What’s been done
Distributor’s territory revamped.
Turnover: Rs. 60 lakhs >> Rs. 84
lakhs.
A total of 98 outlets generate 35
lakhs in revenue. They are critical
to the distributor, commanding
premium services such as
purchase discounts, F8 frequency
attendance by sales units, and
extended credit period.
Based on the above hypothesis,
the following explains the
distributor's financials post
territory revamping.
The distributor earns 8% of Total number of outlets 450 >>
turnover as gross margin 1035
Prior to the revamp, the
distributor used a ready-stock
coverage strategy, which resulted
The number of sales units were
in the cancellation of 13% of
insufficient before the revamping
orders. We anticipate the
and hence needed to be
distributor will transition to an
expanded from 2 to 6.
order-taking coverage model
since 12% of turnover is a major
portion of the gross margin.
Present
Status
Analysis
A – Top 38 stores which bring Rs 18 lakh turnover for the distributor. Average monthly order >Rs
47,000, Earn 2% on their purchases.

B – Next 60 stores which bring Rs 17 lakh turnover for the distributor. Average monthly order >Rs
28,000, 1.5% discount on their purchases

C – Around 250 stores which bring ≅Rs 34.4 lakhs in revenue. Average purchase order around Rs
14,000. Although they are not as lucrative as A and B category stores, they give decent business and
do not need to be given any discount.
D and E – Final groups of around 700 stores which collectively bring >Rs 15 lakhs in revenue. Can be
converted into bigger outlets.
Analysis
One of the key issues with the initial territory design was that sales units were unable to
manage more than 40 calls/day, resulting in lower productivity.

Even after transitioning to an order-taking model, the number of units necessary (3 local
+ 3 van) to cover 1035 locations was too expensive.

As a result, we believe it would be better for the distributor to redirect some stores
(ideally in the D and E categories) to wholesale coverage.

It would lighten the load on the sales units while also saving money by lowering the cost-
to-serve.

We can service 749 outlets through distributor coverage if we consider two local and
two van routes, each with one unit.

Coverage for wholesalers would need 231 local stores and 55 van outlets, a total of 286
outlets.
 Find a proper differentiation and segmentation of the
outlets based on the quantity of business they provide.

Reduce the number of units while attempting to maximize

the number of outlets that can be served.

OVERALL Keep inventory for only 5 days of monthly sales in a 22-

day month to save expense on inventory.
SUGGESTIONS
Delegate the remaining outlets to wholesaler coverage.

By following the design given above, we discern that the

distributor may achieve his desired net profit margin of
2.5 % as follows.
FINANCIALS
 ACTION PLAN
Make efficient Route
Maps
All routes should begin and
terminate near the depot.
All of the outlets along the
route should be near to
one another.
The total distance of the
route should be limited.
Reduce wholesaler
coverage
As existing D and E stores
become bigger, absorb
wholesale covered stores
to distributor coverage
Continue to push newer
varieties of products to the
new stores
Increase number of sales
units and revamp route
maps accordingly
Achieve targets
continuously
Train salespeople
accordingly to push existing
and new products
Motivate salespeople to
look for more stores in
order to convert them to
prospects
Create an appropriate
compensation plan for
salespeople
Reduced workload Convert D and E
on sales units category outlets to C
category
In-store time should be Around 400 outlets which
maximized give business less than Rs
Transit time should be 10,000
minimized Provide newer varieties of
Time spent on depot products to these stores in
should be minimized by order to increase revenues
planning supplies Increase credit period as
adequately these stores start giving
Time from depot to the more business
first outlet should be Introduce discounts as
minimized existing C category stores
enter B and A category
stores