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Abhishek Jain

Aditi Tripathi
Ankush Arya
Denis Jose
Gaurav Kararia
Hardrisht Chawla
Puneet Gupta
Shruti Farmania

Sales and Distribution System of


Mother Dairy
A milk flood that happens daily

Introduction
Mother

Dairy is a wholly owned


company of the National Dairy
Development Board (NDDB)
Mother Dairy was set up in 1974
under the Operation Flood
Programme
Mother Dairy brands includes :
Milk, Cultured Products, Ice
Creams, Paneer and Ghee
Dhara range of edible oils
Safal range

Selective Approach

Differentiation in
offerings

Presence in four areas:


1. Delhi
2. Gujarat (Junagarh, Ahmadabad)
3. Hyderabad
4. Mumbai

Mother Dairy is bringing in mass


Indian flavors
For e.g. For curd, they formulated
it to taste as close to home-made
curd as possible.

Sourcing

Mother Dairy sources its liquid milk requirement from


dairy co-operatives.

Volume
Sales
and
Reach

Mother Dairy markets 3.2 million liters of milk daily in the


markets of Delhi, Mumbai, Saurashtra and Hyderabad
In Delhi, market share of 66%
2.5 million litres of milk daily,1400 retail outlets over 1000
exclusive outlets of Mother Dairy

Product Types
Token Milk

Poly Packed Milk


Premium full
cream milk
Full cream milk
Toned milk
Standardized milk
Double toned milk
Special toned milk
Skimmed milk

UHT toned milk

A well-recognised brand name

- Milk and milk products are perishable

- It is IS/ISO-9002, IS-15000 HACCP


and IS 14001 EMS certified company

- Poor conditions of roads where milk


has to be delivered causes problems of
on time delivery.

- Procurement of milk from cooperative


diaries provide them with fair prices

- Provides good quality at affordable


prices

- Difficult to maintain competitive


pricing

SWOT

- Increase in market share by


expansion into untapped markets

- Unstable economic condition in


India
Other competitor brands like Amul
, Nestle etc

Sales Structure
Sales Structure
Sales Head: Manage & develop retail & other distribution
infrastructure
Regional sales Manager: Maintain relationship with retailers
and distributors in the region
Sales Manager: Create sales target based on estimation of
demand for each area
Area Sales Manager: Engaging with sales team and
consumers for developing promotion plans and product
offerings
Area Sales Officer: Interaction with retailers

Sales Force Reporting Norms & Incentive Plans


Sales Force Selection and Reporting norms
Trying to make the leadership team younger
Recent induction lowered the average age of its top 20 leaders from 54 years
five years back to 45 years
Inducting fresh talent , 60-70 fresh graduates annually to beef up the sales
team
Higher experience typically draw a higher package than their younger bosses

Incentive Plans
The distributors are supposed to increase sales incrementally by 1% every
month.
This target if achieved give the distributors an incentive of .05p/ ltr on their
total sales for the year

Connection with Sub-contractor network


Connects with Sub- contractor with
Ramco ERP on Cloud
It connects its 30+ subcontractors
with an end-to-end ERP
This seamlessly integrate with its
existing SAP instance at the principal
site
In phase I, subcontractors of Mother
Dairys Ice Cream business have
gone live on the solution

Benefits of ERP
Monitor, Manage and Mentor
Your Sales force
Milestones and Track
Effectiveness of Strategies &
Team
Have an Organized Sales
Brigade
Generate Individual Report
Cards of Your Sales Team

Sales Targets and Credit Period


Breakdown approach followed
Yearly targets Monthly targets Daily targets
Head Sales Manager Sales teams Distributors
Payment through Electronic Clearing System

Joint account formed between Mother Dairy and Distributors with marginal amount added by
distributors

Everyday, Distributor takes demand from retailers and Milk booths and receive payment through
ECS.

Distributors buys the demanded quantity from company, and Mother dairy cuts the amount
from Joint account.

Distribution channel
Procurement

Procured from local dairy cooperatives and producer


institutions
This is done twice a day

production
unit

Processed at production unit


Tankers delivers processed milk to the vendors and
outlets

Distribution
channels

Tokens or Lohe ki Bhains


COW or Container on Wheels
Retailers for packaged milk

Distribution Strategy: Packaged Milk


Packaged
Milk agents for transportation who use Trucks/Maruti Vans for
Hire Transporting

Big Distributors

Cater to high demand


transportation.

Distribution
Strategy
Production Unit

Hiring agents reduces cost (eg. hiring a transporting agent is cheaper option
on Pb-Hr border to distribute to 5for
villages in vicinity)
Transporting agents have commission of around .5%

Delivery onceDistributors
in morning between 4AM -11 AM.Transport cum Distributor

Packaged Milk

Small Distributors:

Token Milk
Transporting Agents

Cater to less demand(50-150 crates daily)

Covers the area themselves(No Transportation Agents)


Mode of Transport
is Vans etc and Bikes, Rickshaw & cycles Households
for areas with no
Retailers
good infrastructure.
Eg. 3 crates of 12 lt tied to a bike and taken to rural areas.

Distribution Strategy: Token Milk


Token Milk
Production Unit
Milk directly taken from production
unit to booths through trucks(No
distributors involved)
Trucks have chillers to maintain temperature of 4-7 C.
Kamdhenu (Small
Homogenized
milk carried
Bulk Vending
tankers having inbuilt
(Milk
Booth)
MilkMachine
vending
machines
at Booths are filled.
vending units)
Delivery occurs two times in a day( where demand is high)
Life of milk is max. 2 days.
Kamdhenu
Insulated Container
Carriage on wheels)
Small tankers having capacity of 500-1000 lt. with inbuilt vending
machine used.
Collect milk directly from plant and placed in strategic locations.
Used in areas with no booths and less no. of retailers.
For Last Mile
Delivery

Distribution Strategy: Last Mile Reach


Carriage on Wheels (COW)
Small containers placed on bicycles & carried to remotest of locations.
Take supply from nearest Milk Vending Booths
Presently Mother Dairy is having 800-1000 COWs.
Insulated Containers
Work on the principle of insulation (no electricity required).
Installed at places where milk vending booths are not feasible due to less
population and less availability of area.
Life of milk is very less in these containers hence procurement of milk on
everyday basis and the milk left is milk wasted.

Distribution Strategy: Milk Booths


Milk
Controlled and maintained by Mother Dairy itself; all maintenance and operational expenses borne
by company.
Booths

Company Owned

Only Ex. Army hired for managing booth


Margins low ( 55paisa per lt. )
Franchise Based

Company
Owned

Franchise
Based

license is given to a third party.


All the maintenance and operational expenditures borne by Franchisee
Higher margins.

Selecting Channel Partners


Distributors
Company issues ads or distributor contacts the company directly.
Distributors selected are exclusive to mother dairy(they cant sell brands of direct competition)
Where demand is high, time constraints company keeps multiple small distributors to reduce risk of failure.
In Posh areas with good infrastructure, demand low company keeps a big Distributor.
Retailers
Not selected directly by company

Surprise Invigilation Team (SIT) visits retailer shops and do quality check( if standards not met- warning of
one month)
SIT also visits Milk Booths for adulteration checks too

Unique aspects of SDM noticed through


interviews
Milk Van visits booth twice daily one during night for delivery of milk & 2nd in the evening for cleaning)
Time of arrival is highly consistent with minor fluctuations due to traffic
Driver of Van is also a sales person who takes orders for next day.
Retailer gives daily orders for next day which changes drastically during festive seasons and other occasions.
Field officer visits Mother dairy shop at least twice a week for inspection.
In case of regular late deliveries, retailer can directly contact ASM.
Increased margins as incentives for dealers who meet sales targets.
Payments done through ECS on daily basis.

Critical issues of SDM

Very low margins for company - 50p/lt. for open milk and 45p/lt for packaged milk. Only way to improve
it is by increasing operational efficiency and earn more margins by increasing no. of value added products.

Low Availability: Due to archaic supply, logistics and poor forecasting tools. To improve this, company has
implemented SAP ERP to link 11 plants, 45 distributors and 16 packaging locations to track and monitor
movement.

Issues and Recommendations:


Timing is of utmost importance- inherent chance of delay by any level at the supply
chain- mainly distributors
Keep the size of distributors small
Knowledge transfers to the distributors so that they can also enable a system for
real time tracking of the milk. For example availing GPS chips to distributors
Temperature maintenance:
Regular inspection servicing of trucks and booths
Order quantity is very uncertain on a day-to-day basis--Plus no chance of
last minute changes in the order:
Use MIS for forecasting tool to plan ahead

Overlapping distribution channels lead to unmet sales targets:


Milk packets for retailers and booths can have two different identifiers
Monitoring the distributers :Increasing the frequency of checks at the
distributer level and retail store levels
Intensive training should be inducted properly for all the distributers and retailers
New packaging for increasing shelf life for packaged milk:
Replicate Nandhini model for packaged milk to enhance shelf life & reduce
shrinkage

Alternative Channel of Distribution


We recommend Mother Dairy to open milk ATM
(Any Time Milk)
Similar ATMs are being opened up by Amul in
Gujarat
The machine, can store 150 pouches of 300 ml milk,
dispenses a 300-ml pouch for Rs 10 and it is open
all 24 hours a day
The milk pouches are kept in automatic dispensing
machine which also keeps milk pouches chilled
under 4 degrees
As a pilot project Mother Dairy can try to replicate
the model in Delhi
An improved version would be, if money can be
given through swiping of credit or debit card
The cards may also be used for loyalty programs.

THANK YOU

Some teachers can teach 10 sales chapters in 2 hours, some distributors


can make you forget them even faster A wise man