Comparision of Supply Chain of Hul and P&G Essay Example

manufacturing process involves a network of more than 2,000 suppliers and associates.

HUL's distribution network has approximately 4,000 redistribution stockists, covering 6.3 million retail outlets, reaching both urban and rural consumers. The network has evolved over time, with the initial phase involving wholesalers and large retailers placing orders directly with the company. These orders, comprising 30% of the total, were then grouped by company salesmen and sent to the Head Office as an indent.

Goods were shipped to these markets with the company salesman being the consignee. The salesman then distributed the products to the respective wholesalers, receiving cash payment which was later remitted to the company. During the second phase, the company focused on having one wholesaler in each market designated as a "Registered Wholesaler" who served as a stock point for the company's products in that market. The company salesman still continued to cover the market by actively seeking orders from other traders. Additionally, he distributed stocks from the Registered Wholesaler through distribution units that were maintained by the company.

The distribution reach of the company to a larger number of customers was increased by the Registered Wholesaler system. In the third phase, the concept of "Redistribution Stockist" (RS) was introduced to replace the RWs. The RS had the responsibility of providing distribution units to the company salesman. Additionally, this period saw the establishment of the "Company Depots" system, which aided in transshipment, bulk breaking, and served as a stockpoint to reduce stock-outs at the RS level.

The Company Depot has been replaced by third-party Carrying and Forwarding Agents (C;FAs) in recent times. These C;FAs act as buffer stock

points to prevent stock outs. The implementation of the C;FA system has led to cost savings in direct transportation and reduced delivery time. One major benefit is improved customer service for the RS. HUL's distribution network is a key strength that allows it to supply its products nationwide, from Srinagar to Kanyakumari.

In order to achieve its goals, HUL focuses on maintaining favorable trade relations, providing innovative incentives to retailers, and organizing demand generation activities. Each business within HUL's portfolio has tailored its network to meet its specific objectives. A crucial function of this network is to ensure that the company's products reach the end customer by providing logistics support. HUL employs a distribution system that utilizes a network of 4,000 redistribution stockists. This extensive system covers 6.3 million retail outlets, enabling HUL to reach the entire urban population as well as approximately 250 million rural consumers.

The country has 35 C&FAs that regularly supply redistribution stockists to various types of general trade establishments such as grocery stores, chemists, wholesale, kiosks, and general stores. Hindustan Unilever offers customized services to each of its channel partners, including emerging self-service stores and supermarkets. HUL's 40 manufacturing plants, spread over 2 million square miles of territory, are supported by around 2,000 suppliers and associates.

The company has consolidated all markets with populations below 50,000 into one rural sales organization, which includes an exclusive sales force and redistribution stockists. The main goal of this team is to increase the availability of products. In rural India, this network directly reaches about 50,000 villages and 250 million consumers through 6000 sub-stockists. HUL entered

the rural market by considering two factors: accessibility and viability.

To cater to this segment, HUL has appointed a Redistribution stockist who is accountable for all outlets and all business within their designated town. In the 25% of the markets that have low business potential, HUL has designated a sub stockist. Their responsibility is to visit all the villages at least once in a fortnight and deliver stocks to those markets. The prevalent method of trading is through grassroots buy-and-sell mode. Through this approach, HUL is able to manipulate the retailers' stocks and control the quantities sold by offering credit extension and trade discounts.

HUL introduced Indirect Coverage (IDC) in the 1960s. This method involved replacing company vans with vans belonging to Redistribution Stockists who served specific neighboring markets. Distribution in urban centers occurs through trucks or railroads depending on delivery time and transportation cost. The manufacturing site is typically strategically located to cover a larger area of India.

From the C & F agents, the goods are transported to RS’s by means of trucks. The products finally make the 'last mile' using the local popular and cheap mode of transport. Project Shakti, which started in the late 2000s, created a symbiotic partnership between HUL and its consumers. It enabled Hindustan Lever to access 80,000 of India's 638,000 villages. HUL's partnership with Self Help Groups (SHGs) of rural women acts as an extended arm of the company's operation in rural hinterlands. Project Shakti has been extended to about 12 states.

The initiative is implemented in several states, including Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab,

Rajasthan, Maharashtra and West Bengal. The program is supported by the state governments and various NGOs. Through a partnership with HUL (Hindustan Unilever Limited), self-help groups (SHGs) are trained by HUL and receive assistance from government agencies and NGOs. With micro-credit support, women from SHGs become distributors who directly sell products to rural markets. This model involves groups of 15 to 20 villagers living below the poverty line (earning Rs. 50 per month) acquiring micro-credit from banks to purchase our products for selling to consumers.

In general, a member from a Self-Help Group (SHG) is selected as a Shakti entrepreneur, also known as 'Shakti Amma'. They receive stocks from the rural distributor of Hindustan Unilever Limited (HUL). The Shakti entrepreneur then sells these goods directly to consumers and retailers in the village after being trained by the company. Typically, each Shakti entrepreneur serves 6-10 villages with populations ranging from 1,000 to 2,000. HUL provides the Shakti entrepreneurs with their products on a cash and carry basis. In 1997, HUL launched the Streamline initiative as part of the Project "Shakti" Model Project to meet the needs of inaccessible markets that have high business potential.

Project Streamline is a distribution network that is innovative and effective in reaching rural areas. Its main focus is to extend distribution to villages with populations of less than 2000 by utilizing rural sub-stockists/Star Sellers who operate within these villages. Currently, this distribution network directly serves approximately 40% of the rural population.

The distribution process under Project Streamline involves the transfer of goods from C ; F Agents to Rural Distributors (RD), who are responsible for managing 15 to

20 rural sub-stockists. These sub-stockists, also known as star sellers, are located in rural markets and play a crucial role in distributing goods to neighboring villages. They rely on unconventional modes of transport like tractors and bullock carts.

Project Streamline is a cross functional initiative where the Star Seller is responsible for selling various products such as detergents and personal care items. As part of the new distribution strategy, rural trade will receive higher quality service in terms of frequency, credit, and full-line availability. Hindustan Lever Network (HLN) serves as the company's arm in the Direct Selling channel, which is currently one of the fastest growing sectors in India. HLN has already established itself in over 1500 towns and cities, covering 80% of the urban population. With 42 offices and 240 service centers across the country, HLN provides a range of personalized offerings in Home & Personal Care and Foods. HLN's team of expert managers train and guide several lakh independent entrepreneurs who serve as consultants.