PGP 2010-12

PHYSICAL DISRTIBUTION & CHANNEL MANAGEMENT

REPORT ON DISTRIBUTION CHANNEL OF MOTHER DAIRY IN DELHI & NCR SUBMITTED TO: Mr. JONES MATHEW SUBMITTED BY: TANIMA KAPUR TARUN SUKHIJA UMESH JAISWAL VAIBHAV MALIK VIDHU LATHER VIKEN PATEL VIRENDRA PRATAP SINGH YOGENDRA SINGH

ACKNOWLEDGEMENT

The report submitted is an outcome of the training in Tata Motars done by me. Also I would like to thanks Mr Deepak Singh sir to deliver the best conceptual knowledge in the training without which I could not have maintained a fluent work. I would also like to thank Mr manish khandalwal, sales manager, and Mr. Vikas mathur , for their sincere support in the training, also for their valuable experienced shared with me and also for their valuable time given to me which help me to get learning and exposure in finance and sales. Moreover They help me a lot in motivating me by giving me responsibility which help to gain confidence and interact different customers behaviour and handling the customer

INDEX
1) INTRODUCTION 2) Overview of the industry & the Company 3) Distribution Channel a) Product Forms b) Channel Members c) Selection of channel members 4) Channel Structure a) Product Marketing b) Channel Participant c) Profit Margin d) Pricing Strategies 5) Physical Distribution 6) Conclusion 7) Recommendation 8) References

EXECUTIVE SUMMARY

This report is the outcome of a study about the . The study contains a concise description about the Distribution Network, Channel Management and Physical Distribution of Product of Mother Dairy. The study tried to look at the various Concept of Physical Distribution and Channel Management of Product and Profit Margin. It also explains the processes that take place from supplier to consumer.

OVERVIEW OF THE INDUSTRY & THE COMPANY

Delhi National Capital Region (NCR), among the biggest milk markets in the country, is dominated by Mother Dairy currently. Delhis estimated 40 lakh litres per day (LLPD) organised liquid milk is dominated by Mother Dairy (23 LLPD) and Gujarat Cooperative Milk Marketing Federation (GCMMF or Amul, which sells 10 LLPD). Besides these two, there is the public sector Delhi Milk Scheme (three LLPD) and private brands such as Paras and Gopaljee (1.52 LLPD each). Amul and NDDB's non-compete agreement has prevented the former from launching its liquid milk in the Delhi market till 2003.With the non-compete agreement having run out, Amul launched its fresh milk in Delhi in two variants full cream and toned priced at par with that of Mother Dairy .Amul, to its delight, has seen the demand for its milk going up by leaps and bounds in the city and is now planning to enter into alliances with dairies located around Delhi such as Indian Potash and Modern Dairy to cater to the demand. Mother Dairy Delhi was set up in 1974 under the Operation Flood Program, a wholly owned Subsidy of the National Dairy Development Board (NDDB), whose current chairman is Dr. Amrita Patel. Currently, it is one of the largest milk (liquid/unprocessed) plants in India, selling more than 25 lakh litres of milk per day, thereby enjoying a market share of 66% of the branded milk sales in Delhi. Other important markets include Mumbai, Saurashtra and Hyderabad. Mother dairy ice-cream was launched in the year 1995 and has shown continuous growth over the years, and today it boasts approximately 62% market share in Delhi and NCR. Certification of Mother Dairy: Mother Dairy is an IS/ISO 9002, IS 15000 HACCP and IS 14001 EMS certified organization. Moreover, its Quality Assurance Laboratory is certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of Science and Technology, Government of India. Mother Dairy was the first industry in country to implement ISO14031(Environment Performance Evaluation) project. This provides assurance to the consumer in respect of Quality and Safety of products manufactured and marketed by Mother Dairy.

Collaboration between fiat and tatamotars

It includes three important parts: 1) Product Form 2) Channel Member 3) Selection 1) Product Form: It include variety of product as discussed above. Main Category of them are as below: a) Mother Dairy Milk b) Mother Dairy Curd c) Mother Dairy Cheese d) Mother Dairy Ice Cream e) Mother Dairy Ghee f) Mother Dairy Lassi g) Safal h) Dhara 2) Channel Member:

The type of Distribution is Intensive Distribution because Mass Distribution takes place. It is a Hybrid Channel of Distribution because both direct and Indirect Distribution takes place and is a Multi-level channel of Distribution because intermediaries like distributor, retailer are involved and also because it is not direct.

Channel Members involved are mainly Distributor and Retailer and many retail outlets are present like: Mother Dairy Booths, Mother Dairy Safal, Mother Dairy Exclusive Retail outlet which is named as Gaurav Stores, Cow, Token Distribution, Retailer.

3) Selection of Channel Members: Channel members are selected on the basis of following points:

Presence of Competitor: Where ever competition is less and market area is good they select distributor and retailer of that place. Safety of inventory: A Distributor/Retailer should be responsible to keep the stock of product safely. Proper storage space in form of insulated tank/refrigerator: Either company provides or distributor owned a refrigerated tank in order to keep the milk and other milk product chilled. These protect the milk from damage.

They should be Advertisement and sales initiative: A Distributor/Retailer should be sales initiative and advertisement initiative. Various products should be advertised in form of Banner, Word of Mouth, etc As per the answers given by the concerned retailers & distributors, the channel usually do not suffer with any kind of conflicts with the except for some payments issue which rarely happens & there is no competition factor with in the channel but they fight together with the main competitors like AMUL & VETA for a better & efficient channel distribution.

CHANNEL STRUCTURE
It includes mainly four important parts: 1) Product Marketing 2) Channel Participants 3) Pricing Strategy 4) Profit Margin

1) Product Marketing: They market their product mainly by three means and market it from time to time by these medium: Electronic Media: It is done by doing advertisement in T.V and Fm. In television many ad of mother dairy milk like Lets grow Faster, Ice Cream ad like Andar ka Bandar, Made by mother nature & brought to you by Mother dairy are very famous and all these ad show the feature of mother dairy.

Print Media: Not only by Electronic Media, they also market their product through print media like ad in newspaper, pamphlets, banners & Posters, etc. Product Promotion Strategy: Mother Dairy believes in direct contact with the customer. It organizes various seminars for children from different schools, students from various colleges and even housewives to educate and increase awareness about milk and its products. All this is done by the Customer Information Department wherein consumers are made aware about goodness of milk, various stages of its processing, possible adulterants.

2) Channel Participants: Mother Dairy has following channel structure:

a) Supplier: The main role of supplier is Distribution of milk. It is the first stage and can also be named as Milk Procurement. Mother Dairy sources its requirement of liquid milk from dairy cooperatives and producer institutions. Milk is received from farmer cooperatives through insulated road/rail tankers at very low temperature in order to retain its freshness. The Operation Flood program helps both farmers as well as the city consumer. The program ensures that the farmers get a fair price for their cow and buffalo milk and then the consumer get best quality of milk at reasonable prices. b) Manufacturer/Processing Plant: 79 tankers in the morning and 75 tankers in the evening bring in
milk from the regional collection centers. It includes three steps:

The first step is to check the Quality of milk. The milk in the tankers is first checked for quality and freshness and then unloaded into huge insulated tanks. These tanks have a capacity of 1 lakh liters each. The presence of impurities and germs like bacteria are checked. Milk is tested on 15 quality standards. The second step is processing of milk. It is done because unprocessed milk may contain small particle of impurities which are invisible to naked eyes. After processing of milk, the milk is chilled at low temperature usually 7 degree centigrade and then dispatched to the milk shops in insulated road milk tankers.

To ensure milk freshness the collection and distribution points are always chosen such that the travel time between them is always less than 36 hours. As soon as different process is completed in processing plant, the same tankers are used to deliver the processed milk to distributor, vendors and outlets. c) Distributor: Mother Dairy has over 820 distribution outlet in the NCR which collect the milk from manufacturer. Each of these outlets places their demand by raising an invoice one day in advance. The demand is also calculated using the Calendar Scheme, in this depending on the pre-calculated seasonal demands the outlets place their orders accordingly. In order to satisfy immediate demand, 20 to 25 tankers are provided with a buffer stock of 500 liters each day so that they can be mobilized to cater the demand in an area. To coordinate its operations all the tankers are equipped with HAM radios. d) Retailers: Now from distributor, milk is transported to retailer. Some of retailers are: Token Distribution: Also, termed as Lohe ki bhains (metal buffalo), is an automated milk vending machine. COW/Vendors: Container on Wheels or COW is a manual milk distribution program in which cycle-rickshaws are employed for milk distribution.

Mother Dairy Booths: The packaged milk is distributed via the retailer network throughout the city. General Stores: Milk is also distributed via general stores to the customer of the city.

e) Customer: Customers are the end user of milk. Customer purchase it from retail stores and now a day customer just place the order in shop and shopkeeper deliver it to their home.

Beside milk, Ice cream and safal also have channel partner. Channel partner of Ice cream are same i.e.: Supplier-Manufacturer-Distributor-Retailer-Customer.
Here Supplier that is Diary Cooperative Society provide milk to manufacturer through

insulated road/rail tanks and then in processing plant it is converted into Ice cream by undergoing several processes. Then finally prepared ice cream is distributed to distributors. These distributors can be the same as that of milk or they may be separate. From distributor it is transported to retailer and then to end user.
The company markets an array of fresh and frozen fruit and vegetable products under the

brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than 20,000 retail outlets in various parts of the country. Fresh fruit, vegetable produced from the producers is handled at the Companys modern distribution facility in Delhi with an annual capacity of 200,000 MT. From the distributor it is transported to Mother Dairy SAFAL outlet. A state-of-the-art fruit processing plant of fruit handling capacity of 120 MT per day, a100 percent EOU, setup in 1996 at Mumbai supplies quality products in the international market. With increasing demand another state-of-the-art fruit processing plant has been set up at Bangalore with fruit handling capacity of around 250 MT per day. 3) Pricing Strategy: Mother Dairy follows a convenient pricing strategy. The prices are set by company heads and NDDB Committee. It is according to the demand of the customers like Double Toned Milk costs Rs. 10.50/Half Litre, Toned Milk Costs Rs. 11/Half Litre, Cow Milk Costs Rs. 12/Half Litre, Full Cream Milk costs Rs. 13.50/Half Litre of poly packet. Tetra Packet is About Rs.45. Whenever price of the milk increases there is no significant difference in number of customer buying mother dairy milk because it is one of the necessary product for customer.

4) Profit Margin: Profit margin of the distributors is 20 paise/liter in less demand areas & 25 Paise/liter in the area where the demand is comparatively high. They need not to bear the cost of transport 7 damage whereas the retailers have to pay for the damages (if any) for which they get a higher margin of 80 paise/liter & retailers & distributors have a maximum limit of 3 days for the payment & they get some benefit if they make the payment the very next day of the delivery.

PHYSICAL DISTRIBUTION
It is mainly movement of material from one place to other. It include logistics and it costs. Logistics and its Costs: It includes the transportation of product. Two main product of Mother Dairy i.e. Milk and Ice Cream Transportation can be explained as below: 1) Transportation of Milk:

From Mother Diary Patparganj, New Delhi to Delhi/GGN Distributor to Retailer to Customer. Transportation Vehicle are company owned (Kriti Transport). Milk is transported to Distributor by means of insulated tankers. From Distributor milk is transported to retailer like mother booths, general stores, vendors, etc. Only retailer has to bear the expense whereas for distributor company bear the cost of transportation.

2) Transportation of Ice Cream:

From Mother Dairy Patparganj to Delhi/Gurgaon Distributor to Retailer to Customer. .Transportation vehicle is company owned which is Kriti transport. Beside Distributor for milk, there is separate Distributor also there for Mother Diary Ice cream. Transportation vehicle contain refrigerated tank in order to maintain the temperature.

Till Distributor transportation cost is bear by company while retailer has to bear it cost.

RECOMMENDATIONS
The organization should have a specific distribution model which should be followed necessarily by each distributor as at this level not everything is organized and each distributor follows a different model to distribute milk due to which in some areas potential sale doesnt happens.

To keep track of the supply timings and to sustain the quality of milk till it reaches the retailers, company should have a policy for each distributor to keep vehicles which can maintain the temperature of the milk as maximum distributors are currently doing the distribution with the help of auto-rickshaws which exposes milk to the hot air and sunlight.

There should be an arrangement made available for the distributors so that they can cater to sudden demand for the milk so that not even a single chance of selling is missed. The organization is way ahead in coming out with schemes for the distributors and retailers but the organization should also start coming with schemes for the customers as it would be a real boost to the sales of Mother Dairy milk and also it will help MD get back its lost customers.

CONCLUSION

The project enabled us to get in touch with the players in the sites of the distribution management. There we learned & tried to analyze the tasks that are performed by the members of distribution & what the negotiation & terms they work on. It also enabled us to realize the importance of the class room studys connection with the real business world, where there is not only the competition & money involved in the business but also the commitment & norms which are never been said but are followed by each member of the channel. The minute details which are embedded in the channel network are now getting clear in our mind. With the study, we somewhat also learned about the interests of different channel members & at last that how difficult & easy could be the flow of the product from the manufacturers & to the end consumers.

REFERENCES

We met Mr. B.S. YADAV who is one of the retailers of Mother Dairy Booth. Mobile Number: 9654339751. We also Met Mr. Shiv Prasad who is owner of TIWARI General Stores. Mobile Number: 09212883048. We had a talk to Mr. Deen Dayal who is the Distributor of Mother Dairy Milk. Mobile Number: 9540130921.

www.motherdiary.com www.indianmilkproduct.com www.indiandairy.com