1
Analysis of Damage Management in Retail Industry Big
Bazaar
Partial Fulfillment of the Requirements for the Award of
Pos...
2
Analysis of Damage Management in Retail Industry Big
Bazaar
Summer project submitted
In
Partial Fulfillment of the Requi...
3
4
Acknowledgement
A work is never a work of an individual. I owe a sense of gratitude to the intelligence and co-
operatio...
5
Table of Content
Executive Summary
1. Introduction
1.1 Profile of Future Group
1.2 Joint Venture Partnerships
1.3 Partne...
6
PREFACE
PGDM is the one of the most reputed professional course in the field of Retail Management. It
includes theory as...
7
Executive Summary
The purpose of this training was to have practical experience of working within the organization
to ha...
8
1. INTRODUCTION
Retail plays a major role in increasing circulation and sales for all kinds of consumer goods and
servic...
9
USA. Retailing in India provides employment to about 7% of total work force in the country and
contributes about 14% to ...
10
 Big Bazaar
 Brand Factory
 Central
 Pantaloons
 e zone
 Home Town
11
1.2. JOINT VENTURE PARTNERSHIPS
 Generali Group: Generali is a European insurance company.
 Staples Inc: Staples Inc....
12
Kshitij Investment Advisory Co. Ltd., Indivision Investment Advisers Ltd., and Ambit
Investment Advisory Co. Ltd.
Futur...
13
Footmark Retail
Foot mart Retail is a joint venture with Liberty Shoes and is engaged in the retailing of
footwear prod...
14
ABOUT BIG BAZAAR
Big Bazaar was launched in September, 2001 with the opening of its first four stores
in Calcutta, Indo...
15
 Big Bazaar initiates the Power of One campaign to help raise funds for the Save The
Children India Fund
About Big Baz...
16
Future Group Mission and Vision:
Group Vision
Future Group shall deliver Everything, Everywhere, Every time for every I...
17
Core Values of Company
 Indianness: confidence in ourselves.
 Leadership: to be a leader, both in thought and busines...
18
INDIAN RETAIL INDUSTRY
The Indian retail market, which is the fifth largest retail destination globally, has been ranke...
19
India has emerged the third most attractive market destination for apparel retailers, according to
a new study by globa...
20
to 40% by 2025. Within these top 35 towns, an estimated 70-80% of trade could be in the
organized Sector.
Retail market...
21
stores. Most of the organized retailing in India have started recently and is concentrating mainly
in metropolitan citi...
22
The maximum amount of growth in the Indian Retail Sector will be registered in the topmost 50
to 60 markets that are lo...
23
Demography Dynamics: Approximately 60 per cent of Indian population below 30 years of
age.
Double Incomes: Increasing i...
24
due to the strong increase in income, changing lifestyle, and demographic patterns which are
favorable.
The scope of th...
25
foreign direct investment (FDI) in single brand retail to 51%. This has opened up a lot of
opportunities in India organ...
26
LOGISTICS
One of the most important challenge in organized retail in India is faced by poor supply chain
and logistics ...
27
retailer to move or store products more effectively. Efficient logistics management not only
prevents needless movement...
28
2. PURPOSE OF STUDY
The Indian retail industry is the fifth largest in the world. Comprising of the organized and the
u...
29
3. Objective of Study
 To know which factor influencing to damage of inventory in Big Bazaar, (Ambiance mall)
 To und...
30
4. Inward and Outward Inventory
Effective inventory management is all about knowing what is on hand, where it is in use...
31
 Security personnel to check seal/seal number on the truck and mention details in the
Security Inward Register. If the...
32
1.1.2 Process for Store Warehouse
 Store warehouse staff to verify all the H.U nos. by ticking it on the STN after
phy...
33
 Store warehouse staff to inward the stock in SAP and generates Good Receipt Note
(GRN). GRN must be done within 24 ho...
34
 GRN for the short/damage merchandize to be done separately. Store warehouse in-charge
executive to ensure GRN of the ...
35
 After the document is approved, store warehouse in-charge and store manager will get an
automated mail, suggesting, t...
36
 After the document is approved, store warehouse in-charge and store manager will an
automated mail, suggesting, to po...
37
 Old stock is moved from the shop floor to store warehouse.
 Store warehouse staff to activate alternate EAN for old ...
38
I-Doc
An IDOC (Intermediate document) is a simple text file, which holds crucial data for business to
function. The art...
39
advancement, as its supply chain has become completely computerized. Once the product is sold,
automatically, the compu...
40
the customers is inside the store, then also strategies keep changing. They keep thing in places
where they see for lon...
41
1. Planning & Scheduling
2. Pre-stock Take process
3. Stock Take process
4. Post Stock Take process
5. Shrinkage/Varian...
42
1. Planning & Scheduling:
Stock take schedule for every stock take cycle.
Finalization of MC & dates for stock take by ...
43
44
5. ORDER OF INVENTORY
The inventory in any business is maintained to decrease the set up costs and the shortage costs. ...
45
Deterministic models:
Economic Lot size Model: The most common inventory problem faced by industry concerns the
situati...
46
Solution: Let q be the units of quantity produced (or ordered) per production run at interval of
time t.
The situation ...
47
Model III: Economic Lot Size Model with Uniform Rate of Demand, Finite Rate of
Replenishment and having no Shortages.
T...
48
49
7. DAMAGE AND REASONS OF DAMAGE
Damages at the Store can be:
Malicious Damages: Malicious damages are willful damages c...
50
Vehicle Damage
Damage to Property: In case of standalone stores, the Security Guard at the parking lot to issue
serial ...
51
8. Control method on damage
Despite of all the precautions listed in SOP Avoiding Stock Damages on efficient causes lea...
52
 Return to Vendor
 Repair
 Markdown
 Scrap Sale/ Disposal as garbage
After the approval from Area Manager, store DA...
53
• Zonal Category to ensure that markdown I-docs are sent to stores for the set time period.
• Store DAD champion to ens...
54
9. Research methodology
Statistical tool- Statistical Analysis Tools is required for a thorough and scientifically vali...
55
10. FINDING
Significant losses/damages during shipping.
The next problem in setting up organized retail operations is t...
56
Almost 78% of total freight is transported by road.
Almost 78% of total freight is transported by road. But, according ...
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11. RECOMMENDATIONS
Improvement in supply chains
Big bazaar should use better techniques for improvising its supply cha...
58
Bibliography
http://futurebyte/retail-operation.asp
http://www.business-standard.com/india/news/future-retail-to-open-6...
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Nagendra Singh (1)

Published on: Mar 3, 2016
Source: www.slideshare.net


Transcripts - Nagendra Singh (1)

  • 1. 1 Analysis of Damage Management in Retail Industry Big Bazaar Partial Fulfillment of the Requirements for the Award of Post Graduate Diploma in Management (Recognized by AICTE, Ministry of HRD, Govt. of India) By Nagendra Singh PG-12-32 Batch 2012-14 Under the guidance of Prof. Rishi Taparia INMANTEC, Ghaziabad Integrated Academy of Management and Technology Ghaziabad
  • 2. 2 Analysis of Damage Management in Retail Industry Big Bazaar Summer project submitted In Partial Fulfillment of the Requirements for the Award of Post Graduate Diploma in Management (Recognized by AICTE, Ministry of HRD, Govt. of India) By Nagendra Singh PG-12-32 Batch 2012-14 Integrated Academy of Management and Technology Ghaziabad
  • 3. 3
  • 4. 4 Acknowledgement A work is never a work of an individual. I owe a sense of gratitude to the intelligence and co- operation of all people who had been so easily let me understand what I needed from time to time for completion of this exclusive project. It is a matter of great satisfaction and pleasure to present this report on of. Big Bazaar, Ambience Mall, Vashant kunj. I take this opportunity to owe my thanks to all those involved in my training. First and foremost, I express heartfelt thanks to Mr. Rishi Taparia , Professor – PGDM, Department of Management studies for his valuable guidance, his full support and co-operation without which this project report would not have been completed. I am thankful to Mr. Puran Singh and Mr. Varun Kaushik for their encouragement and able guidance at every stage of my training work. I express my gratitude towards warehouse staff of Big Bazaar those who have helped me directly or indirectly in completing the training. I am expressing heartfelt thanks to Mr. Diwkar Singh and Mr. Tajbar Singh Rana for giving me opportunity to work at Big Bazaar, as a MANAGEMENT TRAINEE. Last but not the least, we want to thank to our family and friends for their wholehearted support for the completion of this Project.
  • 5. 5 Table of Content Executive Summary 1. Introduction 1.1 Profile of Future Group 1.2 Joint Venture Partnerships 1.3 Partner Companies: 1.4 Indian Retail Industry 2. Purpose of study 3. Objectives of Study 4. Inward and outward 5. Ordering 6. Damage and Reasons of damage 7. Control method on damage 8. Finding 9. Recommendation 10. Bibliography
  • 6. 6 PREFACE PGDM is the one of the most reputed professional course in the field of Retail Management. It includes theory as well as its practical application. Summer Training is an integral part of PGDM- retail programme, for successful completion of this programme require two months summer training in retail organization So after completion of second semester each student at INMANTEC Business School need to undergo two months training in an organization. This training serves the purposes of acquainting the student with environment of an organization in which student have to work hard in future .Only theoretical knowledge is not enough but its practical application is also required to be learned. I was fortunate enough to have an opportunity of doing summer training at big bazaar trainee was required to prepare report of his working in the organization. I was assigned a project on “Analysis of Damage Management in retail sector (BIG BAZAAR)”. In this report, all the important findings of the project are included; over and above an overall profile of the company Big Bazaar is also given. It is hoped that this report will make the readers familiar with the store and also give the idea about the product and services offered by the company
  • 7. 7 Executive Summary The purpose of this training was to have practical experience of working within the organization to have exposure to the important management practices in the field of marketing. While writing this report the language has been kept simple and the entire discussion has been logical and coherent outlines The main motto of the project is properly manage and maintain the inventory and damage control thus enhance the sales , increase the profit of the of organization. Inventory management is a very simple concept –“don’t have too much stock and don’t have too little” ,since there can be substantial cost involved in straying above and below the optimal range, careful inventory management can make a huge difference in the profitability of a business, although the concept is simple, the process of setting the right balance can be quite a complex and time consuming task without the right technology.  Actively participated in the inward and outward of the materials in the warehouse.  Seen the damage control system in warehouse and how it is implemented in the store.  Learned the various damage management process.  Analyzed the project difficulties and opportunities in damage management and customer satisfaction.
  • 8. 8 1. INTRODUCTION Retail plays a major role in increasing circulation and sales for all kinds of consumer goods and services. Retailing is the largest private industry in India and second largest employer after agriculture. The sector contributes to around 10 per cent of GDP and 6-7 per cent of employment. With over 15 million retail outlets, India has the highest retail outlet density in the world. This sector witnessed significant development in the past 10 years – from small unorganized family-owned retail formats to organized retailing. Liberalization of the economy, rise in per capita income and growing consumerism have encourage larger business houses and manufactures to set up retail formats; real estate companies and venture capitalist are investing in retail infrastructure. Many foreign retailers have also entered the market through different routes such as wholesale cash-and-carry, local manufacturing, franchising, test marketing, etc. With the growth in organized retailing, unorganized retailers are fast changing their business models and implementing new technologies and modern accounting practices to face competition. The retailing sector in India has undergone significant transformation in the past 10 years. Traditionally, Indian retail sector has been characterized by the presence of a large number of small-unorganized retailers. However, in the past decade there has been development of organized retailing, which has encouraged large private sector player to invest in this sector. Many foreign players have also entered India through different routes such as test marketing, franchising, wholesale cash-and-carry operation. With high GDP growth, increased consumerism and liberalization of the manufacturing sector, India is being portrayed as an attractive destination for foreign direct investment (FDI) in retailing. However, at present this is one of the few sectors, which is closed to FDI. Within the country, there has been significant protest from trading associations and other stakeholders against allowing FDI in retailing. In India, the retail sector is the 2nd largest employer after agriculture. In fact due to wide network of retailing in India it is known as nation of shopkeepers. There are about 12 million retail outlet spread across India and the country has the highest density of shops in the world i.e. one shop for every 20 to 25 families or 11 retail shop for every 1000 persons. While it is only four shops per 1000 in
  • 9. 9 USA. Retailing in India provides employment to about 7% of total work force in the country and contributes about 14% to GDP of India. However the retailing sector in India is highly fragmented and consists predominantly of small, independent and owner managed shop. 1.2 PROFILE OF FUTURE GROUP Big Bazaar Retail is the flagship enterprise of the Future Group, which is positioned to cater to the entire Indian consumption space. The Future Group operates through six verticals: Future Retail (encompassing all retail businesses), Future Capital (financial products and services), Future Brands (management of all brands owned or managed by group companies), Future Space (management of retail real estate), Future Logistics (management of supply chain and distribution) and Future Media (development and management of retail media). Future Capital Holdings, the group's financial arm, focuses on asset management and consumer finance. It manages two real estate investment funds (Horizon and Kshitij) and consumer-related private equity fund, in division. It also plans to get into insurance, consumer credit and other consumer-related financial products and services in the near future. Businesses Future Group has a number of businesses across the retail, financial and service industries.  Financial  Future Capital Holdings  Future Generali  Future Ventures  Services  Future Innoversity  Future Supply Chains  Future Brands  Retail
  • 10. 10  Big Bazaar  Brand Factory  Central  Pantaloons  e zone  Home Town
  • 11. 11 1.2. JOINT VENTURE PARTNERSHIPS  Generali Group: Generali is a European insurance company.  Staples Inc: Staples Inc. is a United States based office supply retailer.  Celio: French fashion wear maker  Clark: C&J Clark International Ltd. is a UK-based footwear and accessories retailer. The Future Group has entered into a 50:50 joint-venture (JV) to form 'Clarks Future Footwear Ltd.'. The JV launched its first (1,600 sq ft.) stand-alone store in Connaught Place, Delhi on 19 April 2011. The brand seeks to gain a share of the premium segment in this category. Future Group's vision is to, "Deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner." One of the core values at Future Group is, 'Indianess' and its corporate credo is - Rewrite rules, Retain values. 1.2.2. Partner Companies: Home Solutions Retail (India) Ltd Home Solutions Retail (India) Ltd. (HSRIL) leads the groups foray in the home improvement and consumer electronics retailing segment. It caters to home management requirements and products, including furnishings and textiles, furniture, consumer electronics, home electronics and home services. It operates retail formats like Home Town, Furniture Bazaar, Collection I, E-Zone, Electronics Bazaar and Got It. Future Capital Holdings Future Capital is the financial arm of the group and is involved in asset management (both private equity and real estate funds) with plans to get into other financial services including insurance, credit and other consumer related financial services. Its associate companies are
  • 12. 12 Kshitij Investment Advisory Co. Ltd., Indivision Investment Advisers Ltd., and Ambit Investment Advisory Co. Ltd. Future Media India Ltd. Future Media India Ltd. is a part of the Future Group, aimed at creation of media properties in the ambience of consumption and thus offer active engagement to brands and consumers. Indus League Clothing Ltd. The group owns a majority stake in Indus League Clothing Ltd., one of the leading apparel manufacturers and marketers in India. Some of its leading brands include Indigo Nation, Scullers, Urbana, Urban Yoga and Jealous 21. Future Bazaar India Ltd. Future Bazaar India Ltd. is a subsidiary of Pantaloon Retail (India) Limited. It owns and operates the online shopping portal futurebazaar.com Galaxy Entertainment Corporate Ltd. The group owns a stake in Galaxy Entertainment Corporate Ltd. that operates chains like Bowling Company, Sports Bar and Brew Bar. Joint Ventures Companies: CapitaLand Retail India The group is a joint venture partner in CapitaLand Retail India, along with Singapore- based Capital and Limited. The company provides retail management services to retail properties owned or managed by various group companies and investment funds.
  • 13. 13 Footmark Retail Foot mart Retail is a joint venture with Liberty Shoes and is engaged in the retailing of footwear products in India. Planet Retail Holdings Ltd. The group is a joint venture partner in Planet Retail Holdings Ltd., which operates sports, lifestyle and leisure retail chain. It also owns the franchisee and distribution rights of brands like Marks & Spencer, Guess, Debenhams and Puma in India.
  • 14. 14 ABOUT BIG BAZAAR Big Bazaar was launched in September, 2001 with the opening of its first four stores in Calcutta, Indore, Bangalore and Hyderabad in 22 days. Within a span of ten years, there are now 148 Big Bazaar stores in 80 cities and towns across India. Big Bazaar is designed as an agglomeration of bazaars or Indian markets with clusters offering a wide range of merchandise including fashion and apparels, food products, general merchandise, furniture, electronics, books, fast food and leisure and entertainment sections. Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now present within every Big Bazaar as well as in independent locations. A typical Big Bazaar is spread across around 50,000 square feet of retail space. While the larger metropolises have Big Bazaar Family centre’s measuring between 75,000 square feet and 1,60,000 square feet, Big Bazaar Express stores in smaller towns measure around 30,000 square feet. Most of the Big Bazaar stores are multi-level and are located in stand-alone buildings in city centers as well as within shopping malls. These stores offer over 200,000 SKUs in a wide range of categories led primarily by fashion and food products. Big Bazaar is part of Future Group and is owned through a wholly owned subsidiary of Pantaloon Retail India Limited that is listed on Indian stock exchanges. Big Bazaar wins its first award and national recognition. Big Bazaar and Food Bazaar awarded the country’s most admired retailer award in value retailing and food retailing segment at the India Retail Forum  The 50th Big Bazaar store is launched in Kanpur  Big Bazaar partners with Futurebazaar.com to launch India's most popular shopping portal
  • 15. 15  Big Bazaar initiates the Power of One campaign to help raise funds for the Save The Children India Fund About Big Bazaar Hyper mart Outlet 162 outlets in India till date Parent group Future Value Retail Ltd. Owner Kishor Biyani (CEO) Founded 2001 Head quarter Jogeswari, Mumbai Industry Retail Website www.bigbazaar.com Tag line “NAYE INDIA KA BAZAAR”
  • 16. 16 Future Group Mission and Vision: Group Vision Future Group shall deliver Everything, Everywhere, Every time for every Indian Consumer in the most profitable manner. We shall deliver Everything, Everywhere, Every time, For every Indian consumer in most profitable manner Future Group Mission We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development. We will be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments – for classes and for masses. We shall infuse Indian brands with confidence and renewed ambition. We shall be efficient, cost- conscious and committed to quality in whatever we do. We shall ensure that our positive attitude, sincerity, humility and united determination shall be the driving force to make us successful.
  • 17. 17 Core Values of Company  Indianness: confidence in ourselves.  Leadership: to be a leader, both in thought and business.  Respect & Humility: to respect every individual and be humble in our conduct.  Introspection: - leading to purposeful thinking.  Openness: to be open and receptive to new ideas, knowledge and information.  Valuing and Nurturing Relationships: to build long term relationships.  Simplicity & Positivity: Simplicity and positivity in our thought, business and action.  Adaptability: to be flexible and adaptable, to meet challenges.  Flow: to respect and understand the universal laws of nature.
  • 18. 18 INDIAN RETAIL INDUSTRY The Indian retail market, which is the fifth largest retail destination globally, has been ranked the second most attractive emerging market for investment after Vietnam in the retail sector by AT Kearney's seventh annual Global Retail Development Index (GRDI), in 2008. The share of retail trade in the country's gross domestic product (GDP) was between 8–10 per cent in 2007. It is currently around 15 per cent, and is likely to reach 22 per cent by 2010. A McKinsey report 'The rise of Indian Consumer Market', estimates that the Indian consumer market is likely to grow four times by 2025. Commercial real estate services company, CB Richard Ellis' findings state that India's retail market is currently valued at US$ 511 billion. Banks, capital goods, engineering, fast moving consumer goods (FMCG), software services, oil marketing, power, two-wheelers and telecom companies are leading the sales and profit growth of India Inc in the fourth quarter of 2008-09. India continues to be among the most attractive countries for global retailers. At US$ 511 billion in 2008, its retail market is larger than ever and drawing both global and local retailers. Foreign direct investment (FDI) inflows as on January 2009, in single-brand retail trading, stood at approx. US$ 25.18 million, according to the Department of Industrial Policy and Promotion (DIPP). India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Also, organized retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$ 107 billion by 2013.
  • 19. 19 India has emerged the third most attractive market destination for apparel retailers, according to a new study by global management consulting firm AT Kearney. It further says that in India, apparel is the second largest retail category, representing 10 per cent of the US$ 37 billion retail market. It is expected to grow 12-15 per cent per year. Apparel, along with food and grocery, will lead the organized retailing in India. India has one of the largest numbers of retail outlets in the world. A report by Images Retail estimates the number of operational malls to grow more than two-fold, to cross 412, with 205 million square feet by 2010, and a further 715 malls to be added by 2015, with major retail developments even in tier-II and tier-III cities in India INDIAN ORGANISED RETAIL SECTOR The overall retail market in India is likely to grow at a CAGR of 5.5% (at constant prices) to 1,677,000 Cr in 2015. The organized retail market is expected to grow much faster at a CAGR of 21.8% (at constant prices) to Rs. 246,000 Cr by 2015 thereby constituting ~15% of the overall retail sales. Based on our projections, the top 5 organized retail categories by 2015 would be food, grocery & general merchandise, apparel, durables, food service and home improvement. Retailers inspired by the Wal-Mart story of growth in small town America are tempted to focus on smaller towns and villages in India. However, a careful analysis of the town strata-wise population, population growth, migration trends and consumer spend analysis reveals a very different picture for India. As per our estimates, the share of the 35 towns with current population greater than 1mn in the overall population of India would grow much faster from 10.2% today to reach 14.4% by 2025. Simultaneously, the share of these towns in the overall retail market would grow from 21% today
  • 20. 20 to 40% by 2025. Within these top 35 towns, an estimated 70-80% of trade could be in the organized Sector. Retail market in the Indian organized sector is expected to cross Rs 1000 billion by 2010.Traditionally the retail industry in India was largely unorganized, comprising of drug stores, medium, and small grocery stores. Most of the organized retailing in India have started recently and is concentrating mainly in metropolitan cities. The growth in the Indian organized retail market is mainly due to the change in the Consumer’s behavior. This change has come in the consumer due to increased income, changing lifestyles, and patterns of demography which are favorable. Now the consumer wants to shop at a place where he can get food, entertainment, and shopping all less than one roof. This has given Indian organized retail market a major boost. Retail market in the organized sector in India is growing can be seen from the fact that 1500 supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian companies have entered the Indian retail market which is giving Indian organized retail market a boost. Indian organized retail market is growing at a fast pace due to the boom in the India retail industry. In 2005, the retail industry in India amounted to Rs 10,000 billion accounting for about 10% to the country's GDP. The organized retail market in India out of this total market accounted for Rs 350 billion which is about 3.5% of the total revenues. Retail market in the Indian organized sector is expected to cross Rs 1000 billion by 2010.Traditionally the retail industry in India was largely unorganized, comprising of drug stores, medium, and small grocery
  • 21. 21 stores. Most of the organized retailing in India have started recently and is concentrating mainly in metropolitan cities. The growth in the Indian organized retail market is mainly due to the change in the Consumer’s behavior. This change has come in the consumer due to increased income, changing lifestyles, and patterns of demography which are favorable. Now the consumer wants to shop at a place where he can get food, entertainment, and shopping all less than one roof. This has given Indian organized retail market a major boost. Retail market in the organized sector in India is growing can be seen from the fact that 1500 supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian companies have entered the Indian retail market which is giving Indian organized retail market a boost. GROWTH PHASE OF INDIAN RETAIL SECTOR TO CONTINUE: The phase of high growth of Indian retail sector is expected to Continue due to huge amounts of investments and breaking up of traditional concepts in this sector. These are leading to various changes and are providing further boost to the growth of the Indian Retail Sector. The Indian Retail Sector that includes the traditional retail and the modern retail is estimated to grow at a very fast pace from US$ 336 billion, in 2006 to US$ 590 billion, by 2011.The traditional retail sector is expected to increase from US$ 324 billion, in 2006 to US$ 493 billion, by 2011. The share of the modern retail in the Indian Retail Sector is also estimated to increase from 4% in 2008, to 16% in the next five years. This exceptional growth is expected to take place in the retail sector due to large amounts of investment which is estimated to be about US$ 35 billion in the next five years. The "cash- and- carry" activities are expected to receive the majority of investments.
  • 22. 22 The maximum amount of growth in the Indian Retail Sector will be registered in the topmost 50 to 60 markets that are located in the urban areas. These markets would be mostly supermarkets and hypermarkets. However, these supermarkets and hypermarkets will also witness fast erosions in their margins. Further, it is estimated that in the longer run, the convenient stores that are located in the local neighborhood will continue to survive. A major focus area in the Indian retail sector is the supply chain management. In the western countries, the retail sector has a highly developed system of supply chain. However developments in supply chain in Indian retail sector has been quite slow. Other areas that need attention for the growth of the Indian retail sector to continue includes duty and tax structures, infrastructure, rising land prices and effective trend forecasting. Trend forecasting needs to be done in the country especially in the segments of cosmetics, apparel and footwear for this will help the retail companies to curtail their expenses substantially. Also another area that requires attention is manpower for it is estimated that the sector of Indian Retail will suffer from shortage of manpower by about a million people, by 2012. The chains in the Indian retail sector need to frequently change their stocks and also adopt concepts like home delivery. If all these areas are given immediate attention then the growth phase of Indian retail sector would continue at a very fast pace. The Indian retail sector would then witness the setting up of retail parks that are flourishing in Europe. Further, the growth Of the Indian retail sector would help in making the country ready for big retailers by 2015-2016. GROWTH FACTORS IN INDIAN ORGANISED RETAIL SECTOR: The Indian Retail growth can be attributed to the several factors including:
  • 23. 23 Demography Dynamics: Approximately 60 per cent of Indian population below 30 years of age. Double Incomes: Increasing instances of Double Incomes in most families coupled with the rise in spending power. Plastic Revolution: Increasing use of credit cards for categories relating to Apparel, Consumer Durable Goods, Food and Grocery etc. Urbanization: increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. Covering distances has become easier: with increased automobile penetration and an overall improvement in the transportation infrastructure, covering distances has become easier than before. Now a customer can travel miles to reach a particular shop, if he or she sees value in shopping from a particular location. SCOPE OF INDIAN RETAIL MARKET: The scope of the Indian retail market is immense for this sector is poised for the highest growth in the next 5 years. The India retail industry contributes 10% of the country’s GDP and its current growth rate is 8.5%. In the Indian retail market the scope for growth can be seen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$ 394 billion in 2005. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for growth in the Indian retail market. The growth of scope in the Indian retail market is mainly due to the change in the consumer’s behavior. For the new generation have preference towards luxury commodities which have been
  • 24. 24 due to the strong increase in income, changing lifestyle, and demographic patterns which are favorable. The scope of the Indian retail market has been seen by many retail giants and that’s the reason that many new players are entering the India retail industry. The major Indian retailers are:  Pantaloons Retail India Ltd  Shoppers Stop  Bata India Ltd  Music World Entertainment Ltd. OPPURTUNITIES IN INDIAN ORGANISED RETAIL SECTOR: The opportunities in Indian organized retail sector are many for this sector is witnessing a boom. The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities in India organized retail sector can be judged from the fact that by 2010 it is expected to rise to US$23 billion. The various opportunities in the organized retail sector in India are mainly there for the Indian consumers behavior pattern has changed. Now the Indian consumer gets more hefty pay- packages, is younger, a large number of women are working, western influences, and more disposable income have opened a lot of opportunities in Indian organized retail sector. The Indian consumer wants to shop, eat and get entertainment in one place which has also given Indian organized retail sector an opportunity to grow. The Indian government in 2005 allowed
  • 25. 25 foreign direct investment (FDI) in single brand retail to 51%. This has opened up a lot of opportunities in India organized retail sector. In fact 325 departmental stores, 300 new malls, and 1500 supermarkets are being built which shows the tremendous opportunities in the organized retail sector in India. CHALLENGES FACING IN THE INDIAN ORGANIZED RETAIL SECTOR: The challenges facing the Indian organized retail sector are various and these are stopping the Indian retail industry from reaching its full potential. The behavior pattern of the Indian consumer has undergone a major change. This has happened as the Indian consumer is earning more now, western influences, women working force is increasing, desire for luxury items and better quality. He now wants to eat, shop, and get entertained under the same roof. All these have lead the Indian organized retail sector to give more in order to satisfy the Indian customer. The biggest challenge facing the Indian organized retail sector is the lack of retail space. With real estate prices escalating due to increase in demand from the Indian organized retail sector, it is posing a challenge to its growth. With Indian retailers having to shell out more for retail space it is effecting there overall profitability in retail. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficulty in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels. The Indian government has allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This has made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector.
  • 26. 26 LOGISTICS One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management. The importance can be understood by the fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% - 5% of the total retail price. Therefore, the margins in the retail sector can be improved by 3% - 5% by just improving the supply chain and logistics management. In India, with demand for end- to-end logistics solutions far outstripping supply, the logistics market for organized retail is pegged at $50 million and is growing at 16%. It is expected to reach $120-$130 million by 2013. Organized retail on the other hand is growing at 400% and is expected to reach around $30 billion by 2013.Even supply chain and logistics firms like Hong Kong based Heng Tai Consumables and ABS Procurement Co and ACM China (the greenhouse specialist) is also eying the opportunity for managing the supplies. The supply chain management is logistics aspect of a value delivery chain. It comprises all of the parties that participate in the retail logistics process: Manufacturers, Wholesalers, and Third Party Specialists like Shippers, Order Fulfillment House etc. and the Retailer. Here, logistics is the total process of planning, implementing and coordinating the physical movement of merchandise from manufacturer to retailer to customer in the timeliest, effective and cost efficient manner possible. Logistics regards order processing and fulfillment, transportation, warehousing, customer service and inventory management as interdependent functions in the value delivery chain. It oversees inventory management decisions as items travel through a retail supply chain. If a logistics system works well, the retail firm reduces stock outs, hold down inventories and improve customer service – all at the same time. Logistics and Supply Chain enables an organized
  • 27. 27 retailer to move or store products more effectively. Efficient logistics management not only prevents needless movement of goods, vehicles transferring products back and forth; but also frees up storage space for more productive use. Retail analysts say on-time order replenishments will become even more critical once the Wal- Mart/ Bharti combine begins operations - the American retailer works almost entirely on cross- docking and is likely to demand higher service levels, including potential levies for delays in shipment. The efficiency and effectiveness of supply chain and logistics management can also be understood by the fact that modern retail stores maintain lower inventories than traditional retail. In India, generally in the traditional kirana stores, three weeks inventories are kept; while in a modern retail store like Hypercity, it's nine days and it's under two weeks for Food Bazaar. Now, it is beneficial for both the manufacturer as well as the retailer. If we go through the following food supply chain in India, we find that a lot can be improved by maintaining the supply chain and logistics, their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer is a Person or Agent or Agency or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer.
  • 28. 28 2. PURPOSE OF STUDY The Indian retail industry is the fifth largest in the world. Comprising of the organized and the unorganized sectors, India’s retail industry has been one of the fastest-growing industries in India, especially over the last few years. Initially, the retail industry in India was mostly unorganized; however, with the change of tastes and preferences of the consumers, the industry is getting more popular these days and is getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The share of retail trade on the country’s Gross Domestic Product (GDP) was between 8-10 percent in 2007, and reached the figure of 22 percent by 2010. India has one of the largest numbers of outlets in the world. Of the 12 million retail outlets present in the country, nearly 5 million sell food and related products. Though the market has been dominated by unorganized players, the entry of domestic and international organized players is set to change the scenario. Around 7% of the population in India is engaged in retailing. Organized retail is preferred by the customers other than unorganized retail. There are many organized retail stores such as, Big Bazaar, Reliance fresh, Spencers and many other stores. Big Bazaar is “Wallmart of India” so it is important to analyze the customer’s perception and satisfaction towards Big Bazaar. The purpose of the study is to find out the customer perception and satisfaction of the Big Bazaar stores. Another purpose of research is to analyze the customer’s demographic profile which purchased from Big Bazaar stores.
  • 29. 29 3. Objective of Study  To know which factor influencing to damage of inventory in Big Bazaar, (Ambiance mall)  To understand the annual demand of inventory.  To know the mostly effective way to control the damage in Big Bazaar  To see whether the Damage & Defective material has been timely identified and necessary action is taken over the same.  DAD is accounted in system, physically removed from store and scrap value is realized, if applicable.
  • 30. 30 4. Inward and Outward Inventory Effective inventory management is all about knowing what is on hand, where it is in use, and how much finished product results. Inventory management is the process of efficiently overseeing the constant flow of units into and out of an existing inventory. This process usually involves controlling the transfer in of units in order to prevent the inventory from becoming too high, or dwindling to levels that could put the operation of the company into jeopardy.DM has to ensure effective replenishments. On the basis of sales vs stock calculation he has to maintain sufficient inventory. This note details out the process for receiving or sending Saleable & Non- Saleable Merchandise, at in-store warehouses of Big Bazaar, Food Bazaar & Fashion @ Big Bazaar. 1. Inwarding of Merchandise Source of receiving merchandize:  Through FLSL warehouse.  Through Vendors.  Merchandize belonging to SIS (Store in Store) through SIS vendors. Transfer of merchandize through FLSL warehouse  Goods are ordered to the warehouse through Stock Transfer Order (STO)  The STO acts as the starting point of documentation for delivery of goods from the warehouse. 1.1 Inwarding Process at Store  Security Process  Store warehouse process  Floor Staff Process  Transporter to the handover the documents to Security/Store warehouse in-charge. Documents will include – one copy of warehouse outward gate pass, one copy of way bill (in case of interstate transfer), two copies of Lorry Receipt (LR)/Consignment Note and STN. 
  • 31. 31  Security personnel to check seal/seal number on the truck and mention details in the Security Inward Register. If the seal is missing or tampered with it should be duly noted in the security inward register.  Loader to unload the vehicle in presence of security and store warehouse staff. Security to count the total number of cartons and check FLSL or Vendor tape on all cartons from all open sides. If the tape is tampered, missing or if it’s a plain tape.  Security personnel to record inward details in security inward register (Refer Annexure 1) and stamp (refer to Annexure 2, for inward stamp format) both the copies of STN and LR with inward stamp, mentioning all the relevant information and handover both the sets to store warehouse in-charge.
  • 32. 32 1.1.2 Process for Store Warehouse  Store warehouse staff to verify all the H.U nos. by ticking it on the STN after physically checking the cartons.  In case of Furniture, Plastic and Crockery products, it is a mandate to check all cartons for damages, in front of the transporter.  After cross checking all HU’s with STN, duplicate set of STN and LR to be acknowledged and handed over to the transporter. Store warehouse in-charge to handover the stocks to respective Department Manager (DMs), as per the details in STN  Floor Department staff to open the carton and cross checks the physical quantity with the quantity mentioned on H.U. no. (100% Physical Count)  Any discrepancy to be escalated to the respective DM, who in turn informs the Store Warehouse In-Charge. 
  • 33. 33  Store warehouse staff to inward the stock in SAP and generates Good Receipt Note (GRN). GRN must be done within 24 hours of receiving the delivery.  GRN number/date to be mentioned in the Security Inward Register .  Store warehouse staff to file a copy of Gate Pass, STN & LR in a file for audit purpose. Consumption of Way Bill to be booked and sent to FKS on daily basis by 6 p.m.  Floor staff to display the stock after counting or seal the carton with tape, signs on the carton, mention the quantity and date of inward in the carton and place the same in the store warehouse. Discrepancy 1. Shortage/Damage 2. Excess Receiving Shortage/Damage  Shortage of Carton and Damage  Shortage in Sealed Carton 1.1 Shortage/Damage of Carton  Store warehouse staff to identify the missing/damaged carton (H.U.no.) from the STN.  Store warehouse staff to mention the missing/damaged carton (HU no.) or damaged article received on both the copies of STN and LR and takes the transporter’s sign on the same in the remarks column.  Copies of discrepancy note is created by store warehouse staff which is to be signed by the transporter. First copy to be handed over to the transporter with LR and STN, second copy is stapled with the other inwarding documents (STN, LR and Gate Pass) and filed and third copy stays in the book.
  • 34. 34  GRN for the short/damage merchandize to be done separately. Store warehouse in-charge executive to ensure GRN of the short carton and damage product is done within 24hrs of receiving the consignment.  Discrepancy to be booked in SAP under ZFLSL MB_1A, transaction code (for debiting the same to the transporter) within 48hrs of doing GRN.  After creating Debit Note in ZFLSL MB_1A, an automated mail is sent to the warehouse manager for approving the Debit Note. This debit note should be approved or rejected within 48hrs of its creation; In case of no response the issue must then be escalated to Zone SCM head and Operations Head.
  • 35. 35  After the document is approved, store warehouse in-charge and store manager will get an automated mail, suggesting, to post the debit note. After posting the document, the stock will get outwarded from stores inventory.  In case the document is rejected the store warehouse in-charge to find out the reason for rejection and escalate the same to the Store Manager.  Damaged products to be sent back immediately through the same transporter. In case the transporter refuses to take the stock back the case must be escalated to ZO SCM Head and ZO Operations Head. Shortage in sealed carton  All shortages inside the carton should be identified within 24hrs of receiving the consignment.  Shortage inside the carton would be identified by the section staff at the time of 100% physical count.  Shortage to be escalated by respective DM who in-turn informs the store warehouse in- charge and mention the articles short in the carton on STN before signing the same.  Store warehouse in-charge to book the shortage in ZFLSL_MB1B, (for debiting the same to supplying site) within 24hrs of doing the GRN.  After creating Debit Note in ZFLSL MB_1B an automated mail is sent to the warehouse manager for approving the Debit Note. This debit note should be approved or rejected within 48hrs of its creation. In case of no response the issue must then be escalated to ZO SCM head and ZO Operations Head
  • 36. 36  After the document is approved, store warehouse in-charge and store manager will an automated mail, suggesting, to post the debit note. After posting the Get document, the stock will get outward from stores inventory .  In case the document is rejected the store warehouse in-charge to find out the reason for rejection and escalate the same to the Store Manager. Excess Receiving  Any excess merchandize discovered in the consignment to be mentioned on the LR and STN.  Both the above documents should be signed by the transporter.  Excess merchandize should be sent back to the warehouse by the same transporter.  In case the excess is noticed after the truck has left, it must either be sent back in the next delivery or the respective DM should talk to the category and ask them to make STO for the same and a virtual entry to be passed for the same. Vendor Delivery  Vendor Delivery is done on the basis of PO. POs are either created by Front End Category (FEC) or store cataloger in case of Food Bazaar.  Store created PO should have sign of the person who has prepared it, checked it and approved it. Person who is checking it should be a DM and the person who is approving it should be ASM/SM. HO or ZO created POs should have sign of FEC.  PO should be checked for its validity (Expiry Date)  All POs should be SAP generated. Manual Pos should not be entertained. Price Change  Old stock to be sold at old price point and the new one at new price point.  New Price is to be maintained in Main EAN.
  • 37. 37  Old stock is moved from the shop floor to store warehouse.  Store warehouse staff to activate alternate EAN for old product, maintaining old MRP. I-Doc (Information Document) request is sent to the I-Doc team in the I-Doc request format for both the EANs. . Item Not Found  In case an Item Not Found Error is identified in a product, a request for I-Doc is sent to the I-Doc team.  Once the fresh I-Docs are received, the stocks are inwarded and checked in POS before displaying on shop floor. Handling I-Doc and Barcode Issues Generally there are 5 types of issues that occur at cash counter viz. A. I-Doc Issues 1. Item not found. 2. MRP mis-match. B. Barcode Issues 1. Missing Barcodes. 2. Wrong Barcodes. C. Offer not updated 1. Offer not reflecting in New POS
  • 38. 38 I-Doc An IDOC (Intermediate document) is a simple text file, which holds crucial data for business to function. The article master files, popularly known as article I-Docs are a set of text files that contain data (such as Article, Article description, selling price, MC, product hierarchy, etc) related to the article. Importance of I-Docs As SAP and POS are essentially databases of different formats, to enable communication between these two, data is converted into simple text files for the ease of transfer at both ends. Types of inventories maintained. The inventories maintained in the outlet, are of different product category. Mainly Cycle inventory is maintained for FMCG product category & Food Category, Safety level of inventory for FMCG Products, and for Apparel, Seasonal inventory is maintained, because of fluctuation in demand. Decision of how inventories are maintained Then coming to how the store manager decides the level of inventory, the store manager inspects the stocks time to time and also the demands of customers. Manager maintains the Stock – in & Stock – out, so that he can decide the level of inventory. He also has seen the trends in the requirement of inventories, as for e.g. he told that apparels are ordered approximately after 45 days. For every sample of clothes they have a back up of 10 pieces. However in case, if more number of pieces are required, they first ask other big bazaar location such as that of Patia etc. but if, even then they fail to meet the demands of customers, they go for “Transfer of Interest”. In this they prefer sending the customers to pantaloons, as it is also of Future Group, instead of losing them. He also told that recently big bazaar has undergone tremendous technological
  • 39. 39 advancement, as its supply chain has become completely computerized. Once the product is sold, automatically, the computer sends the request for back up Reorder points of inventories The manager in charge told us that there is no such reorder points. Orders are placed as and when required. However he told that there are no such measures, except in a few items. Previously apparels were ordered once there stock fell below 4 per item piece. For general merchandise, which includes, food and non-food items, it was 7 days. However they always keep in mind the transit time of 2 days. Vegetables are taken on a daily basis, form local vendors. Supply chain of perishable and imperishable goods Perishable goods like vegetables are maintained with great care. Vegetables are bought on daily basis on the basis of demand, and seasonal item. It is also ascertained that damaged vegetables are sold at a low cost to some other channels. Whereas imperishable goods like utensils and staple goods and electronic items are brought from Jamshedpur. The distribution channel used in supply chain process is operated by Central Distribution Channel, which is located in New Delhi From there goods are supplied to every Big Bazaar Store. The modes of transportation which are used in supply chain process are Truck & Rails, but in case of emergency, flights are also being used. The transportation is outsourced. Mainly the carriers for Big Bazaar are Quick & Safe, Gati, Deluxe Roadways, and TNT. Operational strategies followed by retail outlet to attract more customers When we raised the question of strategy for attracting customers, the manager was not willing to answer us. However after convincing him a lot, he gave us some generalized strategies. He told us that mostly they give discount offers. Discount offers are basically given by manufacturers to them, and after keeping a safe margin of profit, they release the items on discounts. They also give ads in television, go for promotional activities and put banners on road sides. However once
  • 40. 40 the customers is inside the store, then also strategies keep changing. They keep thing in places where they see for longer duration, for e.g. near corners of turning, on cash counters etc. Area of Maintenance Since the store is fully computerized, in the sense, like billing, inventory management, electronic equipments near the gates, to check thieves, it has to take proper care of machines. Food items are to be regularly checked. Inventory room has to be checked regularly for any sort of leakages. Air-conditioner shaves to be regularly checked. Electrical wirings have to be closely monitored. Short circuit cameras have to be checked regularly as it is a major factor in security arrangement. Quality of Food-items: Food items are kept in a separate place, both in inventory and at store. Food items which are required to be kept at cold places, like cold-drinks, cheese, milk products, milk, fruits, etc. are kept in refrigerators, whereas those which can be kept anyway, are kept on proper shelves. Stock Take Process  100% stock take / Physical Inventory (PI) audit activity for each BB & FB outlet/cut-in must be conducted, as per a pre-stock take schedule circulated by Zonal Stock Controller (ZSC) for each stock take cycle.(Each Cycle = 4 months).  Store Manager & Stock Auditor/Asst. Stock Auditor from FKS shall be responsible for the successful completion of the stock take.  Stock Take for a scheduled day must start only after the close of business hours (not later than 10:30pm) and must be completed before start of business next morning.  The investigation of discrepancies and correction of book stock balances shall be completed within 2 days immediately after the completion of stock take process.  The stock take process as explained in the SOP can be classified into following 5 sections:-
  • 41. 41 1. Planning & Scheduling 2. Pre-stock Take process 3. Stock Take process 4. Post Stock Take process 5. Shrinkage/Variance Reporting START Planning & Scheduling Pre Stock take Post Stock Take process Stock Take process
  • 42. 42 1. Planning & Scheduling: Stock take schedule for every stock take cycle. Finalization of MC & dates for stock take by SM & ZSC. 2. Pre stock take: Preparation of location sheet &barcode- Proper mapping of merchandise & location. Pre stock take checklists- to check store readiness to carry out stock take. Team scheduling- proper mapping of staff to carry out various sub actives involved. 3. Stock take: Stock takes team briefing- updating the team about the detailed activities to be carried out. Global count & HHT distribution- Global counting is done. Data to be uploaded in Global & User count sheet. Scanning-dealing with shortage/excess merchandise if any Completions of stock take activity for the day-resolution of merchandise without barcode by store manager, generation of valid report by Asst stock auditor. 4. Post Stock Take: Revalidation of invalids-recheck for the merchandise having multiple barcodes. 5. Shrinkage report & store score card- for measuring the performance. Shrinkage/Variance Reporting STOP
  • 43. 43
  • 44. 44 5. ORDER OF INVENTORY The inventory in any business is maintained to decrease the set up costs and the shortage costs. If the demands of the customers are not fulfilled then in then it may result in the loss of their good wills. If the orders are cancelled then it results in the loss of the business. Thus, there is always a need of inventory for the smooth running of any business. The inventory problems (models) may be defined in to two categories. 1. Deterministic Models – These are inventory models in which demand is assumed to be fixed for a subsequent period of time, and 2. Probabilistic Models – These are the inventory models in which the demand is a random variable having a known probabilistic distribution. Here the future demand is determined by collecting data from the past experience. Some general notations used in inventory models: We shall use the following general notations in inventory models: I = the cost of carrying one rupee in inventory for a unit time. C1 = Holding cost per unit time. C2 = Storage cost per unit time. C3 = Set up cost per production run q = Lot size per production run. (I.e. The quantity produced per production run) r = Demand rate. K = Production rate. C = Average total cost per unit time. t = Time interval between two consecutive replenishments of inventory. z = Order level or stock level. L = lead time. q*, t*, z* = Optimal values of q, t, z respectively for which the cost C is minimum.
  • 45. 45 Deterministic models: Economic Lot size Model: The most common inventory problem faced by industry concerns the situation where stock levels are replenished with time and then are replenished by the arrival of new item. The situation is given in the following economic lot size models. The inventory problems in which the demand is assumed to be fixed and completely predetermined are known as the Economic Lot Size Problem or Economic Order Quantity (EOQ) Problem. Model I: Economic Lot Size Model with Uniform Rate of Demand Infinite Production Rate and having no Shortages To determine an economic lot size formula and the minimum average costs under the following assumptions. (i) Demand is uniform at the rate of r units per unit time. (ii) Production is instantaneous. (I.e. Production rate is infinite). (iii) Lead time is zero. (iv) C1 = Holding cost per unit time. (v) C3 = Set up cost per production run. (vi) Shortage costs are not allowed.
  • 46. 46 Solution: Let q be the units of quantity produced (or ordered) per production run at interval of time t. The situation in inventory can be illustrated as under Model II: Economic Lot Size Model with Different Rate of Demand in Different Production Cycles, Infinite Production Rate and having no Shortages. To derive Economic Lot Size formula and the minimum average cost under the same assumptions as in mode I except that the demand rates are different in different production cycles. Solution: Let q be the units of quantity produced per production run.
  • 47. 47 Model III: Economic Lot Size Model with Uniform Rate of Demand, Finite Rate of Replenishment and having no Shortages. To derive Economic Lot Size formula and the minimum average cost under the same assumptions as in mode I except that the replenishment rate (i.e., the production rate is finite). Solution: Let K > r is the number of items produced per unit time. If q is the number of items produced per production run then the production will continue for a time t1 = q/K. And the time of one complete production run (i.e. the interval between runs) t = q/r (Since r is demand rate and no shortage is allowed). The situation can be illustrated as follows:
  • 48. 48
  • 49. 49 7. DAMAGE AND REASONS OF DAMAGE Damages at the Store can be: Malicious Damages: Malicious damages are willful damages caused by any individual/mob at the store, whether customer or staff, by any means. Damage to Property due to any Vehicle Impact: Damages to Store property can be caused on account of collisions and in certain cases, crashes by Store/Customer Vehicle. Damage to Customer’s Property due to any Vehicle Impact: Damage to customer’s property can be caused due to any improper movement of vehicles in the parking lot. Responsibility The Security at the store is responsible to ensure adherence to the process mentioned herein. The Security staff to keep close vigil at stores to monitor movement of persons with suspicious behavior leading to malicious damages. In case of vehicle damage, the designated Security Guard to report such incident to the Profit Protection Cell Head and prepare a Vehicle Impact Damage Form Procedure Malicious Damage In case of an employee with malicious intent: Any other staff spotting the incident should immediately prevent that employee from causing any further damage. He/She should immediately be brought to the back office and the case to be handed over to the PPC Head of the Store. Store PPC Head to inquire about his/her details and the same to be recorded in the incident report form (Refer to Volume 1, SOP 3.3 Shoplifting) In case of an outsider: The Security guard to apprehend the culprit immediately and take him/her to the back office. The Security Guard to hand him/her over to the police with a complaint after consulting the Profit Protection Cell Head of the Store. The PPC member to record the incident in the incident report form (Refer to Volume 1, SOP 3.3 Shoplifting)
  • 50. 50 Vehicle Damage Damage to Property: In case of standalone stores, the Security Guard at the parking lot to issue serial numbered parking slips to make sure that any unregistered vehicles do not enter the parking lot. The Security at the Parking to also guide the customers during vehicle movement inside the Parking Lot. The Security Guards at the warehouse to ensure that the Inward Area is clear of any hindrance for the Delivery Vehicle to make secured movements. Profit Protection Cell member to prepare a Vehicle Damage Form. The Store is not responsible in case any Customer’s Vehicle is damaged due to some other vehicle impact. Damage to Person: In case of any damage caused to any person, the person to be immediately brought to the back office and rendered First Aid. Audit Process: The PPC Head at the Store to ensure that these processes mentioned in this SOP are adhered to without any deviation. The Store manager to ensure the Vehicle Damage Forms are available at the Store for the Business manager to audit during Store visits.
  • 51. 51 8. Control method on damage Despite of all the precautions listed in SOP Avoiding Stock Damages on efficient causes least loss to the store. This SOP covers the process of dealing with Damaged and Defective (DAD) merchandise of Electronics, Furniture, Food - FMCG and Staples, Food - Food Services, Fashion, Home Fashion, GM- Home ware, Luggage, Toys & Sports & Stationery along with possible treatment plans for the same. . The DAD stock to be regularly cleared from the store with the approval of the relevant authorities. In-Store Process Roles & responsibilities: Store to nominate one ASM or DM (wherever ASM not available) as DAD Champion. If there is no ASM/ DM in the store, then store manager to take it up personally. By 20th of every month or as and when identified, Every DM to identify damaged defective merchandise and keep it in a separate (pre-identified and marked) location in the store. While identifying the merchandise, DM to Check all the sources of damage i.e. Floor Defect & Customer returns. Put a sticker with date of identification and his/ her signature. � Maintain an excel sheet with details of the damaged/ defective merchandise. • By 21st of every month, DM to share the list with the identified DAD store champion. • Store DAD champion to compile the list for all departments and compare the physical stock with the list given by DMs. He/ she should identify any gaps between list and stock or any merchandise wrongly identified as damaged/ defective and get the list in order. Once completed, the list to be sent to Area Manager and Store Manager by 22nd of every Month. • Area Manager to visit all stores between 23rd of the Current month to 02nd of next month and sign off on the damaged/ defective list and the proposed treatment plan. The following treatment plans may be undertaken depending on the nature of the damage:
  • 52. 52  Return to Vendor  Repair  Markdown  Scrap Sale/ Disposal as garbage After the approval from Area Manager, store DAD champion to ensure that the • After the approval from Area Manager, store DAD champion to ensure that the recommended treatment plan is followed as detailed below in Section 3 (Treatment Guidelines). Treatment Guidelines 1 Return to vendor (including FAL): Zonal category to share list of vendors & Terms of Trade in which the merchandise can be returned to vendor, with store teams on quarterly basis Area manager to ensure that such merchandise is not scrapped/ disposed as garbage. List of products which are to be returned to vendor should be shared with Category team through e-mail by 4th of next month. Store DAD Champion to ensure that Damaged & Defective merchandise is picked up by the respective vendor by 15th of the month. 2 Repairs: Wherever possible, damaged merchandise to be refurbished. The cost involved in repairing to be estimated by the DM. Area Manager to approve the merchandise for repair along with cost of repairing. Any markdowns to be taken for selling such merchandise after repair to be taken for Zonal category (as detailed below in 3.3). Once the Area Manager approves the repair list, Store DAD champion should ensure that the damage & defective merchandise is refurbished & packed as fresh merchandise for sale. 3 Markdown: Once the Area Manager sign off is completed on the treatment plan, Store DAD champion should send a list of DAD merchandise which can be liquidated at a discounted price to the Zonal Category team by 4th of the month • Zonal Category should revert with markdown details (percentage & timeline) by 10th of every month • Incase Zonal Category does not revert by 10th, Store DAD champion should escalate the same to Area Manager
  • 53. 53 • Zonal Category to ensure that markdown I-docs are sent to stores for the set time period. • Store DAD champion to ensure that the markdown products are put on sale. 4 Scrap Sale/ Disposal as garbage: • To be booked as DAD in SAP and disposed with Area managers/ Zonal CFO’s approval as per the limits mentioned above For movement type 551, DAD % to sales to be considered at the time of approval by Area Manager. DAD for the month to be taken as % of average monthly sale for the store for last calendar quarter. For instance, for DAD booked in the month of July, August & September, the average monthly sale for Apr-Jun quarter needs to be taken as base. Sales to be taken from Green Plum (net of taxes) and excluding F&V, Navras and SIS.  DAD up to 0.15% of sales in a month to be approved by the area manager for booking and scrap sale/ garbage disposal.  Monthly DAD above 0.15% and up to 0.2% of sales for scrap sale/ garbage disposal to be approved by Zonal Head.  Monthly DAD above 0.2% of sales to be approved by concept CFO/ CEO scrap sale/ garbage disposal.
  • 54. 54 9. Research methodology Statistical tool- Statistical Analysis Tools is required for a thorough and scientifically valid analysis of survey results. There are several choices available for the researcher to choose from ranging from the simple tools available with all survey packages that calculate percentages and totals. Secondary data collection method- Secondary data is the data which has already been collected by someone else for the same, similar or for different purpose. We have collected the secondary data from the annual report of Big Bazaar, text books, websites etc. We have used secondary data for the purpose of preparing observation, industry & company profiles. Type of research Descriptive Research: Includes studies and fact finding enquiries of different kinds. In social sciences and business research we quite often use the term Ex-Post-Facto research for descriptive research studies. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. Most ex-post facto projects are used for descriptive studies. Ex post facto studies also include attempts by researchers to discover causes even when they cannot control the variables.
  • 55. 55 10. FINDING Significant losses/damages during shipping. The next problem in setting up organized retail operations is that of supply chain logistics. India lacks a strong supply chain when compared to Europe or the USA. The existing supply chain has too many intermediaries: Typical supply chain looks like:- Manufacturer - National distributor. Regional distributor - Local wholesaler - Retailer -Consumer. This implies that global retail chains will have to build a supply chain network from scratch. This might run foul with the existing supply chain operators. In addition to fragmented supply chain, the trucking and transportation system is antiquated. The concept of container trucks, automated warehousing is yet to take root in India. Inadequate infrastructure The lack of proper infrastructure and distribution channels in the country results in inefficient processes. This is a major hindrance for retailers as a non-efficient distribution channel is very difficult to handle and can result in huge losses. Infrastructure does not have a strong base in India. Urbanization and globalization are compelling companies to develop infrastructure facilities. The storage infrastructure, too, is severely restricted. In2006, India had a total warehousing capacity of 81 million tones. Like the rest of the infrastructure sector, warehousing is highly fragmented and unorganized Transportation, including railway systems, has to be more efficient. Highways have to meet global standards. Airport capacities and power supply have to be enhanced. Warehouse facilities and timely distribution are other areas of challenge. To fully utilize India's potential in retail sector, these major obstacles have to be removed.
  • 56. 56 Almost 78% of total freight is transported by road. Almost 78% of total freight is transported by road. But, according to the FICCI-E&Y retail report, roads connect less than half of the half a million Indian villages. The normal distance covered by trucks and trailers in India are250-300 km a day, whereas the international norm is 600-800 km a day. Most roads in India are designed to carry a maximum gross weight of 16.2 tones, which allows for a maximum loading of about 9 tones. This severely restricts the ability to transport goods on larger vehicles.
  • 57. 57 11. RECOMMENDATIONS Improvement in supply chains Big bazaar should use better techniques for improvising its supply chains. The organizational structure and the business model of Wal-Mart are its winning-formula for some markets. But this also dooms it to failure in others. The heart of the matter is high-volume-low-cost strategy, which made it a success in cost-conscious smaller, everybody-knows-everybody cities in the US. But this very strategy doomed it to failure in larger (anonymity, high consumerism) cities in the US. A very high real estate cost in big cities was also detrimental to its strategy in such cities. Warehouse location Though it is a cost cutting formula of big bazaar, but now the Indian scenario has changed. Though it has its own logistics called Future logistics, it should try some other ways to improve its in housing of goods. Many a times it happens that goods are not available to customers as the time taken between ordering and processing is very long. Improvement in packaging Big Bazaar should ask suppliers to send goods with good packaging so that losses due to breakage should be avoided. Moreover its own handling and carrying should be improved. Infrastructure Internal warehouse of big bazaar has very low capacity. It’s completely hock- poch. Due to insufficient space of storage losses are very frequent. Shop lifting especially internal is very high. It should allow its suppliers to have a track of their goods so that when stock finishes they will automatically supply. Use of RFID It is cost reducing as well as damage controlling tool. It can be improve the efficiency of warehouse and reduce the manpower involvement to handle inventory in warehouse.
  • 58. 58 Bibliography http://futurebyte/retail-operation.asp http://www.business-standard.com/india/news/future-retail-to-open-60-stores-in-next-18- months/104621/on http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/Future-Retail-to- open-60-stores-in-next-18-months/articleshow/6287575.cms http://www.big-bazaar.co.in/

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