DISTRIBUTION STRUCTURE OF NESTLE INDIA

(NCR ONLY) Mother +odo#n at +ha. a"ad- ,elh /U0

Respect 'e C*F A(ents

, str "utors as per ass (ned terr tor es

Wholesalers n the r area%

Reta lers n the r respect 'e terr tor es

End Consumer FORMAL STRUCTURE INFORMAL STRUCTURE Note: Wholesalers are not a part of the formal structure of Nestle Ind a!s d str "ut on net#or$ for NCR %The& ma$e "ul$ purchases from the d str "utors d rectl& there"& le'era( n( on the mar( ns%

OWNERSHIP TRANSFER Stoc$s manufactured at the factor es and co)pac$ers reach the C*S throu(h mother +odo#ns% The stoc$s stored at C*S are the propert& of Nestle% Encashment of stoc$s are done throu(h In'o c n( to Cash , str "utors C*S as per the (u del nes ( 'en to them% The& also rece 'e and store support mater als l $e ( 'e)a#a&s- st c$ers and complementar& tems etc% Transportation

From the factor& to the d str "utor sta(e the compan& ensures that there s a'a la" l t& of cool cha n for transportat on% At the mother (odo#n 1Located at Sah "a"ad2 there s temperature control "& h red cold stora(e% For the purpose of transport n( chocolates from the mother (odo#n to the Cash , str "utor ,ed cated A r Cond t oned 3ans are used 1espec all& for the summer

seasons2

STOCKS ARE COMPANY PROPERTY

FACTORY

Transfer Challan

MOTHER GODOWN
Transfer D.A

C&S AGENTS

C&S AGENTS

C&S AGENTS

INVOICING AGAINST PAYMENT

C.D

C.D

C.D

STOCKISTS

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SALES AND DISTRIBUTION STRUCTURE

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S $ 'tion o, (istri/#tors Cr ter a are: 0) Capita$ in& st" nt1 Th s s dependent not onl& on the present re5u red turno'ers "ut also on the est mated future cap tal n'estments that # ll "e re5u red "& the d str "utor 1"ased on compan&!s (ro#th plans n the area2% Amounts re5u red 'ar& from area to area and mar$ets to mar$ets%

2) R $ &ant 3p ri n' 1 It s mperat 'e that the d str "utor has had some pr or e6per ence as a channel mem"er n the FMC+ sector so that no tra n n( s re5u red to "e mparted to h m on aspects of the "us ness% The d str "utor should not "e deal n( n compet tor!s products and should "e a"le to funct on as a ded cated channel for Nestle% For e6ample- #h le dec d n( on a d str "utor for chocolates- an o"' ous preference #ould "e an e6 st n(

d str "utor for other products of Nestle Th s s "ecause he # ll pa& attent on to the ent re ran(e of the chocolates and not focus on an& part cular S7U onl&%

4) In,rastr#'t#r 1 Appropr ate nfrastructure 1depend n( on the mar$et ser'ed and o'erall 'olumes2 should "e there) a2 +odo#ns 8 stora(e space% For chocolates- a r cond t oned (odo#n space 1# th #ooden padd n( # ll "e re5u red2% "2 ,el 'er& 'eh cles c2 Salesmen

4o#e'er there are no #r tten (u del nes that are f 6ed for the a"o'e cr ter a and the compan& e6erc ses ts d scret on "ased on mar$ets to "e ser'ed% , str "utors Record Card ment ons the rele'ant deta ls a"out the d str "utor for the r records%

In' nti& s to t- (istri/#tors 0) Mar!ins

MARGIN LAYOUT (Kit Kat) Co"pan*

5.8 %
Distri/#tor

11.5 %

Flexible
R tai$ rs

W-o$ sa$ rs

Negotiable
R tai$ rs

2) S'- " s spr a( o& r 214 "ont-s% These schemes encoura(e spec f c tar(et ach e'ements% Tar(ets are ( 'en as nde6ed (ro#th rates "ased on #e (hts% For e6ample the mean n( of 9:; (ro#th for a d str "utor ha' n( sales of Rs%<:::: # ll ha'e a d fferent mean n( from one ha' n( sales of Rs% 9 lacs% The pr .es n the schemes can "e monetar&) for e6ample add t onal <; mar( n on turno'er Or non monetar& / for e6ample free T%3% sets on ach e'ement of tar(ets% It s attempted to $eep n m nd the monetar& "enef t to d str "utor n case he sells the ( ft ( 'en n $ nd 1for e6ample T%3%2

4) C rti,i'at s1 Cert f cates of ac$no#led(ement for ach e' n( the tar(ets for a name l $e Nestle are pr ced "& the d str "utors% The& frame them and d spla& them n the r off ces%

Mot 'at on of Channel 0artners / =0roud to "e Nestle> The compan& cons stentl& comes up # th schemes for t channel partners to mot 'ate them% One of the r successful schemes #as =0roud top "e Nestle / Supper a#ards for super ach e'ers?> launched on March @:- <::<% Th s contest #as open for the follo# n(: % % % '% Area Sales Mana(ers Sales Off cers Cash , str "utors 0allet Salesmen 1a S%O% ma& ha'e <)@ 0allet salesmen report n( to h m to ena"le h m co'er a # der terr tor&%2 '% , str "utor Salesmen 1These salesmen are the emplo&ee of the d str "utor- "ut are under nd rect pa& roll of Nestle- s nce the r salar& s re m"ursed "& the compan&%2 '% Merchand sers

Ho. (o s it .or% Step 9: The 5ual f& n( cr ter a for the contest s : ) ) ) 9::; ach e'ement of nternal tar(et for Atr III 1 n'o c n(2 M n mum 9:; R,BN turno'er (ro#th o'er the last &ear Atr II% ,urat on : o In'o c n(: :98:C8<::< / <D8:E8<::< o R,: :<8:@8<::< / <@8:E8<::<

Step <: All ASMs #ho fulf ll the a"o'e cr ter a #ere then ran$ed on the "as s of an Inde6 IN,EF G ; R, turno'er (ro#th H a"solute 'alue ncrease

Step @: Top ASMs 1as f 6ed "& the "ranch2 # n pr .es%

The # nn n( team compr ses of: ) ) All SOs n the ASM team T#o top ran$ed C,s n each SO Ione 1Inde6 G ;R, (ro#th H a"solute turno'er ncrease2 ) ) T#o d str "utor salesmen n each of the top t#o C, One Merchand ser n each of the top t#o po nts 1 performance # ll "e assessed "& S%O% on 5ual t& of merchand s n( ach e'ed2

The top ran$ed ASMs 1Nos% as f 6ed "& the Branch2 and the r teams ta$e home the follo# n( pr .es:

R,BM T8O (ro#th ach e'ed <:; J 9K)9D%DD; 9:)9C%DD;

SO

C,

0S

,S

Merchand sers

KK:: CK:: @K::

@K:: <K:: 9L::

<@:: 9L:: 9@::

<::: 9K:: 9:::

9<:: 99:: 9:::

The Top ran$ed ASM team also # ns a TEAM TRO04EM and cert f cates%

E'aluat on Once a d str "utor s appo nted the compan& (enerall& does not ta$e a#a& "us ness from h m- e6cept #hen the underperformance has "een o"ser'ed o'er lon( per ods% Wh le e'aluat n( h s performance- h s tar(ets performance s stud ed relat 'e to that of other d str "utors n the near"& area 1"ecause (ro#th patterns ma& "& re( ons2

, str "ut on n 0ract ce 1,I02 Tra n n( There are proper tra n n( pro(rams for the C*S a(ents as #ell as d str "utors% Follo# n( are the modules ncluded n the pro(ram: ) ) ) Nestle Aual t& S&stem +ood Warehous n( 0ract ces 1+W02 +ood , str "ut on 0ract ces%

Ma5or asp 'ts of the pro(ram nclude:

0+ Sta'%in! as p r nor"s: FIFO "as s of In'entor& mana(ement s used% Stoc$s are $ept n pallets a#a& from the #alls% +odo#n% Stac$ n( s done n an orderl& fash on and the d fferent "atches are ' s "le% There must "e mo' n( space "et#een 'ar ous stac$s%

2+ 6oo( War -o#sin! Pra'ti' s Secur t& F re F (ht n(: Appropr ate pro' s ons are made to handle emer(enc& caused due to "rea$a(e of a f re% Cleanl ness 0est Control

Temperature record and ma ntenance at A%C% +odo#n 0roper 'ent lat on The re5u red L censes as per the local la#s ha'e "een o"ta ned% For E(% Sales ta6 etc%

Transportat on: Effect 'e- rel a"le and 5u c$ transport s a'a la"le to and from the #arehouse%

0roper Load n( 8 unload n(: The la"ours ha'e "een properl& tra ned to ensure that no dama(e to the (oods ta$e place at the t me of load n( 8 unload n(%

Rem ttance: T mel& depos ts of rem ttances are ensured% 0roper records are ma nta ned # th re(ard to Sales ta6 and e6empt on cert f cates%

4+ A''o#ntin! A stoc$ re( ster s ma nta ned to record rece pts and d spatches # th deta l of accompan& n( documents% Shorta(es 1 f an&2 are accounted for separatel&% Sales ta6 and Octro are handled "& C*S%% A separate re( ster s ma nta ned for mater als #h ch are meant for free d str "ut on% All the related e6penses that are ncurred are pa d "& C*S and are su"se5uentl& re m"ursed "& the compan&%

7+ Han($in! o, Ba( 6oo(s: The "ad (oods are separated and mar$ed =salea"le> or =unsalea"le> appropr atel&%

8+ T "p rat#r 'ontro$ ,or '-o'o$at s: s ensured not onl& at the t me of stora(e "ut also at the t me of trans t%