Henkel Cosmetics Egypt

About the company Henkel is a multinational company with the headquarters in Dsseldorf Germany established 1876Operates in 81 countries worldwide with 50,000 employeesThree main business divisionsAdhesive technologies (Pattex, Pritt, Loctite)Laundry & home care (Persil, Pril, Dixan)Cosmetics and toiletries (Schwarzkopf, FA, Dial) Annual NES is 13.5 Billion Euros in 2011

Henkel Egypt Cosmetics DivisionOur concern is Henkel Egypt Cosmetics business unit.The company annual NES is 150 MEGPCurrent Sales strategy/pattern of cosmetics focuses on SALES IN to the companys distributors (traditional trade & modern trade)The distributors perform warehousing, distribution on cost + commission basis

ProcessThe process is as follows:Company imports and produces products.Company stocks its products in company warehouses.Company performs its monthly sales through shipping volumes of products into its two channels (traditional & modern) SALES INThe company tries to boost the demand and SALES OUT of its products to end users through BTL & ATL activities in both channels

DiagramThe following diagram is mapping the strategy that the company uses for distribution and sales pattern maintained to achieve monthly sales targets

Facts & FindingsExpired & slow moving products wroth 3 MEGP with 15% increase Vs. previous yearAnnual sales returns amount of 26 MEGP with 40% increase vs. previous year.Stock replenishment cost 0.50 MEGP with 27% increase vs. previous year Extra warehouse rentals to distributors 360 TEGP

Facts & FindingsExpired products execution provision increasing 18% Vs previous year reaching 2.5 MEGPStocks at traditional channels reaching 250 days.Sales out percentage of sales in decreasing 12% that last year reaching 66%

Facts & FindingsA/R % increase to reach 40% of NESOver dues increase to reach 17% of total A/RCredit terms increased to distributors from 60 to 90 days which affects the cash networking capital negatively.

Conclusion

Achieving targets does not always indicate a successful strategy

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