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Distribution networks…the Jugaad way
The basics of management state that no matter how good /gold standard the quality of the product, its relevance to the marketplace (consumers), the communication strategy, the pricing, the biggest stumbling block at times turns out to be the distribution network. At the risk of placing the various factors determining the success of a brand in the marketplace, ‘distribution’ should be the first among the equals.
The textbooks propagate lucidly various distribution models and most of them have tasted success in the marketplace. These models are conventional in nature and approach wherein and whereby they lay out a mechanism (road map) for the brand to reach from the plant to the consumer often denominated by people / institutions. They are clearly identifiable, have specific responsibilities and spheres of influence and often perform their chores along the dotted lines. Challenges arise when conventional road maps for distribution planning are turned on their heads – essentially circumstances arise where we end up having so many tiers / layers of intermediaries for the product (used interchangeably for brand) to reach the consumer that it results in
  • Inordinate time delays
  • Rise in distribution costs
  • Proliferation of competitors / substitutes / cheap imitations
  • Loss of equity for the brand and the company
My current assignment in the automobile trade requires me to travel to various districts and sub-divisions which throw some interesting models of distributions hitherto not written explicitly within the realms of textbooks.
Imagine a retail outlet operating in a sub-division which is at least 200 kms from the main marketplace. At 5PM a customer requires a certain product which is expensive and the retailer has a definite margin to make. The product is out of stock with the retailer and available in the main marketplace. There is no way the conventional distribution model can service this need by the next day at a cost which would make business sense for the retailer and the customer. Is there a way out? Definitely yes. I have started to envy the efficiency of this distribution model.
In this first instance, the retailer calls up his associate in the main marketplace who promptly packs the product, reaches out to the nearest interstate bus heading towards the retailers sub-division, hands over the parcel to the driver/ conductor in lieu of a consideration which will be paid to them by the retailer when he comes to collect the product. The contact details of the driver / conductor alongwith the details of the bus are promptly passed to the retailer. Rest assured, the parcel is in safe custody, adequate care is taken in case the material is fragile and the moment the bus reaches its destination the retailer picks up his parcel in exchange for the consideration. Typically the customer who placed this order at 5PM with the retailer is able to collect his parcel the next morning from the retailer by 1PM. Just think!
Another instance is the so called ‘human carriers’, a term which I would use in the rest of my post. Human carrier is a person who travels at a pre-decided frequency between two cities – collecting orders from the city of origin, buying the products against collected orders in the destination city and then heading back to the city of origin. The orders placed by the retailer which require material from a distant market place are delivered to him within 24 hours at his doorstep in a safe and secure manner.
So what makes these distribution models tick? What is in it for everybody that the cycle gets repeated day in and day out? For starters,
  • The customer gets his requirement serviced in an agreed time frame.
  • The retailer gets to make a decent margin with a happy customer base.
  • The associate in the main marketplace gets to offload his inventory in distant locations which otherwise wouldn’t be possible.
  • The human carriers and the people involved under the first instance, get to make additional monies and believe me it is not peanuts.
  • It is an alternative employment option for human carriers.
  • The product is transferred from one location in a safe, secure environment with clearly communicated timelines.
One thing though in both these instances is the extent of trust on human carriers or the people involved in this entire chain. Nobody chases anybody, things just seem to fall in place, there is no exchange of written documents, the only thing which works is ‘Trust’.
This is ‘the jugaad way of distribution’
Wondering if two entities operating in different industries could piggy back on the distribution networks of each other.
Views please….
By: Sumit Singh
Dated: 2nd Jul, 2014

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