrative costs, communication costs, lesser wastage and lesser transportation cost because of better route planning. It enhances the revenue because of better marketing planning, demand volatility management, responsive product development. The productivity is also enhanced because of effective use of sales data, improved communication flows and computer assisted ordering. Considering all these advantages, IT looks like to be a natural candidate to be used in sales and distribution.
The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage.
The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry. India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million.
[...] And as it was anyway toying with the idea of refurbishing its IT system it decided to check out the potential of an Enterprise Resource Planning (ERP) system. The ‘business advantages' of ERP systems prompted the company to analyze its potential. Marico sought to keep pace with the dynamically changing business environment and saw ERP as the means to achieve it. Though the benefits of ERP were fairly apparent, Marico decided to play it safe by chalking out a detailed plan on paper. [...]
[...] We are currently in one of those phases and believe it to be the fourth major asset of the company (other three being strong brand image, new product development strengths and an extensive distribution network).” HARNESSING INFORMATION TECHNOLOGY In an effort to establish itself as a strong player in the FMCG sector, The company has already started implementing IT systems and processes all across the company. The distribution network is the lifeline for an FMCG company and is great value add in terms of IT returns than manufacturing. [...]
[...] The team comprises an exclusive sales force and exclusive redistribution stockists, under the charge of dedicated managers. The team focuses on building superior availability, while enabling brand building in the deepest interiors. HLL's distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers, through about 6000 sub- stockists HARNESSING INFORMATION TECHNOLOGY An IT powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis. The objective is to catalyze HLL's growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. [...]
[...] FEATURES OF MFG/PRO The features made available in this solution can be jotted as follows: Customer item numbers for sales orders and invoices Commission splits by line item, margin based commissions option Supports non-stock items and drop shipments Sales tracking by customer type and channel Automatic credit hold and manual order hold Consolidated invoices or one invoice per shipment Single transaction to create invoice and record inventory transaction Automatically updates installed base EDI support, including purchase order acknowledgment Multiple sales orders per invoice Flexible pricing by brand, geography, volume, and rebates Discounting by quantity, product lines, and across combined orders Automatic best-price calculation Repricing option Intrastat data collection and reporting Multiple scheduled order lines for a particular item number Supports container and line charges to Sales/Scheduled order lines Handles invoicing and payments for consigned inventory SALES QUOTATIONS The Sales Quotation module allows the user to create responses to customer request for quotes (RFQs), and maintain historical information on sales quotations to customers. [...]
[...] Few of them can be enumerated as follows: Cost reduction thru savings in Storage costs Administrative costs Communication costs Wastage or spoilage Transportation cost Revenue enhancement through Accurate forecasting by obtaining accurate marker information Responsive product development Better market planning Demand volatility management Increase in distribution channel efficiency Development of mutually beneficial partnerships along the D Channel Greater brand equity Value return in investment Cost reduction Improved people productivity Revenue enhancement Improved people productivity Time saving Computer assisted ordering Effective use of sales data Improved communication flows internally and with trading partners 5.2 CRITICAL SUCCESS FACTORS (CSF's) Before we decide upon the critical success factors that are needed to make any project successful, we need to ask ourselves few questions to make the information technology implementation work: What objectives are central to organization What CSF's are central to meet the objectives What decisions and actions are key to CSF's What variables underlie the decisions and how they are measured What information systems can supply these variables From this list of question we can come up with the critical success factors for our own organization. [...]
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