HUL distribution and supply chain management

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 organization, 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 organization 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 organization. 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.

Distribution System of HUL

HULs products are distributed through a network of 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. There are 35 C&FAs in the country who feed these redistribution stockists regularly. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services to each of its channel partners. It has developed customer management and supply chain capabilities for partnering emerging selfservice stores and supermarkets. Around 2,000 suppliers and associates serve HULs 40 manufac turing plants which are decentralized across 2 million square miles of territory

Distribution at the Villages:

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.The team focuses on building superior availability of products. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers, through 6000 substockists. HUL approached the rural market with two criteria the accessibility and viability. To service this segment, HUL appointed a Redistribution stockist who was responsible for all outlets and all business within his particular town. In the 25% of the accessible markets with low business potential, HUL assigned a sub stockist who was responsible to access all the villages at least once in a fortnight and send stocks to those markets. This substockist distributes the company's products to outlets in adjacent smaller villages using transportation suitable to interconnecting roads, like cycles, scooters or the ageold bullock cart. Thus, Hindustan Unilever is trying to circumvent the barrier of motorable roads. The company simultaneously uses the wholesale channel, suitably ncentivising them to distribute company products. The most common form of trading remains the grassroots buyandsell mode. This enables HUL to influence the retailers stocks and quantities sold through credit extension and trade discounts. HUL launched this Indirect Coverage (IDC) in 1960s.Under the Indirect Coverage (IDC) method, company vans were replaced by vans belonging to Redistribution Stockists, which serviced a select group of neighboring markets.

Distribution at the Urban centers:

Distribution of goods from the manufacturing site to C & F agents take place through either the trucks or rail roads depending on the time factor for delivery and cost of transportation. Generally the manufacturing site is located such that it covers a bigger geographical segment of India.From the C & F agents, the goods are transported to RSs by means of trucks and the products finally make the last mile based on the local popular and cheap mode of transport.

Indirect distribution
It is the system the marketer reaches the intended final user with the help of others. These resellers generally take ownership of the product, though in some cases they may sell products on a consignment basis (i.e., only pay the supplying company if the product is sold). Under this system intermediaries may be expected to assume many responsibilities to help sell the product. The indirect methods include

1 .Single-Party Selling System Under this system the marketer engages another party who then sells and distributes directly to the final customer. This is most likely to occur when the product is sold through large storebased retail chains or through online retailers, in which case it is often referred to as a trade selling system. 2. Multiple-Party Selling System This indirect distribution system has the product passing through two or more distributors before reaching the final customer. The most likely scenario is when a wholesaler purchases from the manufacturer and sells the product to retailer 3. New distribution channels Project Shakti

This model creates a symbiotic partnership between HUL and its consumers. Started in the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's 638,000 villages .HUL's partnership with Self Help Groups(SHGs) of rural women, is becoming an extended arm of the company's operation in rural hinterlands. Project Shakti has already been extended to about 12 states- Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan, Maharashtra and West Bengal. The respective state governments and several NGOs are actively involved in the initiative. The SHGs have chosen to partner with HUL as a business venture, armed with training from HUL and support from government agencies concerned and NGOs. Armed with micro-credit, women from SHGs become direct-to-home distributors in rural markets. Project Streamline / Stream Line Distribution: To improve the efficiency of a process, business organization by simplifying or eliminating unnecessary steps, using modernizing techniques, or taking other approaches. To cater to the needs of the inaccessible market with high business potential HUL initiated a Streamline initiative in 1997. Project Streamline is an innovative and effective distribution network for rural areas that focuses on extending distribution to villages with less than 2000 people with the help of rural sub-stockists/Star.Sellers who are based in these very villages. As a result, the distribution network directly covers as of now about 40 per cent of the ruralpopulation. Under Project Streamline, the goods are distributed from C & F Agents to Rural Distributors (RD), who has 15-20 rural sub-stockists attached to him. Each of these sub-stockists / star sellers is located in a rural market. The sub-stockists then perform the role of driving distribution in neighboring villages using unconventional means of transport such as tractor and bullock carts. Project Streamline being a cross functional initiative, the Star Seller sells everything from detergents to personal products. Higher quality servicing, in terms of frequency, credit and fullline availability, is to be provided to rural trade as part of the newdistribution strategy.

Hindustan Lever Network (HLN)

It is the company's arm in the Direct Selling channel, one of the fastest growing in India today. It already has about several lakh consultants - all independent entrepreneurs, trained and guided by HLN's expert managers. HLN has already spread to over 1500 towns and cities, covering 80% of the urban population, backed by 42 offices and 240 service centres across the country. It presents a range of customised offerings in Home & Personal Care and Foods. RS Net Initiative

The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists (RSs) through an internet based system. It now covers stockists of the Home & Personal Care business and Foods & Beverages in close to 1200 towns and cities. Together they account for about 80% of the company's turnover. RS Net is one of the largest B2B ecommerce initiatives ever undertaken in India. It provides linkages with the RSs own transaction systems, enables monitoring of stocks and secondary sales and optimises RSs orders and inventories on a daily basis through online interaction on orders, despatches, information sharing and monitoring. The IT-powered system has been implemented to supply stocks to redistribution stockists on a continuous replenishment basis.

Distribution Management of HUL HUL's products are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services to each of its channel partners. HUL is using the point of purchase method for much higher level of direct contact, through instore facilitators, sampling, education and experience. It has developed customer management and supply chain capabilities for partnering emerging self-service stores and supermarkets. 2,000 suppliers and 7,500 distributors serve HLLs 100 factories which are decentralized across 2 million square miles of territory. Distribution Management AT THE URBAN CENTERS Distribution of goods from the manufacturing site to C & F agents take place through either the trucks or rail roads depending on the time factor for delivery and cost of transportation. Generally the manufacturing site is located such that it covers a bigger geographical segment of India. From the C & F agents, the goods are transported to RSs by means of trucks and the products finally make the last mile based on the local popular and cheap mode of transport. Distribution at the Villages 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. The team focuses on building superior availability of products. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers, through 6000 sub-stockists.