Focus: How can SNA improve distribution networks used by firms (mainly in the Indian FMCG sector)
Background
India has 9 retail outlets for every 1000 persons which easily amounts to the largest in the world.
With the highly relationship based nature of the distribution system combined with the sheer size of the undertaking, FMCG companies always adopt established wholesale distributors to take care of their distribution needs.
These distributors are assigned territories but the task of governing the distribution network is too tedious and expensive and this lack of control combined with the highly informal nature of the distribution system in India can lead to competition among distributors employed by the same firm and this results in inefficiencies.
Not only internal competition is the problem but also, the same distributors are employed by several firms and carry similar products. This can lead to a conflict of interest with the distributors acting in accordance with the invisible hand, causing a company to unwittingly become the victim of intentional inefficiency.
Questions that can be answered
1. Which distributors to use for a selected geography?
2. How to better define territories with respect to available distributors?
3. How to prevent the overlap of territories assigned to distributors?
4. How to prevent overlap of substitute products of another company in a given region.?
5. What combination of distributors gives you the best results at the lowest cost?
Hypothesis
The networks used by individual distributors can be framed by taking the distribution network being operated by the distributors under scrutiny via survey at the time of application for a contract to identify nodes(sub-distributors, retailers etc) and later assessing each node and assigning them attributes of volume, penetration and geographical spread
This can be combined with the demographics data available to most firms to optimize the distribution network for reach and efficiency.
Implementation
Detailed account of the Distributors' networks and their relationships with the various nodes in their network must be obtained at the time of awarding contracts. This can be done via interviews, surveys etc. whichever method is most convenient.
When the data has been collected, the reach, penetration and overlaps can be assessed for each potential distributor and also the combination of the distribution network employed at district/state and country level.
Conclusion
Applying SNA for framing your firm's distribution network can help optimize reach by identifying which distributors have the best formed networks, and can help achieve lower cost by identifying which combination of distributors results in lowest overlap
Background
India has 9 retail outlets for every 1000 persons which easily amounts to the largest in the world.
With the highly relationship based nature of the distribution system combined with the sheer size of the undertaking, FMCG companies always adopt established wholesale distributors to take care of their distribution needs.
These distributors are assigned territories but the task of governing the distribution network is too tedious and expensive and this lack of control combined with the highly informal nature of the distribution system in India can lead to competition among distributors employed by the same firm and this results in inefficiencies.
Not only internal competition is the problem but also, the same distributors are employed by several firms and carry similar products. This can lead to a conflict of interest with the distributors acting in accordance with the invisible hand, causing a company to unwittingly become the victim of intentional inefficiency.
Questions that can be answered
1. Which distributors to use for a selected geography?
2. How to better define territories with respect to available distributors?
3. How to prevent the overlap of territories assigned to distributors?
4. How to prevent overlap of substitute products of another company in a given region.?
5. What combination of distributors gives you the best results at the lowest cost?
Hypothesis
The networks used by individual distributors can be framed by taking the distribution network being operated by the distributors under scrutiny via survey at the time of application for a contract to identify nodes(sub-distributors, retailers etc) and later assessing each node and assigning them attributes of volume, penetration and geographical spread
This can be combined with the demographics data available to most firms to optimize the distribution network for reach and efficiency.
Implementation
Detailed account of the Distributors' networks and their relationships with the various nodes in their network must be obtained at the time of awarding contracts. This can be done via interviews, surveys etc. whichever method is most convenient.
When the data has been collected, the reach, penetration and overlaps can be assessed for each potential distributor and also the combination of the distribution network employed at district/state and country level.
Conclusion
Applying SNA for framing your firm's distribution network can help optimize reach by identifying which distributors have the best formed networks, and can help achieve lower cost by identifying which combination of distributors results in lowest overlap
1 comment:
Good idea, but there is no real network question, despite the fact that it is indeed a distribution network. The way you've approached it is more like a "maximizing the efficiency of a system" solution than a network analysis.
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