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The Logistics Industry and Its Role in Indian FMCG

The document discusses the logistics industry in India and its role in fast moving consumer goods (FMCG) and perishable fruits and vegetables. It notes that the logistics industry in India is large but highly unorganized. It proposes a new distribution model to remove intermediaries and ensure goods are transported more efficiently from companies to retailers. This would lower costs and prices for consumers. It also discusses establishing managed supply chains for perishable vegetables to reduce price inflation and build consumer trust through branding. The new model has significant financial potential to lower distribution costs for FMCG companies and generate large revenues in the vegetables and fruits industry.

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Debjeet Dey
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99 views

The Logistics Industry and Its Role in Indian FMCG

The document discusses the logistics industry in India and its role in fast moving consumer goods (FMCG) and perishable fruits and vegetables. It notes that the logistics industry in India is large but highly unorganized. It proposes a new distribution model to remove intermediaries and ensure goods are transported more efficiently from companies to retailers. This would lower costs and prices for consumers. It also discusses establishing managed supply chains for perishable vegetables to reduce price inflation and build consumer trust through branding. The new model has significant financial potential to lower distribution costs for FMCG companies and generate large revenues in the vegetables and fruits industry.

Uploaded by

Debjeet Dey
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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THE LOGISTICS INDUSTRY AND

ITS ROLE IN INDIAN FMCG

PRESENTED BY : GROUP 5 :
AJAS A
DEBJEET DEY
MALVIKA MAKHIJANI
PRAKHAR PRATAP SINGH
SATISH K DAS
TEETHI JAIN
WHAT IS LOGISTICS?

 Logistics is the
management of the flow
of goods, information and
other resources, including
energy and people,
between the point of
origin and the point of
consumption in order to
meet the requirements of
consumers.
THE INDIAN LOGISTICS INDUSTRY

 The logistics industry in India is evolving rapidly.


 The annual logistics cost in India is estimated to be
14% of the GDP. Almost 99% is accounted for by the
unorganized sector.
 The Indian logistics industry is growing at 20% vis-à-
vis the average world logistics industry growth of 10%.
KEY PLAYERS IN THE LOGISTICS INDUSTRY

 TNT Express
 AFL

 DHL

 Blue Dart

 Gati

 Safexepress
 Ashok Leyland

 Agrawal Packers and Movers

 DTDC
 First Flight
THE FMCG INDUSTRY IN INDIA

 India’s FMCG sector is the fourth largest sector in the economy.


 It creates employment for more than three million people in downstream activities.
 Its principal constituents are Household Care, Personal Care and Food & Beverages.
 The total FMCG market is in excess of Rs. 110,000 crores and is growing at double

digit growth rate and is expected to maintain a high growth rate..


 FMCG Industry is characterized by a well established distribution network, low

penetration levels, low operating cost, lower per capita consumption and intense

competition between the organized and unorganized segments.


THE KEY PLAYERS IN THE FMCG SECTOR

 Hindustan Unilever Ltd.


 ITC (Indian Tobacco Company)
 Nestlé India
 GCMMF (AMUL)
 Dabur India
 Asian Paints (India)
 Cadbury India
 Britannia Industries
 Procter & Gamble Hygiene and Health Care
 Marico Industries
THE INDIAN VEGETABLE AND FRUITS INDUSTRY

 India is 2nd largest producer of Fruits & Vegetable in the world.


 India is the 2nd largest vegetable Exporter.
 Indian Agriculture sector accounts for 17% of country’s GDP, produces 64%
employment and 18% of country's export.
 India’s share is only 1% of World trade.
 It is also observed that Vegetables and fruits are the highly unevenly priced
goods whereas price can vary up to 400% or even more between different cities 1.
 There is a mismanagement in perishable vegetables which degrades the quality
and increase price variation.
OBJECTIVE AND SIGNIFICANCE OF THE STUDY

 Objective: To study the role of logistics and its


effectiveness in FMCG and commodities (perishable
vegetables and fruits).
 Significance of the study: Of high importance to
study all the sector and how a managed logistics can
better off manufacturers and consumers in FMCG and
farmers and consumers in commodities market
RESEARCH METHODOLOGY

 The study was based on wholesalers and retailers.


The questionnaire mainly consisted of open ended
questions for the secondary data.
How do you get your Dove shampoo or your favorite
soap?

 The products are first transported from the factory to the


CNFs who then send it to the redistribution stockiest
who further transports it to the wholesalers and then
finally it is sent to the retailers from whom the
consumers actually purchase!
 Thus the goods changes so many hands and thus add to
the cost which is finally borne by us.
How much extra do you pay for the vegetables you
purchase on daily basis?

 First the vegetables are purchased by an agent from 5-6


farmers.
 These vegetables are then auctioned at the mandi.
 Now the person who purchases them sends it to
wholesalers who finally transports it to the retailers.
 So, again the consumers pay for the extra costs borne!
HOW RAPIDLY THE PRICE MULTIPLIES?

 Suppose the potato is priced at Rs. 6.50 by the farmer, it will be


charged at Rs. 10 in Agra considering the added transportation cost.
 The same potato when brought to Delhi which is barely 200 km away
from Agra is sold at Rs. 20 here; thanks to the added transportation
cost.
 The price thus multiplies at (53%+153%=206%).
 With all this, the freshness of vegetables is also not ensured!
The Current Structure of Distribution
OUR PROPOSED MODEL!!

 Remove the entire intermediary channel between company and retailer.


 Only one distributor who will work for several companies simultaneously.
The distribution company will have a large warehouse in all the states and
small warehouse in all the smaller cities.
 They will collect products from different companies and then can transfer it to
their city warehouse as and when required. For very small town where there
is no city warehouse the company can transport all the demanded products of
different companies. Hence full payload capacity of the truck will be used.
 From the city warehouse all the demand of the local city will be met and
transportation will be done with the help of Tempos and Lorries.
 FMCG sector is a highly competitive sector and hence companies will
eventually pass on the added benefit to the consumers and hence they will
also get better discounts.
RECOMMENDATIONS

 The price of the vegetables can be controlled by collecting


the vegetables at the local. In the morning when they are
brought from the farms and there by loaded into the trucks
and they will reach the destination in average 6-7 hours
and hence available for the distribution in the destination
city by the evening (this is the time when most of the
people go to collect the vegetables from the market).
RECOMMENDATIONS

 The second problem of presence of extensive middlemen


which cause the price to inflate by 200% can be solved by
the managed supply of fresh vegetables which can be
packed and priced. Hence branding the commodity like
vegetables will inculcate the trust among the consumers
and hence it will be very profitable for the company which
is distributing all the products.
FINANCIAL ASPECT OF THE MODEL

 The whole model is very lucrative as we just distribute products of three companies than

also the total product distributed through our channel will be almost 30,000 crore and

removing the expenses, distributing company can easily save 5-6 percent. Hence total

potential for a company to earn through distribution of FMCG is close to about 1500

crores almost equal to the profit earned by the Hindustan Unilever in the financial year

2008-09.

 Now the contribution by distributing vegetables and fruits: This industry will command a

margin of close to 30-40% and turnover of this sector is bound to be high as total

industry is worth 40 billion dollars and 98% of it is unorganised and very unevenly

priced.
THANK YOU ! !
!

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