Hindustan Unilever's distribution network is recognized as one of its key strengths.

Its focus is not only to enable easy access to our brands, but also to touch consumers with a three-way convergence - of product availability, brand communication, and higher levels of brand experience. HUL's products, manufactured across the country, are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The distribution network directly covers the entire urban population. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever services each with a tailor-made mix of services. The emphasis is equally on using stores for direct contact with consumers, as much as is possible through in-store facilitators.

At the supermarkets: Self-service stores and supermarkets are fast emerging in metros and large towns. To service modern retailing outlets in the metros, HUL has set up a full-scale sales organisation, exclusively for this channel. The business system delivers excellent customer service, while driving growth for the company and the store. At the same time, innovative marketing initiatives are taken to provide consumers with experience of our brands at the store itself, through product tests and in-store sampling.

In the villages: HUL has also revamped its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. The company has brought all markets with populations of below 50,000 under one rural sales organisation. 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. HUL's distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers, through about 6000 substockists.

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 catalyse HUL's growth by ensuring that the right product is available at the right place in right quantities, in the most cost-effective manner. For this, stockists have been connected with the company through an Internet-based network, called RSNet, for online interaction on orders, despatches, information sharing and monitoring. RS Net covers about 80% of the company's turnover. Today, the sales system gets to know every day what HUL stockists have sold to almost a million outlets across the country. RS Net is part of Project Leap, HUL's end-to-end supply chain, which also includes a back-end system connecting suppliers, all company sites and stretching right upto stockists. Hindustan Unilever, which once pioneered distribution in India, is today reinventing distribution - creating new channels, and redefining the way current channels are serviced. In the process it is converging product availability, with brand communication and brand experience. In the end it could be said that HUL's SCM is one of the best in the world and it is quite difficult for any company to challenge it. In India if we see, we will find that LUX is available everywhere and it is through this SCM only that HUL is able to do that.

Hindustan Unilever Limited (HUL) is Indias largest Fast Moving Consumer Goods company, touching two out of three Indians with their large brand portfolio. HULs products are household names across the country and span a host of categories such as soaps, detergents, personal products, tea, coffee, ice cream, and culinary products. Today, there are over 7.7 million retail outlets in India with an average of 6.8 stores per thousand people the highest store density in the world. To maintain their market leadership, HUL pursues innovative distribution mechanisms to reach the millions of potential consumers in both urban areas and small remote villages where there is no retail distribution network, no advertising coverage, and poor roads and transport. HUL realized from the onset that its sales and distribution network gave it an edge over the competition, but that rivals would try to match it over time. To maintain their competitive advantage, HUL has aggressively extended more deeply in India, moving from large to small towns, and from urban to semi-urban areas. The unorganized and scattered character of markets in India means sales and distribution requires a different tactic from that of more developed economies. Like Coca-Cola, HUL knew it needed to tailor its approach for the different markets. Modern Trade Modern trade, or retail chains, is characterized by standardized store formats, air-conditioned ambiance, and a variety of goods and typically lower pricing. Global retail chains such as Walmart and Carrefour fall under this category. In India, modern trade comprises roughly 10% of all commercial transactions and is growing rapidly.

In the past, HULs sales forces were separated by geographies and product categories. However, this organizational structure was ill equipped to manage modern trade, as one regional team negotiating the terms of trade with an individual franchisee of a national retail chain could never be as effective as HUL entering a long-term comprehensive contract spanning all product categories and outlets of the retail chain. Today, HUL has specific account managers dedicated to large modern trade customers. General trade General trade consists of the thousands of independent retail and wholesale outlets across the country. Often called mom and pop shops, each of these stores is considered a distinct customer and has to be addressed individually. HUL services these outlets through a network of 2,900 stockists. Goods are sent to a local warehouse or carrying and forwarding agent (CFA), and are then stocked and dispatched to specific retailers upon orders from the HUL stockists. The stockists are responsible for servicing all the small retail outlets in a specific geographic area. General trade makes up the majority of HULs sales. Rural Markets While general trade encompasses both urban and rural markets, serving customers in more remote areas of India poses unique challenges. Rural markets are scattered over large areas with low per capita consumption rates. While the aggregate potential of rural markets is large, the potential of each of the 600+ dispersed markets is very low. As well, rural markets are not connected to urban centers by air or rail, with road connectivity poor

at best. Accessing these markets, even when feasible, means additional logistics costs to HUL. Despite the roadblocks, conquering the rural markets is a must for HUL. One out of every eight people on this planet lives in an Indian village. In comparison to the urban market, which consists of roughly 250 million people, the rural market is 775 million people across 638,000 villages. Within ten years, per household consumption in rural India is forecasted to equal todays urban levels. To penetrate the rural markets, HUL launched a unique four tier distribution system. Markets were segmented based on their accessibility and business potential.

1. Direct Coverage: HUL appointed a common stockist to service all outlets within a town and sell a limited selection of the brand portfolio. Towns consisted of populations of under 50,000 people. 2. Indirect Coverage: HUL targeted retailers in accessible villages close to larger urban markets. Retail stockists were assigned a permanent route to ensure that all accessible villages in the vicinity were served at least once a fortnight. 3. Streamline: Streamline leveraged the rural wholesale channel to reach markets inaccessible by road. Star Sellers were appointed among wholesalers in a particular village. Star Sellers would purchase stock from a local distributor and then distribute stock to retailers in smaller villages using local means of transport (e.g. motorcycles, rickshaws). 4. Project Shakti: Project Shakti targeted the very small villages (<2,000) and tapped into pre-existing womens self help groups (SHG). Underprivileged rural women were invited to become direct-to-consumer

sales distributors for HUL products. Termed Shakti Ammas (literally strength mothers), these women represent HUL and sell its home-care, health, and hygiene products in their villages. By the end of 2009, Project Shakti network comprised of 45,000 Shakti Ammas covering 100,000 villages across 15 states in the country, cumulatively reaching over 3 million households every month. Unilever has replicated Project Shaktis success in other markets such as Sri Lanka and Bangladesh.