Skipper Pipes Limited

It was a constant battle between the head office and the plant teams because the plants were really high on their inventory levels, and, there was pressure from the head office to reduce inventory and to reduce dead stock. This high inventory was really not necessarily their mistake. So, there would be a little bit of blame game going on that. “No, you know, we did not produce this just by our own decision, it was more from the sales team”, but then the sales team said, “yeah, we felt that this would sell, but then it did not”. Then, it reached a stage where there was a lot of inventory that had not moved for a year or two, or even more. At the distributors’ end, again, it was the same story. A lot of push sales was involved that led to inventories building up at their level. There was a constant battle between the distributor and the company to pay on time; which they could not, as they had not sold that inventory. And, because both the company and the distributor channels were clogged, the retailer would not get what he wanted, and therefore, he would inevitably just go to another company to buy those products. So, these were some of the supply chain challenges.

The most important aspect of the solution was that we transitioned from a ‘push’ to a ‘pull’ mechanism. The first step in that journey was to understand why our current push system was harmful for us. We realized that a push system can never result in sales continuity. It was never going to create a business that was going to be ever-flourishing for years to come. Do you know that every deal that was struck between the company and the distributor had elements of price negotiation, schemes, etc.? Because that was how you were able to sell; because, you are pretty much just sitting across the table and deciding – can you please buy this much, and we will give you this much extra? On the other hand, from the retailers’ perspective, they were juggling with their limited space and their limited capital. And because of that, they were unable to buy some of the things that they actually needed, which they wanted to sell. So, you know, a pull-based mechanism takes away that decision from the distributor. It moves him from what he wants to buy, to what he needs to buy. We could tell the distributors – “we understand what the trends are in your market, and we have the data to support that understanding.” And that data helped us to dispatch only the required materials to the distributors. That helped the system to really smoothen itself out so well that we were able to relieve all of that pressure, and provide the retailers with the correct SKUs, what they needed and the quantity that would keep them satisfied, so that they do not need to turn to another brand.

We have tried all of the different kinds of trades schemes that you can think of – Diwali Bonanzas, gold schemes, foreign tour schemes – all of that. However, the one feature that was common between all of them was that they were all for a stipulated time period. It used to be, say, traditionally a month long or three months long, maximum. And, these schemes were introduced typically during the lean periods, and you feel happy that you have done your best to achieve the best possible sales.

But what used to happen with this was that, we used to just give them the schemes. The distributors would have to work with that and they would buy as per their capability. It was not that they could just magically buy a lot more, but they would take a little bit of extra, which would result in stock dumping, which would result in them not purchasing in the next quarter. A lot of the smaller players would be dissatisfied with these schemes as these schemes are typically ladder schemes. So, the larger distributors are the ones that can actually go on that really nice trip or get that really nice vehicle or whatever. And the smaller guys would just not even try for it because they know that they are not going to be able to do it.

The competition typically works in this market with quarterly schemes or monthly schemes. They are mostly target linked. And you know, that obviously results in distributors or retailers buying a lot more than what they can consume, or what they can sell. The Loyalty Program, on the other hand, is on the other extreme, where no one is pressurized to buy. There is no time limit that you have got to buy in. So that obviously helps retailers to work at their own pace. Now, the flip side to this is that the competition does come out with very lucrative schemes, typically, in quarter four and during low seasons. Where our sales team does come back to us and say that we are unable to sell in a particular market because XYZ brand has come out with a scheme where they are giving an absurd amount of benefits to the retailer. That is something that cannot be helped. I mean, we are not in it to just sell for that particular period.

Retailers who are getting associated with us under the loyalty programme or who are seeing the benefit in the loyalty programme will know that if you buy every week, and if you keep increasing your range, you can potentially earn a larger percentage. So, our loyalty programme is not fixed because there are multiple additional multipliers. There are bonuses that are given, and it depends on a retailer how engaged he gets. So, there is a little bit of gamification to it. Typical retailers would see that – “If I really want to earn a lot more, I can make use of these multipliers, and then I can earn pretty much more than any other competition scheme.”

The way we engage with our retailers is something that was non-existent in the past, you know. Because traditionally, we have always been a company to a distributor model. Of course, our salespeople were there in the market. They were working with our distributors to go and meet their set of retailers. But that set was very small at that stage because typically it was more of a wholesale model. So, they would just be going and meeting, say about 20, 30, 40 odd retailers in a particular geography, whereas that number has now grown to 300 or 400 retailers in that region. The way we interact with them has definitely changed. Earlier it was more of just stepping in and deal striking at that level as well. Whereas, now it is a little more informed. Our people are aware of what the retailer trends have been, what they are, what the retailers’ health is in terms of how loyal a retailer is he to our brand or not. So that decides the narrative that the sales team is going to go with while pitching to the retailer. Plus, from our sales team point of view, they have got a lot more tools in their bag to really pitch to a retailer.

We recently launched our plumber loyalty programme, which we call ‘Skipper Sathi’. We are still in the implementation phase with a lot of our markets. The plumber is someone who is very important in our sales channel. He is the influencer of our sales. Because, as I mentioned earlier, piping, we believe, is a low consumer involvement product. It is considerably dependent on the channel as well as the influencers. It was because of these factors that we we decided to launch this programme. Apart from the benefits that the plumbers definitely get out of this, the company also gets a lot more visibility regarding the visibility on plumber purchase trends. It helps us link directly with the plumber. It helps us continuously interact with them, wish them on their birthdays, help them feel connected to the company directly. Traditionally, they would just be connected to a company’s distributor. Very rarely do plumbers get directly linked with the company.

First from the plant point of view, working capital has really been freed up. We have seen our working capital cycles improve to an extent that we have reduced the investment by almost half. In terms of availability of material at the plant, we are constantly at between 98 to 99 percent. Secondly, distributors are mostly maintaining stocks that are movable stocks. Moreover, in some of the areas that we have implemented this new way of working, we have observed that the distributors have their return on investment shooting up to more than 40% to 50%. Finally, the company’s retail reach has at least gone up by at least three times. But this is a constant journey. We think that there would be nothing less than two, two and a half lakh retailers across India. And yeah, we’ve managed to touch base with at least 10% of them and going forward, you know, there is a wide playground for us to really play in.