Anar Pharmaceutical Limited
ERP Project
DEALER INCENTIVE SCHEME
HOW TO DESIGN A DEALER INCENTIVE SCHEME?
1. Define Name of the scheme.
2. Define the time period for which the scheme is valid. This will be in "Date: From - To" format.
3. Select list of dealers to whom this scheme should be extended:
Ø All Dealers in All Geographical Areas,
Ø All Dealers in Select Geographical Areas,
Ø Select Dealers in All Geographical Areas,
Ø Select Dealers in Select Geographical Areas
4. Geographical Area should be definable as Zones / States / Districts / Cities - the names of which are stored
in the database. In case of Select Geographical Areas, more than one area should be definable. e.g. North
Zone & East Zone could be initial selection. For East Zone the user can select "All Dealers" whereas within
North Zone the user can define only Delhi & Haryana. The screen should be like Windows Explorer, showing
Distribution Network based on the Geographical Areas.
5. If all dealers are to be selected within an area, the software should provide "Select All" option. In case the
scheme is not to be extended to all dealers "Pick & Choose" option should be available. For "Pick & Choose"
option the dealer Criterion should be definable. The following criteria should be available for selection:
Dealer Selection Criteria:
Ø
Ø
Ø
Default Selection: All dealers selected, if "Pick & Choose" option not exercised.
Overall turnover between two specified dates. The software should make date fields available to define
the period during which the turnover was >= user defined amount (say Rs. 1 crore between 1/1/99 &
31/3/99). This will fetch the historical data of Dealer Purchases of all brands between two dates.
Turnover in specified brands between two specified dates. The software should make date fields available to define the period during which the specified brand turnover was >= user defined amount (say
Rs. 20 lacs between 1/1/99 & 31/5/99). This will fetch the historical data of Dealer Purchases of specified brands between two dates. In addition to date fields, the BRAND ORGANISATION should also be
made available to the user for definition of brands.
6. Define Brands for which the incentive scheme is being tailored. The mechanism for defining brands should
be the same as discussed in the Employee Incentive Scheme. An additional option should be provided to
"Select All Brands" to make a quick macro selection.
7. Define parameters that will decide the payment of incentives. These parameters are generally linked to total
purchases made by dealers from Anar Pharma. The common denominator is quantity of goods purchased. Quantity should be defined either in number of units or number of cases. These purchases can be
grouped based on:
n
n
n
n
Overall quantity purchased - either in no. of units or no. of cases;
Quantity purchased of either all brands or specifically defined brands;
Purchases made during stipulated time period (for which invoices have been prepared - Receipt of order is not the criterion for proof of purchase);
The stipulated time period can have time slots in between:
•
There may be one continuous time period (only one slot with one start date & one end date of the
currency of incentive scheme);
•
There can be more than one time slots; say two or three depending on the length of the scheme.
If more than one time slots are defined by the user, then the software should allow definition of
dates (from - to) for each time slot;
Anar Dealer Incentive Scheme.doc
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Sales & Distribution
Anar Pharmaceutical Limited
•
•
•
ERP Project
There can be minimum purchase constraint for each brand or there can be minimum purchase
constraint for all brands put together depending on option user selects i.e. whether the user
wants to tailor a brand specific scheme OR an overall scheme irrespective of whatever brands
purchased by the dealer.
Minimum purchase constraints can be linked to the time slots, if the user has defined more than
one slot.
The incentive amount should be defined in Rs. per unit of purchase. The amount can be graded
depending on the qty purchased and the time slot in which these purchases are made. Earlier
purchases can be rewarded with higher incentives.
8. At the time of designing the scheme, the software should give the maximum amount of Incentive Payable
under the scheme, assuming that all dealers will lift the target quantity defined by the user. This will help the
management in appropriately fixing up the incentive amount.
AN EXAMPLE OF SCHEME DESIGN:
(I)
Name of scheme:
DISMay99 (DIS means Dealer Incentive Scheme, May 99 is Month & Year for which the scheme is operational).
(II) Start Date & End Date:
01 / 05 / 99
-
31 / 05 / 99
(III) Select whether dealers are to be selected based on their Location or Past Performance, or Location
as well as Performance:
(A). If dealers are selected based on Location, then do as under:
(A.1) Select Geographical Area(s):
Select All India Network
Select Partial Network from below:
Zones
States
East
All States
West Bengal
Orissa
Bihar
Districts
All Districts
List of all districts to
choose from
-do-do-
All Cities
List of all cities
to choose from
Towns
-do-
All Towns
List of all
Towns to
choose from
-do-
-do-
-do-
-do-
-do-
West
Gujarat
North
U. P.
-do-
-do-
-do-
Haryana
-do-
-do-
-do-
Anar Dealer Incentive Scheme.doc
Ahmedabad
Vadodara
Sabarkantha
Bharuch
Surendranagar
Cities
2
Sales & Distribution
Anar Pharmaceutical Limited
ERP Project
If All India Network is selected, it is a blanket selection. All Zones - States - Districts - Cities &
Towns are selected. For "Pick & Choose", go for Select Partial Network.
Select East Zone.
In next step, if All States option is selected, by default it should select every state, district, city
& town in East Zone. If the user does not define "All States" option, he may choose from list of
states like West Bengal, Orissa, Bihar. He may choose "West Bengal" & then, "All Districts".
This will imply automatic selection of all districts, cities & towns in West Bengal. If the user
does not define "All Districts", then he may choose each district individually. The same procedure can be followed separately for each Zone where the scheme will be offered.
When management wants to give schemes to only those dealers who are looking after RURAL
DISTRIBUTION in towns, then the user should be able to define only Towns, bypassing Cities.
n
n
n
n
(A.2) Select Dealers from the Geographical Areas:
Based on the areas selected by the user, the software should display list of dealers in a hierarchical mode. The user should be able to select either "All Dealers" or specific dealers under each
hierarchy. "All Dealers" would mean that every dealer falling under that area gets selected for the
incentive scheme.
If the user has defined "Select All India Network", he should still be able to define dealers
for each zone separately. This will facilitate him to ignore "trouble makers".
(B). If dealers are selected based on Past Performance, then do as under:
(B.1) Select Performance Criteria & Generate List of Dealers:
i).
ii).
iii).
iv).
v).
vi).
Define: Whether selection is based on Overall Performance or Brand Specific Performance;
Define: If it is brand specific performance, then specify Brands for which Performance needs to be evaluated;
Define: Time Period of Performance (Dates from - to);
Define the level of performance (say, Qty purchased >= 125 cases);
Query the list of dealers from existing database.
This list should give the name of dealers for incentive scheme.
(C). If dealers are selected based on Location as well as Performance:
(C.1) Follow the route described in (A.1) above.
(C.2) Having selected the geographic region, query dealer list based on performance criteria as described in (B.1) above. This list should give the names of dealers for
incentive scheme.
(IV) Select Brands:
Provide here the Brand Organisation for selecting either Product Groups or individual brand names for
which incentive is to be given. The software should provide "All Brands" for a blanket selection, if the user
wants to pay incentive on all brands.
(V) Define Time Frame & Time Slots:
G
G
G
Select Dates:
1. Start Date: from when the scheme comes into effect;
2. End Date: Which is the last date for the scheme
Select whether the user wants Time Slots within the specified dates.
If YES, decide how many time slots are required (say 3).
Anar Dealer Incentive Scheme.doc
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Sales & Distribution
Anar Pharmaceutical Limited
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ERP Project
Decide the dates of each time slot. These dates should be mutually exclusive and should be within the
overall time frame. (See the following example):
Example: I
Example: II
Scheme Start Date: 01/01/99
No. of Time Slots: 3
Time Slot1: From: 01/01/99
Time Slot2: From: 01/02/99
Time Slot3: From: 01/03/99
Scheme End Date: 31/03/99
Scheme Start Date: 01/01/99
No. of Time Slots: 1
Time Slot1: From: 01/01/99
To: 31/01/99
To: 28/02/99
To: 31/03/99
Scheme End Date: 31/03/99
To: 31/ 03/99
Define Incentive Structure:
Define targets for each dealer separately.
a) Select whether user wants to define targets separately for each time slot or wants targets spread
equally over the no. of slots defined. If there is only one slot, this option is ruled out.
b) If the incentive scheme is for overall purchase of all brands, the software should define targets accordingly. The targets should be defined in total no. of cases (or units) irrespective of brands. Refer
the following table for illustration:
OVERALL PERFORMANCE CRITERION
MULTIPLE TIME SLOTS
Dealer Name: Stadium Chemist
No. of Cases
Example: I
Time Slot
Targets
1
300
2
400
3
500
Total
1200
SINGLE TIME SLOT
Example: II
Time Slot
Targets
1
1200
Total
1200
c) If the incentive scheme is for specific brands, the software should enable target setting in total no.
of cases (or units), separately for each brand. Incentive calculation will be sensitive to the quantity of
each brand. Separate formats are given for single & multiple time slots.
SPECIFIC BRAND PERFORMANCE CRITERION
Example: I
MULTIPLE TIME SLOTS
Dealer Name: Stadium Chemist
No. of Cases
Time Slot
1
2
3
Total
Brand1
100
200
300
Brand 2
200
100
250
Brand 3
150
100
500
Targets
Brand 4
100
150
200
Brand 5
125
125
125
600
550
750
450
375
Example: II ON S I N G L E T I M E S L O T NEXT PAGE
Anar Dealer Incentive Scheme.doc
4
Brand 6
300
400
500
1200
Sales & Distribution
Brand 2
550
Brand1
600
750
450
Targets
Brand 3
Brand 4
375
Brand 5
1200
Brand 6
No. of Cases
SINGLE TIME SLOT
ERP Project
70%
81%
91%
100%
70%
81%
91%
100%
70%
81%
91%
100%
80%
90%
100%
80%
90%
100%
80%
90%
100%
Level of Achievement
>
<=
Incentive
Amount per
Case
(Rs.)
30
40
50
60
30
40
50
60
30
40
50
60
100%
100%
100%
50
75
100
Anar Dealer Incentive Scheme.doc
5
100%
100%
Sales & Distribution
300
200
Bonus Proposition 2
IF IN PREVIOUS TIME
BONUS INCENTIVE PER
SLOT LEVEL OF
CASE ON SURPLUS
ACHIEVEMENT IS >=
OVER DEFINED %
MULTIPLE TIME SLOTS
Bonus Proposition 1 & 2 are
two mutually exclusive Areas. If 1 is defined, then 2 is
disabled & vis-e-versa.
Please see note on next
page as to how this definition
should work.
Bonus Proposition 1
IF IN CURRENT TIME
BONUS INCENTIVE PER
SLOT LEVEL OF
CASE ON SURPLUS
ACHIEVEMENT IS >=
OVER DEFINED %
COMMON INCENTIVE STRUCTURE
Red fonts are user-defined variables / fields. Level of achievement = Actual Purchases in cases / Target Purchases.
3
2
1
Time Slot
Example: I
d) Define incentives per unit (cases or no. of units).
Incentive may be related to time slots, brand name, total quantity and bonus in case of extra performance. The following table illustrates this point: ( I H A V E A S SUMED INCENTIVE PER CASE IS SAME FOR ALL BRANDS - IRRESPECTIVE OF INITIAL SELECTION OF BRAND
SPECIFIC PERFORMANCE OR OVERALL PERFORMANCE. Following formulae may remain constant in both
these options).
Time Slot
1
Dealer Name: Stadium Chemist
SPECIFIC BRAND PERFORMANCE CRITERION
Example-II
Anar Pharmaceutical Limited
ERP Project
70%
81%
91%
100%
>
80%
90%
100%
<=
30
40
50
60
6
100%
100
COMMON INCENTIVE STRUCTURE
SINGLE TIME SLOT
If Level of
Bonus IncenLevel of Achievement
Incentive Amount per
Achievement is
tive per case
case
on surplus
(Rs.)
>=
over defined %
Rs.
Anar Dealer Incentive Scheme.doc
1
Example: II
Time Slot
Sales & Distribution
BONUS PROPOSITION - II attaches an "IF CONDITION". The user wants the dealer to perform 100% in the First Slot, and then claim Bonus in the Second Slot. B o n u s
will always be paid for performance of respective Time Slots only. With an "IF CONDITION" the user is binding the
dealer to show performance in the first slot itself. When there is a repeat performance in the second time slot (in
excess of 100%), Bonus can be defined in greater proportion (like Rs. 200 defined in the example). The user has to
apply his priorities and method of Dealer Motivation. Both propositions are mutually exclusive. It will be illogical
to give Bonus on both propositions. If Proposition 1 is defined 2 should be disabled.
BONUS PROPOSITION - I declares the reward / bonus for dealer performance in the current time slot. The user can discriminate between rates of Bonus in different time
slots. If he wants the dealer to prepone his purchases for a brand, then he can define higher Bonus in the front end.
The user can define Bonus if a dealer's buying performance is greater than defined %. In the above example 100% is given as an example. The user can define it at even 80%
also. In that case the defined % becomes 80% and any SURPLUS over 80% (i.e. DEFINED %), should attract incentive. The rate of incentive is again user defined. The user
can define any amount.
NOTE ON BONUS PROPOSITIONS:
Anar Pharmaceutical Limited
70%
81%
91%
100%
70%
81%
91%
100%
70%
81%
91%
100%
80%
90%
100%
80%
90%
100%
80%
90%
100%
30
40
50
60
30
40
50
60
30
40
50
60
25
35
45
55
25
35
45
55
25
35
45
55
40
45
50
60
40
45
50
60
40
45
50
60
20
25
27
30
20
25
27
30
20
25
27
30
15
23
28
35
15
23
28
35
15
23
28
35
70%
81%
91%
100%
>
80%
90%
100%
<=
Level of
Achievement
Anar Dealer Incentive Scheme.doc
1
Example: II
Time
Slot
ON SURPLUS
OVER DEFINED
%
30
40
50
60
Brand 1
100
100
100
25
35
45
55
Brand 2
40
45
50
60
Brand 3
7
20
25
27
30
Brand 4
15
23
28
35
ERP Project
300
200
100%
Sales & Distribution
50
SINGLE TIME SLOT
If Level of
BONUS INCENTIVE
Achievement is
PER CASE ON
SURPLUS
OVER
>=
DEFINED %
100%
100%
BONUS INCENTIVE PER CASE
ON SURPLUS
OVER DEFINED %
MULTIPLE TIME SLOTS
Bonus Proposition 2
IF IN PREVIOUS
TIME SLOT LEVEL
OF ACHIEVEMENT
IS >=
Bonus Proposition 1 & 2 are
mutually exclusive. Please refer
note on the previous page.
Brand 5
BRAND SPECIFIC INCENTIVE STRUCTURE
Incentive Amount per Case (Rs.)
100%
100%
100%
OF ACHIEVEMENT
IS >=
BRAND SPECIFIC INCENTIVE STRUCTURE
Bonus Proposition 1
Incentive Amount per Case (Rs.)
BONUS INCENBrand
Brand
Brand
Brand
Brand IF IN CURRENT
TIME SLOT LEVEL
TIVE PER CASE
1
2
3
4
5
Red fonts are user-defined variables / fields.
Level of achievement = Actual Purchases (of Specific Brand) in cases / Target for the Brand.
3
2
1
Example: I
Time Level of Achievement
Slot
>
<=
e) If incentives have to vary according to brands, define incentive per brand separately.
Anar Pharmaceutical Limited
Total
Target
Brand 1
No. of Cases Purchased
Brand 2
Brand 3
Brand 4
/
Brand 5
Total
Achieved
%
Scheme ID
Start Date
Incentive
Rs.
Bonus
Rs.
End Date
Total
Rs.
ERP Project
Anar Dealer Incentive Scheme.doc
TOTAL
Target
TIME SLOT 1
Purchased Incentive
Start Date
Bonus
Target
End Date
8
TIME SLOT 2
Purchased Incentive
Bonus
Target
Report Date
TIME SLOT 3
Purchased Incentive
ALL DEALERS' SUMMARY REPORT OF INCENTIVE SCHEME: (Overall Performance Scheme - Without Brand Specification)
FORMAT
Scheme ID
Dealer Name
II.
Sales & Distribution
Bonus
Total
Incentive +
Bonus
Brandwise Summary should be calculated for Management Accounting Purpose. This will be useful while evaluating contribution of profits by each brand at the year end.
This report will be for every dealer. If there are 'n' dealers, there will be 'n' pages.
Brandwise Summary
Incentive
Bonus
Total
1
2
3
Time Slot
Dealerwise Individual DIS Report: (Overall Performance Scheme - Without Brand Specification)
FORMAT
Dealer Name
Report Date
I.
USER-DEFINED REPORTS ON DEALER INCENTIVE SCHEMES:
Anar Pharmaceutical Limited
Target
Purchased
No. of Cases
Target
Purchased
No. of Cases
Target
Purchased
No. of Cases
BRAND 5
Achieved
%
BRAND 3
Achieved
%
BRAND 1
Achieved
%
Incentive
Incentive
Incentive
Rs.
Rs.
Rs.
Bonus
Bonus
Bonus
Target
Purchased
No. of Cases
Target
Purchased
No. of Cases
Target
Purchased
No. of Cases
End Date
BRAND 6
Achieved
%
BRAND 4
Achieved
%
BRAND 2
Achieved
%
Incentive
Incentive
Incentive
Report Date
Rs.
Rs.
Rs.
Bonus
Bonus
Bonus
ERP Project
Anar Dealer Incentive Scheme.doc
9
Sales & Distribution
1
2
3
Total
BRANDWISE SUMMARY
Brand 1
Brand 2
Brand 3
Brand 4
Brand 5
Total
Incentive
Bonus
Total
Brandwise Summary should be calculated for Management Accounting Purpose. This will be useful while evaluating contribution of profits by each brand at the year end.
This report will be for every dealer. If there are 'n' dealers, there will be 'n' pages.
Time Slot
1
2
3
Total
Time Slot
1
2
3
Total
Time Slot
Dealerwise Individual DIS Report: (Brand Specific Performance Scheme)
FORMAT
Dealer Name
Scheme ID
Start Date
III.
Anar Pharmaceutical Limited
15
12
27
No. of Dealers
Brand 4
User Defined
Start Date
Scheme ID
Total
End Date
Last Date To:
Incentive
User Defined
10
Bonus
Total
Brand 5
Report Date
No. of Dealers
Summary of all Schemes Between Any Two Dates: (this may cover one or more accounting years)
0
25001
First Date From:
b.
Total
<=
25000
50000
>
Incentive Amount
For a given scheme: Define Scheme ID
Scheme ID
Start Date
End Date
a.
FREQUENCY DISTRIBUTION REPORT:
Anar Dealer Incentive Scheme.doc
V.
Total
ALL DEALERS' SUMMARY REPORT: (Brand Specific Performance Scheme)
FORMAT
Scheme ID
Start Date
End Date
INCENTIVE + BONUS
Dealer Name
Brand 1
Brand 2
Brand 3
IV.
Anar Pharmaceutical Limited
Sales & Distribution
Total
ERP Project
BRANDWISE INCENTIVE + BONUS REPORT: MACRO REPORT COVERING ALL SCHEMES:
ERP Project
INCENTIVE + BONUS FOR SPECFIC BRAND:
Start Date
Anar Dealer Incentive Scheme.doc
Scheme ID
End Date
11
Dealer Name
Total
Location
Incentive
Bonus
Sales & Distribution
Total
The user should be able to define one specific brand and dates for which the following report should be generated. This report can accommodate more than one accounting
year.
FORMAT
Brand Name
MINT 12
Select Dates
From:
To:
VII.
Total
The user should be able to define one or more brands for which Incentive + Bonus will be calculated for a specified time period (Between two "SELECT DATES"). Between these select dates, if there are 4 schemes, then there will be 4 different rows in the report.
FORMAT
Select Dates
From:
To:
BONUS + INCENMTIVE
Scheme ID
Start Date
End Date
Brand 1
Brand 2
Brand 3
Brand 4
Brand 5
Total
VI.
Anar Pharmaceutical Limited