Supply Chain Management in Parle-G

Parle Products is an Indian private limited company. It owns the famous biscuit brand Parle-
G. As of 2012, it had a 35% dominant share of the Indian biscuit market.

About Parle:
Founded: 1929.
Headquarters: Mumbai.
Founders: Chauhan family, Mohanlal Dayal Chauhan.
Subsidiary: Parle Biscuits Pvt. Ltd.
Type of business: Private company limited by shares.

Parle G Distribution Network:

Intensive Distribution: Parle uses Intensive Distribution for Parle G. This is the ideal strategy
for the market leader as intensive distribution has the following advantages-
1. Increases coverage and sales.
2. Increases product availability.
3. Encourages retailers to compete aggressively. Higher competition leads to narrower
margins for the retails hence, increases the ultimate margin for the manufacturer.

The Channel Members of Parle: The Parle distribution network for biscuits has essentially
four levels as enlisted below –
1. Parle Depots.
2. Wholesalers and Distributors.
3. Carry Forward Agents (if required).
4. Retailers.

Logistics of Parle: Parle has nearly 1500 wholesalers, catering to 425000 retail outlets
directly or indirectly. A two hundred strong dedicated field force services these wholesalers
and retailers. Additionally, there are 31 depot sand Carry and Forward agents supplying
goods to the wide distribution network.
Parle has level 1, level 2, level 3 distribution channels levels –
Level 1: Availability of Parle G biscuits at all departmental stores across the length and
breadth of the country.
Level 2: Since it's an FMCG product this channel exists for customers scattered throughout
the country.
Level 3: Mass consumption and suitable for National and International coverage. For e.g.
Parle's international operations consist of serving markets in the Middle East, Africa, South
America, Sri Lanka, Australia, and North America for which the 3 level distribution channel
exists.

Dynamics: Parle has a multi-channel marketing system since it uses more than two marketing
channels to reach all its customer segments.
Selection of Distributor in Parle G:

Parle takes into consideration a host of factors while selecting the channel members. This is
because it believes that the selection of channel members is a long-run decision and the rest
of the decision regarding the supply chain depends upon the efficiency and coverage by the
channel members.

The following are the host of factors considered by the company in selecting the channel
members:

Authentication is required by regarding the identity of the channel members, which includes
the name and address, photograph of the location.
Proof of solvency which requires name and address of the channel member‟s bankers.

Safety of the inventory, which means that the distributor/ dealer should get the stock of the
company insured.

Inventory or the perishable goods kept by the distributor/ dealer should be in good condition
which means a detail of storage space and Refrigeration facility is to be provided.

Details of the delivery vehicle, which includes the following - Light Commercial Vehicles,
Matador, 3 Wheeler Van, Tricycle Van and Hand/Pushcart, The number, and model of each
of the vehicle need to be furnished to the company.

The company acknowledges the fact that it needs to be sensitive to market demands. For this,
it requires that a number of salesmen need to be present in the field.

The salesmen to are divided into various categories like The Field salesmen | Counter
salesmen.

The details of Clerical Staff and labor are to be provided. The technical competence of the
salesmen needs to be mentioned.
Details of the various products of other companies that the channel member keeps having to
be provided. The following also need to be furnished with the above - The annual sales of
these products have to be mentioned. & Details of complementary products and product lines
need to be mentioned.

Dealers of the company must carry a good reputation. This is due to the fact that Parle
believes that the reputation of the dealer affects the clientele in the long run.
Market coverage by the distributors needs to be defined which includes details of Geographic
coverage and Outlets per market area.
The company also requires the dealers to furnish any Advertising and Sales initiative
undertaken by them on behalf of the company.
The motivation of Parle G Distributor:

Parle strongly believes in maintaining a good relationship with the channel members so
that they are genuinely motivated to work for the company. For the company, motivating its
channel members is of utmost priority because of the following reasons - If the channel
members are motivated, they can also initiate advertising and sales promotion schemes on
behalf of the company. & However, to keep the channel members motivated to work, the
company has to incur certain costs but the benefits of it are felt in the long run.

The Distributors:

One of the main factors, which keep the distributors motivated, is the margin. Usually, the
margins offered by Parle are 8%. Nowadays it has been raised to 8.5%.
Volume-wise this comes out to be a big figure since Parle's product has a good demand in the
market. However, compared to the other companies the margins are still lower since the new
players in the market offer a much higher margin. But the very fact that Parle's products have
good demand in the market motivates the distributors to stock it.

Parle Products being a cooperative cannot afford to give heavy monetary incentives. Parle’s
products are considered to be value for money since the company does not believe in
charging high margins. In fact, all monetary incentives are just the short run means to
promote the company‟s product.

In order to keep the Channel members motivated in the long run, Parle has built on the
concept of “Trade Marketing” which makes the dealers and the distributors believe that the
company’s products are worthy of being pushed in the market.
The company is organizing various Total Quality Management initiatives and workshops.
Here various counseling measures are undertaken by the company to improve the overall
working of the distribution network.

Vision and mission statement: the company cascades down the vision to the various channel
members; this is done through various events organized by the company at different locations
where the values of the company are made clear and enforced to the channel members.
Also, the fact that Parle being a cooperative society cannot afford to spend exorbitantly on
such events therefore it has a very traditional way of organizing this get-together which
leaves an impact on the members.

Factors Affecting Channels of Distribution in Marketing Management

Factors Influencing Channel Selection:
Every producer, in order to pass on the product to the consumer, is required to select a
channel for distribution. The selection of the suitable channel of distribution is one of the
important factors of the distribution decisions.

The following factors influencing the selection of the channel of distribution:

1. Factors Pertaining to the Product:

The selection of proper channel of distribution can only be made keeping in view the nature,
qualities and peculiarities of the product.
The following factors concerning the product, affect the selection of the channel of
distribution:

i. Price of the Product – The products of a lower price have a long chain of distributors. As
against it, the products having higher price have a smaller chain. Very often, the producer
himself has to sell the products to the consumers directly.

ii. Perishability – The products which are of a perishable nature need lesser number of the
intermediaries or agents for their sale. Most of the eatables (food items), and the bakery items
are distributed only by the retail sellers.

iii. Size and Weight – The size and weight of the products too affect the selection of the
middlemen. Generally, heavy industrial goods are distributed by the producers themselves to
the industrial consumers.

iv. Technical Nature – Some products are of the nature that prior to their selling, the
consumer is required to be given proper instructions with regard to its consumption. In such a
case less of the middlemen are required to be used.

v. Goods Made to Order – The products that are manufactured as per the orders of the
customers could be sold directly and the standardized items could be sold off only by the
middlemen.

vi. After-Sales Service – The products regarding which the after-sales service is to be
provided could be sold off either personally or through the authorized agents.

2. Factors Pertaining to the Consumer or Market:

The following are the main elements concerned with the consumer or the market:

i. Number of Customers – If the number of customers is large, definitely the services of the
middlemen will have to be sought for. As against it, the products whose customers are less in
number are distributed by the manufacturer himself.

ii. Expansion of the Consumers – The span over which are the customers of any commodity
spread over, also affects the selection of the channel of distribution. When the consumers are
spread through a small or limited sphere, the product is distributed by the producer himself or
his agent. As against it, the goods whose distributors are spread throughout the whole
country, for such distributors, services of wholesaler and the retailer are sought.

iii. Size of the Order – When bulk supply orders are received from the consumers, the
producer himself takes up the responsibility for the supply of these goods. If the orders are
received piece-meal or in smaller quantities, for it the services of the wholesaler could be
sought. In this way, the size of the order also influences the selection of the channel of the
distribution.

iv. Objective of Purchase – If the product is being purchased for the industrial use; its direct
sale is proper or justified. As against it, if the products are being purchased for the general
consumption, the products reach the consumers after passing innumerable hands.
v. Need of the Credit Facilities – If, for the sale of any product, it becomes necessary to grant
credit to any customer, it shall he helpful for the producer that for its distribution, the services
of the wholesaler and retailer businessmen be sought. In this way, the need of the credit
facilities too influences the selection of the channel of distribution.

3. Factors Pertaining to the Middlemen:

The following are the main factors concerned with the middlemen:

i. Services Provided by Middlemen – The selection of the middlemen is made keeping in

view their services. If some product is quite new and there is the need of its publicity and
promotion of sales, then instead of adopting the agency system, the work must be entrusted to
the representatives.

ii. Scope or Possibilities of Quantity of Sales – The same channel should be selected by
means of which there is the possibility of more sales.

iii. Attitude of Agents towards the Producers’ Policies – The producers generally prefer to
select such middlemen who go by their policies. Very often when the distribution and supply
policies of the producers are being disliked by the middlemen, the selection of middlemen
becomes quite limited.

iv. Cost of Channel of Distribution – While selecting the channel of distribution, the cost of
distribution and the services provided by the middlemen or agents too must be kept into
consideration. The producers generally select the most economical channel.

4. Factors Pertaining to the Producer or Company:

The following factors, concerning the producer, affect the selection of the channel of
distribution:

i. Level of Production – The manufacturers who are financially sound and are of a larger
category, are able to appoint the sales representatives in a larger number and thus could
distribute the commodities (products) in larger quantities. As against it, for the smaller
manufacturers, it becomes necessary to procure the services of the wholesalers and the retail
traders.

ii. Financial Resources of the Company – From the financial point of view, the stronger
company needs fewer middlemen.

iii. Managerial Competence and Experience – If some producer lacks in the necessary
managerial experience or proficiency, he will depend more upon the middlemen. The new
manufacturers in the beginning remain more dependent upon the middlemen.

LOGISTICS:-

As demand for Parle products dispersed and spread over a wide geographical area.
There is no dislodging Parle-G in its segment. Industry observers mainly attribute it
to its well-entrenched distribution (the company covers 12-15 lakh outlets across the
country) which can beat any new player wanting to make an entry. In any case, the
volumes are expected to come from this segment alone with the others (the non-core
segments) such as the salty and cream biscuits commanding meagre volumes
between three and four per cent of the entire biscuit category, according to the
company. The Marie segment, however, seems to register higher volumes of 12-13
per cent while the sweet and salty category registers a nine per cent volume in the
market.

Logistics is a process of planning, implementing and controlling efficient and cost-

effective flow of materials and information from point of origin to point of
consumption. Hence, Logistics is nothing but the process of strategically managing
the movement and storage of materials, parts, and finished inventory from suppliers,
between enterprise facilities and customers.

Some of the functions of logistics are as follows :-

 Transportation Management :- A company doesn’t have its own

transportation service. It has given to few Logistics Pvt. Ltd. on contract
basis.

 Warehousing:- As there is huge demand of Parle products so

they are always in short supply. But as finished products are ready than they
are kept at the place allotted in a factory premises to store the goods. There is
no much cost incurred in warehousing.

 Inventory:- The company has large no. of suppliers so there is no need for
much inventory.