Project on Innovations in Distribution in India

1. Innovations in
Distribution
Aishwary Kumar Gupta (B15066)
Akshay Ratan (B15068)
Ankit Anand (B15071)
Marketing Management II Nov, 2015 XLRI, Jamshedpur

2. 1
1 Contents
I. INTRODUCTION .........................................................................................................2
II. DISRUPTIVE INNOVATIONS IN DISTRIBUTION .......................................................2
III. UBERIZATION IN DISTRIBUTION.............................................................................. 3
3.1 Digitalization of Retailing ....................................................................................................4
3.2 Internet of Things ................................................................................................................5
IV. BEST PRACTICES ACROSS INDUSTRIES...................................................................6
4.1 FAST MOVING CONSUMER GOODS (FMCG) ......................................................................6
4.2 TOURISM.............................................................................................................................. 7
4.3 BANKING ..............................................................................................................................8
V. INNOVATIVE DISTRIBUTION STRATEGIES...............................................................9
5.1 DISTRIBUTION STRATEGY OF ASIAN PAINTS.....................................................................9
5.1.1 APPROPRIATION STRATEGY ...............................................................................................9
5.1.2 RESULTS OF ASIAN PAINTS’ DISTRIBUTION STRATEGY ................................................. 10
5.1.3 INNOVATIVE SERVICE INITIATIVES .................................................................................... 11
5.2 HINDUSTAN UNILEVER LIMITED (HUL)............................................................................. 11
5.2.1 DISTRIBUTION STRUCTURE OF HUL ................................................................................. 11
5.2.2 PROJECT SHAKTI.................................................................................................................13
5.3 TESCO SOUTH KOREA: Virtual Shopping Store.................................................................13
VI. DISTRIBUTION PERFORMANCE METRICS ..............................................................14
6.1 SERVICE METRICS .............................................................................................................. 14
6.2 INVENTORY METRICS .........................................................................................................15
6.3 SPEED METRICS ..................................................................................................................15
VII. CONCLUSION ............................................................................................................16
VIII. REFERENCES .............................................................................................................17

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2 INTRODUCTION
In its broadest sense, the term distribution includes all activities that enable the transfer of material,
services, and goods from supplier to the consumer by direct or indirect means. The evaluation of any
organization’s success cannot be completed without the evaluation of the performance of its
distributor partners. Challenges to the distribution channel lies right from the production location,
transportation, inventory management to optimization of supply-chain. The focus of the companies
to make their distribution channels as responsive and flexible as possible has led to the concept of a
shared economy in which managers realize that by sharing their resources and capabilities, they can
optimize the supply-chain and optimize the costs besides improving productivity. By capitalizing on
improvements in supply-chain, companies look forward to new business opportunities. As companies
are gaining experience of managing global supply-chains, the benefits of experimentation are adding
up to innovate practices across the world. The Uberization in the distribution leads to improved
customer feedback and thus help companies avoid marketing myopia.
3 DISRUPTIVE INNOVATIONS IN DISTRIBUTION
The term Disruptive Innovation is used similar to the original term coined by Christensen is interpreted
as an innovation that creates new value networks displacing the existing market trends and practices.
Driving disruptions does not necessarily mean new technological innovations, they can also refer to
new ways and optimizations to add value to the process. Disrupters can emerge from anywhere, and
instantly disperse themselves everywhere.
In comparison to the old world distribution, the latest era gave some new conventions and practices
in the new world distribution. It sees the companies in control of the process viz a viz the distributor,
a hybrid approach to the deal with flexible release strategies at a lower cost. Earlier, viewers reached
through the distributors, but now there is a direct access to the viewers. Direct sales are also the
options which many firms consider instead of just the third party sales. With technology creating such
big impacts across the supply chain, global distribution has improved. From the supply-chain
management point of view, Fisher in 1997 classified products as functional or innovative and
concluded that for functional products, physically efficient supply chains are needed, and for
innovative products market-responsive supply chains are needed. The global economy is moving
towards a trend for disruptive innovations in products. Google has launched driverless cars, E-
Commerce Giant Amazon promises to reinvent shopping yet again using drones, 3D printing has the
potential to disrupt manufacturing sector. More than anything, the world is seeing an upsurge in
bottom-of-the-pyramid entrepreneurs who are constantly looking for ways of making consumer lives
easier. With this, the need becomes to reevaluate the supply-chain becomes imperative in the global
business. In a world of dynamic changes, customer demands of flexibility in price and quality, need for
real-time information on the status of supply-chain, loop feedbacks, routing of deliveries have become
way too important to be ignored. Before analyzing the latest trends in pioneering supply-chain or the

4. 3
distribution channel process, it is important to understand the major breakthroughs of innovations in
the past which helped revolutionize the business distribution systems:
 3M’s Transportation Load Control Centre (LCC): A common practice these days, 3M centralized
the transportation planning for network synergies back in 1982. They leveraged the mainframe
software for shipper’s perspective, and removed their dependencies on plant and distribution
centres.
 Distribution Requirements Planning (DRP): Andre Martin of Abbot Labs, Canada, to solve the
problem of inventory in manufacturing and distribution setups, built the first computerized
DRP system. That led to the beginning of today’s supply-chain planning software.
 The FedEx Tracking System: The development of a new computerized tracking system
providing real-time information about package status gave rise to today’s concepts of supply-
chain information and visibility systems.
 P&G’s Continuous Replacement: P&G rewrote a mainframe software application bought from
IBM to suit consumer goods supply chain and changed the entire value-chain by driving orders
based on real-time data of sales and withdrawals. By this they could lower inventories and in-
stock retail. Consequently, Efficient Consumer Response Systems, Category Management,
Forecasting Systems were developed.
Distribution is significant to the economy as a whole, and distribution studies in the past have largely
dealt with innovations in the channels. Innovations in distribution have great potential for efficiency
improvement and channel restructuring.
4 UBERIZATION IN DISTRIBUTION
The famous author of Black Swan, Nassim Taleb, tweeted, “To Uberize”, remove the middlemen,
theme of the times.” Uberization simply refers to the focus on a socio-economic ecosystem which is
built around the sharing of human and physical resources in the value chain. Uberization taps on
innovations in digitalization of the services and distribution. It does not necessarily invent something
new but adds value to the service. In the evolution of the retail distribution, disruptive Uberization is
applied in the context of eliminating the payment from the purchase.
Uberization in retail distribution can primarily have three-fold impacts:
 Optimization in time-frames of interaction of customers with retailers
 Increased mobility on demand
 Increased trust beyond the stores leading to a balance of power between retailers and
customers

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4.1 Digitalization of Retailing
The ‘last-mile delivery’ service is the bull's’ eye here for the industry to cash on. Innovations in the last
leg of the supply chain would be giving best returns, and that is something which Amazon wants to
cash on through Amazon Flex. It promises to pay people per hour rate to use their own cars and
smartphones to deliver package on time. Retail industry are positive to these ideas which Uberization
has brought about because they need not dedicate inventory, space and staff especially in an e-
commerce business. At the same time, consumers like it because of convenience and cost-value
tradeoff.
Source: SCM World Future of Supply Chain Survey 2015
The entry of the internet and digitalization in business segment has resulted in new market
opportunities, new companies, and new business models (eg. Sorescu et al., 2011). There is an
increasing need to develop “digitalized supply networks” that make use of digital collaboration tools
to streamline information flow and improve enterprise flexibility of the supply chain. Moving all the
components of supply chain online including procurement, billing, approval cycles, and payment
procedures can help the organizations save resources, time and money. Using the cloud survey,
secured supplier relationship history, and pending processes can be accessed from anywhere. By
moving distribution systems online, not only is the financial benefit associated with the process, but
also a decrease in the carbon footprint which is the focus of major business policies and sustainability
Consumer Product
and Retail
Hi Tech Industrial Healthcare and
Pharma
20
14
13
9
8
15
6
5
APP-ENABLED GROWTH
SURVEY - UBERIZATION AS 'DISRUPTIVE' & 'IMPORTANT' FOR SUPPLY CHAIN
2015 2014

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frameworks. Not only that, the major shift of focus in the coming years is towards transparency, and
only a digitalized supply chain could help move companies towards an ‘open-data culture’.
4.2 INTERNET OF THINGS
An offshoot of digital innovation - Internet of Things (IOT), impacts us on all levels. IOT is already
reshaping supply chain strategies with phenomenal potential. A disruptive innovation, IOT, is changing
the way how suppliers and consumers interact. Now with IOT coming in, a much better integrated
model is there with data and feedbacks being provided by the consumers to corporations in real time.
Internet of Things through semiconductors, Big Data, and analytics produce infinite amount of data.
Through integrating IOT with business processes and IT management systems, corporations will
perform better at data management, predictive analysis of the consumer behavior through data
interpretation, improve consumer experience, streamline key business processes, creating new
business models, save money and resources, and generate new streams of revenues. Wholesalers are
using the IOT network to acquire new customers, develop new sales channels, increase the market
share and retain customers. We can estimate the potential of IOT by the prediction of an industry
research firm Gartner, who reported that by 2020 IOT products and service supplies will generate
incremental revenue exceeding 300$ billion. Some of the key transformations are in industrial vending,
transportation automation, automated vending, and optimization of logistics. The major digital
innovations in distribution systems are RFID enabled sensors on products, automated shelves,
sustainability monitors, digital signage, real-time data capture, demand-based pricing, smart
fulfillment centers, perishable tracking, GPS-trackers, inventory-tracking via smartphones
(Uberization), connected freight transport, and industrial wearable devices.

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5 BEST PRACTICES ACROSS INDUSTRIES
5.1 FAST MOVING CONSUMER GOODS (FMCG)
With a booming middleclass & a growing economy leading to higher purchasing power, India is a major
player in the global consumer market. Since the economic reforms of 1991, the market has seen a major
shift in the marketing pattern. Better last mile connectivity & communication facilities like mobile
phones and internet have exposed even people from remote villages to global products. The FMCG
sector is a prominent party to this growing demand. Despite this growth, FMCG faces many challenges.
Firstly, there are millions of street vendors and unregulated local kirana stores on which the companies
have little to no control. Modern retail stores like reliance and Big Bazaar have regulated the market
but they themselves have a low share due to the convenience that local kirana stores provide.
Regulatory framework has also been frequently changing leading to further challenges for the modern
retail stores. Secondly, FMCG players have been struggling with local players and duplicate products.
In order to mitigate these challenges, FMCG sector needs multiple channels to ensure last mile
connectivity and reach customers thus, managing multiple channels also becomes a cause of concern.
The 2 major factors that affect an FMCG product’s growth are the access to the market (consumer
accessibility) and the purchasing power of the consumer (Measured through the per capita demand).
For the bigger cities and satellite towns, FMCGs usually have different distribution channel for local
kirana stores and modern retail stores. The modern retail stores are served directly through the
distributors whereas the local kirana stores are served through a wholesaler who is intern served by a
distributer. With the advent of e-commerce more channels have evolved. For the smaller cities,
distributees for a distributer are geographically widespread. Hence, in such a scenario, the biggest
challenge faced by distributors and FMCGs is to lower the transportation cost.
Based on these factors, we have the following classification:
1. Cell 1 - Most chain stores or modern retail stores are served by either very largewholesalers
or distributors. Therefore FMCG companies have had to evolve their sales teams. In the
traditional structure, FMCGs had brand managers who individually approached

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wholesalers. With a large wholesaler handling multiple products, they have had to
approach the same company for multiple times for his order fulfilment. In such a scenario,
it makes more sense to have sales persons working with a large distributor or wholesalers
than working with multiple brands. Hence distribution channels have changed to
accommodate this changing landscape.
2. Cell 2 - These are generally smaller towns located in close vicinity of larger cities. Most
retailers here are served by the city distributors or stockists. These stockists try to forecast
demands and try to define best routes to cut transportation costs and thus visit the
retailers infrequently.
3. Cell 3 - These high potential markets demand a rural wholesaler. These wholesalers solve
the issue of last mile connectivity by appointing local means of transport.
4. Cell 4 - These are the consumers from the bottom of the pyramid. These markets are in far
flung rural areas with extremely low per capita income. FMCGs have had to employ the
most innovative techniques here. HUL’s project Shakti and ITC’s eChoupal are shining
examples of this.
5.2 TOURISM
Distribution Channel in tourism industry is defined as “an operating structure, system or linkages of
various combinations of travel organization, through which a producer of travel products describes
and confirms travel arrangements to the buyer“. Each sector within the tourism industry employs
different channels. Often the tourism industry has 2 intermediaries - tour operators (wholesalers) and
outgoing travel agencies (retailers). Further there are intermediaries to handle different aspects like
financial & foreign exchange, Luxury services etc. Distribution channels play a crucial role in the entire
marketing mix including pricing & branding. In this industry the channel partners not only compete
with other products but also with their associates while providing a product. Most travelers have a fix
budget for travelling, thus each channel partner tries to grab the largest pie. An airline for example
would try to sell a luxury service to its customer and would try to deviate the budget earmarked for a
hotel. Aggregators thus face a challenge coordinating with all parties. Most small and medium hotels
rely on tour operators to gain visibility whereas larger chains tend to create loyal customers and a
brand value. Being the point of contact for the customer, these tour operators can control all aspects
of a customer’s travel. They try tostrike a balance between their relationship with the hotel and service
to customer so as to gain maximum revenue while retaining customer.
However, Tour operators face stiff competition from travel clubs that provide free peer to peer
information to consumers that help them cut costs by putting in minimal effort. Thus another
important channel for tourism industry is the travel clubs.
With travel contributing almost 80% to the e-commerce sales in India, the tourism industry has seen a
major shift in marketing. Tour operators no longer have monopolistic power, thus giving hotels &
airlines stronger bargaining power. Internet has become the largest distribution channel & with
customer having the ability to tailor the product based on the budget and their preference.

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5.3 BANKING
Banks offer a bouquet of nontraditional services to their customers which includes bill payments,
purchases, credit, insurance etc. The internet has not only made these possible but also improved the
traditional services. For example, you can get an up to date statement of your account any time from
the comfort of your home. Banks have long been experimenting with various channels to reach
customers. Any improvement in communication systems has seen a revolution in the channels of the
banking industry. With postal network came the money order, with telephone came the phone
banking, internet introduced net banking and now mobility is ensuring efficient banking from a mobile
device. And no one can question that internet is has become the most important channel for the
financial services industry. This is due to multiple factors.
 It is a low cost distribution channel.
 More consumers are becoming PC literate.
However still there are consumers who prefer a morepersonalized experience when dealing with their
wealth. Thus Branches as distribution channel cannot be ignored. Hence the distribution channel
strategies can be classified as follows.
1. Local/National branch banking - It is characterized by a dense branch network and is the core
competency of most Indian banks. However, this is characterized by high costs and human
resource requirement. It is usually as loss making strategy if implemented in a) rural areas with
low customer base & b) prime commercial areas with very high running cost.
2. International branch banking - This channel focuses on local customers with strong
international ties. This channel requires strategic international acquisitions and is capital
intensive.
3. Local/National Internet banking - In the present scenario, India’s internet penetration is very
low for this channel to generate significant revenue. However due to low infrastructure costs,
this strategy can be highly profitable. Traditional Indian banks have not yet found this feasible
however, payment banks have started implementing this.
4. International Internet banking - The channel works by opening few branches within a country
with the bank still having strong dependency on its international parent. The biggest issue with
this strategy is the regulatory framework of different nations.
5. Dual Channel/ Hedge strategy - This channel combines the above 4 strategy thus combining
branch as well as Internet Banking. This gives the opportunity for banks to target the complete
market. It gives banks a chance to make small investments in internet banking while focusing
on branch banking.
Maintaining the different channels require strong coordination among teams with different focus and
experience. The branch banking team focuses on providing personalized service to customer and
physically ensuring the authenticity of transactions. However, Internet banking focuses on providing
the customer a convenient mode of communication and transaction with standardized approach and
little interaction with the bank.

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6 INNOVATIVE DISTRIBUTION STRATEGIES
6.1 DISTRIBUTION STRATEGY OF ASIAN PAINTS
Established in 1942 by four young fellows in a carport in Bombay, Asian Paints (AP) possesses a
premium position in the Indian Paint industry. Asian Paints works in 21 nations with 29 paint
fabricating offices with limit of 440 mn Lts/annum, adjusting customers in 65 nations. Asian
Paints works in five areas over the world viz. South Asia, Southeast Asia, South Pacific, Middle
East and Caribbean area through the five corporate brands viz. Asian Paints, Berger
International, SCIB Paints, Apco Coatings and Taubmans.
Asian Paints’ product mix can be broadly characterized into –
a. Decorative Segment:
 Wall Finishes: Tractor, Royale, Royale Play, Apcolite etc.
 Enamels Brands viz. Apcolite Synthetic Enamel, Utsav Enamel dominate
 Exterior Finishes: Apex, Apex Ultima, Ace.
 Wood Finishes: Touchwood, Asian Melamine Wood Finish
b. Industrial Segment:
 General Industrial Finishes: Apcolite (Hammerton Finish)
 Other Industrial Products: Expory Coatings, Chlorinted Rubberfinishes, viny I & Polyurethane
Systems.
6.1.1 APPROPRIATION STRATEGY
1. Market Condition when Asian Paints entered the business sector: The remote organizations
and their wholesale merchants ruled the business. The remote organizations named a couple of
brokers as their wholesale merchants and permitted them to sustain a circumstance of imposing
business model. Every wholesaler was appointed an extensive domain and was given the privilege to
work as the exclusive channel of the organization in the doled out region. The exchange terms were
exceptionally liberal. The organizations additionally stretched out boundless credit to the wholesalers.
The credit out-standings for the supplies made during the time were required to be settled by the
wholesale merchants just at the year-end, at Diwali time. These merchants controlled the paint
business and were making it unimaginable for another paint organization to enter and set up itself in
the business.
2. Focusing on Retail section as opposed to mass portion: Seeing this fragment was not a growth
segment, however it was surely the significant market by then. AP chose to overlook this section for
the present and go to individual buyers.

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3. Accessing Semi Urban and Rural Markets - AP additionally chose the individual customer
section, semi-urban and country territories would constitute AP's target market. All the real paint
organizations and their wholesale merchants were content with the business sector that was
accessible in the urban ranges. Interestingly, AP unmistakably saw that a substantial business sector
for paints was developing in the semi-urban and country zones, and felt it astute to tap this business
sector.
4. Recruiting Retail Dealers straightforwardly as channel accomplices: It completely avoided the
all-around settled in wholesale merchants and went specifically to the retailers. While AP's rivals
stayed content with their linkage with a modest bunch of wholesale merchants, AP favoured direct
contact with many retail merchants.
5. Country Wide Distribution - On the one side, there were the 1,000 odd little paint organizations
who, as a class, had faith in promoting their paints in restricted domains in and around their purpose
of creation. On the other side were the huge organizations who trusted in constraining their
conveyance to the huge urban areas. Rather than adopting either practices, AP voted in favour of an
across the nation conveyance/advertising. It needed to have a dynamic vicinity all through the nation,
in all the geological zones, states and domains.
6.1.2 RESULTS OF ASIAN PAINTS’ DISTRIBUTION STRATEGY
1. AP's choice to swing to the individual buyers fundamentally implied a wide item run. In the way
of things, the individual customer segment includes a wide decision regarding items, materials, shades
and pack sizes. On top of this, AP had faith in making items taking into account the inclinations of
purchasers. It assembled criticism from the purchasers and turned out items, shades and pack sizes
on the premise of such input.
2. At the season of AP's entrance, paint organizations were supplying paints in holders of 500 ml
or bigger. AP saw that there was a need in the business sector for paints in smaller packs. All end uses
did not require an expansive amount. Also, it was basic practice for customers to purchase paint at
first in a bigger amount and supplement it with smaller size buy to finish the work. AP chose to saddle
the business opportunity and began supplying it paints in little packs-in 200 ml, 100 ml and 50 ml packs.
This expansion in pack sizes additionally added to AP's product line.
3. The approach of having the vastest scope of items, hues and pack sizes had its implication on
AP's distribution. At the point when 2,500 distinct things must be made accessible to the purchasers,
it naturally implied that the organization must be prepared for high stock holding in its different
terminals/retail outlets. Appropriation was turning out to be more intricate and costly for AP.
4. The choice to go to the semi-urban and country markets as opposed to binding to the urban
markets likewise implied amplification of the appropriation capacity. AP needed to go in for more
merchants with a specific end goal to serve the scattered semi-urban and rustic business sector. The
choice likewise implied that AP couldn't choose a straightforward, brought together dissemination of
its items from its industrial facility. It needed to go in for a decentralized, field-focused appropriation,
with a system of stations found everywhere throughout the nation/promoting domain.

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5. Through its choice to go retail, AP was getting profoundly included in physical dispersion and
channel administration. In the framework picked by AP, the physical dispersion cum-channel
administration assignment was significantly all the more taxing, contrasted with the wholesaler-
arranged framework honed by the other paint organizations.
6.1.3 INNOVATIVE SERVICE INITIATIVES
 The Colour Store: Asian Paints runs two top
of the line showcase stores, in Mumbai and
New Delhi. These don't offer any paint,
however have dividers of showcases
indicating different shades and compositions
under diverse light settings. It is a retail
experience that offers a customized shading
answer for every client without specifically
offering a solitary container of paint
 Kid’s World: A break into Kids' World stamps a
unique turning point wherein the organization
offers painting plans for Kids Rooms and in
addition Kids Corners. A first in the industry, an
endeavor has been made to welcome the client
to get into a Do-It-Yourself mode with these
outlines.
6.2 HINDUSTAN UNILEVER LIMITED (HUL)
The distribution system of HUL is one of the key qualities that assist it with supplying most items to
anywhere in the nation from Srinagar to Kanyakumari. The most evident capacity of providing the
logistics backing is to get the organization's item to the end client.
6.2.1 DISTRIBUTION STRUCTURE OF HUL
HUL's items are conveyed through a system of 4,000 redistribution stockists, covering 6.3 million retail
outlets coming to the whole urban populace, and around 250 million rural customers. There are 35
C&FAs in the nation who feed the redistribution stockists routinely. The general exchange involves
supermarkets, scientific experts, wholesale, booths and general stores. Hindustan Unilever gives tailor

13. 12
made administrations to each of its channel accomplices. It has created client administration and
production network capacities for joining forces developing self‐service stores and general stores.
Around 2,000 suppliers and partners serve HUL's 40 assembling plants which are decentralized across
over 2 million square miles.
6.2.1.1 DISTRIBUTION IN URBAN AREAS
Distribution of merchandise from the assembling site to C&F operators occurs through either the
trucks or railways relying upon the time component for conveyance and expense of transportation.
From the C&F operators, the merchandise are transported to Rural Supplier by method for trucks and
the items to make the 'last mile' using popular and cheap modes of transportation.
6.2.1.2 DISTRIBUTION IN RURAL AREAS
HUL approached the ruralsector with two criteria ‐ accessibility and viability. In this regard, HUL named
a Redistribution stockist who was in charge of all outlets and all business inside of his specific town. In
the 25% of the available markets with low business potential, HUL allotted a sub stockist who should
be capable to get to every one of the towns at any rate once in a fortnight and send stocks to those
business sectors. This sub‐stockist appropriates the organization's items to outlets in nearby littler
towns utilizing transportation suitable to interconnecting streets, similar to cycles, bikes or the age‐
old bullock truck. Subsequently, Hindustan Unilever is attempting to bypass the boundary of
motorable streets. The organization all the while utilizes the wholesale channel, suitably incentivizing
them to disperse organization items. The most widely recognized type of exchanging remains the
grassroots buy‐and‐sell model. This empowers HUL to impact the retailers stocks and amounts sold
through credit augmentation and exchange rebates. HUL dispatched this Indirect Coverage (IDC) in
1960s. Under the Indirect Coverage (IDC) technique, organization vans were supplanted by vans
having a place with Redistribution Stockists, which overhauled a select gathering of neighboring
markets.

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6.2.2 PROJECT SHAKTI
This was propelled as a special initiative by HUL in late 2000; planning to make a symbiotic partnership
between HUL and its clients. Shakti had empowered Hindustan Lever to get to 80,000 of India's
638,000 villages. HUL's organization with Self Help Groups (SHGs) of provincial ladies, is turned into
an expanded arm of the organization's operation in rustic hinterlands. The SHGs have decided to work
together with HUL as a business endeavor, outfitted with preparing from HUL and backing from
government organizations concerned and NGOs. Furnished with micro‐credit, ladies from SHGs get to
be direct‐to‐home merchants in country markets. The model comprises of gatherings of (15‐20)
villagers underneath the neediness line (Rs.750 every month) taking micro‐credit from banks, and
utilizing that to purchase our items, which they will then specifically offer to shoppers. When all is said
in done, a part from a SHG chose as a Shakti business person, usually alluded as 'Shakti Amma' gets
stocks from the HUL provincial wholesaler. In the wake of being prepared by the organization, the
Shakti business person then offers those merchandise straightforwardly to customers and retailers in
the town. Every Shakti business visionary more often than not benefit 6‐10 towns in the populace
strata of 1,000‐2,000. The Shakti business people are given HUL items on a `cash and carry basis.'
6.3 TESCO SOUTH KOREA: Virtual Shopping Store
Tesco HomePlus, the retail giant, believed that its South Korean clients have amongst the longest
working hours on the planet, with youthful, upwardly versatile officials regularly caught up, making it
impossible to go looking for basic need at a conventional store, so they added to a system where the
store goes to the general population. Tesco built virtual markets in trams/metro stations all over Korea.
The "virtual stores" are basically notices on the dividers looking like a supermarket with a QR code
under it. People can take a photo of the scanner tag on their telephone and put it on their virtual truck
while they are sitting tight for their train. Following a couple of hours, all that they bought will be
delivered to their homes. Within three months of the dispatch of the virtual stores in August 2011, more
than 10,200 buyers utilized their advanced mobile phones to get to the HomePlus in addition to online

15. 14
store. In the meantime HomePlus expanded by 76% and online deals expanded by 130%. There have
been subsequent 900,000 downloads of the cell phone application.
In spite of the fact that it is possible to get to HomePlus in addition to the online store anyplace, with
the virtual metro based shopping walkways being just a minor piece of Home in addition to the online
framework, this is just the first of Tesco's tests with “captured audiences".
As a consequence of the positive response to their virtual store in Seoul, Tesco initiated an intuitive
virtual market at Gatwick Airport in London to offer vacationers some assistance with shopping
utilizing their cell phones before returning home from their vacations.
Looking ahead, Tesco has uncovered that it is drawing nearer to propelling a 'fly-through' of a virtual
3D Tesco store that will incorporate the online involvement with the exemplary in-store shopping
background. The thought at first originated from the video gaming industry, where gamers can search
for 3D things in virtual stores, as a consequence of the developing accessibility of movement sensor
innovation from gadgets, for example, the Xbox Kinect and Samsung's Smart TVs. This fortifies the
brilliant guideline of distribution; "For innovations in distribution, look for already established channels
and work with them".
7 DISTRIBUTION PERFORMANCE METRICS
Distribution systems/Supply Chains need to perform on three key dimensions:
7.1 SERVICE METRICS
The basic premise for service metrics is to measure how well we are serving (or not serving) our
customers. Since, it at times becomes difficult to quantify the value of a late delivery or a disgruntled
customer, we normally set targets on customer service metrics.
Metrics for Built to Stock (BTS) Cases-
 Line Item fill rate
 Complete order fill rate
 Delivery process on time
 $ Backordered/Lost Sales
 No. of Backorders
Metrics for Built to Order (BTO) Cases-
 Quoted Customer Response Time
 % On-time Completion
 Delivery Process On Time
 $ of Late Orders

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 No. of Late Orders
7.2 INVENTORY METRICS
The major asset which acts as blocked cash in any distribution system is the Inventory. The various
metrics used to measure performance of inventory are as follows –
 Monetary Value
 Inventory Turns; where Turns = (Cost of goods sold)/(Inventory Value)
The Monetary Value metric is most relevant, since it measures funds tied up in inventory (working
capital).
The measurement of Inventory Turns enables managers to make comparisons of inventory levels
across categories, such as different lines of business or different divisions, since the data is adjusted
to reflect the underlying “run rate” of the business.
7.3 SPEED METRICS
These set of metrics are related to timeliness, speed, responsiveness and flexibility.
• Cycle (flow) Time at a Node
• Supply Chain Cycle Time
• Cash Conversion Cycle (Inventory + Accounts Receivable - Accounts Payable)
• “Upside” Flexibility
Reducing cycle flow time lowering lead time and WIP inventory levels.
The Supply Chain Cycle Time measures the total time it would take to fulfil a new order if all upstream
and in-house inventory levels were zero. It is measured by adding up the longest (bottleneck) lead
times at each stage in the supply chain.
The Cash Conversion Cycle (or Cash to Cash cycle time) attempts to measure the time elapsed between
paying our suppliers for material and getting paid by our customers.
“Upside” flexibility refers to requirements, particularly in high-tech, that a vendor be prepared to
provide say 25% additional material above and beyond the committed order, in order for the buyer to
be protected when the buyer’s demand is higher than forecasted. This is usually stated as a percentage
of the amount on order, and sometimes contracts are explicit regarding the percentage of upside
required within various time windows.

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8 CONCLUSION
The paper first defined the meaning and importance of the distribution systems in the value-chain of
a business. It further explored the past history of disruptive innovations in distribution channels. To
stay competitive in today’s digital market and in the era of Uberization, companies are investing
heavily in digital technologies for business development and distributional logistics purposes. They not
only earn the trust of the customers and the distributors due to transparency in digital service, data
retention and security but also reduce their carbon footprint, a practice which is environmentally
sustainable in the long run. Digital collaborations are changing the way the business is conducted and
cloud computing, web 2.0 technologies, mobility and analytics solutions, and predictive analysis are some
of the methodologies assisting this revolution. We also explored Internet of Things which we feel has
the largest potential to transform how distribution takes place in any industry. IOT connects people,
machines, items and services to streamline the information to heighten the consumer experience.
Technological innovations can optimize and increase the potential-margin enhancement through
supply-chain efficiencies. We also saw industry-wide trends of distributions, and how big players are
innovating to reduce the costs of distribution and at the same time delivering added value to their
consumers. They develop strategies not only to secure large volumes of data but also to enable
analytics to predict consumer behavior.

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