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 [...]
[...] For example, while deciding on a distributor for chocolates, an obvious preference would be an existing distributor for other products of Nestle This is because he will pay attention to the entire range of the chocolates and not focus on any particular SKU only. Infrastructure- Appropriate infrastructure(depending on the market served and overall volumes ) Should be there- Godowns / storage space. For chocolates, air conditioned godown space (with wooden padding will be required). Delivery vehicles Salesmen However there are no written guidelines that are fixed for the above criteria and the company exercises its discretion based on markets to be served. [...]
[...] There must be moving space between various stacks Good Warehousing Practices Security Fire Fighting: Appropriate provisions are made to handle emergency caused due to breakage of a fire. Cleanliness Pest Control Temperature record and maintenance at A.C. Godown Proper ventilation The required Licenses as per the local laws have been obtained. For Eg. Sales tax etc. Transportation: Effective, reliable and quick transport is available to and from the warehouse. Proper Loading / unloading: The labors have been properly trained to ensure that no damage to the goods take place at the time of loading / unloading. [...]
[...] One of their successful schemes was “Proud top be Nestle Supper awards for super achievers!” launched on March This contest was open for the following: i. Area Sales Managers ii. Sales Officers iii. Cash Distributors iv. Pallet Salesmen S.O. may have 2-3 Pallet salesmen reporting to him to enable him cover a wider territory.) v. Distributor Salesmen (These salesmen are the employee of the distributor, but are under indirect pay roll of Nestle, since their salary is reimbursed by the company.) vi. [...]
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