BCS Solution SummaryThe solution consists of two parts- one is SWOT analysis, and another is making Vision statement. Early morning delivery, consumer convenience, product Purity Bootstrapping, demography and habit of the target Segment are strengths for DND while wastage, Inability to fulfil unexpected order, narrow product range, non-uniform quality, restricted payment method, and high variable Cost of delivering are weakness. On another side, huge market size, market growth, govt. encouragement, enriched livestock, cross selling, expansion of portfolio are the opportunities for DND. And lastly, presence of established players, branded product, localized shops, hardship to retaining customers are current threats for DND. The mission and vision of DND revolves round the pillars of Technology, Vertical Integration, Customer Centricity, Empowerment, Coordination and community development. DND will work on geographical expansion, portfolio expansion, launch own branded products, set up Quality and Training and Development department, forge partnership for R&D, follow Matrix structure for better coordination in coming five years.

Solution

SWOT analysis of the complete business

 

Strength

• Early Morning Delivery: DND delivers between 5AM and 8AM which is desirable for many customers and this need is not met by other companies.
• Convenience: DND offers an escape from the hassle of standing in the queues of malls or going all the way to the retail stores. They give the products right at the door step. If fulfilled, the on-time delivery guarantee might make them a lucrative option.
• Bootstrapping: Till now, DND has been operated by bootstrapping. It gives them the independence of running the business and the opportunity to fund raising without loss of major stake.
• Founders: Background of management education of founders which might help them in proper governance and administration as well as fund raising through peer network.
• Purity: DND assures customers of the purity of the products which is a major concern in this category.
• Target Segment: Bachelors or working couples are main target segments of DND, who feel comfortable in usage of app to order. They might not be bothered about minor differences in price as compared to other.

 

Weakness

• Wastage: Perishable nature of the product. There is high chance of wastage in case of higher than actual demand estimation.
• Inability to fulfil order: Lack of storage facility might be the reason that DND might not be able to fulfil order if there is higher than expected demand or lower than expected supply.
• Product Range: Narrow range of products. Also, the products are very common and are readily available at neighbourhood stores.
• Non-uniform Quality: Supplying milk and allied products of uniform quality is very hard for DND as they source from different suppliers. This non uniform nature might be reason behind customer’s dislike.
• App Usage: One of the Ideal target groups of DND could be aged persons who cannot go to market to bring milk every day, but this segment is also not proficient in ordering through app. 
• Payment Method: Same thing applies for online wallet recharge and payment. Apart from that, many customers might not use BHIM UPI which is the only existing option of recharge right now.
• Variable Cost: High variable cost of delivering

Opportunity

• Huge Market Size: There is high potential of the dairy market. The growing population of India is creating more demand. The dairy market alone is around 80,000 crores INR which is mammoth sized. It’s a huge market with many players to accommodate and customers to cater.
• Market Growth: The milk processing industry in India is expected to expand at a compound annual growth rate (CAGR) of ~14.8% between FY 2018 and FY 2023. Curd and Paneer market is about to grow at a rate of ~14%.
• Govt. Encouragement: The Indian government is favourable towards agriculture and the food processing industry has been able to receive a lot of perks as a result of this focus.
• Enriched Livestock: India's livestock sector is regarded as one of the largest in the world with a bovine population of 299.9 Mn, which comprises predominantly cattle, buffalo. The growth of the Indian dairy and milk processing market is ensured by the steady supply of milk which is the primary raw material for this industry.
• Cross Selling: Cross selling (bundled products like milk+curd/paneer etc) can be introduced to sell multiple products.
• Expansion of Portfolio: DND can expand it’s product portfolio by including other cultured products like Ghee, Cheese, Lassi, Chaas etc.

Threat:

• Established Players: Established players like BigBasket which also delivers milk and allied products, Licious which deals with in meat and seafoods can enter DND’s territory and acquire their customers given the reputation and brand name.
• Branded Product: Customers might get attracted towards branded milk-products as marketed by Amul, Mother Dairy etc. specially in the cases where DND’s price is higher than the competitor. For e.g. price of 1 kg curd by DND is Rs.120 where as that of Amul is around Rs. 65
• Localized shops: Many localized shops have started home delivery service to nearby customers thereby killing groups of target customers across regions and cities.
• Retaining Customers: It is very difficult to retain customers. They would tend to move with the service provider that offers the most discounts.

 

 

 

 

 

 

 

Vision Document

DND is a start-up focused on hyperlocal delivery of dairy products. For success of it, coordination among departments, superior technology, wide product portfolio and providing customer convenience are very important.

Mission Statement:

Mission statement of DND is presented in the form of multifaceted targets as depicted below:

• To be India’s largest online daily needs delivery company
• To maintain utmost quality, purity and cleanliness
• To expand the portfolio to cater varying demands of customer
• To develop seamless buying experience for the customers
• To be one of the best places to work

Positioning Statement:

For millennials, working households, elderly persons, Daily Needs Delivery is perfect app-based solution to the lack of time, nuisance and hardships of morning shopping by providing early morning doorstep delivery of their customized requirement of dairy based products and breakfast essentials.

Vision Statement:

DND's vision for the next five years is

To foster an effective vertically integrated tech-enabled affordable and sustainable hyper local delivery system reaching out to every corner of the country that would help the users avoid all the associated concerns with utmost priority on four pillars viz. quality, customer convenience, employee welfare and community development.

Additionally, DND would like to have 10X families as its customer and to have 50% CAGR in terms of revenues by including more products to its portfolio to meet the customer’s wholesome needs and by extending services to all Tier 1 and Tier 2 cities in India within next five years.

Guiding Principles:

In order to achieve the said vision, DND will follow multi-pronged strategy, as discussed below:

Vertical Integration:

Currently the cost of purchase of milk, curd and paneer from wholesale dealers are pretty high that is affecting the bottom-line. Also, there is uncertainty in supply specially in cases of unforeseen incidents or higher than expected demand. To combat these, DND is aimed to fully functional vertically integrated supply chain. In the sourcing front, DND will have direct contracts with milkmen or co-operatives in different states. Employees in company payroll will look after smooth functioning of this. This will eventually lower the cost of milk sourcing. Additionally, DND will own arrangements to process the milk and produce other byproducts like curd, paneer etc. in different territories. This will provide DND the required flexibility to operate and the autonomy. It might be very useful in cases of sudden high/low demand.

Use of Technology:

In the current era of rapid technological intervention, DND feels the importance of using technology with a higher pace to reap the better output. DND will make strong inhouse technical team who will make the app more user-friendly, look after building strong supply chain, handling customer queries and feedbacks, making payment simpler etc. Using technology, current friction points like wrong delivery, missed delivery etc. can be avoided. In today’s world, one way to correctly predict demand pattern and to delight customer is by using data analysis and artificial intelligence. Since this is not the core strength of DND, DND will try to collaborate with organisations or start-ups which are specialised on this topic. To enable this function, DND will make a repository of customer data.

Customer Eccentricity:

DND is and will be serving for the utmost convenience of the customers. The ultimate aim is to create seamless experience starting from installing the app and ordering to customer care. Superior technology will help us in achieving that. DND will have dedicated customer service team to address all customer concerns in timely and proper manner. DND will be ensure precise delivery to the right customer using OTP. DND will guarantee timely delivery. Special initiatives will be taken for elderly customers.

Empowerment:

DND understands that in the market of severe competition, there are several alternatives to the customers- any level of discomfort might increase churn rate. At the same time, our delivery executives exert relentless efforts to serve the customers. But they receive some unwanted behaviours from the customers. DND believes them to be the pillar of our success. DND will instil ownership of the work among them and ensure their self-respect to be held high by promoting contextual advertisements and awareness among customers. Since the delivery personnel are the first touch points for the customers, DND aim to arrange special behavioural and operation training for them so that they can exhibit empathy, carefulness, warmth to our customers. At the same time, safety precautions will be strictly followed. Proper insurance plans will be done on their behalf.

Intra-Organization Coordination:

For success, one of the most important things is coordination within departments. This will be even more important as and when DND will integrate more departments like Quality, Customer Service, R&D, Operations etc. DND will follow Matrix organizational structure with very low hierarchy to boost up autonomy among the employees and better communication among all.

Community Development:

DND feels community development is our social responsibility and it will help us close relationships with stakeholders namely our suppliers and customers. As a company, it is our duty to look after the farmers at the grass root level who are taking care of livestock. Also, it will help us gain trust of everyone associated with the business. DND will employ some money from the capital for corporate social responsibility every year which will be used in farming of livestock, enhancement of lifestyle of farmer and families, education to their children, buying vehicles etc.

Ways of Execution

Based on the above four core principles, DND aims to take the below initiatives to achieve the vision:

Expansion:

In the coming 5 years, DND targets to cover all Tier 1 and Tier 2 cities with an average target of 1000 families in Tier 1 cities and 700 families in Tier 2 cities each within one year. This expansion is necessary. Currently we cover 3 Tier 1 cities. The projection is as follows:

Year 1: Expansion into 2 more Tier 1 and 2 Tier 2 cities

Year 2: Expansion into 1 more Tier 1 and 5 Tier 2 cities

Year 3: Expansion into 7 more Tier 2 cities

Year 4: Expansion into 6 more Tier 2 cities

Year 5: Expansion into 5 more Tier 2 cities

This way, DND is supposed to cover all Tier 1 and Tier 2 cities within 5 years.

For dense areas, we will follow traditional delivery system and for non-dense areas we will rope in local women who will act as our delivery partners. We will deliver the products (suited to meet demand for 2-3 days) to their homes and they will distribute it within our customers in those areas.

Portfolio Enhancement:

As customer is the center of our business, we will add different products to our portfolio to cater the varying needs of the customers. The tentative stagewise portfolio enhancement schedule is given below:

Year 1: Other milk based or cultured products like Ghee, Cheese, Chaas, Lassi, Yogurt,     Flavored milk And other breakfast essentials like Juice, Bread etc.

Year 2: Sweets & Ice Creams (From other manufacturers)

Year 3: Own branded Milk Products and sweets, Vegetables and Spices

Since, the milk cultured products, breakfast essentials are easy to procure from sellers and easy to storage, DND would like to sell it from this year onwards. Since, DND’s delivery time is before 8 am, it is suitable to meet all breakfast needs. Hence, it can brand itself as one stop solution for breakfast too.

In the next phase, to be in the line of market leader in delivery of dairy products, DND will tie-up with sweet shops and ice-cream manufacturers to supply them to households.

Since, only delivering is low margin business and seller-dependent we envisage to launch our own brand of milk products and sweets in year 3, which is discussed in detail in the next paragraph.

Also, in year 3, DND will add vegetables and spices to its portfolio to cater to household needs.

Launching Own Brand:

DND believes that creating own brand would give much more reliance, assurance of superior quality to our customers. Also, at present there are not many branded milks and milk-based products. Moreover, these brands are mostly famous in specific regions. DND aims to create a national brand catering to all parts of the country. Given the planning of vertical integration, the product branding would be appropriate. Also, this brand building process will help DND to expand throughout the country.

In this line DND would aim to produce own branded milk products from year 3 besides selling manufacturer’s products. It also aims to sell own branded sweets. This is feasible and highly potential since sweet market is very fragmented and there is hardly any famous brand dominating the market.

On the contrary, DND will not involve in branding the ice-creams as there are many established brands in this segment. DND does not want to go in direct competition with them.

Partnership for R&D:

There is huge scope of research and development in dairy and overall in food industry pertaining to new product development, packaging innovation, storage innovation etc. DND aims to focus in those topics beside the core delivery business. At near future, DND plans to forge partnerships with institutions of national importance like Central Food Technology Research Institute (Mysore), National Institute of Food Technology Entrepreneurship and Management (Sonipat) for new product development and innovations in static and dynamic storage and quality enhancement. Similarly, partnership with Central Institute of Plastics Engineering & Technology will help DND to bring breakthroughs in low cost yet good quality packaging which is integrated part of delivery. These partnerships will help DND to remain ahead of the competitors. DND will envisage to set-up own R&D center along with employing executives in year 2 as we aim to launch our own product in year 3. Own R&D department will help us new product developments.

Setting Up Quality Department:

Since our management is very focused on delivering milk and dairy products of best in the industry quality, it is prudent to be self-reliant on that. In first phase, since our delivery volume is not huge, the quality checking will be done by delivery executives. They will be imparted special training to judge the food in the case of foods those are delivered in open manner or in cases where customer raises concern in front of the delivery executives. Similar testing would be done by the executives engaged in packaging.

With gradual expansion, the need of dedicated quality department would be even more, and we aim to open it within next two years. In the meantime, we will have one quality person in each city that we expand. It will reduce the concerns related to quality.

Training and Development:

Our delivery executives are our assets. They exhibit our brand in front of others. So, it is necessary to groom them by proper training, both operational and behavioral. We will allocate a dedicated funds towards it. Also, one person from HR department will be responsible for their trainings round the year.

Technological Intervention:

DND can be told primarily a tech company as all the transactions take place over the App interface. It is prudent to have strong tech team.

The IT team will be divided into three divisions - App maintenance and troubleshooting, Data Analysis and Prediction, Product Management for proper workflow management. The number of manpower inducted will be decided based on customer base and expansion.

Matrix Organizational Structuring:

To foster a meaningful coordination within the departments in the organization, DND aims to deploy matrix organizational structure. There will be 5 central departments, namely- Marketing and Sales, Human Resource, IT, Finance and Customer Grievance Redressal. Among these, employees from Marketing and Sales, Human Resource, IT team will have dual reporting system- to their Regional Heads and Centralized heads. It will help in reducing any miscommunication and confusion and the accountability of the employees will increase. The Customer Grievance Redressal and Finance team will operate centrally and directly communicate with other teams in different regions as and when required.

We will have R&D team before starting to launch own products. When the vertical integration will materialize, we will have operations team too. The production facilities will cater a region. For e.g. One production facility in South will cater to Hyderabad, Bangalore. Later we will have dedicated team for quality check too. These new departments will also follow similar structure.

In addition to that, DND will follow the principle of low hierarchy (not more than 3/4 levels) so that employees feel comfortable to reach the bosses without feeling claustrophobic within the hierarchy.

Promotions:

DND will rope in offline and online promotional activities to spread the name of DND. Our target segment are frequently present on social media and hence ads there will get their attention. On the other hand, for elderly people, leaflet distribution and promotions through radio will be effective. DND will allocate dedicated budget for promotional activities and will revise them with time.

Optional Assignment

KPIs for each department

Human Resource:

• Increase in employee satisfaction score
• Increase in coordination score (a score, which is to be formulated and which will reflect coordination, reliance, information symmetry etc. within the departments)

Marketing Department:

• Number of new app installations
• Increase in sales
• Increase in sales per delivery boy
• Net promoter score

Financial Management:

• Actual Revenue vs Target
• Actual Expense vs Budget
• Inventory Turnover

IT and Business Analyst:

• Number of new app installations
• Decrease in customer complaints regarding the mobile app.
• Increase in % of active accounts

General Management:

• Actual deadline vs Target deadline of a task/project
• Increase in coordination score ( a score, which is to be formulated and which will reflect coordination, reliance, information symmetry etc. within the departments)

Business Advisory:

• Extent of expansion i.e. increase in number of geographical areas in which DND operates
• Increase in customer base
• Increase in employees
• Extent of product extension

Leadership:

• Overall year on year topline and bottom line growth
• New customer addition and year on year customer growth
• Increase in NPS score
• Increase in valuation

 

ConclusionLooking at the SWOT analysis, leveraging the strength and using the opportunities, DND is positioned very well to succeed. If DND can stick to the pillars described on the vision statement, it will have competitive advantages. Vertical integration with expansion of product portfolio, launching of branded products will give significant boost-up in the business. In addition to that, development and integration of Quality, Customer service, R&D team will help DND gain success and be profitable in coming years.

Attached File Details