Nestlé India: Adopting a Regional Approach in its Distribution Strategy
| Case Code: OPER148 Case Length: 12 Pages Period: 1959-2020 Pub Date: 2021 Teaching Note: Available |
Price: Rs.300 Organization : Nestlé India Limited Industry : Food & Beverage Countries : India Themes: Supply Chain Management, B2B Marketing, Distribution,Operations Analysis |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Nil’s Distribution Process
Analysts felt that NIL had a viable distribution process (See Figure I). The final products from the company’s factories were transported to the mother warehouses at various places. The stocks from the mother warehouses were then sent to Carry and Forward (C&F) agents where they were stored as a property of NIL..
Terms of Operations
NIL established certain policies to enable distributors to manage their operations easily and to see to it that the stocks were supplied to the wholesalers and retailers on time..
Logistics and Supply Chain
In NIL, logistics included road transportation through container trucks. The company was connected to distributors/ super stockists through SAP software for online order booking and processing. SAP provided the ‘stock in transit’ module, which was installed in the distributors’ network systems for tracking the supply of goods...
Hyper Local Cluster Approach
NIL started theorizing the Cluster Model toward the end of 2016, and adopted it fully at the beginning of the year 2018. NIL divided India into 15 consumer clusters and implemented a hyperlocal strategy in each cluster, with the intention of offering more focussed solutions to consumers. The company adopted the hyperlocal strategy, after it recognized the fact that the tastes and preferences of a Maggi or a Nescafé consumer in Mumbai were somewhat different from, say, that of a person living in Salem in Tamil Nadu..
The Road Ahead
NIL had clocked total sales of Rs 35.25 billion in Q3 2020, ending on September 30, 2020. Domestic sales as well as total sales grew at 10.2% and the total profit during this period was Rs 5.87 billion. As a result, the company had announced an interim dividend of Rs. 135 per equity share.
Exhibits
Exhibit I: NIL Timeline
Exhibit II: NIL Product line, as of 2019
Exhibit III: NIL Key Financials
Exhibit IV: Tier classification of cities in India
Exhibit V: NIL Products’ Market share in India - 2020
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