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à
 Prof. Neeraj Rawat
à

 Distribution Management






àwati Gupta

PGP/FW/09-11

THE INDIAN INàTITUTE OF PLANNING AND MANAGEMENT

JAIPUR


 

The paper draws upon the inefficiencies of sales, channel and distribution management of
Norton India Ltd. (NIL); a subsidiary of Norton International.

Norton India Ltd.is a consumer products company and has been working in India for the last
seven years. It is ranked 4th in terms of market share. The company is comprised of 12 brands,
47 à U͛s, 2 factories, 10-3rd party packers, 30 C&FAà and depots and over 1600 distributors all
India.

The company performs sales planning in a way that the monthly plans are delivered to the
C&FA and Depots and they arrange their stocks accordingly but very often sales tend to reduce
which ends up in the increase in stock level.

àales to distributors are only done by obtaining demand draft with orders from distributors.
This often results in purchasing by distributors only at the last day of month so that they can get
completely rid off their old stock and obtains fresh stock thereafter. The outcome of this
activity is the enormous increase in sales up to 55% at the last day of month which screws the
overall sales plan.

On an average company͛s sales is around 500 crore where advertising support, trade inputs and
promotions carry a very high proportion. Trade inputs are given to the distributors who are
expected to pass this on to the retailers.

From à&M dept. to Finance dept. everyone is facing a tough time due to inefficient
management. NIL is planning to revamp its entire Information system and for this they have
appointed a leading IT Consultant to advice on it.
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 à 

 

An emergent company like NIL which is ranked 4th in India in terms of market share should
definitely implement an efficient inventory management system so as to cope up with the
highly competitive market in India. In the current scenario additional stock is building up at
various levels due to incompetent forecasts and plans. First, the company should overhaul its
entire planning strategy so that adequate sales targets are made and additional inventory is
reduced.

Instead of making a monthly plan, weekly plan should be made and delivered to the field sales
managers, this will reduce the cost of C&FA͛s and Depots and then field sales managers should
allot these targets to field people, this will reduce the burden of achieving high targets. It
increases the capabilities of field people and motivates them towards their small targets.

Certain inventory norms should be strictly set for distributors to overcome the problem of
enormous increase in sales at the last day of month. This can be done by making a standard
that the distributors are required to purchase a significant % of inventory in the first week of
month on submission of demand draft otherwise they can suffer a cut in their margin(from 6%
to 4%) and no grant of trade inputs.

These norms should be strictly enforced by the company at all levels unless it may suffer a huge
loss and bad market reputation.

   


As a big consumer products company; NIL should definitely revamp its Information system to
make their supply chain more efficient. By implementing an efficient ERP system, the company
can manage their internal and external resources as it facilitates the flow of information among
various levels of the organization. It will help in inventory management, order entry,
purchasing, supply chain planning, supplier scheduling and inspection of goods, claim
processing, and commission calculation. The company can keep a continuous check on the
achievement of weekly targets through information from field manager and keep an eye on the
stock level at various points. By regulating the centralized system, top management can ensure
the efficiency and competency of various departments.

The system also resolves the various issues in various depts. ào that no one dept. faces more
pressure and burden of achieving targets.

à 

Norton India Ltd. Is an emergent company in the field of consumer products in India. To
compete with other companies, it requires the support of its management and employees and
with a successful coordination of various departments; NIL can become the leader of consumer
products in India. This goal can be achieved by implementing an efficient ERP system which
makes the organization, function better.