Have you ever worked in an FMCG company or in Telecom pre paid business?
What is the largest evil to business in both industries?
In FMCG is stocking the distributor to the maximum level and pre paid is stocking pre paid activated cards (Which stopped Largely due to the regulatory becoming stronger from a security perspective)
This is where I really appreciate Hindustan Unilever taking a stand of stopping all forms of over stocking the distributor and moving to Replenishment market. If I am correct in the year 2003 the company not only started consolidating it’s distribution to ensure ROI as well as moving out of primary based sales to Replenishment based model.
So what are the advantages of Replenishment based model?
- You move from an assumption based model to a consumer based model.
- Real time information of the market gets reflected in the performance.
- The consumer behavior for a particular product in a particular market comes out properly
- The wholesale market which is an outcome of overstocking the distributor stops. Indirectly reduces the cost of distribution for the organization.
- Actual distribution strength and performance can be monitored and actioned for a better outcome
- Product performance can be measured better.
- The sales team is continuously on their toes.
- While the list can go on, you actually become a consumer based organization.