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TABLE OF CONTENTS
Part 1: Introduction to RTM ------------------------------------------------------------------------- 4 Chapter 1: RTM Definition, Scope, and Deliverables------------------------------------- 5
Introduction------------------------------------------------------------------------------------------------------------------------- 5 1.1.1 RTM Definition ------------------------------------------------------------------------------------------------------------- 5 1.1.2 RTM Scope ------------------------------------------------------------------------------------------------------------------ 6 1.1.3 RTM Deliverables---------------------------------------------------------------------------------------------------------- 7
Part 2: RTM Models, Diagnostics and roadmap ---------------------------------------------- 8 Chapter 2.1: RTM Models-------------------------------------------------------------------------- 9
Introduction------------------------------------------------------------------------------------------------------------------------- 9 2.1.1 Types of Distribution Models ----------------------------------------------------------------------------------------- 9
How Each Model Works: Diagrammatic Representation ------------------------------------------------------------------------------------------ 10
2.1.2 Direct Distribution Models: On Basis of Order Taking ----------------------------------------------------- 10

DSD Ready Stock Model ---------------------------------------------------------------------------------------------------------------------------------- 10 DSD - Pre-sell Model --------------------------------------------------------------------------------------------------------------------------------------- 11 DSD - Tel-sell Model ---------------------------------------------------------------------------------------------------------------------------------------- 12 Responsibility Matrix ---------------------------------------------------------------------------------------------------------------------------------------- 12
2.1.3 Direct Distribution Models: On Basis of Management Control ------------------------------------------ 13

Company Managed ----------------------------------------------------------------------------------------------------------------------------------------- 13 Clearing & Forwarding Agent (C&FA) Managed ----------------------------------------------------------------------------------------------------- 13
2.1.4 Direct Distribution Models: On Basis of Delivery Mechanism ------------------------------------------- 13

Feeder Truck Model----------------------------------------------------------------------------------------------------------------------------------------- 13 Bulk Break Model (Direct) --------------------------------------------------------------------------------------------------------------------------------- 14
2.1.5 Advantages and Limitations of Direct Distribution Models----------------------------------------------- 14 2.1.6 Indirect Distribution Models: On Basis of Size and Type ------------------------------------------------- 15
Anchor Distributor Model ---------------------------------------------------------------------------------------------------------------------------------- 15 Distributor Model --------------------------------------------------------------------------------------------------------------------------------------------- 16 Area Marketing Contractor (AMC) Model -------------------------------------------------------------------------------------------------------------- 17
2.1.7 Indirect Distribution: Delivery Mechanism --------------------------------------------------------------------- 19

Full Load from Warehouse/Plant ------------------------------------------------------------------------------------------------------------------------ 19 Milk Run -------------------------------------------------------------------------------------------------------------------------------------------------------- 19
Chapter 2.2: RTM Diagnostics: Selecting an RTM Model------------------------------ 20

Introduction----------------------------------------------------------------------------------------------------------------------- 20 2.2.1 Market Classification--------------------------------------------------------------------------------------------------- 20 2.2.2 RTM Diagnostics -------------------------------------------------------------------------------------------------------- 21
Distribution Effectiveness Index-------------------------------------------------------------------------------------------------------------------------- 21 Distributor Strength Index --------------------------------------------------------------------------------------------------------------------------------- 26 Distributor Strength vs. Distribution Effectiveness -------------------------------------------------------------------------------------------------- 27 Distributor ROI------------------------------------------------------------------------------------------------------------------------------------------------ 27
2.2.3 Choosing an RTM Model---------------------------------------------------------------------------------------------- 28
Chapter 2.3: Two-year RTM Roadmap ------------------------------------------------------ 29

Introduction----------------------------------------------------------------------------------------------------------------------- 29 2.3.1 RTM Planning (Town and Distributor-wise) -------------------------------------------------------------------- 29 2.3.2 RTM Roadmap: Integration into Annual Business Plan (ABP) ------------------------------------------ 34
Part 3: RTM Infrastructure Design and Management ------------------------------------- 36 Chapter 3.1: DSD Operation -------------------------------------------------------------------- 37
Introduction----------------------------------------------------------------------------------------------------------------------- 37 3.1.1 DSD Route Designing Process ------------------------------------------------------------------------------------- 37
Get Data-------------------------------------------------------------------------------------------------------------------------------------------------------- 38 Locate Outlets on Map ------------------------------------------------------------------------------------------------------------------------------------- 39
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Create Zones ------------------------------------------------------------------------------------------------------------------------------------------------- 40 Calculate No. of Vehicles and Vehicle Capacity ----------------------------------------------------------------------------------------------------- 40 Trade Channel Characteristics Determine Distribution Requirements ---------------------------------------------------------------------- 44 Create Routes ------------------------------------------------------------------------------------------------------------------------------------------------ 46
3.1.2 Warehouse Management --------------------------------------------------------------------------------------------- 50

Warehouse Location ---------------------------------------------------------------------------------------------------------------------------------------- 50 Basic components of the Warehouse ------------------------------------------------------------------------------------------------------------------ 51 Designing of Warehouse----------------------------------------------------------------------------------------------------------------------------------- 57 Warehouse Calculations ----------------------------------------------------------------------------------------------------------------------------------- 59 Cross Docking ------------------------------------------------------------------------------------------------------------------------------------------------ 66 Cost Estimate ------------------------------------------------------------------------------------------------------------------------------------------------- 69 Schedules------------------------------------------------------------------------------------------------------------------------------------------------------ 70 Warehouse Layout and Drawings ----------------------------------------------------------------------------------------------------------------------- 71
3.1.3 Stock Management ----------------------------------------------------------------------------------------------------- 74

Assessing Product Age ------------------------------------------------------------------------------------------------------------------------------------ 75 Identifying and Rotating Products in Warehouse ---------------------------------------------------------------------------------------------------- 76 Stacking and Storing Products --------------------------------------------------------------------------------------------------------------------------- 78 Managing Product Quality --------------------------------------------------------------------------------------------------------------------------------- 82 Managing Glass ---------------------------------------------------------------------------------------------------------------------------------------------- 83 Handling Non-conforming Products and Materials -------------------------------------------------------------------------------------------------- 84 Other Good Warehousing Practices -------------------------------------------------------------------------------------------------------------------- 85
3.1.4 Fleet Management ------------------------------------------------------------------------------------------------------ 86

Fleet Buying --------------------------------------------------------------------------------------------------------------------------------------------------- 86 Designing Fleet Upper Structure------------------------------------------------------------------------------------------------------------------------- 91 Fleet Maintenance ------------------------------------------------------------------------------------------------------------------------------------------- 93 Advertising Through Fleet --------------------------------------------------------------------------------------------------------------------------------- 95 Fleet Performance Metric ---------------------------------------------------------------------------------------------------------------------------------- 95
3.1.5 Invoicing and Settlement Process--------------------------------------------------------------------------------- 95 3.1.6 Cost Per Case (CPC) Calculation and Benchmarking ------------------------------------------------------ 96
Warehouse Costs-------------------------------------------------------------------------------------------------------------------------------------------- 96 Handling Costs ----------------------------------------------------------------------------------------------------------------------------------------------- 96 Fleet Costs ---------------------------------------------------------------------------------------------------------------------------------------------------- 97 Manpower Costs --------------------------------------------------------------------------------------------------------------------------------------------- 98 Other Sales and Distribution Costs --------------------------------------------------------------------------------------------------------------------- 98
Chapter 3.2: Clearing & Forwarding Agent (CF&A) Appointment------------------ 99

Introduction----------------------------------------------------------------------------------------------------------------------- 99 3.2.1 C&FA Appointment Process ---------------------------------------------------------------------------------------- 99 3.2.2 C&F Legal Compliance -----------------------------------------------------------------------------------------------100
Chapter 3.3: Anchor Distributor Appointment ----------------------------------------- 103

Introduction----------------------------------------------------------------------------------------------------------------------103 3.3.1 Anchor Distributor Appointment----------------------------------------------------------------------------------103
Chapter 3.4: Distributor Appointment and Management --------------------------- 104

Introduction----------------------------------------------------------------------------------------------------------------------104 3.4.1 Distributor Appointment ---------------------------------------------------------------------------------------------104
When to appoint a distributor --------------------------------------------------------------------------------------------------------------------------- 104 Appointment Process ------------------------------------------------------------------------------------------------------------------------------------- 105
3.4.2 Key Elements of Distributor Management---------------------------------------------------------------------110

Managing Godown ---------------------------------------------------------------------------------------------------------------------------------------- 110 Managing Routes and Vehicles ------------------------------------------------------------------------------------------------------------------------ 112 Managing Glass/Liquid ----------------------------------------------------------------------------------------------------------------------------------- 115 Maximizing Return On Investment (ROI) ------------------------------------------------------------------------------------------------------------ 118 The Right Systems and Processes ------------------------------------------------------------------------------------------------------------------- 120 Distributor Satisfaction Survey ------------------------------------------------------------------------------------------------------------------------- 124
3.4.3 Distributor as Market Execution Partner -----------------------------------------------------------------------124

Market Execution Partner Role------------------------------------------------------------------------------------------------------------------------- 124
Chapter 3.5: Area Market Contractor (AMC) Appointment ------------------------- 127

Introduction----------------------------------------------------------------------------------------------------------------------127
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3.5.1 AMC Appointment -----------------------------------------------------------------------------------------------------127
Part 4: RTM Enablers ------------------------------------------------------------------------------ 128 Chapter 4.1: Systems and Processes ----------------------------------------------------- 129
Introduction----------------------------------------------------------------------------------------------------------------------129 4.1.1 Depot/C&FA Replenishment System ----------------------------------------------------------------------------129
Replenishment Process ---------------------------------------------------------------------------------------------------------------------------------- 129 Performance Metrics -------------------------------------------------------------------------------------------------------------------------------------- 130 Roles and Responsibility--------------------------------------------------------------------------------------------------------------------------------- 130 System Requirement ------------------------------------------------------------------------------------------------------------------------------------- 130
4.1.2 Cola Replenishment System (CRS) for Distributors -------------------------------------------------------131

Objective of CRS------------------------------------------------------------------------------------------------------------------------------------------- 131 How does CRS Work ------------------------------------------------------------------------------------------------------------------------------------- 131 CRS Roles and Responsibilities ----------------------------------------------------------------------------------------------------------------------- 132 CRS Process------------------------------------------------------------------------------------------------------------------------------------------------ 132 CRS Enablers----------------------------------------------------------------------------------------------------------------------------------------------- 134 CRS Benefits------------------------------------------------------------------------------------------------------------------------------------------------ 134 Performance Metrics -------------------------------------------------------------------------------------------------------------------------------------- 134
4.1.3 DSD Router---------------------------------------------------------------------------------------------------------------135

Territory Planner ------------------------------------------------------------------------------------------------------------------------------------------- 135 Dynamic Router -------------------------------------------------------------------------------------------------------------------------------------------- 136 Different Ways for Using DSD Router ---------------------------------------------------------------------------------------------------------------- 136 Scope and Areas DSD Router can Impact ---------------------------------------------------------------------------------------------------------- 136 Critical Success Factors --------------------------------------------------------------------------------------------------------------------------------- 137 Leading Routing Solution Providers ------------------------------------------------------------------------------------------------------------------ 137 Criteria for Evaluation------------------------------------------------------------------------------------------------------------------------------------- 137 Implementation Steps ------------------------------------------------------------------------------------------------------------------------------------ 138
4.1.4 Distributor Automation System (DAS) --------------------------------------------------------------------------139

How does DAS work -------------------------------------------------------------------------------------------------------------------------------------- 139 DAS Implementation Requirements ------------------------------------------------------------------------------------------------------------------ 139 DAS Benefits------------------------------------------------------------------------------------------------------------------------------------------------ 140 Responsibility Matrix for DAS Implementation ----------------------------------------------------------------------------------------------------- 141 Dos and Donts at Distributor Point ------------------------------------------------------------------------------------------------------------------- 142 DAS Performance Metrics ------------------------------------------------------------------------------------------------------------------------------- 142
Chapter 4.2: RTM Organization Structure------------------------------------------------ 143

Introduction----------------------------------------------------------------------------------------------------------------------143 4.2.1 National RTM Organization Structure ---------------------------------------------------------------------------143 4.2.2 Regional RTM Organization Structure --------------------------------------------------------------------------143 4.2.3 Unit RTM Organization Structure ---------------------------------------------------------------------------------144 4.2.4 RTM Job Descriptions ------------------------------------------------------------------------------------------------144
Chapter 4.3: Proposed COA ------------------------------------------------------------------ 145

4.3.1 Proposed COA ----------------------------------------------------------------------------------------------------------145
Part 5: RTM Performance Metrics ------------------------------------------------------------- 146 Chapter 5.1: RTM Index ------------------------------------------------------------------------ 147
Introduction----------------------------------------------------------------------------------------------------------------------147 5.1.1 Calculating RTM Balance Score Card ---------------------------------------------------------------------------147
Quality Parameters ---------------------------------------------------------------------------------------------------------------------------------------- 147 Service Parameters --------------------------------------------------------------------------------------------------------------------------------------- 148 Cost Parameters ------------------------------------------------------------------------------------------------------------------------------------------- 150
5.1.2 Monitoring Progress on RTM Roadmap ------------------------------------------------------------------------151 5.1.3 Monitoring Progress on RTM System Implementation----------------------------------------------------152
Summary--------------------------------------------------------------------------------------------- 153
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PART 1: INTRODUCTION TO RTM
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Chapter 1: RTM Definition, Scope, and Deliverables

Introduction
The RTM Manual is intended to standardize the entire gamut of operations under RTM function. This chapter will cover RTM basics including: 1. What is RTM? 2. What does RTM involve? 3. What are the key RTM deliverables?
1.1.1 RTM Definition

RTM or Route-to-Market refers to the operations focused on ensuring that the retail outlets get the right quantity and quality of relevant SKUs from the complete range of products manufactured by the company, in a timely and costeffective manner. RTM is the critical link between standardized manufacturing and local market dynamics.
Manufacturing
RTM
Outlets
Consumers
Standard International Template
Design for Strategic Fit to Improve Productivity
Local Design based on Demographics & Socio-economic Factors
Sustainable profitability of the system hinges on the robustness and strength of the RTM.
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If the entire product range does not reach the retail outlets/consumers in a timely and cost-effective manner, then it reflects ineffective RTM.
Manufacturing
RTM
Outlet
Input = X
Output = <X
Incorrect RTM Design Low Numeric Distribution Low Market Control Accounts Receivables/Cases On Loan (COL)
Input/Output <1
Dissatisfied Channel Partners Unplanned Discounting Write-offs and BBD
System Inefficiencies
1.1.2 RTM Scope
The main objective of RTM is to optimize fill rates in retail outlets at optimum costs, maximum quality, and desired delivery standards.
RTM Diagnosis, planning and Execution by segment (Metro, power town, and rural)
Distribution Infrastructure Optimization

Warehouse Fleet Glass
RTM Scope
Standardized Systems and Processes for proper administration of RTM function and acquiring relevant RTM MIS
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1.1.3 RTM Deliverables

DSD & Anchor Distributor Territories Order Fulfillment for pre sell outlets: The orders are taken by market developers/pre sell executives. These orders would be fulfilled by the RTM Team. Availability of all the relevant SKUs on ready stock route (depending upon past sales and the expected sale of the outlets on that route) Deciding optimal service frequency of the outlets of the route based on drop size, strategic importance, and investment abilities For Other Distributor Territories SKU availability as per stock norms Ensuring right distribution infrastructure for optimal service frequency to the outlet Measuring and improving Distributor satisfaction scores by optimizing distributor infrastructure & investment Regular distributor financial health review and corrective action plan Effective Distributor Appointments Seamless closure of non viable and inefficient distributors Distributor Coaching to manage their infrastructure.
For Logistics Centre/Warehouses at Plant: Depot Management Warehouse management and MIS Managing productivity of casual labor, forklift, glass rotation, First Expired First Out (FEFO), glass breakages, etc Stock requirement planning and necessary coordination Stock management , First Expired First Out (FEFO) DSD route design and productivity Fleet management Statutory compliances Clearing and Forwarding Agent (CF&A) Management System Operations Distributor Automation System (DAS) Cola Replenishment System (CRS) Routing Software Cola Mobile Cola replenishment through tel-sell team Distributor order generation (Order execution is NOT RTM responsibility) Freight negotiation for outbound along with UCSM and Factory Manager/ Shipping Manager Monthly and weekly sales planning Maintenance of minimum stocks at plant and depot to be coordinated between plant and customer service
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PART 2: RTM MODELS, DIAGNOSTICS AND ROADMAP
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Chapter 2.1: RTM Models

Introduction
This chapter covers the basic RTM Models. While the content of this chapter might seems very basic, it is intended to standardise the nomenclature of various models running within the country. This chapter will clarify that some models, maybe currently known by a different name, are just the variations of the basic models listed in this chapter.
2.1.1 Types of Distribution Models

The various distribution models are broadly categorised as follows based on the complexity of our distribution operations.
Different Distribution Models

DIRECT DISTRIBUTION For a Metro On basis of order On basis of taking management On basis of control delivery mechanism Direct Van Company Direct Sales/ managed from Direct Store depot/ plant Delivery (DSD) Clearing & Ready Stock Forwarding Agent (C&FA) Feeder DSD Pre-sell managed Truck DSD Tel- sell Bulk Break INDIRECT DISTRIBUTION For Power Town/Rural On basis of size and On basis of type delivery mechanism Anchor distributor Distributor Area Market Contractor (AMC) Full load from plant/depot Milk run
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Return to Table of Contents How Each Model Works: Diagrammatic Representation
Direct Distribution: Metro
Indirect Distribution: Power Town/Small Town
Indirect Distribution: Rural
Plant Plant C&FA/Depot Own warehouse/CF &A* (Depot/Godown

Feeder Truck/ Bulk Break For Far Flung Areas
Plant
Anchor Distributor / Distributor
Distributor Milk Run/Distrib utor (Small) AMC*
Distributor
Customer/Retailer
Consumer * C&FA Clearing and Forwarding Agent AMC Area Market Contractor
2.1.2 Direct Distribution Models: On Basis of Order Taking
Direct Distribution model services our customers without the involvement of any intermediaries. Our products are delivered directly by our route truck to the customer store.
DSD Ready Stock Model
A Direct Van Sales/DSD Ready Stock is a type of direct distribution model in which the same person sells and delivers the product in the same visit to a customer.
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Company salesman directly contacts the customers store at the Point-of-Sale and sells our products.
Advantages of DSD Model The company salesman: Improves customer retention. Builds customer relationship. Realizes additional sales opportunities. Obtains first-hand information about the market.
DSD - Pre-sell Model

A pre-sell is a type of direct distribution model in which the salesman sells on one day and merchandises on another day. This means that the salesman would first visit the outlet, generate an order and then pass on the order to dispatch for delivery. This system is used: To service outlets with complex buying patterns where its difficult to forecast demand. To improve vehicles productivity. Pre-seller
Delivery Man
Order Taking
Merchandising
Delivery
Advantages of Pre-sell Efficient use of trucks Easier to introduce new brands and packages More sophisticated selling for key accounts
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Return to Table of Contents DSD - Tel-sell Model

The tel-seller takes orders over telephone, and the delivery man delivers on same day or next day. Merchandising is done along with delivery or by market developers in case they have been deployed.
Tel-seller
Market Developer
Delivery Man
Selling
Merchandising
Delivery
Advantages of Tel-sell Low-cost of order taking (up to 100 customers a day per tel-seller)
Limitations of Tel-sell No face-to-face contact with customers Requires highly reliable and developed phone system
Responsibility Matrix
Responsibility Matrix for Direct Distribution Operations

Direct Distribution Model Account Mgt. DSD-Ready Stock DSD-Pre-sell DSD Tel-Sell SE/MD SE/MD SE/MD Merchandising MD/Salesman MD MD Order Generation Salesman MD Tele Executive Activities
Dispatch C&FA Dispatcher C&FA Dispatcher C&FA Dispatcher
Warehousing Depot Executive Depot Executive Depot Executive
Invoicing and Cash Collection Salesman Salesman Salesman
Delivery Salesman Driver/Load er Driver/Load er
* * SE: Sales Executive MD: Market Developer C&FA: Clearing and Forwarding Agent
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2.1.3 Direct Distribution Models: On Basis of Management Control

Company Managed
The entire gamut of activities in the DSD operation is carried out directly by the company. All the risks associated with selling and distribution of good, etc. rest with the company. The infrastructure and fleet may be hired or owned by the company.
Clearing & Forwarding Agent (C&FA) Managed

The ownership of goods remains with the company till the time the product reaches the retail outlet (in effect the stock in warehouse belongs to the company). Risks associated with selling and distribution of goods, managing labor relations, etc. are shared between the Clearing and Forwarding Agent (C&FA) and the company, depending on the agreement drawn up. In most cases, day-to-day administration, especially management of labor and of filled and empty flow, is put in charge of the Clearing and Forwarding Agent (C&FA). Risk of loss of stock/ theft is also transferred to the Clearing and Forwarding Agent (C&FA).
2.1.4 Direct Distribution Models: On Basis of Delivery Mechanism

Feeder Truck Model
This is a distribution mechanism wherein feeder trucks act as our mobile depots to service our route vehicles. It allows us to replenish our route vehicles on the route itself in cases where: o The plant or depot is far off from the markets. o It is unviable for the route vehicles to plan a return trip to re-load stocks. Use of such feeder trucks thereby minimizes the instances of stock outs both on the route and in route vehicles.
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Return to Table of Contents Bulk Break Model (Direct)

Bulk break distribution mechanism is used to service: o o o o Markets with inaccessible roads where our trucks cannot go Markets where traffic conditions make distribution using our trucks difficult Markets where appointment of a sound distributor/AMC is not possible Markets having non-exclusive Area Market Contractors (AMCs) who do not co-operate with us usually due to the discount structure, other issues, etc.
Route trucks reach in the vicinity of the above markets with stocks and salesmen. The salesmen then unload the stocks into trolleys and take them to the otherwise inaccessible retail outlets.
2.1.5 Advantages and Limitations of Direct Distribution Models
Advantages of Direct Distribution

Improved customer service Service levels to accounts are assured always, as unlike a distributor who may look at discontinuing routes that do not offer him a healthy return, DSD routes run with more commitment and regularity, being focused long-term benefits of servicing accounts. Since DSD is managed and controlled by the company, third party issues (like stock outs due to insufficient funds), do not arise, leading to better customer service. Strengthened partnerships and simpler account management as the company salesman is in direct personal contact with the accounts Increased Speed & Efficiency through: Automation (i.e. handhelds) eliminates manual errors Faster placement of new products/innovations/designs to market, as no intermediary is involved
Limitations of Direct Distribution Initial investment outlay of the company can be high as compared to an indirect distribution because it involves purchase of fleet and certain other investments etc. A DSD operation would normally have a higher running cost as compared to indirect distribution, especially when total volumes are low. The company is directly exposed to all external affairs and environmental risks.
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2.1.6 Indirect Distribution Models: On Basis of Size and Type

Anchor Distributor Model
Who is anchor distributor? As the name suggests, an anchor distributor is a big size distributor who is our mainstay in a market that is not large enough to warrant a DSD operation but at the same time is big enough to get the benefits of a DSD operation. How does the model work? The business model is designed and operated exactly on the lines of a DSD operation but with lesser direct risk, as the title of goods is transferred to the anchor distributor after they get invoiced and receive the goods from the company. The payment model is combination of fixed and variable. All fixed costs are reimbursed. When volume goes up, the benefits come to the company. The anchor distributor gets paid/reimbursed for all his operating expenses and also gets a fixed return, thereby limiting his financial risk.
Advantages of Anchor Distributor Model

Risk and responsibility of managing selling & distribution operations is transferred to distributor, as the ownership of goods lies with the distributors. Company can use its resources and time to focus on its market development objectives for that particular geography. Better market service and account relationship is assured, as the company takes care of account management and the costs of the anchor distributor (due to which he will have no issues in consistently and regularly running all routes as decided by the company irrespective of the season).
Limitations of Anchor Distributor Model

Being a third party, an anchor distributor has to necessarily buy stock from the company and can cause delays and operational issues, such as not buying stock in pre-defined quantities or time period, delaying payments, etc. Higher Cost Per Case (CPC) than a normal distributor
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Return to Table of Contents Distributor Model

Who is a distributor? Distributor is a third party intermediary who purchases stock from us and further redistributes to retail outlets providing quality service to them at an optimal cost. Such intermediaries or distributors are typically appointed in any or all of the following situations: When reaching the customers directly is not economically viable for the company through a DSD operation When markets are very far from sales center and have low volumes When markets are in a very challenging external affairs environment When market is fragmented and with low VPO
How does the model work? Distributors are normally paid on a per cases sold basis for the services rendered by them. The ownership of goods gets transferred to the distributors after the stock gets invoiced to and received by them.
Advantages of Distributor Model

Low cost operation, as distributors are local individuals/firms who operate out of a particular geography. In case of distributors having complementary lines, the overall cost structure of the distributors becomes low, as the operating costs get apportioned to all lines managed by him. Risk and responsibility of managing selling & distribution operations is transferred to distributor, as the ownership of goods lies with the distributors. Company can use its resources and time to focus on its market development objectives for that particular geography. Provides information/recommendation on expanding the footprint of the company in a particular geography, as the distributor knows the area and enjoys good local retail relationships. Easy entrance into new channels where the distributors have complementary lines Distributors can extend and track credit and Cases On Loan (COL) to the local market (which the company is unable to do), as they are local parties with limited business size and limited number of retail outlets to deal with.
Limitations of Distributor Model

Withdrawal of low-return service routes in off-peak season, affecting the companys ability to reach consumers in such geographies. Distributors in some cases can also tend to emphasize products/brandpacks that are easy to sell but may not be in-line with companys marketing objectives. Being third party intermediaries, distributors can cause operational issues in their defined territories in cases where they have some financial constraints or any other personal problems (which could not be anticipated at the time of their appointment).
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Responsibility Matrix for Distributor and Anchor Distributor Operations
Direct Distribution Model Account Mgt. SE/MD SE/MD Merchandising Distributor Salesman/MD Anchor Distributor Salesman**/ MD Order Generation Distributor Salesman Anchor Distributor Salesman**/ MD Activities
Dispatch Distributor Anchor Distributor
Distributor Anchor Distributor
Warehou sing Distributor Anchor Distributor
Invoicing and Cash Collection Distributor Salesman Anchor Distributor Salesman
Delivery Distributor Salesman Anchor Distributor Salesman
** The Anchor Distributor salesman, though on Anchor Distributors payroll, is selected and chosen by the company representatives based on the eligibility criteria specified by the company.
Area Marketing Contractor (AMC) Model

Who is an Area Marketing Contractor (AMC)? An Area Marketing Contractor (AMC) typically is a very small distributor who normally cannot take a full truck load from the plant and hence needs to purchase stock from another distributor in smaller lots. Area Marketing Contractors (AMCs) are generally required in the following types of markets: Markets with low Volume per Outlet (VPO) Markets with very high contribution of returnable glass and low case strength, which necessitates high frequency of service Congested areas that are inaccessible by typical distributor vehicles such as LCVs, autos, vans, etc. High credit requirements coupled with great credit risk (both of which can only be fulfilled by a local entity) Far-flung markets where the volume is high enough to warrant a distribution entity, but low enough to be catered directly from the plant/depot
How does Area Marketing Contractor (AMC) model work? The AMC gets compensated on a per case basis, part of which is funded by the company and the balance by the distributor. Depending upon the intensity (i.e. whether he has mechanized or non-mechanized operations), AMC compensation may vary.
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Types of Area Marketing Contractor (AMC) Model 1. AMC as a sub-distributor in a city In cities, there are certain markets with characteristics that necessitate the use of AMCs. Typically, these areas are: Slums Low-cost housing areas with inaccessible roads Old city wholesale markets where traffic conditions make distribution difficult Certain areas which absorb a lot of credit and/or COL, which the company may not be able to extend
It is recommended that these AMCs should be directly supplied by the plant as in case of a normal distributor or as a Milk Run from the plant to prevent double handling in a city distributor godown. 2. AMC as a sub-distributor in upcountry In rural markets, there are certain markets that have the characteristics described in the previous variation of the AMC model. Typically, these areas are groups of villages that are too few in number and too low in volume to merit a regular outlet-wise beat plan, but high enough to merit distribution. 3. Non-exclusive AMC Operations Such an AMC model is typically operational in large metros like Mumbai and New Delhi (at times referred to as FAT agents). It is characterized by a market where there are only wholesale operations, i.e. a local wholesaler breaks bulk and distributes products of many beverage companies. No company-controlled operation in present in that area. This type of an operation has notable drawbacks such as loss of control, excessive and competitive discounting to stay in that market, etc. This model is not recommended and the company should try other means like bulk break to directly cover these markets.
Advantages and Limitations of AMC Model Limitations of Distributor AMC Model Increased cost as one layer increases in the distribution set up Over-reporting of sales by distributor or salesmen: The distributor may over-report sales to the AMC leading to leakages. Also, if the AMC is part of a DSD route, there is a possibility of over-reporting of sales by the salesman. In extreme cases, both possibilities could occur simultaneously. Hence, it is important to have separate AMC routes and fix upper limit/capping in their volumes. Outlet-level sales data may not available for a small set up.
Advantages of Distributor AMC Model Regular service assured for small markets, which do not get serviced on a regular beat or warrant a full load from the plant Local AMCs normally have good local relationships and can extend credit in Cases on Loan (COL) with less risk as they are physically present in the area. Long-term possibility to convert AMCs into regular distributors who can receive full truckloads from the plant, as the AMC distributors gradually grow in size.
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2.1.7 Indirect Distribution: Delivery Mechanism

Full Load from Warehouse/Plant
This is the most common distribution mechanism for feeding our distributors. Distributors place a full truck-load order on our plant or depots, and a full truck load gets dispatched. The truck load can vary in size ranging from a payload capacity of 5.5 tons to 16 tons. The most commonly used payload capacity is 9 tons.
Milk Run
This distribution mechanism is usually used in upcountry markets to service small distributors or AMCs who cannot take a direct truck load from the plant/depot but still warrant service from the company and are also located relatively close to our plant/depot. This can also be used to service small distributors who cannot take full load from a plant in a city. How does Milk Run work? Milk runs involve consolidating multiple shipments to make a full truck load and dropping off small lots at multiple locations.
Advantages of Milk Run Model Ensures distribution in low-volume seasonal rural markets/ towns that do not warrant a full truck load but are located close to the plant Enables the company to service C & D class distributors with annual volume ranges between 4,000 to 15,000 c/s. Eliminates payment delay issues: The distributor presents the demand draft at the time of receiving goods from the milk run van Being operated by the company, Milk run ensures all points are covered, unlike a transporter who is at times unable to cater to more than 2 drop points. Simpler vehicle planning, as orders are usually collected a day prior to the delivery
Limitations of Milk Run Model Delays in truck turnaround in case of communication gap between company and distributors who fall on the milk run route. Misuse of the system by some larger distributors for their own convenience who should ideally get full load from the plant.
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Chapter 2.2: RTM Diagnostics: Selecting an RTM Model

Introduction
In the previous chapter, we covered list of various RTM models. However, next we need to focus on: Analyzing effectiveness of current RTM Selecting ideal RTM model for different types of market
An ideal RTM should deliver : Ideal service level: On-Time In-Full (OTIF) to all retail outlets measured through retail satisfaction survey and right numeric availability Sufficient distributor ROI and net take home per month Right CPC, calculated as a percentage of NR for the company
For each type of market and our distribution objective in that market, we need to identify the right RTM model which meets the above principles. In this chapter, we cover how to: First diagnose the current state of RTM in a market. Then choose an RTM model for different types of market.
2.2.1 Market Classification

As a first step while identifying ideal RTM, classify markets into manageable entities with a similar market condition with respect to distribution. Classification is based on Market Potential Volume (MPV).
Market Type Metro A Metro B Power Town Rural A Rural B
MPV Range > 200 >20 < 200 > 3 < 20 Below 3 Below 1
Refer to Annexure K for list of various Indian cities that fall under each market type.
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2.2.2 RTM Diagnostics
For each of the markets, define a clear Distribution Objective based on the following parameters: Is our current distribution effective? Is our current distributor strong enough?
Distribution Effectiveness Index

The effectiveness of distribution in various markets is evaluated based on certain criteria. These criteria vary for metros and power towns as depicted in the diagrams below. Evaluation Criteria for Metros
Stability of Structure (% New Distributors/Routes) % of Distributors/Routes > Break Even Volume (BEV) METRO MARKETS Swing in Market Share Volume Performance
Swing in Numeric Availability of Lead SKU
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Evaluation Criteria for Other Towns
Stability of Structure (% New Distributors/Rout

REST DISTRIBUTOR AREAS
% of Distributors/Routes > Break Even Volume (BEV) Volume Performance
Rating Each Parameter Performance across each parameter is classified into bands of RED, YELLOW & WHITE each carrying 0, 1 and 2 points as follows: RED = 0 YELLOW = 1 WHITE = 2 Then, net Distribution Effectiveness Index for the market is calculated. Markets below score 8 require immediate RTM correction.
Rating Limits For Metros

RED(0) Numeric Availability Swing Market Share Swing Volume Growth/Decline > -5% >-2% >-10% YELLOW(1) In Between In Between In Between In Between In Between In Between WHITE (2) >=0% >+2% >=0% >66% <10% >=8
% of Distributors >Break Even Volume <33% (BEV) Stable Distribution (% New Distributors) >33% Net Score <=5
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Rating Limits For Other Towns
RED(0) Volume Growth/Decline >-10% YELLOW(1) In Between In Between In Between In Between WHITE (2) >=0% >66% <10% >=4.5
% of Distributors > Break Even Volume <33% (BEV) Stable Distribution (% New Distributors) >33% Net Score <=2
Note:
The limits for each band are based on internal targets for the given set of markets. The Break Even Volume (BEV) volume is estimated based on the minimum level of annual earnings for the distributor. In case of direct routes, route productivity is used.
Prioritizing Market Prioritize the market for corrections based on sales per unit Market Potential Volume (MPV) and Distribution Effectiveness index score (current vs. target) as depicted below. The diagram below is referred to as the Opportunity Matrix. Volume Potential= Sales/MPV
High Focus Markets for
RTM Corrections
Focus on Cost
RTM Correction
Medium Focus Markets for
Focus on Cost
RTM Corrections RTM Corrections
Low
Focus on Cost
Distribution Effectiveness Index Note: Low, Medium & High segmentation is based on cluster average.
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Using Distribution Effectiveness Model: Example The example below uses the distribution effectiveness model for RTM diagnosis of three metro cities: City A, City B, and City C. Rating Distribution Effectiveness in the three cities. 1. Each city is rated on distribution effectiveness parameters.
Numeric Swing 0 -16 -1
Volume Performance -5% -3% -8%
Market Share 0% 6% -9%
City A City B City C
% of Distributor greater than BEV 33% 0% 17%
Stability of Structure (New%) 8% 16% 0%
Net Score
Sales/MPV
7 5 4
10.23 7.39 8.21
2. Based on the rating limits for metros, the red, yellow, and white bands are assigned to each value.
Numeric Swing
Volume Performance
Market Share
% of Distributor greater than BEV
Stability of Structure (New%)
Net Score
Sales/MPV
City A City B City C
0 -16 -1
-5% -3% -8%
0% 6% -9%
33% 0% 17%
8% 16% 0%
7 5 4
10.23 7.39 8.21
3. Based on the red, yellow, and white bands, Distribution Effectiveness Index is calculated. Red = 0; Yellow = 1; White = 2 For City A 2 whites = 2 x 2 = 4 3 yellows = 1 x 3 = 3 Net Distribution Effectiveness Index = 4 + 4 = 7 Similarly, Distribution Effectiveness Index for City B = 5, and City C = 4. Distribution Effectiveness Index reflects: City A market is near ideal. It needs slight correction. Cities B and C markets need immediate corrections in the distribution.
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4. Next, market prioritization is done by plotting the Distribution Effectiveness Index on the Opportunity Matrix.
City A Sales Opportunity in 000

City B
Town 1 Town 2 Town 3 Town 4 Town 5 Town 6 Town 7 Town 8 Town 9 Town 10 Town 11 Town 12 Town 13 Town 14
500
City B City C
250
0 0 5 8
Note: Sales Opportunity is calculated after benchmarking it with the average Sales/MPV index of 8.6. 5. Based on the diagnostic results, specific action plan is worked out. For example, the diagnostic results and findings for City B are depicted below; based on these, the RTM plan is worked out.
% of V olume e Dis t ribut or t han B E V St abilit y of St ruc t ure(N ew% ) Net S c ore Remark P erf ormanc great er
-1% -9% -8% 1% -5% -8% -21% -6% 4% 13% -27% -15% -13% -20%
0% 0% 100% 100% 100% 0% 100% 100% 0% 0% 0% 0% 0% 0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
3 3 5 6 5 3 4 5 4 4 2 2 2 2
Merge Distributors Merge Distributors Ok. Ok. Ok. Merge Distributors Market Correction Required ? Ok. Dist is viable at 40K. Merge Distributors Market Correction Required ? Market Correction Required ? Scarp Hub & Spoke Market Correction Required ?
Towns 3, 4, 5, and 8 are amongst the most stable distribution. Towns 1, 2, 6, and 10 require merging of distributors. Towns 7, 11, 12, 13, and 14, require immediate correction.
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Return to Table of Contents Distributor Strength Index

This is the second level of analysis to further diagnose the source of distribution weakness or possibility of weakness arising at a later date. Both objectively as well as subjectively, a distributor is measured on certain parameters (listed below) to derive his strength in a particular area. We need to make sure that our distributor in the area is a long term and highly aligned Market Execution partner. In a given geography, he is our key representative for the customers. If we have a strong, aligned, and satisfied partner, then we will be able to ensure highly-satisfied customers - which is our key goal. It is difficult to measure a distributors strength/weakness on an objective basis only, as there are a lot of personal traits like aggressiveness in market, which though can be captured through indicators like market share still may not give a full picture. Say, there is a non-customer friendly distributor in a historically high share market area with a currently weak competing distributor; he will give us a false sense of security in the market and as well a set of dissatisfied customers as well. In this section, we make an attempt to rate the strength of our distributor in a more objective and a comprehensive way. We measure a distributor on the following heads, each allocated different weightages, as listed below:
25 % weightage 25 % weightage 50 % weightage
Level of Infrastructure Investments vs. required Investments (on 10-point scale) o Vehicle no. actual vs. required 5/10 Max weightage of 5 per parameter (excess investment is also not good) Glass Actual vs Required 5/10
Overall Financial Strength (break-up as below)
Level and Strength of Market Relationships & Level of Market Aggressiveness
o Objective Financial Strength (points 10) 15 % weightage Points on Stock investment for 100% investment &proportionate for each %age point up to a max limit 1 point for every Rs.1/- credit per cs annual volume, up to a maximum of 4 points o Subjective Financial Strength (points 10) 10% weightage A persons financial strength/status may not get captured in the above numbers alone. Here the Area Sales Manager (ASM) / Sales Executive (SE) can rate a person based on their knowledge of the persons financial status.
Relationship (Objective Measure) (Points 10) 30% weightage No of years spent as a distributor Half point for each year spent in KO system 2 points for 100% service level & proportionate points for lower service levels 1 point for every Rs. 2 credit per case on an annualized volume (upper limit for all points) 2 points for every 50 % RED score Relationship (Subjective) (Points 10) 20% weightage Level of market aggressiveness and customer satisfaction based on Sales Team rating (customer satisfaction survey in certain key markets can also be carried out to objectify a part of this parameter).
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Note: First the objective score needs to be calculated and then the subjective score needs to be put down. This is because it is always better to first get an unbiased true evaluation on real time numbers. If there is too much variation between the objectives vs. the subjective assessment, the same needs to be explained. Refer to Annexure N for calculating the distributor strength score, as mentioned above. The maximum distributor strength score would be 10. To reiterate the content till now: In the previous section, we had calculated the effectiveness of distribution through a full analysis of key business indicators at town level. In this section, we went to a second level of diagnosis which is the distributor level for each town that will help in drawing up a specific distributor level action plan.
Distributor Strength vs. Distribution Effectiveness

In this section, we try to plot the Distribution Strength Index versus the Distribution Effectiveness Index which will give us a clear direction needed to be taken in the market
D i s t r S t n g t h I n d e x Low Low High High
Needs specific guidance and support to fully capitalize on the Distributor Strength
Next rung development for further customer satisfaction
Definitely need to change distributor and maybe the current RTM Model
A clear area of risk where current distributor / RTM model may not be able to hold on to current advantage
Distributor ROI
Target an ideal ROI of twice the bank rate (In current circumstances 18% = 2 * 9%) Ensure a minimum ROI of 15% for each distributor. Review the ROI half-yearly for all A class distributors and once a year for the rest. If ROI is <15% for half yr and also for YTD: Jointly analyze distributors cost of operation and explore ways of reducing costs, and improve revenue without adversely impacting the quality and frequency of service to outlets. o Explore increasing the geographical coverage and or sales volume of the territory serviced by the distributor. o Assess the need of revision of distributor commission on select pack(s). o If none of the above is feasible, close the distributor and consolidate his business with the geographically closest distributor(s).
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2.2.3 Choosing an RTM Model

For each of the types of markets, identify the possible models and choose the best one based on requirements. On a broad level a very directional grid based on Volume of the Area and Market Type (as shown below) can be used to know the possible RTM model for an area.
Metro Anchor Distributor/ Distributor Anchor Distributor/ Direct Direct Distribution
M A R K E T T Y P E
Power Town
Distributor
Distributor/ Anchor Distributor
Anchor Distributor
Distributor (Rural)+Milk Run Rural

Low
Distributor (Rural)+ Milk Run
Distributor/ AMC
High
MARKET VOLUME
At a much more deeper level a grid as shown below can be used to determine the ideal model as well as the RTM direction to take for the market.
Metro A
M A R K E T T Y P E
DSD (Clearing and Forwarding Agent (C&FA) Metro B DSD (C&FA) Build Operate Transition Anchor Distr Build Operate Transition Distributor needs change
DSD (C&FA)
DSD (C&FA)
Anchor Distributor
Anchor Distributor
Power Town
Distributor
Distributor to be retained
Rural A Rural B
Ideally single viable distributor
Distributor to be retained
Distributor (Rural) + Milk Route

Lag
Distributor (Rural) + Milk
Distributor AMC
Lead
DISTRIBUTION EFFECTIVENESS Index

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Chapter 2.3: Two-year RTM Roadmap

Introduction
In the above chapters, we have covered: 1. Various RTM models which are or can be in operation in an area 2. Deriving ideal model matrix by evaluating market types and the distribution objective of an area based on current level of distribution effectiveness, distributor strength, and distributor ROI. Finally, we need to now inculcate the above diagnosis and principles into action on the ground. This chapter covers the 2-year RTM roadmap that will help put the process in place for executing and monitoring RTM correction plan.
2.3.1 RTM Planning (Town and Distributor-wise)
The RTM analysis and direction setting needs to be inculcated into the Annual Business Planning process at the units.
For the ABP RTM planning: 1. The UCSM along with the sales team should chart out by Metro, Power Town, and Rural, the current distribution effectiveness index and distributor strength index. 2. The current Distributor ROI needs to be calculated for all distributors. 3. The desired RTM model needs to be selected based on the directional grid as well the above factors. 4. The flow from the current RTM to the desired RTM needs to be charted on a two-year timeframe.
Phase I RTM
Desired RTM
Current RTM
2006
2007
2008
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Heres an example illustrating RTM planning town and distributor-wise, using the approach described above. Say, theres a sample Area Sales Manager (ASM) territory with metro power town and rural markets. The area details including distributor wise outlets, volume, and growth over previous year, are displayed in the excel sheet below. For RTM Planning: 1. We first draw up the current RTM Photography post carrying out all the relevant diagnostics in the previous section.
Distributo r Effectives s index Distributor Strenght Index
Name of Town Type of Town
Population
Outlets
Volume
Distr Name
Outlets
Volume LY Vol Gr vs PY
Current Distr ROI
Current RTM Model
City A
Metro B
1,000,000
2,564
461,780
5 D1
D2
750
150000
5%
8 6 5 7 5 3 6
17% 10 Distr Town 15% 10 Distr Town 12% 10 Distr Town 17% 10 Distr Town 13% 10 Distr Town 8% 10 Distr Town 10% 10 Distr Town
330
59400
-10%
D3
180 300 220
23400 60000 44000
-20% 4% -5%
For RTM diagnostics, we calculate the:

D4
o o o o
Distributor Effectiveness Index: calculation shown in previous section Distributor Strength Index: Calculation shown in the previous section The current Distributor ROI The current RTM model functioning in the town
D5
D6 D7
94 120
11280 16800
-30% -18%
D8 D9 D 10
140 300 130
23800 51000 22100
8% 2% 2%
7 4 5 7 4
14% 10 Distr Town 10% 10 Distr Town 12% 10 Distr Town 10% Small 2 Distr Town -3% Small 2 Distr Town
Currently an AMC under a distributor near the plant
Town A
Power Town
120,000
287
37,321
2 D 11
D 12
201 86
26124 11196
0% -10%
Town X
Rural
14,000
28
3,360
3 D 13
28
3360
-5%
12%
Town Y SE 1 ASM 1
Rural
14,000
25
3,000
2 D 14
25
3000
-10%
5%
Currently serviced from plant as an RD
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2. Based on the above data, we need to derive action plan by distributor for each city/town in the territory. First, lets take City A which is a Metro B with 10 distributors. We make following observations for City A based on data available: The Distribution Effectiveness score is 5, which is definitely a reason for worry and needs immediate attention. Very few distributors are making a healthy ROI; the ROI varies significantly from -3 % to +17 %. Distributor Strength is also varying across all the parties. Last year volume performance is also varying drastically between the distributors from 30% to +8 %.
Volume
Distributo r Effectives s index
RTM Plan
Distr Name Distributor Strenght Index Current Distr ROI Current RTM Model
DSD
City A
Metro B
461,780
5 D1
D2
150000
5%
8 6 5 7 5 3 6
17% 10 Distr Town 15% 10 Distr Town 12% 10 Distr Town 17% 10 Distr Town 13% 10 Distr Town 8% 10 Distr Town 10% 10 Distr Town
For key Accounts run DSD Pre sell route from the plant (Annual Vol 1 lac phy cases) Since it is plant town
Anchor Distr Consolidation Should be converted to Anchor with main markets of the city - Add area D 5, D 7, D 9 , D 10 Close / Consolidate with D 1 Close / Consolidate with D 1 Continue add D 6 area Close - Add area to Anchor D1 Close / Consolidate with D 4 Close - Add area to Anchor D1 Keep as he is in a n isolated part of city Needs support to beefup ROI Close - Add area to Anchor D1 Close - Add area to Anchor D1
59400
-10%
We have a large distributor with a high Distributor Strength Index and ROI. He can be looked at as Anchor Distributor.
D3 D4 D5
23400 60000 44000
-20% 4% -5%
D6 D7
11280 16800
-30% -18%
D8 D9 D 10
23800 51000 22100
8% 2% 2%
7 4 5
14% 10 Distr Town 10% 10 Distr Town 12% 10 Distr Town
Heres the detailed RTM plan drawn for City A: Since City A is a Metro B town with a plant attached to it with a lot of prestigious and high volume key accounts, we should run a DSD pre-sell route from the plant for least RTM cost. Since it is a Metro B, as per the RTM Directional Grid we are proposing that we move to an Anchor Distributor Model. The largest distributor in the city, D 1, is also having a high Distribution Strength of 8. So, we need to initiate discussions with him to convert him to an Anchor Distributor. We shut down a lot of unprofitable distributors like D 2 , D 3 , D 5, D 6, D 7, D 9, D 10, and merge with Anchor, or based on geographical location, merge with the other viable distributors we intend to continue. Distributor D 8 is a sitting in a geographically isolated area that would be difficult to cover from the locations of remaining distributors. Moreover, he relatively has a high Distributor Strength Index, so he needs to continue. His ROI is low, and need to re-look at his cost structure and see ways of improving his ROI.
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So, summarizing the above, a 10-distributor Metro B Town with low Distribution Effectiveness Index and many unprofitable distributors is converted to: DSD route from plant for key accounts One large anchor distributor Two very viable and aligned distributors with a high Distributor Strength
Now we draw up the plan for Town A which is a Power Town:

Distributo r Effectives s index Distributor Strenght Index
Name of Town
Type of Town
Volume
Distr Name
Current Distr ROI
Current RTM Model
DSD
Anchor
Distr Consolidation Consolidate Entire Area under D 11 Close
Town A
Power Town
37,321
2 D 11
D 12
26124 11196
0% -10%
7 4
10% Small 2 Distr Town -3% Small 2 Distr Town
The Distribution Effectiveness is very low and RTM correction is an immediate imperative.
This is a Power Town with two distributors both of whom are not having sufficient volume, ROI, and Distributor Strength index for one of them is really low.
The solution here is obvious; we need to merge the two areas under distributor D 11. After merging, check the ROI. If we still have a problem, then we need to look at the cost structures of the distributor and see how to improve his ROI.
Next we draw up the plan for Towns X and Y, which are rural areas.
RTM PLAN Distributo r Effectives s index Distributor Strenght Index
Volume
Distr Name
Current Distr ROI
Town X
Rural
3,360
3 D 13
3360
-5%
12%
Milk Run As is near plant area Currently an AMC under a distributor convert to near the plant milk Run
Current RTM Model
Distr AMC
Town Y
Rural
3,000
2 D 14
3000
-10%
5%
Currently serviced from plant as an RD
Very far from plant needs to be attatched to nearest Distributor as AMC
In both towns X and Y, the Distribution effectiveness index is very low. The Distribution Strength is not sufficient and current ROI is under stress.
Town X is actually near the plant area and can be converted to a Milk Run Route. As he, becomes a direct distributor his commission will go up and hence his ROI will improve. In Town Y: o o We have a distributor with a low Distributor Strength as well as low ROI. The distributor is a small distributor and his viability is going down, as he has to invest in large quantity of stock relative to his volume because of distance from the plant.
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o He needs to be shifted under a Distributor in a Distributor AMC kind of model. His AMC commission needs to be worked out to make sure he is viable. Given the low Distributor Strength, we may even look at changing the distributor and setting up a new AMC party altogether.
The key actions based on the above analysis would be any of the following: DSD in certain locations with percentage of DSD volume targeted Anchor distributors in certain locations with percentage of anchor distributor volume target Distributor consolidation Start of Milk Run and percentage of volume to flow through the same Markets where Area Market Contractors (AMCs) need to come up and number of AMCs (a very small distributor may have to be made an AMC, and some new locations may need to be identified to start up AMC operations).
In the above manner, the actual vs. desired needs to be worked out for each area, and after comprehensive discussion between UCSM and SM, the UCSM needs to propose the final plan by SE area to the GM and the RCSM for final approval. The RTM Action Plan needs to clearly mention the timelines and person responsibilities. This action plan needs to flow into the Annual Business Plan (ABP).
Below is a sample RTM Action Plan template.
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2.3.2 RTM Roadmap: Integration into Annual Business Plan (ABP)
Final ASM level plans need to get into the ABP which will form the base document for RTM corrections before next year.
On an all India level, the RTM footprint directionally is expected to be as depicted below:
CURRENT
End 08
Direct: 60 %
High drop size, high growth potential market converted to CBO run DSD Robust and sustainable Anchor Distributors Appointed. HVO, Key A/C converted to Pre -sell
Direct: 75 %
Anchor: 5 %
Anchor: 20 % In-direct: 5 %
Metro
In-direct: 35 %
Power Town
In-direct: 100%
Unviable & Unsustainable distributors to be rationalized Stable Distributors consolidated, territories enlarged. High VPO, high NR markets, converted to Anchor / DSD
In-direct: 85% DSD/Anchor: 15%
Rural
In-direct: 85% Unviable & Unsustainable Distributors closed Sustainable spokes supported / converted to distributors. Small geographically far spread distributors serviced by Milk Runs In-direct: 80% Distr AMC: 10% Milk run 10%
Distr & AMC: 14%
Milk run 1%
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Current
End 08
Business under DAS : 3% of indirect Business under CRS : 31% of indirect Handheld @ DSD: 2 Metro, 8% of Vol DSD Router : Nil
Systems
Business under DAS : 60% of indirect Business under CRS : 60% of indirect Handheld : All Metro DSD DSD Router : All Metro DSD
No of warehouses : Fleet uptime : 70% Glass Turns : 4.1
Distribution Infrastructure Optimization
No of warehouses : Fleet uptime : 90% Glass Turns : 5.5 Audit Score : 85%
Stock Availability : 92% No of Distributors: 3500 Metro DSD % : 60% Metro Pre-seill % : 14% Business thru anchor : 3% Cost as % NR : 14%
RTM Correction
Stock Availability : 97% No of Distributors: 2500 Metro DSD % : 75% Metro Pre-sell % : 40% Business thru Anchor : 15% Cost as % NR : 12%
RTM Roadmap
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PART 3: RTM INFRASTRUCTURE DESIGN AND MANAGEMENT
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Chapter 3.1: DSD Operation

Introduction
Direct Store Delivery (DSD), commonly referred to as direct route operation, is a model focused on servicing customers without any intermediaries. It is a critical part of the RTM operations. This chapter covers following DSD operations: DSD route designing Warehouse management Stock management Fleet management Invoicing and settlement DSD Cost Per Case (CPC) calculation
3.1.1 DSD Route Designing Process

Key inputs required for DSD Route Design Pack-wise month-wise total volume and average season Off-season drop size Outlet base and EDS High Volume Outlets (HVOs) exclusive outlets Service frequency required by outlet Geographical spread Percentage of outlets and volume for pre-sell and ready van sale Channel construct of the area Estimated channel-wise average In-outlet time
1
Get Data for Every Dealer
2
Locate Outlets on Map
Create Zones
4
Calculate No. of Vehicles and Vehicle Capacity Required
Create Routes
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Return to Table of Contents Get Data

Get complete EDS of all outlets with details like outlet name, address, annual volume, and service frequency required by each outlet.
Sample EDS Data Required for Route Design

Outlet No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Route No. 114 117 114 114 118 116 101 116 120 122 112 124 117 114 118 115 115 123 Account Name Alexus Deli Alph's Bar and Grill Andriotti's Restaurant Athenian Pizza Buggehti's Carl's Quick Stop Chateau Efite Chinese Buffet Connie's Convenience Crown's Dante's Deli Deano's Diner Dillion's Discotheque Unique East of Eden Fan Faire Fielder's Rest Stop Freda's Lunch Room 692 723 578 680 601 124 410 783 550 212 598 114 215 273 105 218 653 109 Addresses Greenwood Angier Ave. North Ave. Greenwood North Ave. Winton Terrace Rankin St. Angier Ave. Greenwood Ponce De Leon Angier Ave. Morgan St. Somerset Ponce De Leon Somerset Bonaventure Ponce De Leon Somerset Service Freq. 3x 2x 2x 1x 1x 1x 1x 3x 1x 2x 1x 1x 2x 1x 1x 1x 3x 1x Trade Channel 147 020 018 018 018 004 018 018 003 147 147 018 020 035 035 018 147 018 Volume 12 8 10 9 30 12 6 9 14 18 9 20 6 24 30 35 7 15
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Return to Table of Contents Locate Outlets on Map

Locate all the outlets gathered in step 1 on a map to get a complete picture of the area.
GR EENWOOD
49 50 48
GR EENWOOD
BARN ET T
SAINT CHARLES WAY SAINT CHARLES AVE.
AVE.
AVE.
Outlets located and numbered
LAKEVIEW
PONCE
47
SAINT
CHARLES
PONCE D E
LEON CT.
46 45 44
PL.
MA IDE N
43 5
LA
DE
SOMERSET TERR.
4 6 39
LEON
ST. BARN ETT
AVE.
PONC E
ONE WAY
27 26
BONAVENTURE
FO RD
7 8 9
NORTH
ONE WAY
41 40 38 35 33 32 30
A
42 37 36 34 29 28
S PRI NGS
DE RA
ONE WAY
AVE.
RD .
ARNOLD
DRIVE
25 22
AN MO RG
ST.
24
S T.
31
23
AN ER GI E. AV
R IE NG
E. AV
21
W IL M E R
17 16 15
LG BE
W DA OO
S T.
EDITH ST.
LL . ST
S T.
18 19 20
RANKIN
LAS DA L
O W NE AY
ST.
R A NK
IN
ST.
14
EN
MC
G IL
IRIS
ARNOLD ST.
S T.
ANGIER
12
E. AV
EGGL ES TON
10 11
13
W IL
L IA M
E SL Y
ST.
RA
H LP
TO PLANT
WILLOUGHBY
ASHLEY AVE.
ONE WAY
Y WA
B ERN
IZ EL ET AB
IN A
EAST
AVE.
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Create Zones
Zones need to be created for a very large city. This helps in getting the average number of routes. Create manageable zones based on proximity from supplying location. Keep the zones geographically contiguous with natural locality boundaries. Create zones in a way that the volumes are balanced in these zones.
1
Sale Center
3 1 4
Cover outlying areas first while creating zones.
8 7 6 2
Calculate No. of Vehicles and Vehicle Capacity
1. List all the outlets within a zone with the volumes and their required service frequencies. 2. Classify the outlets that can be on pre-sell (ideally all High Volume Outlets (HVOs) which have monopoly should go on to pre-sell) and those for Ready Stock sale. 3. For all Ready Stock retail outlets in the zone, take the weighted average of the service frequency. 4. Take the average drop size for the zone.
Create separate routes for season and off season. 5. Each zone will have a known stem time (Driving time taken from Plant or Depot to the first outlet for a particular route in the zone). Here is a format for calculating time available:
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Time 1 2 3 4 5 6 7 8 9 10 11 In-plant Time - Morning In-plant Time - Afternoon Stem Time - Morning Stem Time - Afternoon Breaks Total Number of Minutes:
Amount in Minutes
Time not available for route
Time in the Workday Less Time Not Available
(___ hours X 60 minutes) Time Available per day
6. Then based on estimated in outlet and average between outlet time (based on geographical spread of the area), calculate how many outlets can be done by a route in a day in a particular zone. This is of course after removing sufficient time for in Plant/Depot time. 7. Based on the weighted average service frequency for a zone, calculate the no. of days between two deliveries as follows:
No. of days between two deliveries =
6 (Total No. of Working Days in week) Avg. Service frequency
8. Calculate the number of outlets to be covered in a day in the zone
No. of outlets to be covered in a day in zone = Total outlets No. of days between two deliveries
9. Calculate number of vehicle needed to service the area.
No. of vehicles needed in an area =
Total outlets to be covered in a day No. of outlets one route can do in a day
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10. Calculate sale generated on a route in a day.
Sale generated on a route in a day = Average drop size per outlet x Number of outlets a route can do in a day
11.
Vehicle capacity = Sale generated x 1.2 Since the vehicle need not carry the exact SKU mix as required by the outlets and the demand could normally be variable, so 1.2 safety factor is taken into account. This step is a gross level calculation of number of vehicles required and the possible capacity of the vehicle. Finally, the exact routes still need to be drawn up before actual purchase decision of the vehicle is taken. This is covered later in this section.
It is better to have hybrid system for routes as one vehicle size does not fit capacity required for all
Accounts on pre-sell route Accounts on conventional route
Example showing how to calculate number of vehicles and vehicle capacity, based on formulae covered above, and how hybrid system for routes can impact this requirement Scenario 1 A zone has following details: Total outlets = 600 outlets in peak season Average drop-size = 2 cases per visit. Outlets the salesman can do in a day = 35 Average service frequency required in the area = 3x. Lets see how to find out the number of vehicles needed and their required capacity.
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No. of days between deliveries = 6 / 3 = 2 (as per step 7 above) No. of outlets to be covered in a day in zone = 600 / 2 = 300 (as per step 8 above) No. of vehicles needed in an area = 300 / 35 = 8.57 ~ 9 (as per step 9 above) Sale generated on a route in a day = 2 x 35 = 70 (as per step 10 above) Required Vehicle capacity = 70 x 1.2 = 84 (as per step 11 above) Scenario 2 Lets now see what happens if we tackle the above scenario in a different fashion: No. of outlets = 600 (50 High Volume Outlet (HVO) + 550: Normal Retail) We can now plan the vehicle number and capacity a little smartly by capitalizing on the outlet type: Say, we convince the HVO outlets (50 nos.) to increase glass strength and buy twice a week on presell so their average service frequency is 2x. Average drop size = 12 cases per visit @ 2x or HVO and 1.5 cases per visit @ 3x for retail outlets Outlets the salesman can do in a day = 20 for HVO and 40 for retail outlets HVO outlets normally consume more of salesman time than the normal retail outlets. Lets now see how many vehicles are required and what the required vehicle capacity is. Lets first calculate for HVO: No. of days between deliveries = 6 / 2 = 3 (as per step 7 above) No. of outlets to be covered in a day in zone = 50 / 3 = 16.7 (as per step 8 above) No. of vehicles needed in an area = 16.7 / 20 = 0.8 ~ 1 (as per step 9 above) Sale generated on a route in a day = 12 x 16.7 = ~ 200 (as per step 10 above) Required Vehicle capacity = 200 x 1.2 = 240 (as per step 11 above) Next, lets calculate for normal retail outlets: No. of days between deliveries = 6 / 3 = 2 (as per step 7 above) No. of outlets to be covered in a day in zone = 550 / 2 = 275 (as per step 8 above) No. of vehicles needed in an area = 275 / 40 = 6.8 ~ 7 (as per step 9 above) Sale generated on a route in a day = 1.5 x 40 = 60 (as per step 10 above) Required Vehicle capacity = 60 x 1.2 = 72 (as per step 11 above) So, total no. of vehicles required is 7+1 = 8, which is one less than that used in previous scenario. This means the route design can impact the no. of vehicles required.
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Note that for HVO, number of vehicles is determined by capacity as Volume is high and is pre-sell, and for normal retail outlets, it is determined by time in a day or max outlets a person can do in a day.
The advantages of separating High Volume Outlets (HVOs) on a pre-sell route are: One vehicle less the biggest impact of this will come in terms of daily running cost as one vehicle less will run everyday Better capacity utilization Better focused service for both the HVO and the retail outlet
Trade Channel Characteristics Determine Distribution Requirements

Till now, we have gone through the basic route designing logic at a very simplistic level more for understanding the basic principles of route design and why we need to segregate certain outlets for deriving better efficiencies of route design. The key principle in route design is the required In outlet time for all the outlets in a zone and the In outlet time available to a particular route truck after removing all other time elements like between outlet time, stem time and In plant time. In the previous examples for simplicity and ease of explaining we had taken average in outlet times for a large group of outlets spanning many channels. But in a real time scenario in a large complex market, there are many different types of channels having very different service requirements. In this section, we will try to see how to manage these factors while designing our routes. In a large Metro market, we need to consider the channel construct before designing routes. Why channel-wise split? All channels have different service requirements. Different execution standards require different skill sets, hence specialized manpower. Service frequency requirement of different channels is different. In outlet time required for different channels is very different. Brand pack requirements are very different. Discount structures are different and hence less chances of discounts ramping. Multiple trade channels exist within the same territory.
Trade Channel 1 Trade Channel 2 Trade Channel 3 Trade Channel 4
Certain channels which should be looked at for Pre-sell Channels that have fixed base quantity and work on replenishment model, for example, Modern Trade High discounting exclusive outlets, for example, Bar Channels, etc. FC/grocery: High PET contribution/ glass requirement is not a constraint. Channel is already dealing in pre-sell with other companies
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How to calculate routes based on channel construct: The four-step approach 1. 2. 3. 4. EDS to identify different channels Derive the basic channel construct of the area Identify average In outlet times by channel Identify weighted average required service frequency by channel
We can use various distribution systems to meet different service requirements of the different channels.
Example of creating routes based on channel construct (as per the four-step approach above) 1. Derive a channel construct mentioning relevant channels (with very clear definition of channel characteristics) that we are looking for converting to pre-sell along with their volume contributions
Channel Modern Trade (organized chains, 5 outlets and above) Key Accounts ( premium horeca, transport, entertainment etc.) At Work Bar Channel/ Discounted( discounts above 15% of GR) FC ( staples available and consumer can pick up herself) IC( sitting for 20 pax minimum at one time) Traditional mom and Pop TOTAL
Outlets 250 150 150 625 650 800 15800 18425
% Vol 8 5 2 10 4 6 65 100
2. Next, identify the average In Outlet time by channel. Some chain outlets have one drop point for a series of chain.
Channel Modern Trade (organized chains, 5 outlets and above) Key Accounts ( premium horeca, transport, entertainment etc.) At Work Bar Channel/ Discounted( discounts above 15% of GR) FC ( staples available and consumer can pick up herself) IC( sitting for 20 pax minimum at one time) Traditional mom and Pop
Hindustan Coca Cola Beverages Pvt. Ltd.@copyright2007 Page 45 of 153
Outlets 250 150 150 625 650 800 15800
Drop Points 45 125 150 410 625 745 15800
Avg. in outlet Time ( in mins) 150 45 45 30 20 20 12.5

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3. Put in the service frequency as calls per working cycle and hence calculate the Total Cycle In Outlet Time required.
Channel Modern Trade (organized chains, 5 outlets and above) Key Accounts ( premium horeca, transport, entertainment etc.) At Work Bar Channel/ Discounted( discounts above 15% of GR) FC ( staples available and consumer can pick up herself) IC( sitting for 20 pax minimum at one time) Traditional mom and Pop TOTAL
Outlets 250 150 150 625 650 800 15800 18425
Drop Points 45 125 150 410 625 745 15800 17900
Avg. in Avg. outlet Service Time ( in Frequency mins) 3 150 3 45 2 45 3 30 2 20 3 20 2 12.5
Total In outlet time Total calls spent / week / week 135 20250 375 16875 300 13500 1230 36900 1250 25000 2235 44700 31600 395000 37125 552225
The In outlet time available to a route truck in a particular zone (depending on the stem time, In plant time, and estimated between outlet time) for the same working cycle has already been calculated while calculating no of vehicles and vehicle capacity (covered on previous pages). 4. Based on the above details, the number routes required can be calculated. In all Main Metros, certain channels as shown in above example need to be segregated and put on pre-sell routes. Efficiency of pre-sell routes and truck productivity can be increased by use of dynamic routing software, DSD Router. Next, we will cover the exact process of route design for a conventional route.
Create Routes
We just covered e process of calculation of number of vehicles and their capacity on a very gross level. Now we cover how to create routes. Routes need to be designed in a detailed fashion as below before vehicle purchase decisions are taken. Guidelines for sequencing outlets for a route: Avoid traveling the same street twice. Avoid repeating loops. Do not skip outlets. Work toward sales center. Plan entry and exit points. Make left turns. Minimize driving time; use shortest route.
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To create a route: 1. Locate and mark known route segments as: o One-way streets o Single direction traffic 2. Locate and mark small clusters to be serviced in sequence: o Outlets farthest from sales office o Outlets on same side of busy highways 3. Connect segments into complete route; cover remaining outlets. Create one route at a time.
Start
Northern Ave.
1 2 3
A route map need not be complicated.

Eastern Ave.
Western Ave.
Al Kayman
Recreation Center
End
30 29
22 21 20
23
24
25
26
27
28
6 7
19 18 17 16 15 14 13 12
8 9 11 10
Southern Ave.
Route: F-46
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Route creation for conventional routes Below is the actual template for route designing routes. Start by listing outlets with the below detail and continue in a logical order maintaining the above principles till the salesmans time runs out in the below format. 1.
Route No. Account Name Address 114 Andriotti's Restaurant 578 North Ave. 114 114 114 114 114 114 114 114 114 Cases/ Call 8 Driving/Park Available: Total In-outlet Time Between Total Time Time Outlets Used Remaining Total Cases
2.
Route. No. Account Name Address 114 Andriotti's Restaurant 578 North Ave. 114 Buggehti's 601 North Ave. 114 114 114 114 114 114 114 114 114 Cases/ Call 8 14 Driving/Park Available: Total In-outlet Time Between Total Time 490 Time Outlets Used Remaining 8.1 3.0 11.1 478.9 Total Cases 8
3.
Route No. 114 114 114 114 114 114 114 114 114 114 114 114 Account Name Andriotti's Restaurant Buggehti's Captain's Club Crown's Dillion's East of Eden Fan Faire Freda's Lunch Room Harrigan's Lounge Address 578 North Ave. 601 North Ave. 207 Bonaventure 212 Ponce De Leo 215 Somerset 105 Somerset 218 Bonaventure 109 Somerset 219 Bonaventure
Cases/
Call 8 14 16 10 7 18 19 6 15
Driving/Park Total In-outlet Time Between Total Time Time 8.1 10.9 12.0 8.9 7.6 12.9 13.5 7.2 11.4 Outlets 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Used 11.1 13.9 15.0 11.9 10.6 15.9 16.5 10.2 14.4
Available: 490.0 Remaining 478.9 465.0 450.0 438.1 427.5 411.6 395.1 384.9 370.5
Total Cases 8 22 38 48 55 73 92 98 113
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4.
Route No. 114 114 114 114 114 114 114 114 114 114 114 114 114 114 114 114 Account Name Andriotti's Restaurant Buggehti's Captain's Club Crown's Dillion's East of Eden Fan Faire Freda's Lunch Room Harrigan's Lounge Re-load Stem Time In Re-load Time Re-load Stem Time Out Address 578 North Ave. 601 North Ave. 207 Bonaventure 212 Ponce De Leo 215 Somerset 105 Somerset 218 Bonaventure 109 Somerset 219 Bonaventure Cases/ Call 8 14 16 10 7 18 19 6 15 Driving/Park Available: Total In-outlet Time Between Total Time 490.0 Time Outlets Used Remaining 8.1 3.0 11.1 478.9 10.9 3.0 13.9 465.0 12.0 3.0 15.0 450.0 8.9 3.0 11.9 438.1 7.6 3.0 10.6 427.5 12.9 3.0 15.9 411.6 13.5 3.0 16.5 395.1 7.2 3.0 10.2 384.9 11.4 0.0 11.4 373.5 25.0 348.5 30.0 318.5 25.0 293.5 Total Cases 8 22 38 48 55 73 92 98 113
The above process continues till the time is exhausted. Then, see the volume that is generated in the route in the day and this gives the vehicle capacity. Finally, based on service frequency and day required by outlet, day-wise routes are designed for each working day. Mostly in India we have very low VPO outlets and as a result time runs out much earlier than capacity (in LCVs). On the other hand, in case of Autos, capacity runs out much before time leading to a lot of reloads and SKU shortages on route.
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3.1.2 Warehouse Management

This section provides basic details and guidance on How to go about setting a warehouse for DSD Operation The objective is to design a facility that will enable delivery of product to the market at the least cost to serve. To ensure this, we need to optimize both facility cost and operating cost of the warehouse. The scope of the facility in the warehouse can be increased in future by adding items and structures that are justified with a favorable IRR.
Setting up a warehouse encompasses: Choosing best warehouse location Specifications for basic components of warehouse Calculations for different warehouse components Calculating material handling equipment required Designing and creating the warehouse layouts Estimating cost
Warehouse Location
To theoretically get the best locations, perform the following steps: 1. Plot Demand Distribution as follows: a. b. c. d. Cluster geographically-close & socio-economically similar areas. Determine overall demand of each cluster. Determine the expected CAGR for each cluster. With the above, calculate the demand distribution over 5 years.
2. From the above, determine theoretically possible warehouse locations across 5 years. 3. Calculate the root mean square: (Di*di2/ Di) where Di: Demand, di: Distance from the locations 4. Rank the depots according to the above factor with the least getting the best rank. Now we have theoretical best locations. 5. Add in practical realities such as: Bottlenecks due to traffic Railway line Low lying area Infrastructural support - electricity, drainage, labor, etc. Rental rates Availability of requisite sq ft space
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Commercially & statutorily approved location High risk areas ( labor availability, political risks) Close to highway or transport hub for easy availability of vehicles Area to be 3 ft 5 ft high from nearby road level Easy access for commuting, road network Authorized area for warehousing activity
Basic components of the Warehouse
A warehouse should have: Warehousing area Loading bays Truck & other company vehicle parking area Cold drink servicing & refurbishment area Fleet maintenance area Administrative offices Solid waste collection area Stock checker/security gate house Employee facilities The entrance - truck /employee entrance Fire hydrant systems
Warehouse Area
The warehouse building should be designed based on design calculations of the area requirement. Warehouse area needs to have the provisions for the following: o o o o o o o o o o o o Finished product storage Empty bottle storage Bottle sorting Mixed pallet make-up Case consolidation Storage for pallet Miscellaneous storage Maintenance equipment storage Advertising/POS material Quarantined product Forklift parking Supervisors offices, toilets etc
Storage areas should be designated by means of stripes painted on the floor with each storage lane indicated. Forklift aisles shall be designated and material should not be stored in the aisles. The recommended clear height under all structural components, mechanical systems, lights, etc., is 8.0 meters. The 8.0 meter clear height provides for efficient racking (in case it is required in future). The minimum acceptable height is 6.5 meters.
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The warehouse floor should be concrete with an aggregate hardener power floated into the surface. Floor drains are not required in the warehouse area. Lighting should be metal halide type which overall costs less than fluorescent lighting. Column spacing should consider building economics and pallet size. In general, column spacing should result in building bays (rectangles defined by 4 columns) that are 400 square meters. A 0.5 meter border should be provided between materials that are stored adjacent to walls and the wall. This border should be identified by painting the floor white from the face of the wall to a distance 0.5 meters away from the wall.
Loading bay
The loading bay should be designed based on area requirement calculations. It should be designed so that any one truck, positioned in the hall for loading, can be removed independent of any other properly positioned trucks that are in the hall. The loading bay should have provision for the following: o o o Truck loading Truck parking Supervisors' offices
Floor stripes must be used to designate floor spots for parking trucks while loading/unloading. The recommended clear height under all structural components, mechanical systems, lights, etc., is 8.0 meters. The 8.0 meter clear height provides for conversion to warehouse space if required in future expansions. The minimum acceptable height is 6.5 meters.
The loading hall floor should be concrete with an aggregate hardener power floated into the surface. Trench drains are best. The minimum possible floor slope should be used. Lighting should be metal halide type which overall costs less than fluorescent lighting. Column spacing should be designed for a clear span in the loading hall. This will allow for efficient truck maneuvering. If a clear span is not possible, then building columns should be minimized.
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Return to Table of Contents Parking for Trucks and Other Company Vehicles
Maneuvering and parking area should be provided inside the security fence for company vehicles (delivery trucks, sales cars, sales equipment repair trucks, etc.) This area should include designated parking for all vehicles such that traffic areas are not blocked by parked vehicles. Paving material in parking area can be asphalt, concrete, or paving stone, depending on local conditions and economics. The area should be illuminated to a level of 50 lux.
Sales Equipment Refurbishment Centre

A workshop cum refurbishment centre is required for maintenance of cold drink coolers, and pre and post mix dispensers used in the market place. The area could be used for any of the following: o o o o Uncrating Testing new equipment Minor maintenance and repairs Complete refurbishment of equipment brought in from the field
The refurbishment center should contain the following: o Open floor area for working on even large 30 cases equipment items. The area should be large enough for testing multiple pieces of equipment simultaneously. o o o o Electronics testing and repair area equipped with work benches Utilities including compressed air, Carbon Dioxide, hot water, and cold water. Spare parts store room Storage area for new machines in inventory (It needs to be a fenced area in the warehouse and should be near the shops.) Washing area for washing coolers, dispensers etc., brought in from the field. The area should be large enough to access all sides of a machine, open the door and clean and repair the inside. The area should be furnished with sanitizing equipment. A tile floor and walls should be built along with floor drains so that the wash water can fall to the floor and be drained away.
Workshop for Fleet Maintenance

Company vehicles are frequently seen by consumers in the marketplace and therefore a fleet that appears clean and well maintained is important. This makes it important to have a facility for basic servicing of company vehicles at the warehouse.
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The size of the shop and the equipment required in the shop will depend on the size of the fleet and the level of service to be provided. Only minor service (i.e. oil change, lubrication, brake maintenance, and tire repair, etc.) will be performed in the shop. Major maintenance requirements will be handled at OEMs workshop. The workshop should have the following: o o o A separate area for forklift truck maintenance A separate battery room if forklifts are electric An area for repairing delivery trucks and other vehicles, having at least 2 bays - each capable of holding the largest size truck The bays should be sized such that the vehicle being serviced can be accessed from any side by jacks or other equipment. One of the bays should be designed with a pit for accessing the underside of the vehicle. o o An area for mounting tires on wheels and taking tires off wheels A secure storage area for spare parts, tires, lubricants, etc. Ensure this area is separated from other workshop areas to avoid fire hazards. o Office space for supervisor and clerical personnel associated with the workshop
Administrative office
The space required for administrative office will largely depend on the organization of the overall distribution system, i.e., what administrative functions will be located at this facility. It is important to note that the administrative offices discussed here do not include the supervisory/functional offices located in the functional areas of the facility. The administrative facility can have the following areas: Reception Security Control Center Office Space for General Management Finance and Accounting Area Cashier Desk Dispatching & Scheduling Area Inventory Control Room Small Conference Room Driver's Cash Settlement Room Training Room DG Room Refreshment Centers
Driver's Cash Settlement Room

A room should be provided for driver-salesmen returning from their routes where they can count the money they collected and fill out the necessary reporting forms. The room should be designed for limited access; it should not be a through-way to other areas. It should be next to the cashier. A safe should be provided in the wall between the route settlement room and the cashier's office.
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The safe should have a night deposit door in the route settlement room and a full access door in the cashier's office. The room should be equipped with small separate tables that drivers can use. There should be only one driver per table.
Usually enough tables for 60-80 % of the drivers are sufficient since all of the drivers do not return from their route at the same time. It should be equipped with a rack for blank reporting forms.
Training Room
A training room sized to seat the entire sales staff is usually provided for sales meetings, promotional rallies, etc. Window treatments should be provided to allow the room to be completely darkened. The room should have complete audio-visual capability.
Solid Waste Collection Area

An area is required for solid waste collection. It shall be enclosed on three sides with a small wall (about 2.0 meters high) for aesthetic reasons.
Checkers Building and Security Post

A small check post should be provided at the truck entrance for the security personnel responsible for checking trucks entering and leaving the site. It must be designed to minimize the incidence of trucks, trying to enter the site, being queued and creating congestion on the city street. The gatehouse should be built on a raised concrete platform with a finished floor level approximately 1.25 meters above the surrounding entrance street level. The platform should provide a walkway along each side of the gatehouse and the minimum width of this walkway should be 1.0 meter. The front room (facing the city street) should allow at least 270 visibility to the security personnel. The gatehouse should have a small drivers lounge to be used by drivers while waiting at the gatehouse. The gatehouse should have toilet facilities for the company personnel assigned to the gatehouse, and for the drivers. The streets through the checker area should have at least three lanes: o o o The outside lane on the right should always be an entrance lane. The outside lane on the left should always be an exit lane. The inside lanes should be reversible to improve traffic flow and minimize delays during peak hours.
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Return to Table of Contents The Entrance

A distinct entrance should be provided for company vehicles (delivery trucks, inbound trucks, sales cars, sales equipment repair trucks, etc.). This entrance should be separated from the employee entrance. The truck entrance should not connect with the main municipal street near a corner or other type of intersection. A (motor operated) security gate, controllable from security house, should be provided across the truck entrance road. This should be at least 2.0 meters high, should be designed to stop both pedestrian and vehicular traffic. The gate area should have illumination level of 100 lux. This gate is normally open during operating hours and closed during closed hours.
Employee Parking
A parking area inside the site security gate should be provided for employee vehicles. This area should be separated from the rest of the site by a fence such that both vehicular and pedestrian movement into the operating areas is not possible without passing through the control point. All employees must walk from the car park through the reception area. Paving material in the employee parking area can be asphalt, concrete, or paving stone, depending on local conditions and economics. The employee parking area should be illuminated to a level of 50 lux.
Fire Hydrant
A fire lane should be provided around the perimeter of the building in accordance with local specifications. This should specify the width of the fire lane and the distance it can be offset from the building. Paving material in the fire lane can be asphalt, concrete, or paving stone, depending on local conditions and economics.
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Return to Table of Contents Designing of Warehouse

Building should be designed for the Sales Volume expected after 5 years of completion of the project. Land sizing should be done for volume expected after 8 years of project completion, so that there is provision for future expansion. Equipments should be sized based on volume 1 year after completion of the project.
PARAMETERS TO BE USED AS DESIGNING INPUTS
Parameters Peak Month Factor Peak Month Sales Days Inventory Level (Days) Storage Space Utilization Factor Aisle Factor Area Per Floor Pallet Position Empty Bottle Storage Requirement Miscellaneous Area Storage Factor
Value 12-16% 22-28 2-3 75%85% 20 - 30% 1.2Sq M 1.5-2 10%
Description/Comments Percent of annual sales in a peak month Number of sales days in a peak month No of sales days in a peak month used for planning storage space Factor to allow for "honeycombing" in the storage area. Honeycombing refers to the empty storage space resulting from differences in receiving and shipping schedules. Percentage of warehouse building required for aisles Warehouse area required = (Storage space) / (1-Aisle Factor) The standard 1 Meter * 1.2 Meter pallet dimension Requirement expressed in terms of sales days in peak month Storage Area, expressed as a percentage of finished product storage area, required for storage of miscellaneous items such as empty pallets, material to be scrapped, promotion remnants, advertising materials etc. Area determined by layout Area determined by layout To be done ideally at plant , Low cost of space and labor Basic Stuff : Ex Fuel, Lubrication, brake pads, Coolant, clutch, etc
Distribution Center Functions Mixed Pallet Make Up Consolidation to case or pallet Bottle Sorting Fleet Maintenance
Yes Yes No Yes
GENERIC DESIGN PARAMETERS
Package Mix
200ml RGB 300ml RGB 250ml RGB 500ml PET 1.5L/ 2L PET 1.2l MZ 600ml MZ 250ml MZ All others
Package Mix Factor
Cases per pallet
Pallet Stack Height
Weighted Average Cases per pallet
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PRODUCTIVITY PARAMETERS
Activity Item
Value
Description
Cases per Man (Forklift) Hour Cases per Man (Forklift) Hour Cases per Man (Forklift) Hour Cases per Man (Forklift) Hour Cases per Man (Pallet Truck) Hour Cases per Man (Pallet Truck) Hour Minutes per Truck Minutes per Truck Area determined by layout Area determined by layout ACTIVITIES OF WAREHOUSE
Route Truck Loading ;4-5 trucks /hr 1080-1350 Route Truck Unloading;4-5 trucks /hr 1080-1350 16MT Truck Unloading 2-2.5 trucks / hr 1800-2250 16 MT Truck Loading 1800-2250 Mixed Pallet Make-Up 200 Pallet/Case Consolidation 200 Route Truck Loading & Unloading 12-15 Transport Truck Unloading and Loading 24-30 Mixed Pallet Make-Up N/A Pallet / Case Consolidation N/A TYPE OF EQUIPMENT TO BE UED FOR DIFFERENT Equipment Forklift and or Manual Forklift and or Manual Forklift or manual Forklift or manual Manual thru Casual Labor or Hand pallet Manual thru Casual Labor or Hand pallet Forklift
Equipment Forklift and or Manual Forklift and or Manual Forklift or manual Forklift or manual Manual thru Casual Labor or Hand pallet Manual thru Casual Labor or Hand pallet Forklift
Distribution Center Operating Program

Each warehouse should have a daily plan with time-wise details of activities to be done on that day. At the end of day, actual activities done should be monitored and reviewed against planned activities. Here is a sample format for this.
Route Truck Unloading and loading Cases Route Truck Reloads Cases Transport Truck Unloading & Loading cases Mixed Pallet Make-Up Case Consoli dation
24.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00 19.00 20.00 21.00 22.00 23.00 24.00
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Return to Table of Contents Warehouse Calculations

The purpose of this section is to present the models used for the design calculations of warehouse space and material handling equipments.
Formula for Calculating Warehouse Size:

Warehousing Area is calculated for each SKU Peak Months Sale in Cases = Pack Mix of an SKU * Annual Sale from Depot (all SKUs together) x Peak Month factor Peak Day Sale = Peak Months Sale / No. of Sale Days in Peak Month Peak Month Warehouse Inventory (cases) = Peak Day Sale x Inventory Level (Days) Peak Month Warehouse Inventory (Pallet) = Peak Month Warehouse Inventory (cases) / (No of Cases / Pallet) Pallet Positions Required = Peak Month Warehouse Inventory (Pallet) / Pallet Utilization Factor Floor Pallet Positions Required = Pallet Positions Required / Stacking Norm for the SKU Storage Area Required = Floor Pallet Positions Required / Area per Pallet Area Required for Warehousing = Storage Area Required / (1- Aisle Factor)
TOTAL AREA REQUIRED FOR THE WAREHOUSE = SUM OF WAREHOUSING AREA REQUIRED FOR EACH
SKU (as calculated above)
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Example showing warehouse size calculations mentioned above
Warehouse Size calculations - FG Storgae Area

Annual Sale 2E+06 Peak Month - No of days Inventory Level- Days 24 5 Utilization factor 75%
Peak Month Fac 14%
Empty Bottle Storage day 1.5
Pack % SKU Ko 200 2% Tu 200 14% Fx 200 3% Li 200 4% Sp 200 8% Ko 300 7% Tu 300 11% Fx 300 1% Li 300 3% Sp 300 5% KI 300 1% MZ 200 9% MZ 250 4% MZ 600 2% MZ 1.2L 1% Ko 500 2% Tu 500 6% Fx 500 2% Li 500 2% Sp 500 4% Ko 1500 1% Tu 1500 1% Fx 1500 1% Li 1500 Sp 1500 1% KI 500 1% KI 1000 5% Total
Peak Peak Floor Area Storage Peak Month Month Plng Pallete Pallet / Area Area Month Inventory Cases/ Inventor Utilisatio Position Stack Positio pallet Rqrd -SQ Required sales -Cs Pallete y-pallet n factor s Rqrd Height n e Meter Aisle SQ M 5600 1167 45 25.9 75% 34.6 3 11.52 1.2 13.83 30% 19.75 39200 8167 45 181.5 75% 242.0 3 80.66 1.2 96.79 30% 138.27 8400 1750 45 38.9 75% 51.9 3 17.28 1.2 20.74 30% 29.63 11200 2333 45 51.9 75% 69.1 3 23.05 1.2 27.65 30% 39.51 22400 4667 45 103.7 75% 138.3 3 46.09 1.2 55.31 30% 79.01 19600 4083 45 90.7 75% 121.0 3 40.33 1.2 48.40 30% 69.14 30800 6417 45 142.6 75% 190.1 3 63.37 1.2 76.05 30% 108.64 2800 583 45 13.0 75% 17.3 3 5.76 1.2 6.91 30% 9.88 8400 1750 45 38.9 75% 51.9 3 17.28 1.2 20.74 30% 29.63 14000 2917 45 64.8 75% 86.4 3 28.81 1.2 34.57 30% 49.38 2800 583 45 13.0 75% 17.3 3 5.76 1.2 6.91 30% 9.88 25200 5250 45 116.7 75% 155.6 3 51.85 1.2 62.22 30% 88.89 11200 2333 45 51.9 75% 69.1 3 23.05 1.2 27.65 30% 39.51 5600 1167 75% 34.6 2 17.28 1.2 20.74 30% 29.63 45 25.9259 2800 583 75% 17.3 2 8.64 1.2 10.37 30% 14.81 45 12.963 5600 1167 75% 38.9 2 19.44 1.2 23.33 30% 33.33 40 29.1667 16800 3500 75% 116.7 2 58.33 1.2 70.00 30% 100.00 40 87.5 5600 1167 75% 38.9 2 19.44 1.2 23.33 30% 33.33 40 29.1667 5600 1167 75% 38.9 2 19.44 1.2 23.33 30% 33.33 40 29.1667 11200 2333 75% 77.8 2 38.89 1.2 46.67 30% 66.67 40 58.3333 2800 583 75% 21.6 2 10.80 1.2 12.96 30% 18.52 36 16.2037 2800 583 75% 21.6 2 10.80 1.2 12.96 30% 18.52 36 16.2037 2800 583 75% 21.6 2 10.80 1.2 12.96 30% 18.52 36 16.2037 0 0 75% 0.0 2 0.00 1.2 0.00 30% 0.00 36 0 2800 583 75% 21.6 2 10.80 1.2 12.96 30% 18.52 36 16.2037 2800 583 75% 19.4 2 9.72 1.2 11.67 30% 16.67 40 14.5833 14000 2917 75% 97.2 2 48.61 1.2 58.33 30% 83.33 40 72.9167 1196
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Formula for Calculating area required for empties storage:
Warehousing Area is calculated for each SKU Peak Months Sale in Cases = Pack Mix of an SKU * Annual Sale from Depot (all SKUs together) x Peak Month factor Peak Day Sale = Peak Months Sale / No. of Sale Days in Peak Month Peak Month Empties Storage Requirement (cases) = Peak Day Sale x Empties Inventory Level (Days) Peak Month Warehouse Empties (No. of Pallets) = Peak Month Empties Storage Requirement (cases) / (No of Cases / Pallet) Pallet Positions Required = Peak Month Warehouse Inventory (Pallet) / Pallet Utilization Factor Floor Pallet Positions Required = Pallet Positions Required / Stacking Norm for the SKU Storage Area Required = Floor Pallet Positions Required / Area per Pallet Area Required for Warehousing = Storage Area Required / (1- Aisle Factor)
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Example showing Empties Storage Area calculations mentioned above

Warehouse Size calculations - Empties Storage Area
Annual Sale Phy Cs Peak Month Factor Utilization factor 2,000,000 14% 75% Peak Month - No of days Inventory Level- Days Empties Storage days Empty Bottle storgae Aisle area factor 3.11 30% 21.78 30% 4.67 30% 6.22 30% 12.44 30% 10.89 30% 17.11 30% 1.56 30% 4.67 30% 7.78 30% 1.56 30% 14.00 30% 6.22 30% 24 5 1.5 Warehoue Area Required Sq M 4.4 31.1 6.7 8.9 17.8 15.6 24.4 2.2 6.7 11.1 2.2 20.0 8.9 160.0
SKU Ko 200 RGB Tu 200 RGB Fx 200 RGB Li 200 RGB Sp 200 RGB Ko 300 RGB Tu 300 RGB Fx 300 RGB Li 300 RGB Sp 300 RGB KI 300 RGB MZ 200 RGB MZ 250 RGB Total
Area Per Empty Empty Floor Bottle Floor Bottle Pallete Storage Storage Pallete Pallete Positions Positions cases 350 7.78 2.592593 1.2 2450 54.44 18.14815 1.2 525 11.67 3.888889 1.2 700 15.56 5.185185 1.2 1400 31.11 10.37037 1.2 1225 27.22 9.074074 1.2 1925 42.78 14.25926 1.2 175 3.89 1.296296 1.2 525 11.67 3.888889 1.2 875 19.44 6.481481 1.2 175 3.89 1.296296 1.2 1575 35.00 11.66667 1.2 700 15.56 5.185185 1.2
Formula for Calculating Storage Requirement for Miscellaneous Items: This is based on a basic assumption that the miscellaneous activities would not be more than a fixed % of the floor position area required for the storage of finished goods. It can vary from unit to unit depending upon level of unplanned activities one wants to add while planning. Ideally, this should be limited to maximum of 20%. The calculation details are: 1. Pick up the floor pallet positions from the calculation of finished product storage. 2. Multiply the same with miscellaneous item storage factor to arrive at the floor pallet positions required, after including miscellaneous item requirements. 3. Compute the area by multiplying the same with pallet area and factor in the aisle factor as treated in the warehouse storage space calculation to arrive at the area required for miscellaneous items storage requirement area.
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Example showing miscellaneous item storage area calculations mentioned above

Warehouse Size calculations - Miscellaneous Item storage
Annual Sale Phy Cs Peak Month Factor Utilization factor Final Product Floor pallet positions 11.5 80.7 17.3 23.0 46.1 40.3 63.4 5.8 17.3 28.8 5.8 51.9 23.0 17.3 8.6 19.4 58.3 19.4 19.4 38.9 10.8 10.8 10.8 0.0 10.8 9.7 48.6 6000000 14% 75% Peak Month - No of days Inventory Level- Days Empty Bottle Storage days Area Per Floor Pallete Positions Sq m 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 22 5 1.5
SKU Ko 200 RGB Tu 200 RGB Fx 200 RGB Li 200 RGB Sp 200 RGB Ko 300 RGB Tu 300 RGB Fx 300 RGB Li 300 RGB Sp 300 RGB KI 300 RGB MZ 200 RGB MZ 250 RGB MZ 600 PET MZ 1200 PET Ko 500 PET Tu 500 PET Fx 500 PET Li 500 PET Sp 500 PET Ko 1500 PET Tu 1500 PET Fx 1500 PET Li 1500 PET Sp 1500 PET KI 500 PET KI 1000 PET
Miscelaneo s Items Floor storage Pallete factor Positions 0.2 1.7 0.2 12.1 0.2 2.6 0.2 3.5 0.2 6.9 0.2 6.0 0.2 9.5 0.2 0.9 0.2 2.6 0.2 4.3 0.2 0.9 0.2 7.8 0.2 3.5 0.2 2.6 0.2 1.3 0.2 2.9 0.2 8.8 0.2 2.9 0.2 2.9 0.2 5.8 0.2 1.6 0.2 1.6 0.2 1.6 0.2 0.0 0.2 1.6 0.2 1.5 0.2 7.3
Items Storgae Area Aisle Required factor 2.1 30% 14.5 30% 3.1 30% 4.1 30% 8.3 30% 7.3 30% 11.4 30% 1.0 30% 3.1 30% 5.2 30% 1.0 30% 9.3 30% 4.1 30% 3.1 30% 1.6 30% 3.5 30% 10.5 30% 3.5 30% 3.5 30% 7.0 30% 1.9 30% 1.9 30% 1.9 30% 0.0 30% 1.9 30% 1.8 30% 8.8 30%
W/H Area Required Misc Items Sq M 3.0 20.7 4.4 5.9 11.9 10.4 16.3 1.5 4.4 7.4 1.5 13.3 5.9 4.4 2.2 5.0 15.0 5.0 5.0 10.0 2.8 2.8 2.8 0.0 2.8 2.5 12.5 179.4
Formula for calculating the number of loading bays required:

Peak Months Sale in Cases = Pack Mix of an SKU * Annual Sale from Depot (all SKUs together) x Peak Month Factor Peak Month Average Daily Sale = Peak Months Sale / No. of Sale Days in Peak Month x (1 + Peak Day Factor) Peak Day Sale (in cases) = Peak Months Average Daily Sale Peak Day Sale (in pallets) = Peak Day Sale (in cases) / No of Cases per Pallet No of Trucks Required = Peak Day Sale (in pallets) / No of Pallets per Truck Loading Positions Time per Truck = Time Required to Park, Load and Taxi One truck Out of a Bay Total no of Loading Minutes Required = No of Trucks Required * (1+ Delay Factor) * Loading Positions Time per Truck No of Loading Bays Required = Total No of Loading Minutes Required / (Available Number of Minutes per Loading Positions)
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Route Truck Loading & Unloading - No of Bays Required
Annual Sale Peak Month Fac 2,000,000 Peak Month 14% 24 Palletes Per Truck 6 25 minutes
Loading Position Time/Truck
SKU Ko 200 Tu 200 Fx 200 Li 200 Sp 200 Ko 300 Tu 300 Fx 300 Li 300 Sp 300 KI 300 MZ 200 MZ 250 MZ 600 MZ 1200 Ko 500 Tu 500 Fx 500 Li 500 Sp 500 Ko 1500 Tu 1500 Fx 1500 Li 1500 Sp 1500 KI 500 KI 1000 Total
Peak Peak cases Annual / Month day sales by Pack Mix sales factor Pallet Pack % 40000 5600 15% 45 2% 280000 39200 15% 45 14% 60000 8400 15% 45 3% 80000 11200 15% 45 4% 160000 22400 15% 45 8% 140000 19600 15% 45 7% 220000 30800 15% 45 11% 20000 2800 15% 45 1% 60000 8400 15% 45 3% 100000 14000 15% 45 5% 20000 2800 15% 45 1% 180000 25200 15% 45 9% 80000 11200 15% 45 4% 40000 5600 15% 45 2% 20000 2800 15% 45 1% 40000 5600 15% 40 2% 120000 16800 15% 40 6% 40000 5600 15% 40 2% 40000 5600 15% 40 2% 80000 11200 15% 40 4% 20000 2800 15% 36 1% 20000 2800 15% 36 1% 20000 2800 15% 36 1% 0 0 15% 36 20000 2800 15% 36 1% 20000 2800 15% 40 1% 100000 14000 15% 40 5%
Peak day sales (pallet) 5.96 41.74 8.94 11.93 23.85 20.87 32.80 2.98 8.94 14.91 2.98 26.83 11.93 5.96 2.98 6.71 20.13 6.71 6.71 13.42 3.73 3.73 3.73 0.00 3.73 3.35 16.77
Loading Truck No of positions loading No of Loading Minutes / loading requirem trucks to Time( in Minutes) Delay Minutes loading Bay's be ents (Pallete) loaded per truck Factor Required positions required 5.96 0.994 25 15% 28.6 180 0.16 41.74 6.957 25 15% 200.0 180 1.11 8.94 1.491 25 15% 42.9 180 0.24 11.93 1.988 25 15% 57.1 180 0.32 23.85 3.975 25 15% 114.3 180 0.63 20.87 3.478 25 15% 100.0 180 0.56 32.80 5.466 25 15% 157.1 180 0.87 2.98 0.497 25 15% 14.3 180 0.08 8.94 1.491 25 15% 42.9 180 0.24 14.91 2.485 25 15% 71.4 180 0.40 2.98 0.497 25 15% 14.3 180 0.08 26.83 4.472 25 15% 128.6 180 0.71 11.93 1.988 25 15% 57.1 180 0.32 5.96 0.994 25 15% 28.6 180 0.16 2.98 0.497 25 15% 14.3 180 0.08 6.71 1.118 25 15% 32.1 180 0.18 20.13 3.354 25 15% 96.4 180 0.54 6.71 1.118 25 15% 32.1 180 0.18 6.71 1.118 25 15% 32.1 180 0.18 13.42 2.236 25 15% 64.3 180 0.36 3.73 0.621 25 15% 17.9 180 0.10 3.73 0.621 25 15% 17.9 180 0.10 3.73 0.621 25 15% 17.9 180 0.10 0.00 0.000 25 15% 0.0 180 0.00 3.73 0.621 25 15% 17.9 180 0.10 3.35 0.559 25 15% 16.1 180 0.09 16.77 2.795 25 15% 80.4 180 0.45 8.31
Formula for calculating the number of loading bays for primary vehicles:
Peak Months Sale in Cases = Pack Mix of an SKU * Annual Sale from Depot (all SKUs together) x Peak Month Factor Peak Month Average Daily Sale = Peak Months Sale in cases / No. of Sale Days in Peak Month Peak Day Sale (in cases) = Peak Months Average Daily Sale x (1 + Peak Day Factor) Peak Day Sale (in pallets) = Peak Day Sale (in cases) / No of Cases per Pallet No of Trucks Required = Peak Day Sale (in pallets) / No of Pallets per Truck Loading Positions Time per Truck = Time Required to Park, Load and Taxi One truck Out of a Bay Total no of Loading Minutes Required = No of Trucks Required * (1+ Delay Factor) * Loading Positions Time per Truck No of Loading Bays Required = Total No of Loading Minutes Required / (Available Number of Minutes per Loading Positions)
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Formula for calculating area per loading bay of transport trucks using transport trucks dimensions and clearances : Note down: Length of truck Width of truck Clearance required on sides Clearance required at back of truck Area required per bay = (2 x Clearance required on sides + Width of truck) x (Length of truck+ Clearance required at back of truck) On total area, incorporate a safety factor of 5%.
Formula for calculating number of route truck unloading equipment required : Peak Month Average Daily Sale = Peak Months Sale in cases / No of sale days in peak month Peak Day Sale (in cases) = (Peak Months Average Daily Sale) x (1+ Peak Day Factor) Peak Day Sale in Pallet = Peak Day Sale in cases / (No of Cases / Pallet) Handling Requirement = (Peak Day Sale in Pallet) x (% of Product to be Unloaded) Forklift Truck Hour Required = Handling Requirement / Productivity *(1+ Delay Factor) No of Forklifts Required = Forklift Truck Hour required / No of Hours per Shift Using the same above formulae as above, calculate the handling equipment required for Loading of route trucks Unloading of transport trucks received from supplying location Formation of mixed pallets: For this, based on sales requirement estimation assume: o % of peak day pallets that would be required to be converted to mixed pallets o Productivity in cases / hour Case consolidation: For this, based on sales requirement estimation assume: o % of peak day pallets that would be required to be consolidated o Productivity in cases / hour In addition, calculate the space required for other purposes including: Uncovered space for vehicle parking Vehicle maneuverability Office Stores Solid waste area Marketing items Storing and repair of pallets Staff vehicles parking Diesel generator Security office
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Return to Table of Contents Cross Docking

In a cross-docking system, pallets of material are: Received on one dock Broken down into customer-specified loads while still on the dock Transferred to outbound trucks
In this system, items are not placed in slots for storage. This system requires a high level of coordination of incoming and outgoing product. In practice, many "cross-docking" operations require large staging areas where inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready to ship. If the staging takes hours or a day, the operation is usually referred to as a "cross-dock" distribution center. If it takes several days or even weeks, the operation is usually considered a warehouse. Advantages of cross-docking system Product is generally shipped in larger quantity which minimizes the lifting of single units of product. Larger quantities are usually moved via mechanical means such as forklifts with little individual manual handling. If pallets must be broken down into smaller units, this can be performed without the confines of storage racking. This facilitates the use of lifts and other mechanical means and increases the access of employees to product. It encourages electronic communications between supplier to cross docking location and customers that are serviced from cross docking locations there by giving further gains in efficiency Cross docking shifts the focus from "supply chain" to "demand chain". This means stock coming into cross docking center has already been pre-allocated against a replenishment order generated in the distribution chain. It helps reduce operating costs, increase throughput, reduce inventory levels, increase sales space, improve responsiveness to various customer demands, eliminate unnecessary handling, and facilitate reduction in product damages.
Limitations This type of system is not practical for situations where: Customers generally do not deal in full pallet orders. The diversity of product requires more floor space than is practical.
How cross-docking works? 1. On receiving goods, workers put pallets in lanes corresponding to the receiving doors. 2. A second team or workers sorts pallets into shipping lanes. 3. A final team loads them from shipping lanes into outbound trailers. The following figure illustrates the cross docking process:
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Step 1: Unloading at cross Dock
Step 2 and 3: Segregation and arranging of segregated stock at Cross Dock
Step 4 : Loading of segregated stock on to outgoing vehicles Note: This is a simplistic illustration of how cross docking works. Cross docking can take many forms like manufacturing cross docking, distributor cross docking, transportation cross docking, retail cross docking ( Wal-Mart uses this type) and opportunistic cross docking. Based on different classification, exact execution of cross docking may vary.
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Typical applications "Hub and spoke" arrangements, where materials are brought into one central location and then sorted for delivery to a variety of destinations Consolidation arrangements, where a variety of smaller shipments are combined into one larger shipment for economy of transport Deconsolidation arrangements, where large shipments (e.g. railcar lots) are broken down into smaller lots for ease of delivery.
Factors influencing the use of cross-docks Customer and supplier geography -- particularly when a single corporate customer has many multiple branches or using points Freight costs for the commodities being transported Cost of inventory in transit Complexity of loads Handling methods Logistics software integration between supplier(s), vendor, and shipper Tracking of inventory in transit
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Return to Table of Contents Cost Estimate
Cost Estimate Template

Scope Engineering Purchase Description Design Engineering Project Engineering Land Land Improvements Buiding Equipment Gate Fencing Parking Drainage Lighting Signage Minor Landscaping Warehouse Loading Bay Administrative office CDE Refurbishment centre Fleet maintenance centre DG Compressed air Power distribution Sprinkler Hose Reel & Piping Fork Lift Hand Pallet truck Racks, if any Pallets Furnitures PC, H/W and Network Communication Equipment Audio Visual aids Stores / Shelving etc Tools / Machines Building Equipment Overall Cost Estimate MM INR Comments, if any
Site Improvement
New Buildings
Utility
Fire Fighting Material Handling Equipment
Office Furnishings
Maintenance Contingency
Total
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Return to Table of Contents Schedules
Templates for Scheduling and Monitoring Progress
PROJECT DEVELOPMENT SCHEDULE

Task Basic Arch / Civil Design Basic Mech / Elec Design Prepare RFQ document Reciept of Bids Evaluation of Bids Finalisation of vendor Necessary Approvals Go Ahead to Vendor Start Date End date Jan Feb Mar
PROJECT CONSTRUCTION SCHEDULE

Task Start Date End date Site Installation Earth Works Drainage Sewer etc Warehouse Foundation Structure Roofing & Cladding Mechanical & Electrical Floor Administrative office Foundation Structure Roofing & Cladding Mechanical & Electrical Floor Finishes Adnministrative Office Fleet Maintenance area CDE refurbishment area Fences and Security post Landscaping Site clean up Apr May June July Aug
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Return to Table of Contents Warehouse Layout and Drawings
A good layout ensures: Efficient flow of material, vehicle and forklift in the warehouse Nil/minimal double handling of material Nil/minimal idling of trucks and pallets Efficient flow of information Safety of staff, workmen, and equipment
Best Practices for Layout Planning

Establish distinct rows & space for each SKU and keep it in place. Maximize facing to maintain inventory movement. Establish distinct overflow areas for high volumes products to maintain the integrity of the layout. Place high volume SKU nearest to loading areas to minimize loader travel distance. Use maximize 11-pallet rows in storage lane for high volume SKU and use short storage lanes for low volumes products - 4 pallet position or less. Optimize location of center aisles and use effectively. Use forklift aisles to create facings. Truck aisles should double as forklift aisles. Base the product layout location and method of storage on SKU velocity. Use all space, corners, and area around poles. Utilize cubic capacity (height). Seeks new and better ways to utilize all available space. Establish separate pick areas for primary and route loading wherever possible. Match SKU storage location in each pick area with the side of the truck it is usually loaded on. Match pick areas product sequence with pick sheet product sequence. Set up pick areas so that highest volume SKUs are closest to the truck. Have slow moving items in the pick area. Provide, if possible, one pick area for each route loading station. Store SKUs on pallets with safe distance from the walls. Create and update a warehouse map and layout based on changing volume. Establish space allocation based on min/max levels of inventory. Establish distinct areas for segmented operations (Primary routes, etc.)
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Sample Layout Drawing 1
Sample Layout Drawing 2: Delhi Lawrence Road Depot
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Sample Layout Drawing 3
Sample Layout 4
Vehicle loading area Toilets and Trash wash point Packaging material Marketing POS/POP CDE/ Fountain Cups Quarantine Packing Area CDE Repair shop
Depot Layout
Aisles
Security Entrance Loading dock
Empty pallet area
Unloading Dock
Storage area for fresh products
Sorting area Storage area for empties/ Pallets
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3.1.3 Stock Management

To deliver quality products to the consumers, we need to manage the stock well. For this, the company has designed a systematic effort called Total Product Management (TPM). TPM focuses on providing refreshing products to the consumers by: Reducing the time to get our products to the consumer Ensuring that our products are kept as cool as possible at all times Managing our two biggest enemies- temperature and time!
Why do we need TPM? To ensure our consumers receive the freshest possible products because: As with most food products, all soft drinks have an optimum taste time, normally referred to as shelf life. The taste and appearance of soft drinks is affected by time and temperature, especially more in PET and Dietary drinks. The shelf life of our products gets reduced when they are: o Stored in warm or hot places, or exposed to sunlight o Stored for too long in the warehouse/distributor godown TPM results in: Fresh product delivered to the consumer Increased consumer satisfaction Repeat sales Greater market share
As part of TPM, both you and distributor need to: Assess product age. Identify and rotate products in warehouse. Stack and store products as per norms. Manage product quality. Manage glass. Handle non-conforming products. Follow good warehousing practices.
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Assessing Product Age

Listed below are the age specifications of various products. In case the stock exceeds Dispatch Out Date (DOD), it needs to be communicated to sales supervisor so that immediate action can be taken. Note: DOD refers to the maximum months/ days a product can be kept in the godown. In case the product exceeds Best Before Date (BBD) in the distributor godown, the product should be treated as expired and non-conforming material for which the necessary action should be taken. Refer to Handling non-conforming products in this section.
Age Specifications for all SKUs SKU IDOD DOD RGB and NRGB 2 months 3 months PET CSD - 0.5/0.6L 5 days 15 days PET CSD - 1.5/2L 15 days 30 days PET Water - 0.5/1/2L 2 months 3 months PET/Cans - Diet Coke 15 days 30 days PET Hotfill/Tetrapak (Mango) 2 months 3 months Kinley Water Jar 15 days 30 days Cans - All flavours except Diet Coke 2 months 3 months Cans - Diet Coke 15 days 30 days Postmix Canisters - All flavours except Diet Coke 30 days Postmix Canisters - Diet Coke 30 days
* Declared BBD - 6 months
BBD 6 months 2.5 months 3 months 6 months 3 months 6 months 3 months 6 months 3 months* 75 days 60 days
Please also refer to Q-dec document: IND-WH-221-SPN-01-01-00-01
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Identifying and Rotating Products in Warehouse

Identify the stock to be focused on, the stock to be cleared, and stock to be disposed (non-conforming material), as displayed in the diagram below.
Pick
EARLIER STOCK
Replenish
FRESHEST STOCK
FOCUS STOCK
15 days
Manufacturing
DOD
BBD
Date
Product 2 weeks from BBD to be used for direct orders
CLEARANCE STOCK
2 weeks
Manufacturing Date
DOD
BBD
DISPOSE STOCK
Manufacturing Date
DOD
BBD
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Maintain TPM Display Board/Critical Stock Status Board for easy identification to ensure proper stock rotation.
Mark BBD and DOD for each stack of products.
Follow FEFO First Expiry First Out. Older stock should be closer to loading bay.
Maintain First-Expired First-Out (FEFO), not only at the company warehouse, but also at the distributor godown, retail outlet, and point-of-sale.
REJECTED Product /SKU: Mfg Date: Batch No.: Reason for Rejection: Quantity: Signature and Date: Mfg Location:
QUARANTINE Product /SKU: Mfg Date: Batch No.: Reason : Quantity: Signature and Date: Mfg Location:
Why is product identification required? To maintain traceability, as depicted in the image below. To keep non-conforming products from mixing with other stocks
ON HOLD Product /SKU: Mfg Date: Batch No.: Reason for 'On Hold': Quantity: Signature and Date: Mfg Location:
RELEASED Product /SKU: Mfg Date: Batch No.: Quantity: Signature and Date: Mfg Location:
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Stacking and Storing Products

The table below displays the standard storing and staking norms to be followed.
Maintain appropriate distance of stacks from the walls (1.5 ft) and distance between stacks for easy cleaning and survey.
Paint yellow lines with glossy epoxy paint.
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Handle products correctly while storing/stacking/loading
Right Handling
X X
X X
X X
Poor Handling
Stack products properly
X X
X X
Do NOT stack the product in a manner that damages its integrity.
Segregate burst bottles, and leaky cans and tetra-packs from the good product.
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DO NOT store as depicted below:
X X
X X
X X
X X
Storing PET Products
X X
X X
Do NOT Store PET products in direct sunlight
X X
Do NOT stack the product in a manner that damages its integrity
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Transporting PET Products
X X
Use simple shield to protect against exposure to sunlight while loading the trucks
Use covered Trucks for transporting the Products
Do not transport PET products on uncovered Trucks
X X
Use special protection when transporting PET products to reduce the exposure to direct sunlight
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Managing Product Quality
Measure performance on quality parameters
Ensure proper storage for cans so that they do NOT get dusty.
Quality-related posters should be in local language
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Return to Table of Contents Managing Glass

Glass is money follow the tips below to manage glass effectively: Sort and store bottles systematically. Reduce breakages. Be vigilant and alert about glass in the market. Have a system in place for daily accounting of glass. Salesman should not be allowed to loan glass without prior authorization. Deposit the right amount of glass in the market. Ensure glass sorting (SKU wise) happens at the outlet level. Sort the empties.
Prevent dirty bottles from entering the value chain sort the empties.
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Return to Table of Contents Handling Non-conforming Products and Materials
NEVER sell non-conforming product.
Non- conforming products include: Over aged products Damaged products Product with integrity issues Products on hold due to quality guidelines
How to handle non-conforming products 1. Completely segregate and identify the non-conforming products/materials. 2. Specify the immediate next action. 3. Dispose as per company norms. Prevent cross-contamination while disposing.
Non-Conforming Product Handling Norms

FINISHED PRODUCTS Non conforming Filled Packages , The contents should be disposed off properly crossed BBD product according to the Environment Performance Standard through the unit ETP( as per PCB / TCCQS requirement , whichever is stringent) PACKAGING MATERIAL Glass Bottles Culling of the glass bottles PET Bottles / PC jars Grinding of the empty bottles, jars Cans Canisters Beverage cups Crowns Closures (plastic) Labels(From PET bottles) Cartons Crates ADVERTIZING MATERIAL POS & Outdoor Advertising materials Crushing Removal of rubber handles from the defective canisters and recycling Crushing the beverage cups Disfiguring / Bale them off-site Grinding / Crushing Remove and shred or tear the labels Dismantling of cartons 'flat' sheets and recycle or deface by puncturing Grinding into pieces Plastic materials: To be crushed Metal: Scratch the logo/crush the material Paper/paperboard: Shred the material
Drain through the ETP
1 2 3 4 5 6 7 8 9 10 1
Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Recycling to scrap vendor Disposed to authorized recycler or store as hazardous waste

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Other Good Warehousing Practices
Warehouse should be clean, ventilated, rodent and vermin free.
Hold regular inspections to see any leakages or damages and sort stock regularly.
Unclean
Unorganized
Not easy to survey
Use good pallets. To avoid damage of cartons, PET bottles, and cans, specifically use PLASTIC PALLETS with NO FUNCTIONAL DEFECTS like splinters or any protruding materials at any surface area.
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3.1.4 Fleet Management
The following aspects of fleet management are covered in this section: Estimating fleet requirement and fleet buying Key consideration in fleet upper structure design Basic Fleet maintenance Advertising through fleet Performance metric
Fleet Buying
The process to buy fleet is listed below: 1. 2. 3. 4. Estimate fleet requirement. Identify various vehicle types available in the market. Identify major suppliers of vehicles and vehicle specifications offered by them. Select the vehicle.
Estimate Fleet Requirement

a. Determine the correct size and weight capacity of delivery vehicle. Aim to acquire the right combination of vehicles necessary to establish the smallest number of routes that can service the market cost-effectively. While capacities may be described in cases or pallets, the load carrying capacity is defined by axle capacities and loaded weight limit is defined by local Road Transport Office (RTO). To determine the required total weight capacity and size of delivery vehicles for each route, the following procedure is suggested. It may be necessary to do this process for peak periods as well as for the "average." Note: This approach is only one of several approaches that may be used to define route structure and the approximate size of the fleet.
Total no. of customers x No. of deliveries per week per customer = Total no. of deliveries per week Total no. of deliveries per week / No. of working days in a week = No. of daily deliveries required Weekly sales volume in cases / No. of days of the week = No. of cases to be delivered per day Weekly expected sales volume in cases / Total No. of deliveries per week = No. of cases per delivery
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b.
Determine the number of routes to be run.
Time available for servicing outlets = 8 hours* 60 min Warehouse time- Stem time Route driving time- Personal break and lunch time
Where: In warehouse (load planning & checking, meetings & communications, settlement process etc) = 45 min Stem Time (time spent driving between the depot and the route delivery area)= 40 min Route Driving = 60 min Outlet time (time spent at the outlet to prepare for and complete the delivery and customer service)= 5 min per delivery Case Delivery = 3 min per cs Case merchandising, (if applicable) = 5 min per POS material
The total minutes required to service the outlets = No of deliveries/ Day x Time per outlet + No. of cases to be delivered per day x delivery time / cs + No. of cases to be merchandised x time per cs Total no. of routes required = The total minutes required to service the outlets / Time available for servicing outlets No. of cases per day / Total No of routes = No. of cases per Route Day This combined with the weighted average weight (Kg) per case would decide size and pay load of vehicle to be used for the route.
c. Estimate vehicle sizing. The most accurate way of finding the weight of payload is by using the weighted average of RGB, PET, Cans, and Others. The vehicle capacity required is based on the weight of the payload. A safety factor ranging from 15-20% should be added to ensure spare capacity for peak loads and future growth in the market.
Different Vehicle Types Available

LCV and HCVs: Vehicles with GVW (Gross Vehicle Weight) more than 12MT are classified as HCV. Sub 12MT GVW vehicles fall under LCVs. Industry has classified LCVs further into: o Sub 5MT Example: Mahindra Champion, Piaggio Autos, Mahindra Pick up vans, Tata ACE, and Tata 207 o 5-11MT Example: Tata 407, Tata 709, Eicher and Ashok Leyland vehicles
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As per RTO rules only LCVs can ply in cities. This limits us to use only LCVs only for our DSD operations. Usually vehicles with GVW less than 7 MT have 4 or less than 4 wheels. Few cities in India have even put restriction to ply more than 4-wheeler even if it falls under LCV classification.
Emission Norms: BS2 and BS3 11 Cities in the country have mandated BS3 compliance for registration of all new commercial vehicles. For all other cities BS2 is acceptable.
Key Indian Manufacturers of Commercial Suppliers of Vehicles

Tata Motors Eicher Motors Ashok Leyland Mahindra & Mahindra Swaraz Mazda Mahindra Pik-up
TATA MOTORS
LPT 407 SFC 407 CNG LPT 709 EX TATA ACE 207 I EX SFC 407 EX SFC 410 EX SFC 709 EX LPT 712 Ex SFC 712 EX
Technical specifications of Different Vehicles
Power (in Ps) Torque (in Nm) Dimensions (mm)* Wheelbase (mm) Payload (in kg) Max Permissible GVW (in kg) Price (INR) Fuel Efficiency (Indicative)# Pollution Norms
16 38 2200 X 1500 2100 545 1550
65 177
75 225
100 300
75 225 4093 X 2074 3400 2965 6250
75 190 2883 X 1908 3100 2250 5550
90 325
90 325
125 400
125 400 4183 X 2057 4100 3520 7600 37
2395 X 1650 2883 X 1908 2883 X 1908 3150 860 2950 3100 2680 5700 3100 2930 5950
5050 X 2042 3833 X 2057 5050 X 2042 3800 3095 7490 3800 3475 7490 3800 3095 7490
13 10 BS-II & BS- BS-II & III BS-III
7 BS II
5 BS III
7 BSII
7 BS III
6 BS II
6 BS II
6 BS III
6 BS III BS
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Tata 709
EICHER MOTORS
10.50 10.59 10.75 10.75 10.80 10.80
Tata Ace
10.80
10.90
94 299.5
94 299.5
94 299.5
94 299.5
94 299.5
94 299.5
94 299.5
94 299.5
3752 X 2135 3753 X 2135 4300 X 2227 4941 X 2227 3751 X 2227 4300 X 2227 4941 X 2227 5246 X 2227 3350 3500 3350 4500 3350 5225 3760 5215 2750 6035 3350 6025 3760 6015 4050 6270
5400 516,542 N.A.
6250 547,371 N.A.
7450 651,139 N.A.
7450 653,329 N.A.
8250 641,014 N.A.
8250 651,139 N.A.
8250 653,329 N.A.
8800 733,714 N.A.
BS II & BSIII BS II & BSIII BS II & BSIII BS II & BSIII BS II & BSIII BS II & BSIII BS II & BSIII BS II & BSIII
MAHINDRA & MAHINDRA + MAHINDRA INTERNATIONAL Maxx Maxi Truck Maxx PickUp Champion Mahindra DI 3200 Mahindra Loadking Pride 71.7 195 Mahindra Loadking Super LWB 71.7 195
63 180
63 180
10.8 31.9
61 185
2200 X 1530 2550 X 1670 1930 X 1450 3150 900 2300 3150 1150 2820 2050 620 1350
2920 X 1800 3120 X 1920 4250 X 1800 2654 2575 4600 2500 3280 5500 3320 3585 5950
15-16 BSII
15-16 BSII
22-24 CNG
13-14 BSII
9-10 BSII
9-10 BSII
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Eicher 1059
Evaluation Criteria for Vehicle Selection

VEHICLE EVALUATION CRITERIA
Criteria Load carrying ability
Description Rated Payload Torque at the rear wheel Traction power of the engine and the wheel Cubic feet of s pace available on the vehicle for carrying its cargo Permissible payload Minimum turning radius Physical dimension (overall length and width) of the vehicle Gear ratios for first two gears Differential Ratios Service network available in the city in which it is to be used Availability of spare parts, skilled mechanic Cost of spare parts vs. the cost of same spare part of competing vehicle KM per ltr of fuel
Loadability
Easy maneuverability
Stop and Start performance
Service ability/repair
Fuel efficiency
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A few tips: For a payload requirement, select the vehicle which gives better fuel efficiency at the low speed of 30-40KMPH when driven on 2nd / 3rd gear. This is the condition under which our vehicles run almost all times. For the same HP (Horse Power), select the vehicle whose engine which gives maximum Torque at rear wheels. In its category select the Vehicle which has Maximum GVW less un-laiden weight. This will ensure higher permissible payload available for carrying the cargo. Higher distance b/w wheels ensures higher cubic feet of space for carrying the same payload. This is useful in case of low density cargo. Vehicle with highest HP in its category would be helpful for traction in over-loading, if needed. Overloading should be strictly avoided! Vehicle having minimum width in its category will have better, faster and safe access to narrow lanes and bylanes, where the vehicle need to go to service outlets. Do take inputs from local RTO on whether 6 wheelers commercial vehicles are allowed in the city. If allowed they are the better options for high payload requirements. Model number , manufacturer of current population of fleet at the unit and experience of running the vehicle at the unit to be given its due share especially on parameters like maintenance costs, ruggedness, and availability of mechanics, after sales support, driving comfort, etc. Pollution norms and CNG related registration requirements are statutory and need to be taken into account while finalizing buying decisions. Standardized Models Based on the above criteria and the technical specifications, the following models have been standardized, to facilitate economy of scale in buying, and optimization of spares inventory required for basic maintenance: Tata ACE Tata 407 Tata 709 Eicher 1059XP
Designing Fleet Upper Structure
Criteria for designing fleet upper structure The upper structure designed to be mounted on the vehicle must be Dynamically stable in fully loaded condition. This must be tested through finite element analysis. The weight of upper structure need to be as low as possible while meeting the above criteria of dynamically stable. Lower weight means higher payload available for carrying cargo. Low cost and time of repair, in case of damages, if any Ease of access to stocks for faster low effort in loading and unloading
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Over all aesthetics of vehicle mounted with upper structure Meeting statutory requirement wrt overhang over the rear wheels. Cost Working life of the vehicles
Sample Design of Upper Structure
Tata Ace with Upper Structure
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Return to Table of Contents Fleet Maintenance
Fleet Maintenance Principles Basic jobs like minor repair, breakdown, and preventive maintenance should be done in-house. Major overhauls like engine, gearbox, differential and denting, painting related repairs should ideally be outsourced.
PREVENTIVE MAINTENANCE CHECKS
Daily Check Up Radiator water/coolant Engine oil Brake oil Speedo meter Tyre pressure Self Starters Headlights/brake lights/indicators Mirror/reflector
Monthly Maintenance Nipple greasing Gear/differential oil checking. Joint bolt checking Fan belt checking Engine oil top up Air filter servicing Brake/clutch setting Diesel filter checking Oil filter checking
Annual Maintenance Complete vehicle greasing Oil seal Axle packing Lock washer Cut washer Oil changing Diesel filter Oil filter Air filter Fan belt Tappet cover packing Diesel nozzle cleaning Bosch pump setting Denting & painting of vehicle
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MAINTENANCE PERSONNEL
Fleet Incharge (One) Key Deliverables: Vendor development/ monitoring/follow up Depot visit twice a week Surprise route riding of vehicles Complete monitoring of all maintenance activities of 3 depots MIS & monitoring of FMO Weekly reporting to AM/ GM Implementing Best Maintenance Practices in HCCBPL. Monitoring forklift
Fleet Maintenance officers (One for each depot) Key Deliverables: Material requirement/purchase Maintenance record vehiclewise Stock monitoring Routine complaint handling Vehicle service planning Fuel monitoring (Lock in key with signature) KM/mileage monitoring Daily job allocation to mechanics Following suggested MIS completely Vehicle RTO paper work/PR/GR/gate pass Yearly servicing /denting & painting Complete fork-lift maintenance
Other personnel Fleet Executive (One) Diploma in Automobile Engineering Mechanics (Two) ITI Technician Helper Mechanic (Four) Min 10th std. Electrician (One) ITI Technician Helper Electrician (Two) Min 10th std Tinkering/Welding (One) ITI Technician
FREQUENCY AND RESPONSIBILITY MATRIX FOR MAINTENANCE ACTIVITIES Sr. Particular labor Time Req uire d Nos 1 15 Minutes Helper Mechanic 2 Daily Servicing-3 Vehicles Electrician Helper Mechanic 3 Weekly Maintenance.- 3 Vehicles Electrician Helper Mechanic 4 Yearly Servicing Electrician 1 2 1 1 2 1 1 2 2 8 Hrs 3 Hrs 3 Hrs
Person Mechanic 1 Daily Checking
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Return to Table of Contents Advertising Through Fleet

Collapsible fleet curtain: This is one of very good options for quality and elegant fleet advertising. This involves a 900 GSM PVC film printed with coca cola graphics mounted through the low friction roller on the sides of the vehicle. This is tightened and locked by a series of high quality fasteners which straitens the PVC fabric and ensure a good display of printed artwork. The salesmen require low effort to open and close the curtain as it slides smoothly on the rails. Few sample pictures of the same are as below.
Fleet Performance Metric

The following parameters are tracked as part of fleet performance metric: Fleet availability and uptime Truck-wise fleet maintenance costs Vehicle-wise running expenses
3.1.5 Invoicing and Settlement Process

This section includes: Current invoicing and settlement process in most DSD operations The new solution: Cola Mobile Refer to Annexure M for invoicing and settlement process.
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3.1.6 Cost Per Case (CPC) Calculation and Benchmarking

Key inputs required for DSD cost estimations: Total number of routes that are required to be run from the warehouse SKU wise month wise expected sales volume Peak month seasonality No of days of inventory planned to be stored at the warehouse SKU wise stacking norm, pallet area, aisle factor CPC calculation involves calculating the following costs: Warehouse costs Handling costs Fleet costs Manpower costs Other sales and distribution costs
Warehouse Costs
The warehouse should have space for the following: Storage of Fulls including quarantine stock Storage of empties, sorted, unsorted, and other glass Loading and unloading bays Vehicle parking , vehicle maneuvering Route settlement Storage and repair of pallet Mixed case formation, repacking Glass sorting/shell swapping ( half depth, full depth) Administrative office, stores, solid waste collection, diesel generator, parking
For computing the covered and uncovered area required for the warehouse, refer to section 3.1.2: Warehouse Management of this manual. Compute the monthly rental costs on the basis of negotiated cost per square feet. Divide the annual cost with the annual physical cases expected to be sold from the warehouse to arrive at the cost per case on account of space for warehouse.
Handling Costs
Handling cost has four components: Unloading costs of finished goods received from the plant/other supplying location Loading costs of empties that are to be sent to manufacturing location Cost of loading stocks on to route truck Unloading cost of empties received after completion of the route
Depending upon level of mechanization through the material handling equipment used, productivity of labor, and minimum wage of labor, the per case cost for each of the above four activities needs to be negotiated and finalized.
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Return to Table of Contents Fleet Costs

The major components of fleet costs are: Expenses on account of fuel Fleet maintenance costs
Fuel Expenses
Total return trip distance of route Average fuel efficiency of vehicle used Diesel Cost Average no of days the vehicle will ply in a month Total no. of months the vehicle will run in a year Total no. of routes Fuel Expenses Cost Per Case Fleet Maintenance The following expenses related to fleet maintenance need to be considered: Insurance Fitness Certification Road Tax (F)
= A Km per day = B Km/ltr = C Rs./ltr = 28 =D =E = A *28/B*C*D*E = F/ Annual volume.
Other variable expenses pertaining to maintenance are: Engine Oil Battery Expenses Tyre - wear and tear Lubricants Miscellaneous
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Return to Table of Contents Manpower Costs

The manpower required for DSD operations includes: Stock checkers Loaders for route truck Loaders for vehicle plying between supplying location and warehouse Salesmen Staff for managing fleet
Though the number of people required is a function of productivity and level of automation, some broad rules for manpower requirement calculations are: One checker should usually take a maximum of 5 minute per truck. Maximum two loaders for every route truck One spare salesman every 15-17 vehicles for parking, etc. of route truck Two to three persons for housekeeping. One to two persons for administration, depending upon size of business Cashier and route settlement staff One to two Depot Executives One Depot Accountant Two or three security staff
Depending upon monthly salaries for each of the above positions, the total manning cost per case is worked out.
Other Sales and Distribution Costs

Some of the other sales and distribution costs associated with DSD operations that should be considered are : Insurance costs o Fidelity o Cash in safe o Cash in transit o Cash in transit o Other assets Printing and stationery Electricity costs Generator expenses Telecommunication costs Depot repair costs Depot rent rate and taxes Staff welfare Travel expenses Auditors fee Pallet expenses Bank charges Miscellaneous
Refer to Annexure L to see sample calculation of end-to-end costing of a DSD operation. Please note that this is a representative way of computing.
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Chapter 3.2: Clearing & Forwarding Agent (CF&A) Appointment

Introduction
C&FA (Clearing and Forwarding Agent) is the agent whose services are hired by the company to manage operations in the warehouse and to efficiently deliver the product to the retail outlets. Here, the ownership of the product remains with the company till the stock reaches the retail outlet. Typically, C&FA is responsible for dayto-day administration, especially management of labor, stock flow, and associated efficiency and productivity. This chapter covers the appointment and management of C&FA.
3.2.1 C&FA Appointment Process

1 Initiate appointment process UCSM 2 Collect & analyze data UCSM/Sales 3 Calculate CPC/viability of operations UCSM 4 Identify suitable partner based on CPC calculations UCSM 5 Perform quality checks at godown Quality
Sales provides following data: Total volume of territory EDS VPO/ Outlet wise data Desired outlet-wise service frequency
UCSM gathers following data: Size of the godown Location of the godown No. of vehicles required Vehicle hire/purchase decision Glass and stock investment required
Visit godown site, and check & sign-off on the following: Surroundings of godown- proximity to polluted/hazardous areas Facility check- physical structure Ventilation, flooring GMP & housekeeping conditions
6 Verify financial background PFM/Finance
7 Introduce CFA to PFM, RCSM, AGM UCSM
10 Financial review and warehouse audit every 6 months UCSM
Appoint CFA UCSM, PFM, RCSM, AGM
HR Checks HR
Background check of CFA through: Bank a/c statement Balance sheet Bank guarantee
UCSM: Unit Customer Service Manager PFM: Plant Finance Manager RCSM: Region Customer Service Manager AGM: Area General Manager
HR- checks and signs off on the following: Statutory compliances and licenses: o Shops & establishments license o PFA license o RPF license Quality of manpower: o Accountants, dispatchers, loaders, support staff o Drivers- valid drivers license, test of driving ability Strictly confidential; For internal use only
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After the above steps, the C&FA Agreement is signed. Refer to Annexure H for Agreement format where C&FA is the owned. Refer to Annexure I for Agreement format where the company is the owner.
3.2.2 C&F Legal Compliance
Land documents & payment of taxes o o o If C&FA is owner of the warehouse, original title deed of such warehouse should be with him in order to show that the warehouse is not mortgage with any body. He should pay all the taxes such as land tax, municipal corporation tax, or any other outgoings. Proof of last payment should be checked. If the C & FA is a partnership firm, the deed of partnership firm should be checked and in case of company, the Memorandum and Articles of Association should be checked in order to see whether the company is entitled to carry on C & FA business.
Trade License or Panchayat License to be obtained for carrying on business. Shops and Establishment Act & Rules: Since this is a godown, registration under Shops & Establishment Act is required. Notices for opening and closure of the shop, weekly holiday, etc. are to be displayed in the warehouse. Maintenance of the following registers: Attendance Register Wage Register Register of hours and rest intervals Leave Register Register of overtime Visit Book Prevention of Food Adulteration Rules: License is to be obtained for storage and distribution of food for sale. o o o State Private Security Guards (Regulation of Employment and Welfare) Act If the C & FA engages security staff and if the area is under the State, then the provisions of and its rules will be applicable. In such case, he will have to obtain registration from the Board and the security personnel will have to get registration under the Board.
Employees Provident Funds and Miscellaneous Provisions Act, 1952 and the Scheme read with the Employees Pension Scheme, 1995 o o o o To obtain allotment number of each employee To deposit contribution each month with the authority To file annual return with the authority To file correct nomination form of each employee with the authority
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Employees State Insurance Act, 1948 and Regulations o o o o If ESI Act is applicable in the warehouse, then the C & F A will have to obtain registration number from the authority and also allotment number of each employee. Deposit contribution with the authority Filing returns with the authority Maintenance of Registers of employees, Accident Book, Report of Accident and Inspection Book
Payment of Wages Act, 1936 with Payment of Wages (Procedure) Rules, 1937 & State Payment of Wages Rules o o o o Notice for date of payment of wages for various categories of workers in English and in local language should be displayed. Abstract of the Act and Rules should be displayed on the notice board. Maintain register of fines, advance register and list of act and omissions. Display of Abstract of the Act and Rules
Minimum Wages Act, 1948 read with State Wages Rules, 1951 o o Wages should not be minimum than the wage prescribed by the State. Abstract of the Act and Rules has been displayed in the Notice Board at the entrance of the Plant Office.
Payment of Bonus Act, 1965 read with The Payment of Bonus Rules, 1975 o o Bonus should be paid to all employees covered under the Act and statutory register should be maintained. Annual return should be filed with the authority.
Payment of Gratuity Act and Rules thereof. o o o Notice in Form A regarding opening, change, or closure of establishment should be submitted with the appropriate authority. Notice specifying the name of the officer with designation authorized to receive notice or applications should be displayed. Abstract of the Act and Rules both in English and local language should be displayed.
Contract Labor (Regulation and Abolition) Act and State Contract Labor (Regulations & Abolition) Rules (This is required in case the C & FA engages contract labors for loading and unloading.) o The C & FA will have to get registration as a principal employer. o The contractor shall obtain license. o Register of contractors to be maintained by the C & FA o Annual Return to be submitted by the C & FA o Half-yearly return to be submitted by the Contractor. o Wage register should be signed by the C & FA.
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State Mathadi, Hamal & Other Manual Workers (Regulation of employment & Welfare) Act & Rules, 1969 If the area falls under Maharashtra, then the provisions of the Act will be applicable and Mathadis to be engaged for loading and unloading.
Standards of Weights and Measures Act & Rules If any weighing scale is being used in the ware house such scale has to be registered and verified every year by Legal Metrology.
Indian Electricity Act and Rules In case of installation of generator, necessary permission has to be obtained from the authority.
Safety o o o Adequate number of Fire Extinguishers, Buckets filled with water, and sand has to be placed in different areas of the warehouse. No Smoking Board should be displayed. Adequate First Aid Boxes should be kept and certain trained first-aid attendants should be engaged.
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Chapter 3.3: Anchor Distributor Appointment

Introduction
Anchor distributor is the distributor who is our mainstay in a market not large enough to warrant a DSD operation but at the same time large enough to have better control over the market and overall business operations than a normal distributor area. This chapter covers the appointment and management of anchor distributor.
3.3.1 Anchor Distributor Appointment
1 Initiate appointment process UCSM
2 Collect & analyze data UCSM/Sales
3 Calculate CPC/viability of operations UCSM
4 Identify suitable partner based on profile required UCSM
5 Perform quality checks at godown Quality
Sales provides following data: Total volume of territory EDS VPO/ Outlet wise data Desired outlet-wise service frequency
UCSM gathers following data: Size of the godown Location of the godown No. of vehicles required Vehicle hire/purchase decision Glass and stock investment
Visit godown site, and check & sign-off on the following: Surroundings of godown- proximity to polluted/hazardous areas Facility check- physical structure Ventilation, flooring GMP & housekeeping conditions
6 Verify financial background PFM/Finance
7 Introduce Anchor Distr to PFM, RCSM, AGM UCSM
10 Financial review, ROI, and depot audit every 12 months UCSM
Appoint Anchor Distr UCSM, PFM, RCSM, AGM
HR Checks HR
Background check of Anchor distributor through: Bank a/c statement Balance sheet Bank guarantee
Distributor Appointment Form Refer for Annexure C for Distributor Appointment Form.
HR- checks and signs off on the following: Statutory compliances and licenses: o Shops & establishments license o PFA license o RPF license Quality of manpower: o Accountants, dispatchers, loaders, support staff o Drivers- valid drivers license, test of driving ability Strictly confidential; For internal use only
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Chapter 3.4: Distributor Appointment and Management

Introduction
Distributor is a third party intermediary who purchases stock from us and further redistributes to retail outlets providing quality service to them at an optimal cost. Distributor is a key element of our operations as he provides infrastructure, investment, manpower, and sales services. This makes it imperative to manage the distributor using careful appointment and management processes. We want our distributors to be highly aligned market partners for the company. This chapter covers the following aspects that will ensure smooth distribution operations: Distributor appointment process Key elements of managing the distributor Working towards making distributor as a Market Execution Partner
3.4.1 Distributor Appointment

When to appoint a distributor
A distributor is appointed in one or more of the following three situations:
Unserviced Areas
Replacement/Closure When the existing distributor is being closed or replaced
Inadequately-serviced Areas When the existing distributor is not servicing the area to satisfactory levels
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Return to Table of Contents Appointment Process
1
Gather and Analyze Data for Distributor Area
Calculate Investment Required and Service Fee for sustainable ROI
Identify potential partners and communicate business proposal
Distributor Appointment Process
5
Hand over/take over Sales Generating Assets
6
Sign Distributor Agreement
Collect DD and start dispatches
Ideal Distributor Appointment Process Distributor Appointment: Detailed Steps 1. Gather and Analyze Data for Distributor Area
1. Define distribution objectives. 2. Get a complete understanding of the area: a. Annual Volume figures by pack b. List of outlets and assets in the area along with volume clearly identified and verified by Area Sales Manager (ASM). c. Seasonal and non seasonal outlets d. Geographical spread of the area and route maps e. Number of small cluster population in case of upcountry distributor (should be < 7k) f. Estimated rent rates in the area where Godown has been identified. g. Number of routes to be run and route list verified by ASM
2. Calculate Distributor ROI How to calculate distributor ROI a. Finalize Sales: Estimated Annual Volume and the estimated pack mix of the distributor for Next Yr ( It should be realistic and in line with previous volume trends) Estimated peak month Seasonality
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b. Calculate peak day sale as follows:
Peak Day sale = (Annual Volume x Peak Month Seasonality) No of days in peak month
c. Calculate Distributor Investment required Refer to section 3.4.2 for investment required in godown, vehicle, glass and stock.
d. Estimate all expenses of the distributor. These include: Godown Rent Vehicle Running and Maintenance Expenses Owned and Hired o Routes to be run in season and off-season Refer to section 3.1.1 for route design and calculation of vehicles and vehicle type. Manpower Expenses Salaries, Commission & Incentives o Route Salesmen and Loaders o Loading and Unloading Labor o Staff Expenses Godown Keeper and Accountant Breakage & Sorting Costs Redistribution Expenses Other Administrative Expenses o Telephone Expenses o Mail and Stationery o Water and Electricity Statutory and Legal Compliance Expenses Other Miscellaneous Expenses
e. Estimate the revenue Based on realistic Volume and Pack mix estimated of the distributor and the pack wise distribution margin, the Revenue of the distributor is calculated.
Net Take Home (or Profit) = (Net Revenue) (Expenses)
Any committed distributor subsidy reimbursement from company needs to be added.
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f. Calculate ROI ROI = (Net Revenue) (Expenses) ---------------------------------x 100 Investment Refer to Annexure B for the ROI calculation template. We should try to ensure that distributor ROI is twice the current bank rate. In current situation, an 18% 20% ROI is sufficient.
3. Identify potential partners

Knowledge of local market Financial capability to support operating expenses-first investment to be his own Minimum educational qualification: graduation for mini metros and power towns and 10+2 in rural markets Experience in FMCG products or at least a family background of business Business desire and ability to focus on distribution operation with daily involvement Preferably exclusive but if multiple business holder then should be able to devote 50 % time to our business
Find out if the business is a start up or an existing business. If has an existing business, what is the nature of business and how much is his current income?
Should not be over-qualified either; anything beyond a bachelors degree may suggest that he would not be interested in a long term relationship.
Find out if any other family member would be involved. It would be advantageous to have ample family manpower.
Age group: 25-40; energetic and in excellent physical condition
Owns Godown in the identified markets- if on rent then rent should not exceed annually 80 paisa per case of total volume Current income not more than the cash operating profit which we plan to give him in a year
Find out will the storage facility meet basic criteria: storage area, cleanliness, vermin/rodent-free environment, accessibility for LP delivery, off loading facilities (with no major constraints like traffic, adequate illumination for night delivery, etc)?
Know what income the distribution partner expects to make per month from KO business. Strictly confidential; For internal use only
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4. Distributor Appointment Process The distributor appointment form needs to be filled as per the flowchart below. Refer to Annexure C for distributor appointment form and checklist.
Start
Merge that area into closest, strongest distributor
RTM Executive/ASM recommends new distributor
Area-SE/RTM Vol. Construct. -SE/ASM Business Plan/ROI- RTM/ASM Y
Restruct ure ROI calculati on
Business Plan ApprovalSM/UCDM
Godown, land, legal education, finance verifn- FM/UCSM Depot inside space and hygiene-TPM/RTM Y
Assessment of stock norms & Route Plan ASM /UCSM
Stk Norms Route PlanSE/RTM
Is sale and Stock OK UCSM
Y Train distributor/Salesman on route and finance Y
Share of discounted & nondiscounted Vol
Assessment as per Business plan ROI OK

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Return to Table of Contents 5. Hand over/take-over Sales Generating Assets (SGAs)

Transfer list of SGA outlets to the new distributor; Distributor and Sales Executive (SE) to sign the list.
6. Get the Distributor Agreement signed

Distributor to sign the Distributor Agreement form. Refer to Annexure D for Distributor Agreement format.
7. Collect DD and start dispatches

The final step is to collect DD from the distributor and start dispatching stock to his Godown.
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3.4.2 Key Elements of Distributor Management
Distributor management focuses on managing: Godown/warehouse Routes and vehicles Glass and stock investment Systems and processes ROI Maximization Distributor training
Managing Godown
The godown/depot is the hub of all sales & distribution activities. It receives full product from the company warehouse or plant, stores it in an orderly manner and delivers it to the market when required. For effective Godown management, we along with the distributor need to focus on: Estimating godown space requirement Planning godown layout Handling material efficiently
Estimating Godown Space Requirement Godown area requirements depend on the estimated storage needs as per the peak period. Use the annual sales forecast as basis for godown planning. o o Projected Sales Volume of each product and package (as mentioned in ABP) are translated into estimated storage and handling needs. We need to review updated forecasts and plan on an ongoing basis, identifying any changes in projected demand that affect depot/godown requirements.
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Once we have ascertained how much product we can sell, the area requirement can be calculated as follows:
REQUIRED FLOOR AREA FOR GODOWN = COVERED AREA + OPEN AREA
Covered Area required = (total cases to be stored**/10 X 1.275 X 1.5) 70% Where: 10 = case height level*; 1.275 = size of case; and 1.5 = Aisle space (in sq. ft per case) Total Cases to be Stored = 5 days of peak-day sale Peak day sale = Sales in peak month No. of days in the peak month
Open area required = 1.5 times the covered area

* For most of our distributors with lower ceiling heights, 10-case height should be considered as a standard.
Godown shall be centrally located and accessible through all weather roads and usual IMT trucks. It should either be preferably owned by the distributor; or the annual rent cost should be < 80 paisa per case.
Plan for peak month and off-peak month requirements as follows: 1. Identify peak and off-peak months 2. Calculate the required depot/godown space as per peak month demand. 3. Schedule major equipment work, vacations, and other non-depot/godown activities in off-peak period. Planning Godown Layout The following areas need to be clearly demarcated in the Godown: Loading/unloading dock: where bulk goods are brought from warehouse and empty cases/bottles are sent back Vehicle loading area: where route vehicles are loaded Bottle sorting area: where empty bottles brought back from a route are sorted product wise, for chip necks and broken bottles. Storage area: where bulk products and empty cases are stored. Refer to section 3.1.2 for details on godown layout.
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Handling Material in Godown Storage Clean, ventilated, rodent and vermin-free depot with no exposure to heat and direct sunlight Regular inspections to see any damages/leakages Arrangement of goods fulls and empties should be easy for survey
Stock Management Ensure First-Expiry-First-Out (FEFO) is followed at the godown. Ensure Total Product Management (TPM) is followed as per section 3.1.3.
Managing Routes and Vehicles

Vehicle is an important link in our sales and distribution process as it serves: Means of product delivery Method of advertising
For effective vehicle management, you need to focus on: Vehicle Investment Vehicle productivity Effectiveness of route design Vehicle Breakdown handling
Vehicle Investment Vehicle investment is finalized on the basis of the number and type of vehicles required. For this, we need to finalize/calculate the following data: The following need to be considered while investment planning for vehicles: o o Is the distributor a city only or city plus upcountry distributor? What is the geographic spread of the operation?
Ideally, we need to have the EDS of the market. We need to segregate the main city outlets and the pockets of demand catered to in the upcountry markets.
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Based on the average service frequency required and the average drop size per outlet (separate for season and off-season), calculate the number of routes and vehicle types as per section 3.1.1. We need to identify the High Volume Outlets (HVOs) and key accounts in the city. Ideally for these, there should be separate routes. Most upcountry routes will be LCV routes due to higher distances. For local markets in small towns and cities, due to low Volume Per Outlet and upper limit of outlets that can be covered in a day (time available wise), Auto or Tata Ace are the best options.
Vehicle Productivity Vehicle productivity is the amount of sales generated by a vehicle in an entire year. It is also a good indicator of the effectiveness of a route and the salesman. So, we must work towards increasing vehicle productivity.
Vehicle productivity (%) = Annual Sales (in cases) Vehicle Capacity (in cases) X 300 days To maximize productivity, we must: Have well-planned routes. Choose the right vehicle capacity. Maintain them well. Use vehicle space efficiently. Teach our salesmen/drivers about efficient and safe driving tips. Pre-sell for High Volume Outlets (HVOs) and have separate routes for them. Ensure proper season and off season route planning. Track effectiveness of route design on a daily basis as per the key route indicators, as covered below.
Effectiveness of Route Design An effective route is the route that ensures optimum utilization of resources. We need to plan routes effectively to: Provide required service frequency to the outlets. Factors impacting service frequency required by an outlet: o o o o o o Account volume Bottles deposited Minimum order policy Space constraints for holding stock within the account Competition frequency Convenient timing for outlet
Minimize unproductive driving time in order to maximize the time a salesman has to service accounts In simpler words, ensure that the salesman spends minimum time between outlets so that he can spend more time in the outlets.
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Example highlighting the variation in time spent on various routes
Diamond Per call sales Per call time 2000 15 Gold 1000 10 Silver 500 10 Bronze 250 7
Total working time for salesman = 480 min

No of Calls Name of Beat Br on ze 11 10 10 16 Distribu tor to First Call 30 30 15 10 30 25 Travel time Last call to Distrib utor 30 30 15 25 45 35 Avg time betwee n calls 4 2 1 3 4 3 Total Time
Too Much
Diamo nd 4 4 5 1 4 11
Gold 11 4 4 7 17 10
Silve r 12 2 3 13 10 6
katwaria sarai MC road MC road 1 gur.nagar Badarpur sarita vihar
575 288 266 470 525 463
Too Low
Key indicators to monitor effectiveness of route design: Completed calls percentage
Completed Calls Percentage =
No. of completed calls x 100 No. of scheduled calls
Productive calls percentage
Productive Calls Percentage =
No. of calls with sales x 100 No. of scheduled calls
Stock return rate
Stock Return Rate = Cases sold daily
No. of cases returned x 100 No. of cases loaded
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Vehicle Breakdowns Vehicle breakdowns cost: o o o o o Waste of time Loss in sales Unhappy retailers Angry supervisors Less incentives
Daily Vehicle Checklist

Badly maintained vehicles
Hand Brake Ignition Engine and oil level Brakes and brake fluid Tyre pressure Lights and indicators Windshield wipers Horn Instrument panel Spare Tyre Water Fuel
Vehicles without branding
The Right Vehicles
Managing Glass/Liquid
Glass constitutes an important investment. It is money. Breakages, chip necks, and no glass rotation results in dip in sales. Proper management of glass is critical to our success in the distribution business. We need to ensure that market has adequate quantity of glass and is rotated properly.
For effective glass management, you need to focus on: Investment in glass and stock Maximizing glass investment Breakage and chip neck handling
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Investment in Glass Total Glass needed in market is calculated as below:
Glass in trade = 5 days of sale; this is normally deposited by the outlet and the distributor should separately return to the company. Areas where there had been distribution in the past and a new distributor is getting appointed, there will be old glass deposit in the market. So, most of this investment does not need to happen anew. The previous distributor normally pulls out his old Cases On Loan (COL) from key accounts which need to be re induced by the new distributor. So in most cases, the distributor finally needs to put in 1 or 2 days COL from his side in the market.
Calculating Glass Investment

Parameter Initial Investment = Glass in route truck = Filled Glass at godown = Empty glass in godown = Days in transit from plant = GOD required = Requirement 1 or 2 days COL --------------------------(A) 1 days sale -------------------------------- (B) 3 days (in plant city distribution) -------------- (C) 4 days (in upcountry markets) 2 days ---------------------------------------- (D ) 2 days (Will be in form of COL from Company) (A) + (B) + (C) + (D) This can vary from 7 to 9 days.
The company also gives support of 1 : 1 for Glass On Deposit (GOD) vs. Cases on Loan (COL) for better viability for the distributors. So, 6 to 7 days GOD from new distributors is recommended.
Investment in Stock
Depending on the distance from the plant the lead time is decided, say= 1 to 2 days No of days of filled stock required in godown = 3 (in plant city distributor) and 4 (in upcountry markets) Glass in route truck = 1 days sale Credit in Market = 1 day Total no. of days investment in stock = 6 to 8 days (Minimum and maximum of GOD required, refer to glass investment calculation above.)
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Optimizing Glass Investment Sort and store bottles systematically. Be vigilant and alert about glass in the market. Have a system in place for daily accounting of glass. Salesmen should not be allowed to loan glass without prior authorization. Get deposit of the right amount of glass from outlets. Glass sorting (SKU-wise) should happen at the outlet level. Proper and timely sorting of bottles means: o Better availability of empties for re-fill o Optimum use of the glass asset
Handling Breakages and Chip Necks Avoid sorting glasses at the warehouse. Enforce that sorting is done at the outlet. For outlets situated in narrow alleys, where our vehicle cannot enter easily, carry the cases in a trolley. If we cannot reach a shelf easily, use a ladder/stool to load/unload. Always store empty bottles in Coca-Cola full-depth plastic cases provided for the purpose and NOT in half-depth cases At the outlets, do NOT place cases in the passage. Procure proper openers and distribute them at the outlets.
Storing glass empties in halfdepth cases or placing cases on top at an awkward angle can cause chip necks.
Do NOT store empties in Pepsi case, as it is a halfdepth case, and can lead to breakages and chip necks.
A bad opener can cause breakage or chip necks.
Right Opener
Bad Opener
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Return to Table of Contents Maximizing Return On Investment (ROI)
How can a distributor improve his ROI?

By Increasing Volumes Opening new customers o o Increasing share within existing customers o o Proper activation and merchandising of an account to increase impulse purchase o Planning proper vehicle load outs Training, targeting and giving incentives to the route salesman to sell these packs Focusing on right placement and merchandising of these packs By selling more profitable packs (which should ideally have higher distributor margin/incentives)
By reducing expenses
By optimizing investments For Vehicles: Redesigning routes to reduce number of vehicles and having right mix of owned and hired vehicles For Glass: Deposit right quantity of glass in retail trade. So distributor needs to give minimal Cases on Loan (COL). Fill all empty glass in market so that it does not get lost to competition. Reconcile glass on weekly basis. Reduce breakages through better handling.
Making routes more efficient and thereby reducing running costs vehicle running costs are the biggest cost. Minimizing unproductive driving time in order to maximize the time a salesman has to service accounts Restructuring the routes for lower service frequency for HVO outlets on pre sell or even tel-sell. Refer to section 3.1.1 for an example illustrating this. Season and off season route designing after studying the required service frequencies during these times. Monitoring and Managing S&D expenses on a daily basis, including: - Casual labor loading and unloading productivity - Sorting costs to be minimized - all sorting to be done by route salesman on the route - Proper maintenance of all vehicles ensuring right fuel efficiency for all vehicles
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Rules of Engagement on Distributors ROI Plan a minimum ROI of 15% for every distributor who is invoiced directly. ROI to be computed every quarter, jointly by Unit Customer Service Manager (UCSM) and Distributor, for the Quarter and for YTD, using the standard ROI calculation template. Refer to Annexure B for ROI Calculation Template. ROI workings to be signed by distributor and Plant Finance Manager (PFM) every quarter for the quarter and YTD. All distributor expenses used in ROI to be checked and verified by finance with supporting of money actually spent. If ROI is <15% for two consecutive quarters and also for YTD , RTM team need to: o Jointly analyze distributors cost of operation and explore ways of reducing costs and/or improve revenue without adversely impacting the quality and frequency of service to outlets. Explore increasing the geographical coverage and sale volume of the territory serviced by the distributor Assess the need of revision of distributor commission on select pack(s). If none of the above materializes within one month, close the distributor and consolidate the business of the said distributor to the geographically closest distributor(s).
o o
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Return to Table of Contents The Right Systems and Processes
New Glass policy/ Empties Mgmt
Order Generation Process
Closing Stock Norm
Financial Reconciliati on
Routine Systems and Processes

Data Reporting
In-transit/ Damage Handling Policy
Distributor Audits Quality Systems Distributor Fact File Responsibility: Distributor Responsibility: Sales/TPM/UCS M/ASM
a. Order Generation Process Responsibility: Distributor 1. Work out the weekly SKU-wise requirement every Saturday, based on: Last weeks SKU-wise closing stock Last three weeks SKU wise average secondary Expected increase / decrease in secondary in the coming week Agreed SKU-wise planned closing stock norm
2. Send requirement by mail/ fax/ phone to Unit Customer Service Manager (UCSM) team mentioning: Tentative day(s) of the week when stocks would be required Quantity in approximate multiples of full truck load LCV or HCV or a combination
A record of the above process needs to be maintained at the distributors office / warehouse. b. Closing Stock Norm Responsibility: Distributor + Unit Customer Service Manager (UCSM) + Area Sales Manager (ASM) Calculate closing stock norm SKU-wise for the distributor based on the following factors: Supply Lead time Variability in lead time
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Production frequency of the SKU Desired Service levels Variability between forecast and actual sale
Refer to Annexure A for standardized template for computing BASE NORM and SAFETY NORM.
c. Empties Management Process Responsibility: Distributor Communicate (if required repeatedly) with the salesmen & retail outlet to return empty glass to warehouse in sorted form (one SKU brand pack in one crate) primarily. Ensure that the competition/other glass and shells are not picked up in-lieu of KO glass/shells from retail outlets. End of every week, give an indicative plan of total quantity (need not be brand pack level) of empties that are expected to be returned to plant during the ensuing week. This should be in line with the last week secondary.
New Glass Policy As per the Policy: Plant will accept only Coca-Cola trademark glasses. No competition glass shall be accepted from distributors / super stockist /direct route salesmen. Competition glass if loaded in the truck from our distributor will not be unloaded at company premises. Company will not give any credit to the concerned distributors / super stockist /direct route salesmen even if any Competition Glass reaches company plant / depot by reason of a mistake from their end. Competition Glass Bottles means any Glass Bottle which does not bear the Trade Mark of The CocaCola Company.
d. In-transit/handling damage policy Responsibility: Total Product Management (TPM) Executive Distributor would be liable to be given a replacement in any of the following situations: o If there is any verifiable quality complaint in the non-tampered pack All such complaints must be brought to the notice of TPM executive and should get resolved by TPM executive of the unit within 15 days of receipt of stocks. In case, the product expires at the retail outlet and if the same is brought to notice within 15 days of expiry, subject to approval from Unit Customer Service Manager (UCSM).
The distributor gets the credit for all the products which are received by him in damaged condition only when the same is agreed by both transport representative and the distributor, and is mentioned and signed jointly on the delivery challan. The damaged product needs to be returned to the transporter, who in turn needs to return it to HCCBP supplying location. The disputes, if any, need to be escalated to UCSM.
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e. Quality systems at distributors end Responsibility: Distributor Ensure Dispatch Out Date (DOD) and Best Before Date (BBD) date are displayed on every stack/lot of the product stored in warehouse of distributor. Mark on hold/market return/complaints/BBD stocks and keep them separate from the good saleable stock. Maintain a daily closing stock record having following details: o SKU-wise quantity o Date of Manufacturing (DOM) o Days to BBD o Age in descending order SKU, quantity of stocks which are beyond DOD must be maintained and updated on every day closing basis. Ensure that the issue of stock from warehouse/the loading sheet of route truck is based on FMFO. The loading slip details and the actual quantity loaded on the route truck to be randomly audited, at least one vehicle everyday. At the end of the day, ensure the unsold stocks in the route truck are rotated within the truck so that older stock is available for first sale opportunity. All records must show that First-Expired First-Out (FEFO) is in practice. Ensure housekeeping, personal hygiene, ventilation, condition of stack, aisle space, safe work practices, and overall appearance of warehouse is good. Maintain a separate record need for customer complaints mentioning complain details, actions taken/planned, and the status.
f.
Financial Reconciliations Responsibility: Distributor Claim Reconciliations Manage claims through Cola Live.
Submit all claims of the month in ONE statement and at ONCE. Every month, give a declaration of NO further claim pending for that month apart from what is claimed in that months claim statement. Any claim which is overdue for more than 3 months would not be liable to be paid, unless it is approved as an exception by the unit Area General Manager (AGM).
Account Receivables (AR)/ Cases on Loan (COL) Reconciliations AR/COL confirmation to be got from all distributors on a quarterly basis.
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g. Data Reporting from Distributors end Responsibility: Distributor Daily brand packs secondary sales Weekly SKU-wise closing stock Weekly outlet-wise SKU-wise quantities sold Distributor stock availability and excess stock index Consumer complaints Supply service levels On Time In Full (OTIF) of quantities ordered
The above information is recorded in the Distributor Weekly Docket. Refer to Annexure E for distributor weekly docket.
h. Distributor Fact File Responsibility: Distributor The distributor needs to regularly update the Distributor Fact file. Refer to Annexure F for distributor fact file (also referred to as Distributor Red Book).
i.
Distributor audits Responsibility: TPM Executive TPM Audit Conduct an audit of all A-class distributors (contributing 40% sales) once a month, covering the following areas: o o o o o o o Correctness of SKU-wise requirement generation process Competition and unsorted glass stock Age of stock at warehouse Implementation of FMFO processes Record on daily SKU-wise age of closing stock and verification with physical count Daily secondary reporting: Reconciliation of same with primary and closing stocks Storage and Warehousing : Stacking norms, aisle, hygiene, and safety
The distributor who is getting higher rating consistently for quarter should be recognized by the UCSM and GSM along with a token financial reward.
Financial and Stock Audits A financial and stock audit needs to be carried out for all A-class distributors (contributing 40% sales) every quarter and for rest of the distributors on a half-yearly basis. This audit can be carried out by third party auditors or internal resources if available.
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Return to Table of Contents Distributor Satisfaction Survey

To evaluate the distribution processes, all distributors are required to take the Distributor Satisfaction Survey once a year. Refer to Annexure G for the Distributor Survey Docket comprising: Cover Letter to the distributor Brief to the distributor on filling up the questionnaire The questionnaire
3.4.3 Distributor as Market Execution Partner
Our distributors will be called Market Execution Partners from July, 2007. The RTM team, along-with the Corporate Sales team will take steps to develop and implement processes and develop Market Execution capabilities among the Market Execution partners and their Salesmen for improving In-Market Execution.
Market Execution Partner Role
In-Outlet Roles Currently, the Distributor Salesmen role is limited to Delivery, Order-booking, Basic Selling and some Basic Merchandising. As a way forward, we will make the Distributor Salesmen role more focused on Selling, Merchandising and Account Development. Accordingly, his allocation of inoutlet time will change.
Increase Selling and Market Execution Efforts
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In-Outlet Roles - Current
Salesmen Role 10% Total time Spent at Outlet 10% 25% 25% 25% 50% 40% 20% 80% 20% Account development 10% Merchandisin g 15% 15% Selling/PreSelling Invoicing 30% 10% 10% Delivery
Goal
Total time Spent at Outlet
MD Role 10%
Planned In-Outlet Roles : Market Execution Partner Routes

Salesmen Role (Old) 10% Salesmen Role (New) 5% 20% Total time Spent at Outlet 25% 40% 25% 50% 50% 20% 20% Account development Merchandisin g 30% 30% 15% 10% Selling/PreSelling Invoicing 30% (Pre-sel) 10% 10% Delivery
MD Role
The above re-allocation of time will be achieved through RTM process implementation to reduce time spent on invoicing and physical delivery: Pre-sell in High Volume, Prime Metro routes More efficient routing system and invoicing mechanism Improvement in delivery infrastructure
Transition to Market Execution Partner Model A. More importantly, the transition from the current Selling and Delivery role to a role focused on Market Execution will entail building capabilities among the Market Execution Partners and their salesmen. We have initiated the process of building capability through: Training Programs on Market Execution:
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o Distributor Training: All Distributors will be taken through the Star Salesmen and Distributor and Route Management training modules. These training programs are aimed at making the Market Execution Partners aware of Their Role in Selling and Market Execution and also on how to manage their Distribution Business more effectively and profitably. o Salesmen Training: All Salesmen will be taken through the Star Salesmen Training module. This program is aimed at increasing the understanding and capability of salesmen at Selling and Market Execution.
On The Job Training: A standard On the Job Training process has been developed for Distributor Salesmen. Training on Market Execution is being provided during route rides by Sales Team Leaders ((STLs) and Sales Trainers. Certification Programs for Distributor Salesmen: A standardized certification program has been developed to certify Distributor Salesmen who demonstrate proficiency in Market Execution. This will be followed up by a Retention Program to retain trained distributor salesmen.
B. The Market Execution Partners have a clearly defined role in implementing our Picture of Success in the market. HCCB Picture of Success comprises of three parameters, and the Market Execution Partners have clearly defined roles in implementing this POS, viz. Cold Drink Equipment Maintenance and Merchandising. Distributor is responsible for one aspect of this parameter; Visi-Cooler Purity. Availability of relevant SKUs as per segmented execution norms. Distributor is completely responsible for maintaining availability. In Outlet Activation. Distributor is only responsible for maintenance of Activation material, and not for activating the outlets.
To reinforce the Market Execution responsibilities of distributor, we have rolled out a quarterly incentive program for distributors called Market Execution Partner Incentive Program. Henceforth all incentive programs for Market Execution Partners across HCCB will be linked to his performance on Market Execution as reflected in his RED Score for POS Parameters under his responsibility. Market Execution Scores (RED Scores) will form an intrinsic part of our Market Execution Partner Evaluation process. The Market Execution Partner Rating will take into consideration the distributor RED Score, among other parameters, to evaluate the overall suitability of our Market Execution Partners in delivering our RTM and business objectives. This rating will be used to take decisions related to continuation, termination, consolidation of areas, etc, for Market Execution Partners.
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Chapter 3.5: Area Market Contractor (AMC) Appointment

Introduction
An Area Marketing Contractor (AMC) typically is a very small distributor who normally cannot take a full truck load from the plant and hence a distribution model needs to be worked out to service his small orders. Refer to section 2.1.5 to know about Area Market Contractor (AMC) variations and when it is used. This chapter covers the appointment and management of Area Market Contractor (AMC).
3.5.1 AMC Appointment
1 Initiate appointment process SE/RTM Exec
2 Collect data
3 Calculate CPC/viability of operations UCSM
4 Identify suitable partner based on CPC calculations SE/RTM Exec
SE/RTM Exec
Sales provides following data: Total volume of territory Desired service frequency UCSM takes decision on: Distributor or AMC
Vol. projection CPC and viability of operations Commission structure & sharing of commission between Company and Distributor
5 Introduce partner to UCSM, ASM SE/RTM Exec
Appoint AMC Sales Checks Sales UCSM, PFM, ASM, AGM
Sales- checks and signs off on the following: Facility check- physical structure Number and type of vehicles Glass and Stock Norm
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PART 4: RTM ENABLERS
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Chapter 4.1: Systems and Processes

Introduction
This chapter covers the key RTM software systems used to manage RTM operations and performance. These include: Depot and C&FA Replenishment System Cola Replenishment System (CRS) for Distributors Distributor Automation System (DAS)
4.1.1 Depot/C&FA Replenishment System
Depot replenishment system is a COLA-based system, which calculates the stock requirement for depot/C&FA on daily basis to replenish stock in line with the primary sales trend.
Replenishment Process
1. Define minimum and maximum stock in physical case for each SKU/mrp. 2. Define average days cover to be maintained for each SKU /mrp. 3. Enter the gross sale planned for the week in physical case. 4. System converts the gross physical case to brand pack estimated sales based on last two week SKU mix. 5. Modify the projected sales as required to take into account any specific promo/requirement. 6. System automatically picks-up stock-on-hand and goods-in-transit (only dispatches from COLA sites, manual entry for all non-cola sites). 7. Stock requirement is calculated as follows:
Stock Requirement = Estimated weekly sales/7*Defined days cover stock on hand Goods In Transit (GIT)
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8. The replenishment stock requirement order is communicated to the sourcing site. Replenishment Stock Requirement Order is calculated as follows:
If Stock Requirement + Stock on Hand + GIT > Max Stock Then Replenishment Stock Requirement Order = Max Stock Stock on Hand GIT If Stock Requirement + Stock on Hand + GIT < Min Stock Then Replenishment Stock Requirement Order = Min Stock Stock Requirement - Stock on Hand - GIT If Min Stock < Stock Requirement + Stock on Hand + GIT < Max Stock Then Replenishment Stock Requirement Order = Stock Requirement
Performance Metrics
Following system report on a date range is available: Count of days when stock was below Min Stock Count of days when stock was above Max Stock Count of days when stock was Nil
Roles and Responsibility

RTM Executive/Manager: To generate the plan and place orders on sourcing site. Sales Manager: Planned primary plan for the week.
System Requirement
Depot replenishment system can be accessed from any computer on network
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4.1.2 Cola Replenishment System (CRS) for Distributors
CRS is a tool, which generates weekly replenishment plan and daily primary plan for distributors using secondary data from KOMPASS.
Objective of CRS
To enable RTM associate to understand and follow standard processes across units to replenish stocks for distributors at SKU level To achieve availability of all SKUs To avoid loss of sale without over stocking, thus optimizing investment in inventory To plan and streamline dispatches to distributors and ensure optimum loadability
How does CRS Work

1. The planning weeks secondary forecast for the distributor is generated as follows: a. The previous weeks secondary sale (that is reported through PRISM or COLA) is taken. b. Growth percentage is applied to it for that week.
Example If last weeks secondary sale is 10,000 cases and we apply growth as 10% over last week, then this weeks secondary forecast will be 11,000 cases. This is gross secondary sale forecast for the distributor. 2. Individual SKU contribution is derived by system considering last two weeks average secondary sale and applied to planning weeks gross secondary sale forecast to arrive at distributor level, SKU level secondary sale forecast.
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Return to Table of Contents CRS Roles and Responsibilities

This process is owned by the Unit Customer Service Manager (UCSM) supported by a full-time resource that will touch base directly with distributors. He also coordinates between Sales, Logistics, and Finance on dayto-day basis. The Weekly replenishment plan has to be generated and frozen for the planning week on Saturday morning, as soon as the secondary reporting is done for CRS distributors. The same can be forwarded to distributors for information. The Daily replenishment plan has to be generated every morning and dispatches are to be effected as per the plan. This plan may be discussed with distributor before invoicing to improve confidence in the process. Sales Team collects AR & COL in line with the primary plan to enable dispatches as per plan.
CRS Process
Detailed Process 1. Select distributors who can be put on CRS.
The selection criterion should be distributors volume, financial health and willingness to adhere to the processes defined by us. Agree with SM and GM on this list to ensure role clarity and dispatches as per plan. 2. Obtain one single number as growth percentage over last weeks secondary sale from respective sales manager/s. Also, obtain the information whether there will be any promotion running for specific distributor or for product/SKU to ensure availability of stocks. 3. Define lead time and frequency at which each distributor will be serviced on the days of week. 4. Define stock norms in terms of number of days at distributor class level and pack type/pack size level. This will get extended to each distributor accordingly. Distributor level, SKU level stock norms can be changed through stock norm adjustment menu. However, these adjustments are considered only for the planning week.
The stock norms can be changed depending on the seasonality. There is also a provision to define stock norms in terms of fixed quantity. It is suggested to use this functionality very judiciously. 5. Select the FG items which need to be replenished to the distributors in planning week. This can be done in combinations of all the distributors, all the SKUs, or select distributors and select SKUs. 6. Process the Primary plan and run Weekly Primary Plan Checklist.
While going through this checklist, change the values like, stock norm adjustments, contribution adjustments, etc., if required. Reprocess the plan if any of the input values have been changed, so that they are incorporated in the weekly plan.
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7. Once satisfied with the weekly plan, confirm the same by closing it for the week. No changes are allowed once it is closed. However, it is must to close it to enable process daily requirement plan at SKU level. 8. Process daily replenishment plan every morning. By doing so, system will generate primary plan for the day and will consider only those distributors which fall on those service frequency days.
The total requirement for the day can be modified by changing the allocation at distributor class level, if stocks are insufficient. 9. Assign vehicles to daily requirement proposed by system as per truck size and run daily dispatch plan. The same has to be checked for AR/COL (outside the CRS scope). Forward the same to shipping for executing dispatches. Process Steps to be followed in System to Process Weekly and Daily Replenishment Plan
COLA Replenishment System (CRS) Process Steps

Step 1 Process Select Distributors Comments Select distributors which need to be put on CRS. Need not be done week on week, if no change. Input growth on secondary sale over last week in terms of percentage. Lead time in terms of days and service plan in terms of days of a week on which the customer is to be serviced. Lead time and service plan may remain unchanged in future weeks. Input values in terms of days and/or quantity, as required. This may also be same and need not be changed while processing plan for coming weeks. Select the distributors and SKUs which need to be planned for replenishment in the week. Input the adjustment value in terms of number of days and/or quantity, if any. This adjustment is considered only for the current week. Process the plan for the week. Run this report and review output. Follow steps 1 to 6 above, if any changes to be carried out. Carry out changes, if any. Run this report again and check for details. If satisfied, share with all concerned. E.g. SMs, UCSMs. Close the week if satisfied to be able to run daily replenishment plan. Note: No changes can be carried out once week is closed. Process daily replenishment plan. Adjust the allocation in terms of percentage, if required, and save. Allocate vehicles as per capacity and click on calculate and save. Run daily dispatch report and forward for execution to the concerned.
2 3 4 5 6 7 8 7
Define Cycle Growth, Lead Time Define Stock Norms Select FG Items for WR Stock Norm Adjustment Primary Plan Processing & Closing Weekly Primary Plan Checklist Contribution Adjustment Weekly Primary Plan Checklist
10 11 12 13
Primary Plan Processing & Closing Daily Replenishment Plan Daily Vehicles Selection Daily Dispatch Report
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Return to Table of Contents CRS Enablers

Timeliness of secondary reporting (Saturday 12.00 noon) Accuracy of secondary data (Accurate closing stock, ensure no negative secondary sale is appearing) Distribution Automation System (DAS) for CRS distributors Signed weekly reports from all the CRS distributors Glass availability Glass On Deposit (GOD) planning Fixed stock norms for each distributor Distributor details storage area, etc. Growth percentage over last week secondary sale from sales managers along with sale promotion details, if any. Collection plan Distributor-wise (Account Receivables (AR) /Cases On Loan (COL))
CRS Benefits
Minimal data entry Plan gets re-set every week. Hence errors, if any, do not get carry forward. Easy to monitor the status of Plan vs. Actual primary on day-to-day basis Primary done-till-date is considered while processing daily requirement plan.
Performance Metrics
The following MIS reports are available to understand as to where do the units stand in terms of each performance parameter. Weekly Dispatch Analysis Secondary Forecast Vs. Actual Primary Plan Vs. Actual Closing Inventory Cycle Growth Trend
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4.1.3 DSD Router
Direct Store Delivery (DSD) Router is a tool used to improve the delivery efficiency of DSD operations. The basic principle of operation of a router is optimisation of total delivery cost under a set of real life constraints vehicle capacity, time available for delivery with a salesman, delivery time window requirement of customers, the kind of vehicle allowed in a street, etc. The cost optimisation by using a router comes from following two areas: Reduction in total case KM travelled by stock to service the customers Reduction in number of vehicles required to service a set of customers without impacting the service frequency
This can also be used as a strategic tool with a range of what If simulation abilities. It aims to centralise the planning process, while the delivery is executed from different warehouses. This is a planning tool which integrates seamlessly with the transaction system and tracks the variance between plan and actual. There are two key modules of DSD Router Module 1: Territory Planner, which balances Territory and creates master Routes Module 2: Dynamic Router for pre-sold orders
Territory Planner
The Territory Planner does the following: Optimize all existing sales, service and delivery routes. Reduce transportation costs by efficiently allocating resources. Automate your strategic rerouting process, reducing time and management involvement needed to complete the planning cycle. Balance capacities and workloads. Explore what-if scenarios. Plan for growth, holidays, and seasonal swings. Create service policies based on volume of business. Capture customized daily reports and vital historical data. Improve customer service, including exceptions. Maximize oversight and evaluation. Serve as a depot planning tool.
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Return to Table of Contents Dynamic Router

For an available set of orders, this module does routing and scheduling and usually helps to: Reduce fleet KM and driver overtime to build greater profitability. Measure driver performance on a daily basis with clearly defined itineraries, manifests, maps, and directions. Maximize driver and equipment productivity while adhering to service regulations of key customers. Meet and exceed customer service expectations by seamlessly converting exceptions into opportunities. Assess delivery costs for profitability by drilling down to actual costs per stop. Work smarter by investing fewer hours in route planning and more time in strategic forecasting. Explore what-if critical scenarios to plan in advance for the unexpected. Capture customized daily reports and vital historical data.
Different Ways for Using DSD Router

Design Optimal Routes once every quarter at the each of DSD locations (and Anchor distributors) factoring o o o o Changes in outlets sales volume Changes in required service frequency Changes in available outlet base, if any Changes in traffic / en-route restrictions
On a daily basis, design routes based on pre-sell orders, and use it as a tool to decide daily routes to be run.
Scope and Areas DSD Router can Impact

Scope
All company-run DSD operations All Anchor distributors Multi distributor drop point Milk runs routing
Areas DSD Router Impacts For servicing a given set of customers, DSD router will: Help reduce the total KM distance traveled by route vehicles by re-designing routes and way to reach the outlet Help reduce the number of routes (& hence fleet required) run by us Substantially Improve Route Vehicle capacity utilization
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Return to Table of Contents Critical Success Factors

A dedicated cross functional team (finance, RTM, Sales and IT) for 90 days Correct validated data requirements o o Complete address of each of the outlet Outlet-wise day-wise sales data for at least one year (Quality of output will be based on quality of this data) Outlet-wise current & desired service frequency Outlet-wise projected requirements for season / off season and mini season months Data on fleet, routes, drivers, work hours, volumes and costs
o o o
Absolute willingness to change routes (outlets to a route might get added, deleted, sequence of visit changed substantially) Willingness to shift running of a route from one depot to another depot Salesmen would have to run different routes in different (season/ off season/min season) period Willingness to change the vehicle size mix Strong sponsorship of unit management team in change management initiatives
Leading Routing Solution Providers

UPS Logistics Descartes OPSI systems SSA Global Ortec
Criteria for Evaluation

Cost and Payment terms o o o o License Maps Maintenance costs Implementation costs
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Availability of local implementation partner and local support Technical specifications wrt hardware requirements, integration, speed of accessing, processing time, graphic user interface, etc. Quality and level of details of digital maps Capability of different modules o o o o Territory Balancing Master Route creation Dynamic Routing optimizer capability Vehicle space optimization capability
Feedback from known users
Implementation Steps
1. List of customers with name and address for whom delivery is to be optimized. 2. One needs to physically visit all the customers and through an accurate GPS device, note the latitude and longitude of each customer. 3. Noting down latitude and longitude of all potential supply locations viz. warehouses, logistics centre, and plant. 4. Configuring the sales profile (viz. average sale, delivery window, service frequency, day of the delivery, etc.) of each customer. 5. Data on each of the delivery vehicle viz. carrying capacity, fuel efficiency, cost of driver, helper, and other fixed and variable costs associated with each delivery vehicle. 6. Mapping of all customers and supply locations on to the digital map of the city. a. The digital map must have all the street networks, drivable roads, one ways, two ways, and average speed during different times of the day on each of the sections of the road, mapped on to it. 7. The other constraints, if any, need to be fed in. 8. The optimizer is run and the output is: a. The optimal number of routers that are required to be run from each of the supply location b. The optimal sequencing of outlets on to the route c. The total cost of delivery pre and post
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4.1.4 Distributor Automation System (DAS)
DAS is a specially designed and customized mini ERP solution for the Coca-Cola Bottling Distributor, which helps the distributor to build system control and transparency in his operations - thus freeing him/her up for driving business growth. It covers all day-to-day processes related to purchase, inventory, accounting & finance, sales and assets. This software is based on Visual FoxPro with components of different libraries of VB, C++.
How does DAS work
INPUT
OUTPUT
SETUP & MODULE:
Purchase Entry, Sales Invoice Entry, Shipping Transactions, Financial Transactions, Asset Maintenance,
MIS REPORTS BUSINESS ANALYTICS
Masters (Product, Outlet, Rate, Scheme) Opening Bal. ( Stock FG / Empty, AR/ AP, COL/ ROL, GOD/ ROD, CDEs) Module: Purchase, Sales, Finance, Inventory, Asset
DAS Implementation Requirements

Following are basic Infrastructure requirements: o o o o o o Desktop PIV Printer UPS / Invertors / Generator Internet Connection Refer to DAS Master Data Collection format (Sheet: c infrastructure) for details. Printed Stationary SKU wise printed Cash / Credit Bill Books Consumable
Distributor has to pay DAS Software License cost.
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Human Resource requirement: Minimum one dedicated resource to Operate DAS Software with following qualifications: o o o o o Minimum basic education: 10 + 2. Basic knowledge of English Language & Computer Operation Basic bottling business knowledge like SKU, Glass, Crates, Settlement, etc. One-year experience as a computer operator preferable Three-months experience with bottling operations preferable Number of resources based on number of Active Outlets: Active Outlets < 600 600 1500 No of resources required 1 2
: :
Master Data Refer to DAS Master Data Collection format for details. Opening Balances Refer to DAS Master Data Collection format for details.
DAS Benefits
How it benefits Distributor
How it benefits us Automated day-end secondary sales info Replenishment based on daily stock status Claims to be run can be controlled centrally Sales team can use various reports for improvement of distributor operations and for market development Tracking of company assets and its productivity coolers, glass
Quick and Final Settlement: Option to link to Handheld and 100% Cash Tally and Books Updation Claim Settlement: Accurate & easier claim generation Operational Ease: o Automatic salesman commission calculation o AR & COL tracking in the market o AR & COL tracking with the HCCB o Accounting and Taxation Powerful MIS reports to improve efficiencies o Route productivity, performing and non-performing routes/salesman o Outlet-wise SKU-wise drop size, frequency, sales dips o Cooler productivity, GOD/ROD o Stock status & movement o ROI
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Return to Table of Contents Responsibility Matrix for DAS Implementation

DAS Implementation is primarily driven by RTM Team with help from trained DAS Local Champions of each Unit. DAS Local Champions consist of one representative from RTM, BSG, and Finance team.
DAS Implementation: Responsibility Matrix

Day Day 0 Day 1 Role Identification of Distributor Gaps Analysis : Process / Resource Req. / Infrastructure Readiness Refer to DAS Master Data Collection format (Sheet: Checklist) for details. Day 2-3 Day 2-8 Payment of License Cost from the distributor Master Data Collection & 1st cut Opening Balances Refer to DAS Master Data Collection format for details. Day 9-10 Installation of Software, Dongle coordination from Region / Corp. Refer to DAS Installation CD. Day 9-10 Change Management & Fixing Gaps in Requirement, Master Data RTM / Sales Team / BSG BSG RTM RTM / Sales Team / Finance / BSG BSG Responsibility RTM RTM / BSG
Day 11-13
Training / Parallel run with Masters and Opening Balance Refer to DAS Training Manual for details.
Day 11-13
Training / Parallel Run Contd. Capturing Transaction and Settlement for the Day Verifying the Settlement with Manual. Load the Masters and Opening Balance after Verification Physical Count FG / Empty in Production Database Go-live Post Go-Live Support
BSG / RTM / Finance BSG / RTM / Finance
Day 14 Day 14 Day 15
BSG
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Return to Table of Contents Dos and Donts at Distributor Point
Dos Load-out and Load-in should be SKU-wise. All Bills made by Route Agents/ Salesmen should be SKU-wise. Scheme details should be mentioned on the bill especially for free SKU, For example, in case of 1BTL scheme, SKU name of free bottle should be written. AR/COL should be mentioned on the bill and all bills should be made outlet-wise. Outlet code should be mentioned on the bill. GOD should be maintained outlet-wise. Opening stock should be captured batchwise/separately, especially in case of different MRP, purchase/sale price, and incentive of same SKU. Net load should be verified with billed quantity by the salesman before giving it to the settlement clerk.
Donts Difference in book stock vs. physical stock. Giving cash discount equal to the value of the free Scheme SKU quantity. Selling an SKU to the retailer rate which is not approved by company.
DAS Performance Metrics

Key Reports to be Generated from DAS on Regular Basis
Report Stock Movement Report Salesman Daily Productivity report Last Billing Date Zero Business Retailer Market AR Report Market COL Report How to Access (Menu Navigation) Analysis > Specific Reports > Net Load Stock Movement Analysis > Specific Reports > Daily Productivity Analysis > Retailers > Last Billing Date Analysis > Retailers > Non Operational Reports > Accounts > Debtors List Core > Two Way Packs > Empties Report > Party ROL COL Summary
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Chapter 4.2: RTM Organization Structure

Introduction
This chapter covers the RTM organization structure at: National level Regional Level Unit Level
4.2.1 National RTM Organization Structure
4.2.2 Regional RTM Organization Structure
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4.2.3 Unit RTM Organization Structure
4.2.4 RTM Job Descriptions

Refer to Annexure J for detailed job descriptions of the following key RTM roles: RTM Planning and Execution Manager RTM Distributor Infrastructure Manager RTM System Implementation Manager
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Chapter 4.3: Proposed COA

4.3.1 Proposed COA
The parameters are rated as P: Propose I: Initiate A: Approve
COA Required
Description
Appointment of Normal Distributor Appointment of Anchor Distributor DSD Operations start-up Initiating new DSD routes Appointment of C&F Agent Non-DSD Warehouse Reimbursement of following expenses to distributors a) AMC commission / Redistribution expenses b) Freight / long lead subsidy c) Reimbursement of Taxes Distributor commission KO Fleet addition Glass /shell purchase/transfer Casual Labor rates Company assets (vehicles) on loan to dist/CFA Sales Return Purchase of FG from FBO I I I I I I P P P A A P P A A A A A A A A A A A A A A A I I I I I I
UCSM
SM / GSM
I P P P P P I
RCSM
A A A A A A A
AGM
A A A A A A A
RVP
A A A A
Corp RTM
A A A A
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PART 5: RTM PERFORMANCE METRICS
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Chapter 5.1: RTM Index

Introduction
RTM index is an indicator of effectiveness of the RTM operations. It is calculated on the basis of: RTM daily operation index: This indicates effectiveness of RTM daily operations. Progress on RTM corrections planned by a unit : This tracks RTM roadmap created from the Annual Business Plan (ABP) for each unit and region RTM system implementation progress: This tracks effectiveness of RTM systems and processes for each unit and region.
This chapter covers how to calculate or monitor each of the above inputs to RTM index.
5.1.1 Calculating RTM Balance Score Card
The RTM daily operation index evaluates three aspects of RTM operation: Quality Service Cost
Each aspect is rated on certain parameters.
Quality Parameters
Distributor Stock Freshness Index o o o This is to be calculated initially for distributors which account for 40% of units sale This is to be calculated after conducting monthly physical audit of Age and saleable condition of closing stocks of all the above distributors Stocks which are 30 or more than 30 days to BBD ( best before date) are considered as Fresh for this calculation
Distributor Stock Freshness Index = No of cases of stock which is Fresh Total Stock
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Return to Table of Contents Service Parameters

Distributor Stock Out Index / Distributor Service Level o This is calculated (initially) for top distributors (which account for 40% of units primary sale) of the unit for the SKUs that account for 95% of sale of the respective distributors. The distributor SKU combinations are to be selected one time by the unit in the KOMPASS. This measures the net impact of all internal and external factors on the status of stock availability at distributors. This is measured weekly. The target score for the parameter is 10%. After alignment with all regions, this can be changed.
o o
o o
Distributor Stock Out Index = (Cumulation of no of cases when distributor SKU stock is less than one day of last week secondary for that distributor SKU) (Total No of distributor SKU combinations)
Distributor Excess Stocks o This is to be calculated for the distributors for which we are calculating Distributor Stock outs.
Distributor Excess Stocks = (Total number of physical cases of stocks which is more than closings stock norm + 2 times last week secondary of that distributor SKU combination) Total physical cases of stocks at all distributor SKU combination
o o o
The units need to: Select distributor SKUs combination in Kompass Input one time distributor SKU wise planned stocking norms . This is computed in Kompass automatically on a weekly basis. High Distributor Excess stock means potential risk of Expiry of stocks. High distributor stock outs and high excess stock means misdistribution of stocks.
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Fulls (Plant and Depot) Availability Index o o This is a measure of our readiness to service orders of our customers and our distribution partners This is to be calculated separately for each of the stocking location viz. depot/CFA of the unit. Fulls Availability Index at stock location =
Count of SKUs days when stock was less than one day of months sales requirement of that SKU from that depot (Total count of SKU days of the Month)
o o
This is computed automatically in Kompass. The unit team need to enter: On a daily basis SKU wise closing stock at each of their stocking location Once a month the months requirement of that SKU from that depot Units need to target fulls availability to at least 98%.
Distributor Order Servicing measured as On-Time-In-Full (OTIF) Index o o o o This is to measure our service levels towards the order placed by distributors. This needs to be measured for all distributors. The source of this parameter is Units report. OTIF Index = On-Time Index x In-Full Index On time Index = No of orders serviced on the day on which it was received Total no of orders received on the day In Full Index = Count of number of line items of orders which are not serviced less than 90% of indented quantity) Total no of line items of all the orders
Poor OTIF will usually mean high level of Distributor Stock Outs unless the secondaries are trending lower than estimated. High OTIF usually means no Distributor Stock Outs unless secondaries are trending higher than plan.
Routes Run Index o o This refers to routes actually run for a day/week/month vs. targeted routes to be run. This is to be measured initially at all our DSD operations.
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Return to Table of Contents Cost Parameters

NR Increase o o o o This is measured in Rs. per Physical case. % improvement in YTD 06 over YTD'05 is used as criteria. The above score is compared with the pre agreed target, and a rating is arrived at. The data source is the Monthly Management Report (MMR).
FG Inventory Loss o o o o This is measured in MM INR. % improvement in YTD 06 over YTD'05 is used as criteria. The above score is compared with the pre-agreed target, and a rating is arrived at. The data source is Monthly Management Report (MMR).
Freight Costs o o o o This is measured in Rs. / physical case. % improvement in YTD 06 over YTD'05 is used as criteria. The above score is compared with the pre-agreed target, and a rating is arrived at. The data source is Monthly Management Report (MMR).
Distributor Expenses o o o o o This is measured in Rs. / physical case. % improvement in YTD 06 over YTD'05 is used as criteria. The above score is compared with the pre-agreed target, and a rating is arrived at. The data source is Monthly Management Report (MMR).
Warehousing Costs o This is measured in Rs. / physical case. o o o o o % improvement in YTD 06 over YTD'05 is used as criteria. The above score is compared with the pre-agreed target, and a rating is arrived at. The data source is Monthly Management Report (MMR).
Empties Exchange Costs o This is calculated for as % improvement over YTD'05 in YTD '06. o The source of this parameter is Monthly Management Report (MMR).
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5.1.2 Monitoring Progress on RTM Roadmap
The RTM red-print progress index monitors progress against the plan for RTM corrections planned Systems Implementation plan
A sample template, mentioned below, illustrates the parameters usually used for the above progress monitoring:
Unit 1 MTD BP RTM CORRECTIONS Number of unviable distributors closed Total No of active Distributors Number of Anchor Distributors Appointed % of Indirect Business under Anchor Distributors No of Spokes started No of unsustainable Spokes closed No of spokes converted to distributors No of Milk Runs initiated % of Indirect Business under Milk Runs % Business under Pre-sell 2007 No of Outlets under Pre sell % of Metro volume under DSD 2007 % of CBO Business under DSD 2007 No of towns under DSD Actual BP YTD Actual BP MTD Actual BP Unit 2 YTD Actual BP MTD Actual BP REGION YTD Actual
12
20
20
12
20
20
12
20
20
7 10% 6%
7 6% 10%
7 6%
7 6% 10%
7 6%
7 6%
3 2
3 4
3 4
3 2
3 4
3 4
3 2
3 4
3 4
1%
3%
3%
1%
3%
3%
1%
3%
3%
53% 10% 17% 2
53% 17% 2 10%
53% 17% 2
53% 17% 2 10%
53% 17% 2
53% 17% 2
INFRASTRUCTURE No of DSD Routes Route productivity Phy Cs sold / Load out No of Vehicles for DSD Vehicle Uptime (1- No of truck hours under breakdown/ total no of truck Hours) No of vehicles added to DSD Fleet No of DSD Depots started No of NON DSD Depots started No of warehouses closed Warehouse QCS Audit score Hindustan Coca Cola Beverages Pvt. Ltd.@copyright2007 Page 151 of 153 Strictly confidential; For internal use only
89
89
89
89
89
89
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5.1.3 Monitoring Progress on RTM System Implementation
The RTM system implementation index tracks effectiveness of RTM systems and processes for each unit and region.
Below is the sample template used for monitoring RTM system implementation progress.
Unit 1 MTD BP SYSTEM IMPLEMENTATION Number of DAS sites % of Distributors under DAS % of Business covered under DAS Number of Distributors under CRS % of distributors on CRS % Business under CRS No of DSD depots on Handheld A class Distributor's Numeric stock Availability A class distributors Excess stocks 1 16% 37% 17% 38% 17% 38% 16% 37% 17% 38% 17% 38% 16% 37% 17% 38% 17% 38% 6 6 1 6 6 1 6 6 Actual BP YTD Actual BP MTD Actual BP Unit 2 YTD Actual BP MTD Actual BP REGION YTD Actual
2%
2%
2%
2%
2%
2%
2%
2%
2%
Based on the score of above three pillars of RTM, a final score is arrived at basis the pre-agreed relative importance assigned to each of the parameters.
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Summary
The RTM manual covered: Definition, scope, and deliverables of RTM RTM diagnostics and roadmap RTM infrastructure design and management RTM enablers RTM metrics
The manual has been created after referring to a pool of valuable information about RTM available at global KO intranet and other internal/external sources.
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2.1.2 Direct Distribution Models: On Basis of Order Taking ----------------------------------------------------- 10

2.1.3 Direct Distribution Models: On Basis of Management Control ------------------------------------------ 13

2.1.4 Direct Distribution Models: On Basis of Delivery Mechanism ------------------------------------------- 13

2.1.7 Indirect Distribution: Delivery Mechanism --------------------------------------------------------------------- 19

Chapter 2.2: RTM Diagnostics: Selecting an RTM Model------------------------------ 20

2.2.3 Choosing an RTM Model---------------------------------------------------------------------------------------------- 28

Chapter 2.3: Two-year RTM Roadmap ------------------------------------------------------ 29

3.1.2 Warehouse Management --------------------------------------------------------------------------------------------- 50

3.1.3 Stock Management ----------------------------------------------------------------------------------------------------- 74

3.1.4 Fleet Management ------------------------------------------------------------------------------------------------------ 86

Chapter 3.2: Clearing & Forwarding Agent (CF&A) Appointment------------------ 99

Chapter 3.3: Anchor Distributor Appointment ----------------------------------------- 103

Chapter 3.4: Distributor Appointment and Management --------------------------- 104

3.4.2 Key Elements of Distributor Management---------------------------------------------------------------------110

3.4.3 Distributor as Market Execution Partner -----------------------------------------------------------------------124

Chapter 3.5: Area Market Contractor (AMC) Appointment ------------------------- 127

3.5.1 AMC Appointment -----------------------------------------------------------------------------------------------------127

4.1.2 Cola Replenishment System (CRS) for Distributors -------------------------------------------------------131

4.1.3 DSD Router---------------------------------------------------------------------------------------------------------------135

4.1.4 Distributor Automation System (DAS) --------------------------------------------------------------------------139

Chapter 4.2: RTM Organization Structure------------------------------------------------ 143

Chapter 4.3: Proposed COA ------------------------------------------------------------------ 145

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Strictly confidential; For internal use only

Return to Table of Contents

PART 1: INTRODUCTION TO RTM

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Chapter 1: RTM Definition, Scope, and Deliverables

1.1.1 RTM Definition

Standard International Template

Design for Strategic Fit to Improve Productivity

Local Design based on Demographics & Socio-economic Factors

Return to Table of Contents

Dissatisfied Channel Partners Unplanned Discounting Write-offs and BBD

1.1.2 RTM Scope

Distribution Infrastructure Optimization

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1.1.3 RTM Deliverables

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PART 2: RTM MODELS, DIAGNOSTICS AND ROADMAP

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Chapter 2.1: RTM Models

2.1.1 Types of Distribution Models

Different Distribution Models

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Return to Table of Contents How Each Model Works: Diagrammatic Representation

Direct Distribution: Metro

Indirect Distribution: Power Town/Small Town

Indirect Distribution: Rural

Plant Plant C&FA/Depot Own warehouse/CF &A* (Depot/Godown

Distributor Milk Run/Distrib utor (Small) AMC*

2.1.2 Direct Distribution Models: On Basis of Order Taking

DSD Ready Stock Model

Hindustan Coca Cola Beverages Pvt. Ltd.@copyright2007