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[OPERATIONS MANAGEMENT] Indian Institute of Management Kozhikode

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Submitted to: Prof. Sanjay Jharkaria

Submitted By: PGP/14/260 NITESH KUMAR GUPTA PGP/14/280 MAHTAAB KAJLA PGP/14/287 PRACHI CHAWLA PGP/14/290 RAHUL MITTAL PGP/14/308 SUSEENDRAN U PGP/14/313 VINNY ARYA PGP/14/315 VISHAD DUBEY

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[OPERATIONS MANAGEMENT] Contents

Introduction ................................................................................................................................................... 3 The Organizational Structure. ....................................................................................................................... 4 Stakeholders .................................................................................................................................................. 5 Internal Stakeholders ................................................................................................................................. 5 External Stakeholders ................................................................................................................................ 5 Operations ..................................................................................................................................................... 6 Operations Strategy ................................................................................................................................... 6 Objective: .............................................................................................................................................. 6 Methods Used: ...................................................................................................................................... 6 Challenges/Constraints: ........................................................................................................................ 6 Inventory Control ...................................................................................................................................... 7 Inventory Control for Perishables ............................................................................................................. 7 Inventory Storage ...................................................................................................................................... 8 Working Hours .......................................................................................................................................... 8 Quality Control .......................................................................................................................................... 8 Customer Service/Feedback.......................................................................................................................... 9 Home Delivery System ............................................................................................................................. 9 Marketing/Advertisement ............................................................................................................................. 9 Club More .............................................................................................................................................. 9 Employee Training: SPARK....................................................................................................................... 10 Store layout ................................................................................................................................................. 11 Customer Order Processing ........................................................................................................................ 15 Service Blueprint ........................................................................................................................................ 16 Analysis of Operations and Sales Data ....................................................................................................... 17 Problems and Recommendations ................................................................................................................ 21 References ................................................................................................................................................... 23

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[OPERATIONS MANAGEMENT] Introduction

'More. is the brand name of Aditya Birla Retail Limiteds (ABRL) chain of retail stores. Aditya Birla Retail Limited is the retail arm of Aditya Birla Group, a USD 28 billion Corporation. The Groups foray into the retail sector began in December 2006 when it acquired Trinethra, the chain of stores based in south India. Since its inception in May 2007 till end-September 2009, the company had set up 640 supermarkets and five hypermarkets. All the supermarkets are branded More. and the hypermarkets are branded More Megastore. The company has around 11,000 employees and has a pan-India presence. More. supermarkets are neighbourhood stores with the core proposition of offering value, convenience and trust to the customers and averaging 2,500 sq ft area. The hypermarkets are self-service superstores offering value and range in food and non-food products and services at a single location. Hypermarkets are located in large catchment areas and encourage mass consumption with discount prices and substantial depth of assortment with an average store size of 55,000 sq ft shopping area. More. supermarkets cater to the daily, weekly and monthly shopping needs of consumers. Spread across a wide range of products of food and non food items, ranging from basic necessities such as, fruits and vegetables, staples, personal care, home care, household care products, general merchandise, and dairy products, more. provides a one stop solution for grocery shopping needs. Also in store are essentials such as, innerwear, kids essentials, and a pharmacy, bakery and a mobile store. More. has also launched a huge range of private labels in food and grocery, staples and apparel which have already obtained a significant share of category as well as salience with the consumer. With a range of over 4,000 products, the shop fulfils daily shopping needs all under one roof and at a convenient location.

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[OPERATIONS MANAGEMENT] The Organizational Structure.

Operations Head Territory Manager Cluster Manager Store Manager Assistant Store Manager (1-3) PartTime New Trainees Store Manager Cluster Manager Territory Manager Cluster Manager Cluster Manager

Store Manager

Store Manager

Customer Service Associate (CSA)

Housekeeping

Security Guard

The More stores have a Store Manager (SM) who is present in the outlet at all the times. The primary responsibility of the store manager is to keep a watch on the inventory, coordinate with the Head office and give monthly reports to the higher authority. The Assistant Store Manager (ASM) helps the store manager with his tasks as well as supervises over the store and coordinates with the employees. Number of ASMs in a store can be anywhere ranging from 1 to 3 depending upon the size of the store and the expected sales. The Customer Service/Sales Associates (CSA) are the employees who take care of the racks in the outlet as well as help the customer with the product they are looking for. Number of CSAs in the NGO quarters store was 14. Then there are the new trainees who are kept as part time workers so that they learn the way the store works and then according to their performance are put on full time payroll. Indian Institute of Management Kozhikode 4

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[OPERATIONS MANAGEMENT] Stakeholders

Internal Stakeholders
Aditya Birla Group: The retail offerings in the Indian market from the stable of Aditya Birla Retail Ltd. currently comprises of the following two formats: supermarkets and hypermarkets. Shareholders: This includes all the investors who have invested in this retail venture and are holding some shares. Employees: This includes a store manager, 10 staff and security personnel. The store manager is appointed by the Headquarters at Ernakulum and is constantly monitored by the Cluster manager. The staff at each store is controlled by the store manager, who is also at liberty to appoint them. Lenders: This includes all those players who have either supplied in credit or are lending some money in one form or the other to the supermarket chain. Suppliers/vendors: Most of the branded material is supplied by the Headquarters at Ernakulum. The other set of suppliers include the local vendors from whom the daily requirements of milk, vegetables and other such items are procured.

External Stakeholders
Customers: All the consumers who have purchased from in the supermarket are the customers of the supermarket. The primary focus is on consumer in the radius of about 2-3 km. Consumer profile determines the products, brands and service that the supermarket needs to store in its shelves. Calicut Corporation: The Calicut Corporation is the local authority that governs the city of Calicut. So it is a passive stakeholder in the retail chain as it may be impacted by the stores actions towards environmental regulations, pollution control, energy conservation, etc. Local Stakeholders: This invariably refers to the Society at large. All participants in a community mobilization and community development representing the different segments of the society come under this category. School board members, environmental organizations, elected officials, chamber of commerce representatives, neighborhood advisory council members, and religious leaders are all examples of local stakeholders.

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[OPERATIONS MANAGEMENT] Operations

The store we visited was the More Superstore at NGO Quarters. There are 3 other Superstores in the Kozhikode area in Jaffer Khan Colony, Mims and Nadakkavu. Besides the Superstores, More has also setup some Hypermarkets which are much larger in size and deals in much varied product lines. According the Store manager at NGO quarters, a new HyperMarket is being planned to be opened at Cochin very soon. The More store at NGO quarters was started some 6 months back and has a strength of around 17 people now including the Store manager (S.M.) and the Assistant Store Manager (A.S.M.). Following are the details of the operations as furnished by the A.S.M.

Operations Strategy
Objective: Optimization of number of staff people and minimize procurement cost of material while ensuring smooth operations. Methods Used: Sophisticated Inventory Management tools Sales forecasts and accordingly predicting the staff requirements Efficiency maximization of employees Electronic billing facilities Challenges/Constraints: More efforts on Marketing while keeping the overall cost low Regular feedbacks from the store managers should be taken seriously and some decisions should be left to the store manager

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[OPERATIONS MANAGEMENT]

Inventory Control

All the More retail stores are connected to the central system through sophisticated Inventory Control software which forms the backbone of all inventory related management tasks. The Central system keeps a watch on the inventory level for the various articles and sends inventory as soon as the quantity drops below a pre-defined level. On a regular basis, the Inventory is replenished by supplies from the Ernakulum (Head Office, Kerala) office every Tuesday and Thursday. These are generally the items which can be stored for a long time without any deterioration since it takes a long transportation time from Ernakulum to Kozhikode.

Inventory Control for Perishables

Since the time taken for delivering inventory from the Ernakulum office is relatively large, all the perishables like the food articles, milk,

vegetables etc are procured from the company authorized local vendors. The replenishment of these food articles is the responsibility of the local store manager and he keeps a track of the available inventory and orders for more when required.

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Inventory Storage
There is no separate area for the storage of the items and thus most of the unloaded inventory is stacked in the store space and finally loaded on to the display trays. Most of the work for the employees in the non-peak hours includes checking the inventory for any defects and loading them on to the trays.

Working Hours
The working hours for the store are as follows: 1st Shift 7.30 a.m. 4:30 p.m. 2nd Shift 12:30 p.m. 9:30 p.m. On Saturdays/Sundays the store opens till 10 in the night. There are no explicit breaks given for lunch or Dinner but the employees can go any time with the permission of ASM.

Quality Control
All the quality and fitness checks for the goods to be delivered to the retail stores are done at the Ernakulum office for the non-perishables and at the local vendors site for perishables. No quality check is done at the retail stores and any defect found by the customer in any of the products is sent back to the head office with a replacement/refund given to the customer immediately.

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[OPERATIONS MANAGEMENT] Customer Service/Feedback

One of the major focuses of Mores business strategy is to ensure the customer satisfaction at any cost. For this purpose, every store has been equipped with feedback forms which can be filled in by the customer and only the store manager can read the feedbacks of the customers.

Home Delivery System

Free home delivery is provided for any purchase more than Rs. 250 within a distance of 5-6 kms. Here are the details of the system at NGO quarters store: Number of Vehicles: 1 Average Delivery Time: 20-35 Min. Average Number of Home Delivery orders: ~10/hr

Marketing/Advertisement
Marketing and promotions are taken care of by the Buying and Merchandizing Team in the Head Office in Cochin. Every week and on festival occasions it comes up with some promotional offers that are advertised through issuing pamphlets in the local newspapers and magazines. More chain of retail stores has this policy of spending less on TV advertisements and other electronic media to keep the overall costs down. Most of the offers are also displayed on a notice board outside the retail store.

Club More
This is the membership loyalty card system that More has come up with to encourage regular purchase from their stores. Under this scheme, with every purchase the customer accumulates points which can be redeemed for other products. Also the customer gets entitled to other special promotional offers and discounts for which the customer receives SMS alerts. It is one of the most successful Customer Retention Scheme being employed by More retail chains.

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[OPERATIONS MANAGEMENT] Employee Training: SPARK

More Retail chain has a specific employee training program known as SPARK i.e. Specialized program for Accelerated Retail career. Under this program, the SM and ASM are required to attend a 10 day training program at the Cochin head office which orients them towards the operations strategy being employed and other information regarding the Aditya Birla Group. The CSAs are required to attend a weeks onsite training program at the retail store itself where the ASM and SM act as their mentors and orient them towards the operations. This program has been the benchmark for the training of employees in the retail industry and been very successful when it comes to ramping up the new comers to productivity levels which are required for efficient output.

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[OPERATIONS MANAGEMENT] Store layout

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Detailed view of Left Wing

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Detailed view of Right Wing

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Detailed view of Middle Wing

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[OPERATIONS MANAGEMENT] Customer Order Processing CUSTOMER ENTERS STORE PICKS UP A SHOPPING BASKET
NEW CUSTOMER REGULAR CUSTOMER

REQUIRES ASSISTANCE FROM SALES REPS TO LOCATE DESIRED PRODUCT CATEGORIES

CHOOSES THE PRODUCTS REQUIRED FROM THE SHELVES (TAKES MINIMUM ASSISTANCE OF SALES REP)

PRODUCT UNAVAILABLE

CUSTOMER CONVEYS REQUIREMENT TO SALES REP

SALES REP REQUIREMENT MANAGER

CONVEYS TO STORE

STORE MANAGER WRITES A MAIL TO SUPPLIER LOCATED IN ERNAKULUM PRODUCT AVAILABLE GOODS SUPPLIED BY SUPPLIER AND RECEIVED AT STORE MEMBERSHIP CARD (OPTIONAL)

BILLED IN BILLING COUNTER

BILLED GOODS PACKED FOR CUSTOMERS IN A CARRY BAG ALONGWITH BILL STOCK

PRODUCT REORDERED WHEN FALLS BELOW RE-ORDER LEVEL

STOCK REDUCED IN BOOKS 15

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[OPERATIONS MANAGEMENT]

Service Blueprint
1. Customers enters into the store 1. Failure: Security Guide Idle Poka yoke: He should keep the belongings of customers 12. Failure: No work for security guard again Poka yoke: He should tally the bill with articles to prevent theft 12. Customer exits the stores after receiving delivery

Line of Visibility 2. Customer searching for tray 2. Failure: Wastage of time of customers as trays are not available at entry. Poka Yoke: Fixed place for trays 3. Failure: No sales person to help the customer at the entry. Poka yoke: 1 sales person should be at the entry gate to help the customer. 5. Customers select items by browsing through the shelves 11. Failure: A big queue at the billing counter Poka yoke: There should be two persons at billing counter 11. Cashier makes the bill and packs the articles

3. seeks trays.

Customer help for

6. Failure: Shelves are not managed

Poka yoke: Separate shelve for each brand

7. Failure: No sales person at shelve.

Poka yoke: Sales person should present near shelves only. 7. Customer seeks for sales persons help

10. Customer comes to billing counter afteshopping

9. Sales person locate the brand asked by the customer

4. Customer starts shopping

6. Customers cannot locate the particular tooth paste

Line of interaction
8. Which toothpaste do you want?

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Analysis of Operations and Sales Data

As MORE. retail network shops are directly owned by Aditya Birla Group. Every store has a weekly target to be achieved. Although the store operations manager devises a monthly target for the store as per the monthly annual business plan, the store performance is monitored on a daily basis. This is done by tracking: 1. Daily sales and profit report 2. Daily inventory report (value as well as volume) 3. Daily executive report The headquarters monitor the weekly reports it receives from all the outlets and checks for discrepancies, if any, at any particular outlet. Each territory manager then shares the consolidated monthly MIS report with the operations head and the overall performance of the store is evaluated. To ensure customer loyalty, each of the MORE. adheres to the following: Service and Product quality: The store aims providing the highest standards of service and product quality to ensure customer satisfaction. Best market prices: MORE. offer its customers heavy discounts on products as compared to the prices available in the market. Brand Image: Building a brand image not by aggressive advertisements but by word of mouth from loyal customers. Customer Care: MORE. has a motivated team for addressing the customer grievances and resolving the issue at the earliest. In fact the megastore also provides the options to customers to exchange the product bought provided the packaging is intact and they have the invoice. In case the customer is not interested in purchasing any other item in exchange, a gift card is issued value equivalent to the product) which can be redeemed at a later time. Customer Delight: MORE. offers all first time shoppers a membership to the Clubmore. As a Clubmore member, customers are entitled to special benefits, besides the regular offers and promotions. Members also have the benefit of receiving exclusive SMS alerts for special offers on the products and services. Comfortable Ambience: The stores are built with a modern and comfortable ambience, air conditioned and with speedy automated cashiering to help customers shop better.

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From above picture it is observed that the store offers a comfortable shopping environment to all age groups. The store has a customer friendly design and offers easy navigation to the shoppers even in peak rush hours. Convenience: The stores are strategically opened at convenient locations so to ensure easy accessibility to customers. Variety: More offers a diversified range of products and has become a one stop solution for all customers. The wide range of fresh fruits and vegetables along with private label offerings under brand names Value, Select and Premium ensure that more variety is a promise delivered across the store.

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Weighing meters like above help customers make on the spot decisions regarding the quantity to be purchased rather than realising it at the last after reaching the cashier counter. Some of the product categories which are sold predominantly in the retail store are Bakery Home Decor Products Cosmetics Mobile Store Beverages Personal Care & Cosmetics Apparels Processed Food Cutlery & Cookware Small White Appliances Fruits & Vegetables Staples Dairy Products Stationary FMCG Products Women's Accessories Grocery Home Decor Products General Merchandise Mobile Store Home Care Products As a process to make the retail system more efficient and robust the Aditya Birla Retail (ABRL), which runs the More came up with My More Store (MMS) experience idea. In this drive every ABRL executive, including the CEO, had to work in the store for 8 days in a year as a customer sales associate (CSA) and handle jobs such as cashier, deliveries and so on. In another move, the companys senior executives are required to survey at least 40-50 homes in of the territory their store and engage understand the basic needs, perception and preferences of the customers. Product Sales Strategy: MORE has a good blend of branded as well non-branded products for all requirements. More follows an interesting sales strategy for products with its own label; these products Indian Institute of Management Kozhikode 19

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are placed among the branded products in the racks. Further, they offer a better cost advantage than the other products. This strategy has predominantly helped in boosting the sales of its own products. The margins obtained from MORE products is much more than the profit obtained from other branded products. Variations in Sales figure over a year.

Sales
100 80 60 40 20 0

The figure is based on some of sales and profit assumptions. The rise in sales during the months of September and October was observed because Diwali. Post this time period, the sales dropped drastically.

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[OPERATIONS MANAGEMENT] Issues and Recommendations

POOR FLOOR PLAN

Blockage of stock causing inconvenience to customer movement:

Due to piling of stocks in the pathways as observed in the layout, the customer has to walk all the way back to enter a new passage. We advised putting stock in cardboard boxes and placing one over another in a remote corner giving way to free movement of customers.

BLOCKA

POOR SPACE PLANNING Horizontally long objects lay flat occupying a lot of space We recommend effectively utilising space by vertically placing such objects in tall bins. Different products are placed one behind another which blocks view causing loss of sales and stockouts- We immediately advised them relocate products. BOTTLENECK AT BILLING COUNTER The store has only one billing counter which is sufficient considering the average sales of the store are low. The billing counter was idle for a long time but during rush hours customers had to face a lot of waiting time. -We recommended deploying one of the staff members to assist the billing counter with packing and bill verification. PERISHABLE ITEMS: The store complained of wastage owing to spoilage of perishable items and expiry of preserved food items. We observed that new stock was piled in front of old stock which lead to sale of only the freshly acquired stock, thus the same items of stock formed the units of the re order level and gradually expired. We recommended stocking new pieces behind the existing ones.

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POOR PERFORMANCE OF SALES REPS No clear alley was allotted to sales rep which caused confusion for directing customers to the location of products.-We recommended allotting specific alleys to the sales reps and they were expected to memorise the placement and stock levels of each item in their respective alley.

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[OPERATIONS MANAGEMENT] References

http://www.adityabirla.com http://www.morestore.com wikipedia.org/wiki/Supermarket www.adityabirla.com/media/ retail-guru.com/less-is-more-for-aditya-birla-retail-downsizing-yet-again/ http://www.scribd.com/doc/28513642/Aditya-Birla-More

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