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Distribution structure of Nestle

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  1. Introduction
  2. Distribution structure of Nestle India
    1. Ownership transfer
    2. Transportation
    3. Policies
  3. Selection of distributors
    1. Capital investment
    2. Relevant experience
    3. Infrastructure
  4. Incentives to the distributors
    1. Margins
    2. Schemes spread over 2-3 months
    3. Certificates
  5. How does it work
  6. Major aspects of the program
    1. Stacking as per norms
    2. Good warehousing practices
    3. Accounting
    4. Handling of bad goods
    5. Temperature control for chocolates
  7. Retailer and distributors survey
    1. Reasons to buy from the distributor
    2. Reasons to buy from the wholesalers
    3. Credit policy
  8. Observations

Properly planed distribution is always the quintessential factor when a company needs to reach its customers in all parts of the world therefore this paper will take a look at how the company Nestle distributes its products and where all does it face challenges and, finally, how it can counter these problems.

Stocks manufactured at the factories and co-packers reach the C&S through mother Godowns. The stocks stored at C&S are the property of Nestle. Encashing of stocks are done through Invoicing to Cash Distributors C&S as per the guidelines given to them. They also receive and store support materials like give aways, stickers and complementary items etc.From the factory to the distributor stage the company ensures that there is availability of smooth chain for transportation. At the mother godown there is a temperature controlled area cold storage that has been hired.

For the purpose of transporting chocolates from the mother godown to the Cash Distributor Dedicated Air Conditioned Vans are used (especially for the summer seasons)

[...] There are a few sources of channels conflicts like- WHOLE SELLERS As discussed above, these are not a part of the formal structure of Nestle's distribution network. They make bulk purchases from the distributors directly thereby leveraging on the margins. Typically the wholesaler gets a margin of about from the distributor, of this he retains and passes on the remaining as discount to the retailer. Such sales based on undercutting can be a source of irritation to the distributors who are not supplying to the retailers but are suffering due to selling by the whole seller in their areas. [...]

[...] He visits the wholesaler twice in a month and gets his supplies in bulk. Here he dose not have to be bound to take, and neither is there any pressure to keep any other SKU's of Nestlé. Point to note here is that this retailer is quite happy and content with Cadbury's Distributor's. He is ready to give his order to him as he is getting good margins and dose not really need to visit to the market. Observations As seen earlier, the wholesalers are a cause of conflict in the distribution [...]

[...] Sample area Retailer 1 This retailer gets his supplies from Distributor of Nestle and also from the market. He is satisfied with the distributor as he gets his supplies from the distributor at his doorstep and does not need to travel for the supplies which he is sure he will sell during the week. The distributor comes once in a week for supplying the ordered stock. The stock order is taken a day before the supply is made. But he prefers the wholesalers when in between the week, his stock gets exhausted and he needs more supply. [...]

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