kalyan pharma caset

7/31/2019 Kalyan Pharma Caset

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Sales and Distribution Management

Kalyan Pharma Case

Submitted to Dr. G Sridhar towards Sales andDistribution Management

By Garima Dhamija

Epgp-03-113


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Overview

Manufacturer of glass, pesticides and chemicals, pharmaceuticals, veterinary productsand poly propylene fibres

Independent Product Production and Distribution Systems Annual sales turnover increased by 11% in 1990-91 over the previous year KPL had achieved its leading position through continuous changes in product mix,

promotion and distribution as per changing market conditions

Distribution Strategy

Wide network and open door policy: Chemists could also directly approach KPL for itsproducts

Prior to 1972 was Sole Selling Agency approach where exclusive sole selling agent fordistribution appointed, with 15% commission which covered distribution costs like

delivery to chemists, admin, maintenance etc.

From 1972 to 1979, distribution through regional marketing companies to strengthenpresence in secondary and tertiary markets.

Formed 4 regional marketing companies for promoting goods to doctors and retailers;stocking and movements of goods taken over by KPL

At this stage, the company had the largest number of branches in the industry From 1979 to 1987, focus wholesalers for distribution; started giving goods on credit Annual sales target linked rebate from 2.5% - 5% Products were sometimes used as Loss leaders by the trade In 1982, KPL stopped direct supply to retailers, restricted supply to selected wholesalers Wholesalers were not able to promote the product 1987-1990: Introduction of Regional Depots (KRDs) In 1987, half of the branches shut down


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Stocks now dispatched from factory to one location in a state to be supplied to branch.New stock point called the KPL Regional Depot (KRD)

Higher cost of distribution and poor customer service Sales promotion was neglected Present System (1991): Distributors introduced in every state To provide better service to the customer, reducing accounts receivables and improving

sales and profitability

Product flow from the factory to KRDs to distributors who would then supply to thewholesalers

Objectives of the New System:

Improvement in

Customer Service Sales and Profitability Reduction in Accounts Receivables and Incorporating stocking and dispatching work at various branches

Cost AdvantagesManpower

Elimination of 200 people employed at KRD Order Processing

Other Costs

Reduction in costs of accounts receivable by elimination of KRD Reduction in transportation costs due to elimination of one company level in the

channel

Cost related to debt collection would be reducedInventory Costs

Costs of inventory keeping by KRD would become zero. Establishment costs in terms of infrastructure would decrease


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Meeting Objectives after the changes

Inventory levels at different links had reduced Customer service had increased through faster order processing Book debts gone down from 90 days to just 7 days of sales, increasing profitability Distribution staff at KPL reduced from 600 to 200

How IT can be leveraged to improve further?

IT can help in virtual design/re-design and test-run of distribution channels to predictchanges as per changing market conditions

ERP tool to help manage inventory levels CRM toolkit to manage leads and contacts related to customer service

kalyan pharma caset

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