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Putting The Price War to Rest

Putting The Price War to Rest

How Indian company Sheela Foam rebuilt its brand with IT

A Short Siesta

Mankotia's team also decided to use a simple mechanism for data management: SMS. "This is the most simple and innovative way for controlling MOP and for tracking and maintaining stock at the location of the distributors and the dealers without spending too much," he says.

Mankotia goes on to explain that the system tracks product movement all the way from the factory to the customer. "It maintains data on the stock at our factories, at the distributors' warehouse and the dealers' warehouse".

Tagging is done with the aid of a unique product serial number, which is bar coded. With each dispatch, an SMS is sent to the distributor about the material that is dispatched to him. "The stock of finished goods at our factory is reduced and stock with the distributor is updated. When the distributor sells a product to a dealer, then the distributor's stock is reduced and dealer's stock increases. All this is recorded by our ERP system," he says.

So what's new? The innovation of using SMS comes into play when the dealer makes a sale to an end customer. When the dealer sells a mattress to a customer, he uses his own mobile phone to SMS the product serial number along with the customer's mobile number to a number belonging to Sheela Foam. "This SMS is fetched by our database, where the system checks the entire transaction. Within two minutes of the SMS being received, the system automatically informs the dealer and the customer, through SMS, about the 'Successful Guarantee Validation' and the MRP of the product," says Mankotia.

Thanks to the rapid proliferation of mobiles in remote and rural areas, the system can be implemented in any place where a mobile phone can work.

According to Mankotia, the biggest advantage of using SMS as a means to transfer data is that the dealers are not forced to install computers -- it is more than sufficient if the distributors get their hands on a phone. All that the dealers have to do is use SMS to complete transactions from their side.

Since the system has a bird's eye view of the entire transaction of the mattress -- moving all the way from the factory to the distributor to the dealer -- it is able to authenticate the genuineness of the dealer. The dealer gets five points for each transaction made, and this can be redeemed by him after a period of time.

Fighting Insomnia

Sheela Foam spent about $54,000 on Greatplus, and it went live in January 2007. But the rollout was not as smooth as expected. Distributors and dealers resisted the new system because they felt that Sheela Foam would have full control over their stocks. They also feared that if the company tried to rigorously monitor the MOP, then the dealers would not be able to sell the product properly because the customer price would go up.

In order to address these fears, Mankotia says that Sheela Foam conducted several workshops, group meetings and one-to-one discussions with various distributors and dealers to explain to them the long-term benefits of the entire system. In order to show the seriousness of the initiative, the CEO and the head of sales and marketing personally attended all meetings and workshops in order to strengthen confidence among distributors and dealers.

Thankfully, their efforts paid off and the project became a success. Before the project, registering for a guarantee could take many months and the company paid approximately 40 cents per guarantee registration. "Now, the guarantee is registered in just two minutes and we are spending only 40 paisa (1 cent) on the SMS," says Mankotia. This difference in cost has been passed on to the dealers, and naturally they are happy -- especially since the number of guarantees has gone up from around 500 per month before implementation to around 10,000 per month.

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