In the past decade, organisations have rapidly grown their footprints in urban, semi-urban and rural areas in India, as well as in overseas markets. To cater to these growing markets, organisations have set up an extensive network of channel partners, who help these organisations maximise their sales and minimise their credit risks.
To augment the sales of their products in various new or existing markets and create brand awareness, organisations generally operate various sales led initiatives through their network of channel partners. Consequently, sales and distribution spends of organisations have been on the rise, typically in the range of 7-15 percent of their sales.
The ongoing COVID-19 pandemic has also caused substantial business disruptions, making it difficult for organisations to manage their vast supply chain networks. The preferences of consumers have changed, health and safety have become a priority and digital transactions have increased. Consumers who had never used the e-commerce channel for purchasing products have now adopted it and existing consumers have increased the quantum of their digital transactions. Organisations have faced multiple challenges in the COVID-19 scenario and are investing in technologies to improve efficiency and augment its sales and geographical footprint.
The sales and distribution spends, especially Below-the-Line (BTL) spends, typically consist of huge volume of transactions having relatively less value individually, but a substantial collective impact. Further, due to multiple touch points and involvement of numerous channel partners, other third parties and employees of the organisations, it is even more difficult for organisations to monitor these spends.
Most organisations have started taking the digital route to manage and optimise their sales and distribution spends (BTL spends) by implementing various technologies and tools like Distributor Management Software (DMS), Sales Force Automation (SFA) solutions, and merchandising portals, among others.
KPMG in India’s latest point of view document titled – “Sales and distribution spends: are these vulnerable to leakages?” highlights various vulnerabilities and leakages in the sales and distribution spends as mentioned below:
Considering the above it is pertinent for organisations to take following proactive measures to prevent, detect and minimise such leakages:
Rapid development on the technology front and constantly evolving supply chain networks have resulted in benefits to organisations, but at the same time, it has provided increased avenues for fraudsters to defraud organisations and consumers by taking undue advantage of the process vulnerabilities. Organisations taking proactive efforts to reinforce their controls and monitoring processes can shield themselves from financial and reputational losses, while also protecting the consumers at large.