Big Bazaar

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The role of supply chain in Indian organized retail has expanded over the years with the boom in this industry. The growth of the Indian retail industry to a large extent depends on supply chain, so efforts must be made by the Indian retailers to maintain it properly. As supply chain Management involves procuring the right inputs (raw materials, components and capital equipments); converting them efficiently into finished products and dispatching them to the final destinations; there is a need to study as to how the company's suppliers obtain their inputs. The supply chain perspective can help the retailers identify superior suppliers and distributors and help them improve productivity, which ultimately brings down the customers costs. At the same time, Market logistics helps planning the infrastructure to meet demand, then implementing and controlling the physical flows of material and final goods from point of origin to points of use, to meet customer requirements at a profit. Supply chain management is a topic of importance among the logistic managers and researchers because it is a Consider with a competitive edge. Supply chain management deals with the management of materials, information and financial flows in a net work consisting of suppliers, manufactures, distributes and customers. From an analytical point of view a supply chain is simply a net work of material processing cells with the characteristics such as supply, transformation and demand. Supply chain management is management of a net work of interconnected businesses involved in the ultimate provision of product and service packages required by end customer. Supply chain management spans all movement and storage of raw material work in process inventory, and finished goods from point of origin to point of consumption. The success in this competitive and dynamic sector depends on achieving an efficient logistics and supply chain, which can be provided by professionals, as they combined the best systems and expertise to manage a ready flow of goods and services. The retail boom promises to give an impetus to host of allied sectors and the logistics industry, as the back bone of the retail sector, stands to gain the maximum. In India the logistics market is mainly thought to mean transportation. But the major elements of logistics cost for industries include transportation, warehousing etc., and other value added services such as packaging. The Logistics cost accounts of 13 percentage of GDP (Gross domestic product). The industry is currently on an upswing and is poised for a growth of 20 percentages in the coming years.

With extension of retail supply chain will take on an increasingly important role. With the end consumer becoming more demanding and time conscious, the need for just in time services is increasing. In retail where competition is intense and stakes are high, customer satisfaction is paramount . India is witnessing changing life styles, increased incomes, the demographic variability's and vibrant democracy. Indian retailing is expanding and is expected to reach at US $637 billions by 2015. Modern retail is soon capturing 22% share in total retail by 2011 with the expansion of 12 millions outlets and provision of creating 1.5 millions jobs in 2 to 3 years. The industry is playing vital role in the economic growth of the country. The concept of shopping is moving in and around hypermarkets, supermarkets, and specialty stores and in other formats. Retail industry is one of the key upcoming sectors in India contributing major to employment generation. Retail in India is featured with street markets and convenience stores which accounts for 96% of retail business. Most of the stores are very small with an area of less than 50 sqcm. But the organized retail IMPORTANCE OF SUPPLYCHAIN AND LOGISTICS MANAGEMENT

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% to 5% by just improving the supply chain and logistics management. 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, 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 I the most timely, effective and cost efficient manner possible. Logistics regards order processing and fulfillment, transportation, warehousing, customer service and inventory management a 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 reduces stock outs, hold down inventories and improve customer service all at the same time. Logistics and supply chain enables an organized 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/Bharati 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 are kept; while in a modern retail store like hyper city its nine days and its under two weeks for Food Bazaar. Now, it is beneficial for both the manufacturer 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.

A third-party logistics provider (abbreviated 3PL, or sometimes TPL) is a firm that provides a one stop shop service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer s needs based on market conditions and the demands and delivery service requirements for their products and materials. To put forward some standard definitions, we would adopt the definition of 3PL found in the Council of Supply Chain Management Professionals glossary, which reads as follows: "A firm [that] provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding." Future Group

Future Group is the country's leading retail business group that caters to the entire Indian consumption space. It operates through six verticals: Future Retail (encompassing all lines of retail business), Future Capital (financial products and services), Future Brands (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 spaces). The group's flagship company, Pantaloon Retail (India) Limited operates over 5 million square feet through 450 stores in 40 cities. Some of its leading retail formats include, Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, EZone, Depot, Health & Beauty Malls and online retail format, http://www.futurebazaar.com./ The group's joint venture partners include Italian insurance major, Generali, French retailer ETAM group, US-based stationary products retailer, Staples and UK-based Lee Cooper and India-based Talwalkar's, Blue Foods and Liberty Shoes. Future Group is working on the vendor network as well as the logistics network. The company has identified up to 40 anchor vendors, each with turnovers of US$45 million, to achieve economies of scale. The group is also keen to ensure that its smaller vendors are able to reach turnovers of around US$1 million and a growth rate of 40% annually, to be able to pass on the benefits of scales. The company is also working towards bringing its 1,200 vendors online, like Wal-Mart. Going further in this direction, the Future Group has also launched Future Logistics initially aimed at handling the supply chain logistics of the group. However, sensing immense opportunity in this area, the company is now looking to offer its services to its 1000-odd vendors, spread across consumer related goods, to reach a targeted turnover of about Rs.700 crore by 2010.The thrust at present will be on modes of surface transport like roads and rail only. However, at a later stage, sea and air modes might also be considered as per the requirement, said sources. In India, Future group derives significant economies of scale in managing their supply chain. With more than 170000 products, the company maintains a strong supplier relationship in a partnership mode, avoiding the exploitative supplier buyer transactional philosophy. The IT enabled back-end operations and supply chain management increases the reliability and efficiency of the business. As part of the operation, Future Group is also undertaking to reduce its warehousing costs through a consolidation process. In a country like India, where most retail stores are located in the heart of the city where rents are high and storage space is scarce supply chain management has even more serious business implications. Future Logistics now handles two-and-a-half million SKUs (or stock keeping units) a day across the Future Group's various retail formats around the country. By 2010, this number is expected to increase to more than 30 million SKUs a day. Even with 98% accuracy, some

600,000 pieces will not be delivered correctly, resulting in an estimated sales loss of more than Rs 4 crore a day. The biggest driver in consumer logistics is going to be zero defect in managing the supply chain. While infrastructure, technology, automation, processes and people will all play an important role, zero defect can only be achieved through vertical integration across the entire supply chain from raw material supply, production, wholesale and retail. The different parts of the supply chain will no longer be able to work in silos as they do today. 1. INTRODUCTION TO 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 2010. Organized retail on the other hand is growing at 400% and is expected to reach around $30 billion by 2010.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 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. 2 SCENARIO OF LOGISTICS IN INDIA The logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technology and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services (which are also growing). Changing government policies on taxation and regulation of service providers are going to play an important role in this process. Coordination across various government agencies requires approval from multiple ministries and is a road block for multi modal transport in India. At the firm level, the logistics focus is moving towards reducing cycle times in order to add value to their customers. Consequently, better tools and strategies are being sought by firms in order to enhance their decision making. In this paper, we provide a perspective on these issues, outline some of the key challenges with the help of secondary information, and describe some interesting initiatives that some firms & industries are taking to compete through excellence in managing their logistic. .2.1 Some Peculiarities of the Indian Supply Chains The Indian logistics sector has typically been driven by the objective of reducing transportation costs that were (and often continue to be) inordinately high due to regional concentration of manufacturing and geographically diversified distribution activities as well as inefficiencies in infrastructure and accompanying technology. Freight movement has slowly been shifting from rail to road with implications on quality of transfer, timeliness of delivery and consequently costs except for commodities which over long distances, predominantly, move through the extensive rail network. More on the nfrastructure issues later. Figure 1 shows the relative value of transportation costs vis-à-vis other elements of the logistics costs in India. The transportation industry is fragmented and largely un-organized a large

number of independent players with regional or national permits that carry freight, often with small fleet size of one or two single-axle trucks. This segment carries a large percent of the national load andalmost all of the regional load. This fragmented segment comprises owners and employees with inadequate skills, perspectives or abilities to organize or manage their operations effectively. Low cost has been traditionally achieved by employing low level of technology, low wages (due to lower education levels), poor maintenance of equipment, overloading of the truck beyond capacity, and price competition amongst a large number of service providers in the industry. Often, one finds transportation cartels that regulate supply of trucks and transport costs. However, the long run average cost of transport operations across th entire supply chain may not turn out to be low. 3 PROFILE OF THE COMPANY Big Bazaar is a unique chain, currently more than 75 stores in all around the India. Owned by pantaloon retail (INDIA) limited , future group. Headquarter is situated in Jogeshwari Mumbai, Idea was pioneered by entrepreneur KISHORE BIYANI, the CEO of future group, born in middle class Marwari family, began career with selling stonewash fabric to small shops in Mumbai . He Launched Pantaloon , biggest listed retailer of the country. Pantaloon is credited with launching many retails formats in value and lifestyle retailing brand names in country, including big bazaar, food bazaar , central , e-zone and home town . In 1993, he experimented with a small store format, and Pantaloon Shoppe was launched in Panjim , Goa. Then a large family s store in 1998 in Kolkata , after a great success he launch aBIG BAZAAR Is se sasta aur accha kahi nahi in the year of 2001. Now total revenue of the company was $249 million in the year, Group s vision is to deliver everything , everywhere , everytime to every Indian consumer in most profitable manner . The group considered Indianness as a core value and its corporate code is Rewrite rules , Retain values. 3.1 SWOT ANALYSIS Strengths Low cost Cost cutting by reducing intermediaries Promotional offers on Wednesday Location Home delivery facility Weakness Low customer loyalty Time gap between order and processing Low internal warehouse capacity

Employees not trained. Less Conversion level Frauds in Retail Opportunities Percolating down Rural Retailing kids and teens retailing segment. Organized retail is only 3% of the total retailing market in India Threats Shopping Culture Uncertainty in market position New entrants like reliance middleman between the manufacturer and retailer the manufacturer and retailer. Supply Chain Supply chain, is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer. Warehouses Warehouses of big bazzar are located at Boomanahalli and Hasketta. Suppliers of various products to warehouses from warehouses goods supplied to internal warehouses. In some cases as in food items vendors directly sell to retailers. Logistics helps a lot in maintaining 4Ps. The four Ps of marketing mix Product mix:- A product has both tangible and intangible components . Customers view product as boundless of satisfaction rather then just physical things. Quality , technology Packaging Labelling Branding Trademark Merchandising Size, design , colour , features Service Warranty Product line and range Price Mix:- Price is an important consideration in buying decisions. Price also denotes quality in the costumers mind a psychological factor. For some product

Pricing policies Credit terms Cost and profit Allowances and discounts Competition Terms of delivery Place Mix:-The marketer has the responsibility of making his product available near the place of consumption so that consumer can easily by it. If the brand proffered by the consumer is not easily available at the convenient location. Distribution Channels Transportation Warehousing and Storage Inventory level Positioning Promotion mix Advertising Sales promotion Personal relations Publicity Direct responses Promotiom Mix:- Marketing promotion is a management process through which an organisation develops, presents, and evaluates a series of messages to an identified audience. So, effective promotion depends on : The nature of communication The target audience The environment in which it is received The receivers perception of the source as. eg., friends, reference group, etc. The medium used to transmit the message 5. RESEARCH OBJECTIVE The research objective is to Study of Logistics and Distribution of Marketing Knowing how logistics is done in Big Bazzar. 7. Indian Retail Industry Indian retail industry is going through a transition phase. Most of the retailing in our country is still in the unorganized sector. The spread out of the retails in US and India shows a wide gap between the two countries. Though retailing in India is undergoing an exponential growth, the road ahead is full of challenges. What is retailing? The word Retail originates from a French-Italian word. Retailer-someone who cuts off or sheds a small piece from something. Retailing is the set of activities that markets products or services to final consumers for their own personal or household use. It does

this by organizing 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. BIG BAZAAR It is a unit of Pantaloon Retail (India) Ltd and caters to the Great Indian Middle Class. It was started as a hypermarket format in Mumbai with approx. 50,000 sqft of space. Its values and missions are to be the best in Value Retailing by providing the cheapest prices and hence goes the tag-line Is se sasta aur achcha kahin nahin It sells variety of merchandise at affordable rates, the prices of which it claims are lowest in the city but the level of services offered is also very low. Usually the items are clubbed together for offers as on the lines of Wal-mart and Carrefour and it also offers weekend discounts. It currently operates out of 64 stores and top 15 stores register a cumulative footfall of 27 lakh a month on an average. The following graph shows the retail life cycle and we can say that Big Bazaar is currently at the Growth Stage. 9 OBSERVATIONS There were various observations made from the time I entered the store. They can be summed up as follows: Verticals inside the store relates to each category of product Food Bazaar Depot- books M-bazaar Electronic Bazaar Furniture Bazaar Footwear Bazaar Trolleys are not easily available, especially on other than ground floor. Little attention to cleanliness. Dust on shelves as well as some product items. In-house packaging not efficiently done. Crowded store interiors. Items are arranged in a cluttered way. Tried to stock maximum number in limited area. Sign boards are not prominent. Lack of direction creates confusion. Family crowd is evident. Youth comprises of only around 10% of the crowd. Food Bazaar very efficiently managed. It is a bit over-staffed but layout is very good. Shelf space is used very well to stock products with clear distinction. Supply chain Supply in big bazzar occurs by two methods: 1.Suppliers Warehouse

Internal Warehouse This type of supply chain is used in crockery items and other durable goods. 2. Vendors Big bazzar This type of supply chain is used in food items and other fmcgs. 10 PROBLEMS AT BIG BAZZAR LOGISTICS. .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. In 2006, India had a total warehousing capacity of 81 million tonne. Like the rest of the infrastructure sector, warehousing is highly fragmented and unorganised 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. 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 are 250-300 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 tonnes, which allows for a maximum loading of about 9 tonnes. This severely restricts the ability to transport goods on larger vehicles. Warehouses located far from city: Some of the warehouse are located in villages and are far from the city so it takes time for goods to reach mall. 11 RECOMMENDATIONS Improvement in supply chains:-

Big bazzar should use more better techniques for improvising its supply chains. The organisational 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 bazzar, 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 Bazzar 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 ware house of big bazzar has very low capacity. Its completely hoch- 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 RayMedi Head Quarter RayMedi HQ is designed to manage your chain of shops more easily. RayMedi HQ is a web-based, easy-to-use software which gives you more control in managing your chain of shops. It works seamlessly with your individual shops data (RayMedi RPOS/RE/DE data) and gives you a consolidated and centralized way of managing your chain bett RayMedi HQ gives you the Real-time business status at HQ from about every point of sale. From the head office, you can monitor sales & inventory position at each one of your store. The software helps you in consolidating the data from your various branches into one system and do an integrated analysis of sales, inventory and purchase. RayMedi HQ primarily focuses on managing your branch wide sales, purchase, inventory, receivables and profits. It helps in controlling expenses, decreasing costs and increasing your profits. 12 Conclusion Big bazzar is having its own logistics called future logistics but in near future to cope up with changes it have to do a lot.The logistics companies at present provide services from transportation to warehousing and inventory management. But, in the near future, they will have to expand their products basket to include new value-added services, such as packaging, labelling and reverse logistics. The biggest challenge that faces these companies is that they should quickly imbibe latest technologies, such as GPC/GIS tracking of consignments, and uncork new services to cater to corporates seeking to outsource their logistics needs. Also, the Government should come out with a sound policy that facilitates the operations of the logistics companies.

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