As the country slowly and steadily recovers from the devastating socio-economic impacts of the Covid’s second wave, we are witnessing a shift in the mindset of Indian FMCG companies towards making their supply chain more efficient and predictable by implementing a cloud-based distributor management system (DMS) at super stockists, distributors, sub-distributors and working hand-in-hand with these entrepreneurs and channel partners to achieve the vision. In the words of an FMCG leader of a rapidy growing regional FMCG company:
Covid made us realise the importance of having an automation-enabled, highly effective, data-driven supply chain and just not rely on leg work done by our frontliners.
The way we interpret this change is that Indian FMCG companies have been focusing on scaling production and improving frontline productivity for far too long and in the process have ignored a vital element in their last mile success i.e. facilitating channel partners in adopting automation. This sentiment is slowly changing and next-gen SAAS salesforce automation platforms like Peri CRM are getting enquiries from Indian FMCG companies and their distribution partners for fresh DMS implementation. In this blog we will first talk about the why DMS is important for improving FMCG distribution, then give a glimpse of the rise in DMS adoption, and finally things to keep in mind while going through this digital transformation curve.
Levers of Improving Distribution
Although there are multiple levers of improving the distribution efficiency for a typical pan-India spread FMCG business operation, below are the top ones which are simple, actionable and can be readily applied with minimal time, budget and resources. Let’s have a look:
The journey of creating distribution efficiency starts with digitization or as the jargon goes “moving to cloud”. What that essentially means is moving the day-to-day business transactions of a company like sale, purchase, invoicing etc from either paper or physical servers to a cloud infrastructure. If you as a company want to even get onto a path of supply chain improvement, this step is mandatory, there is no other way. However, this shift is easier said than done, and all the questions you may have in mind at this moment, trust us, all are pertinent ones. Allow us to give some clarity to them:
- Which cloud platform to chose: First thing to understand is that there is an entire ecosystem of software vendors serving the Indian FMCG industry. Most of these vendors are SAAS now which means close to 100% uptime, low upfront cost, agile implementation and data analytics as a bonus. If you want to know more, read our blog “Peri Covers FMCG General Trade 100%”.
- How difficult the transition would be: With the right salesforce automation partner like Peri CRM, a FMCG company can move to cloud fastest in about a week’s time and maximum in a month, depending upon the data preparedness. Take a look at our blog “Data preparedness for Salesforce automation implementation”.
- How much would it cost: As a thumb rule, adopting a SAAS, cloud-based salesforce automation platform should be easy on the pocket because the technology vendor spreads the cost over the period of the contract typically 3 years. Peri CRM is India’s most economical salesforce automation plan because our philosophy is that everyone who is part of the Indian FMCG industry should have access to the latest technology. Check our latest pricing to know more.
- Will I lose control and be at risk of data theft: Moving on the cloud doesn’t mean that company loses control of its data and data is vulnerable to be misused by any interested party. On the contrarary, cloud data is highly secure, with 99.99% availability and backups across multiple geographies.
Once a company has moved to the cloud and digitized its data on a SAAS, cloud-platform like Peri CRM, the next thing to focus is to optimise the geographical territories in which its salesforce, suppliers and retailers are spread and working. On Peri, this optimisation is really simple and can be done using automated or manual beat creation depending upon the preparedness and maturity of the sales function. Below are the few dimensions of territory optimisation:
- KYC of retailers: A digitized retail universe is useless if all stakeholders in the sales organisation including frontliners, managers, senior managers, marketing, finance teams cannot identify the customer. In banking terms this is called KYC or Know your customer. Peri focuses alot on perfecting the KYC of a company by focusing on full, correct name of retailer validated by one or more photographs of the store’s facade, a 10 digit mobile number validated by SMS or WhatsApp, having the right beat and the right preferred supplier. Companies must spend first few months perfecting KYC for their digitized retail universe.
- Beat creation: Beat is nothing but a clustering of retail universe based on size, territory understanding, and penetration of a brand. Companies must work with sales managers to create weekly, fortnightly or monthly beats and assign to the sales representatives based on their individual potential.
- Beat servicing: Once beats are assigned, companies must ensure that the sales team is visiting those beats on defined days and covering the retail universe in those beats. Covering includes doing a sales call with the store owner or incharge, checking product shelves, placement, inventory levels and competition’s, as well as sharing new schemes, recommending how much should be bough to avoid stock-out, confirming previous orders, payments and finally taking the new order.
Once a sales representative of an FMCG company starts servicing a beat by doing routine visits, meeting and greeting retailers, picking orders and sharing with distributors, next attempt which a company should make to create supply-chain efficiencies is to do month-end reconciliation of physically inventory available at all supply points including the company depot, stockist’s, distributor’s warehouse vis-a-vis the mathematically calculated number i.e. opening plus purchase minus sale.
Once you have a strong grip on the precise inventory positions at various supply points which allows for better sales forecast and production planning, the next area to attack is gaining discipline on secondary order fulfilment. In a typical scenario, a salesman visits a retail beat, meets a set of retailers, collect orders and share it with the supply point (company depot or stockist or distributor). Now the supply point priortises this orders based on a lot of factors – brand pull, stock availability, credit history of retailer or some adhoc reason. As a result, the fulfilment of these orders do not follow a linear trend and many a times, neither the salesman nor the retailer is informed about delivery details. For a company to derive supply chain efficiencies, every supply point must be accountable for communicating the expected fulfilment date when an order is received and keeping the fulfilment within a reasonable TAT (turn around time).
The last but not the least area where Indian FMCG companies can derive distribution efficiencies is by doing the good old month-end data analysis of each distribution point. This typically involves analysing the opening stock and purchase trends, layering it up with the retail universe, daily sales calls and daily orders summarised by company’s brands, and territories. Lastly, the order fulfilment trend should be closely tracked and supply points should be informed and trained on the advantages of doing fulfilment on a timely basis.
DMS Is The Answer
All the above mentioned levers of supply chain improvement can be put to practice on Day 1 by implementing an easy-to-use, and highly functional cloud SAAS Distributor management system like Peri DMS, coupled with a very strong support system (in terms of documentation and trainings).
Most FMCG companies will tell you that Indian supply chain partners are NOT willing to use a technology platform.
In our mind, the root cause of the above gap lies in the prevalent management culture of many Indian FMCG companies especially the ones still owned or controlled by families. Firstly, DMS is still seen as a far-fetched dream in the mind of CXO’s, also because it doesn’t directly impact the top-line of the company. Second, automation is not a specialised role in these companies. Technology heads are either old school themselves or stretched too thin on business-as-usual to own a turnkey initiative. Thirdly, sales leaders are not encouraged or incentivised enough to make them risk their track record (or career) by volunteering for such initiatives. Even when their KRA’s include automation, it is mostly for quarterly updates with no interim, dedicated project steering committee meetings. Lastly, when a leader gathers the courage to own a project, he often lacks cross-functional support (HR, Marketing, Supply chain) to pull off a successful rollout.
How often you have seen sales leaders hand-off DMS initiatives to someone who is under utilised (typically a middle manager sitting out of the head office) or a MIS resource not skilled at leading turnkey automation projects?
In our mind, the root-cause of the above gap lies in the prevalent human resource management culture in many Indian FMCG companies. Employees are still evaluated by their defined job role rather than their skills. There is too much emphasis on performing the current job role, rather than making a progression plan which is beneficial for the entire organisational hierarchy. High stakes & high responsibility initiatives are often pushed downline with the premise that someone on-the-ground will do a better job.
And how often have you seen middle managers hand-off the execution of such projects to their downline making the entire initiative a “Chinese whisper” where the vision and communication of the sales leader never gets translated to the suppliers who then are bound to take it less seriously?
In our mind, the root-cause of the above gap is due to the absence of top-down culture and project management best-practices in many Indian FMCG companies. Middle managers are not groomed to lead initiatives, infact they have internalised handing-off execution to the next available employee in their team because that’s what they have seen leaders doing. The lack of a command centre means that a project’s goals are open for interpretation and twisting. To make matters worse, there is hardly any documentation around turnkey projects – no project charter, no project plan, scattered disoriented resources, no minutes of meeting and no steering committee to intervene when things aren’t going as planned. And when this happens once or twice, the biggest downside is company’s partners (including employees, vendors, customers) lose trust and belief in the vision and benefits of projects like a DMS rollout.
DMS ADoption On The Rise
As a country, India is moving up the automation curve pretty fast. The government of India is busy shifting manual processes to technology with the overall aim of creating transparency and accountability. FMCG is a sector of great interest for both Indian and international stakeholders. Which means over the next 5 years, the industry will go through major shifts with technology at the centre of it. Supply chain automation (including logistics, inventory, distribution and shelf automation) will come into play and can prove to be a competitive advantage for the early movers. If you are a FMCG manufacturer with 100+ supply chain partners (stockiest, distributors or sub distributors), we recommend you to evaluate a Distributor management system (DMS) at the earliest and plan a phase-wise implementation in the current financial year. While evaluating, we strongly suggest to keep these adoption factors in mind which are also the pillars of Peri’s DMS:
- DMS activation must take 10 minutes or less
- 100% accurate Primary sales should be readily available
- Retail universe of the distributor should be readily available
- Distributor should feel empowered – that he can now control his and company’s salesmen
- Inventory reconciliation at first month-end should be strictly enforced
- Secondary order should flow to distributor real-time
- Fulfilment of secondary order should be super easy and user-friendly
- GST Sales document should get generated from DMS compatible with top ERP’s (the likes of Tally, Busy, and Marg)
- All company reimbursements to distributor must be routed through the DMS.
What To Do Next?
As an automation partner to Indian FMCG companies, Peri CRM wants to increase the penetration of DMS not just across tier-1 and tier-2 brands or suppliers in bigger cities but for each and every FMCG brand who wishes to strength its supply chain by gaining transparency, better control and real-time data with insights for taking preventive and reactive measures. Give us a call and take a demo of Peri CRM’s newly launched and highly user-friendly DMS.