ANALYSIS OF SUPPLY CHAIN MANAGEMENT IN

RETAIL INDUSTRY

Interim Report

Date of submission: 15.02.2018

Section: B

Submitted by: Group 8

Amol Rane Maruti (17052)

Gopi Pilla (17061)

Manikanta S (17067)

Ramkrishna Patil (17079)

Saurabh Singh (17084)

Sharon Pinto (17085)

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Index

1. General Industry analysis

2. Supply chain analysis for the industry
3. Study company
a. Introduction
b. Competitive strategy
c. Demand and supply analysis
d. Supply chain strategy
e. Supply chain design, planning and operation
i. Facilities
ii. Inventory
iii. Transportation and logistics
iv. Information
v. Sourcing and procurement
vi. Distribution network
f. Supply chain performance analysis
i. SCOR model
ii. Benchmarking with financial data

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Introduction of the industry

The Indian retail industry has risen as a standout amongst the most powerful and quick paced
businesses because of the section of a few new players. It represents more than 10 % of the
country’s Gross Domestic Product (GDP) and around 8 % of the work. India is the world's fifth-
biggest worldwide goal in the retail space.

Indian Retail Industry has monstrous potential as India has the second biggest population with
well-off working class, quick urbanization and strong development of internet.

Market Size

India's retail market is expected to increase by 60 per cent to achieve US$ 1.1 trillion by 2020,
on the back of components like rising salaries and way of life changes by working class and
expanded digital network. While the general retail advertise is required to develop at 12 % for
every annum, current exchange would extend twice as quick at 20 % for each annum and
customary exchange at 10 for every cent. Indian retail advertise is partitioned into "Organized
Retail Market" which is esteemed at $60 billion which is just 9 % of the aggregate area and
"Unorganized Retail Market “constitutes the rest 91 % of the segment.

India's Business to Business (B2B) online business advertise is required to achieve US$ 700 billion
by 2020. Online retail is required to be at standard with the physical stores in the following five
years and has grown 23 for each penny to $17.8 billion out of 2017.

India's aggregate capability of Business to Consumer (B2C) is assessed to be US$ 26 billion, of

which $3 billion can be accomplished in the following three years from 16 item classes, as per an
examination by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian
Institute of Foreign Trade (IIFT).

Road Ahead

Online business is growing constantly in the country. Customers have the consistently
expanding selection of products at the least rates. Online business is most likely making the
greatest upset in the retail business, and this pattern would proceed in the years to come.

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Retailers should use the computerized retail channels (E commerce), which would empower
them to spend less cash on land while contacting more clients in level 2 and level 3 urban cities.

Both organized and un organized retail organizations need to cooperate to guarantee better
prospects for the general retail industry, while creating new benefits for their customers.

By and by, the long term viewpoint for the business is sure, encouraged by rising incomes, good
socioeconomics, foreign players, and expanding urbanization.

Supply chain analysis in the retail sector

Distribution
Supplier Factory Warehouse Retailer Customer
centre

Information Flow

 The raw materials are supplied to the manufacturers as per the requirements of the retailer. In
some cases, the supplier supplies it to the collection center and the supplies reach the retailer
from the collection center.
 The flow of materials depends on the manufacturing method followed. In the retail sector make
to stock is usually followed.
 Once manufactured it is stored in the warehouse. Warehouses may either be privately or
publicly owned.
 The goods are then taken to the distribution center when the retailer places an order for the
stock.

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  The distribution center is either centralized or decentralized. Each retailer follows a different
system.
 Once in the retail stores, customers buy the product and feedback about the product is given to
the retailer. Online forums on the retailers’ websites have made the job easier. The customer
can give their feedback online.
 This gives the retailer information required to place orders for new goods as per the customers’
needs. The information is then passed on to the manufacturer to produce the required goods.
 The supplier is then given the order for materials needed to manufacture the products.

Study of Future Group Company

Introduction

Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of India's leading
business houses with multiple businesses spanning across the consumption space. While retail
forms the core business activity of Future Group, group subsidiaries are present in consumer
finance, capital, insurance, leisure and entertainment, brand development, retail real estate
development, retail media and logistics.

In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic expansion of a
hypermarket. The first set of Big Bazaar stores opened in 2001 in Kolkata. Hyderabad and
Bangalore.
The group's specialty retail formats include, books and music chain. Depot, sportswear retailer.
Planet Sports, electronics retailer. Ezone, home improvement chain, Home Town and rural
retail chain, Aadhar, among others.

Competitive Strategy

SWOT analysis (or SWOT matrix) is short for strengths, weaknesses, opportunities,
and threats and can be used for analyzing the business competition.

Identification of SWOTs is important because they can inform later steps in planning to achieve
the objective. First, decision-makers should consider whether the objective is attainable, given

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the SWOTs. If the objective is not attainable, they must select a different objective and repeat
the process.

Strengths
 Low cost

 Cost cutting by reducing intermediaries

 Location

Weakness
 Low customer loyalty because of competition.

 Time gap between order and processing

 Low internal warehouse capacity

 Less conversion level

Opportunities
 Kids and teens retailing segment

 Organized retail is only 3% of the total retailing market in India

Treats
 Uncertainty in market position

 New entrants like reliance

Introduction of Big Bazaar

Big Bazaar whole business is dependent on products which are going to be delivered from their
suppliers. Based on the distance between the suppliers location and warehouse location, the
accessibility to the warehouse, etc. Big Bazaar have fine-tuned the process of delivery. They can
accurately estimate how much time it will take for goods to reach its end destination.

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But Big Bazaar still doesn‘t have the tracking information for their goods, which were delivered
by their supplier for them. They have to rely on their truck drivers only for exact position of
their goods. This made them to fall behind from their competitors.

Big Bazaar works with suppliers to review supply chain efficiencies. One of the main tasks is to
evaluate cost efficiency, to ensure that costs are being driven down throughout the contract
duration.

Study of Reliance Retail Company

Reliance Retail Ltd. is a subsidiary company of Reliance Industries. Founded in 2006 and based
in Mumbai, it is the largest retailer in India in terms of revenue. Its retail outlets offer foods,
groceries, apparel and footwear, lifestyle and home improvement products, electronic goods,
and farm implements and inputs. The company’s outlets also provide vegetables, fruits and
flowers. It focuses on consumer goods, consumer durables, travel services, energy,
entertainment and leisure, and health and well-being products, as well as on educational
products and services.
It has a total of 3,383 stores as of June 2016 in India with an area of over 13 million square feet
across 210 cities.

There are over 45 Subsidiaries & divisions of Reliance Retail. Following is the list of major
divisions:

1. Reliance Fresh: Retail outlets of fruits, vegetables & groceries.

2. Reliance Digital: Consumer Electronics retail stores. It had 689 stores in October 2014.
3. Reliance LYF: 4G mobile handset manufacturer based in Mumbai, founded in 2015.
4. Reliance Jewels: Jewelry retail; it had revenues of approx. Rs. 8 billion in financial year
2012-13.
5. Reliance Time Out: Lifestyle store of Books, Music, Movies, Toys, Gaming, Fragrances,
Stationery.

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 6. Reliance Trends, Reliance Footprint and Reliance Living: Apparel and Clothing. It had
revenues of approx. Rs. 16 billion in financial year 2012-13 with a store count of 287
7. Reliance Market, Reliance market - Wholesale cash n Carry: It had revenues of approx.
Rs. 1.6 billion in financial year 2012-13.
8. AJIO: One of the company’s first forays into e-commerce – a fashion website, officially
launched at the Lakme Fashion Week SS16 with the philosophy ‘Doubt is Out’.

Competitive Strategy

Strengths

 It is Indian retail chain with 900+ stores in 80 cities in India

 Hyper market with 95000 markets with tailoring, shoe and watch repair, laundry

 It owns various private label brands

Weakness

 Product variety is available but more SKUs are not present due to inefficient back end
infrastructure

 Poor inventory control at certain locations is a concern

Opportunities
 Sourcing directly from farmers; no middlemen could earn more profit as number of
farmers will increase five times in next 5 years

 Large potential to reduce operation cost in cities using strong supply chain
Treats

 Strong competition globally from Carrefour, Metro A.G., Tesco

 Operation cost are too high

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 Big Bazaar

Supply chain design, planning and operation

Suppliers
of
products

Inspection Warehous Transported to Quality On the shelves to

of products e retail centers check end customers
Suppliers
of
products

I. Facilities
Model of Management BIG BAZAAR Big Bazaar is a chain of hypermarket in India, which
takes into account each family's needs and necessities. This retail location is a backup of
Future gathering, and is a response to the United States' Wal-Mart. Huge Bazaar has
discharged the entryways for the form world, general stock like games merchandise,
cutlery, porcelain, utensils, and home decorations and so on, best case scenario
practical costs. Enormous Bazaar amass offers more than 214 stores crosswise over 90
urban areas and towns everywhere throughout the nation with an amalgamation of
Indian bazaars' vibe and touch with an accommodation and decision of the advanced
retail offices. The retail organization of the Big Bazaar aggregate incorporates Aadhar,
Rural and Home-Town retail chain, E-zone home-change chain, sportswear retailer,
station and music chain is few among others

II. Inventory
The inventory at Big Bazaar includes a variety of different products. Most of the
products are FMCG product and of Food Category and they are mostly maintained by

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 Cycle Inventory. Safety stock accumulation is maintained mainly because of high
uncertainties in the demand.
The level of inventory is maintained by the store manager, level of inventory depends
on time to time check and demand of the customers.

III. Transportation and logistics

Transportation of goods is handled by vendor and the vendor is responsible for any
mishappening. It has been seen that the vendor has upper hand if the product is
branded. This means that Big Bazaar has to struggle for display of such products. While
if the products are ordinary than the vendor has trouble in displaying their product.
Company possess and owns warehouses. Due the frequent order at Big Bazaar these
warehouses are not big enough since it is not required. On the arrival of the product to
the warehouse it is examined by the in charge at the warehouse and accordingly a
inward checklist is filled out.

The entries in the checklist are:

 Vendor Name
 Purchase Order Number
 Date, Quantity, Amount
 Invoice Number

All the products go through a quality check:

 Expiry Date
 Batch Number
 EGG mark/ ISI mark
 Date of Manufacturing

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IV. Infrastructure
Distribution Centers of Big Bazaar have the following features: multiple air ventilation
for curbing extreme temperatures, height of the building 7 to 12 meters, working
conditions of high quality, G+4 “Multi-Tier Shelving Storage System”, G+7 “Selective
Pallet Racking System” and many other facilities.

V. Sourcing and procurement

Big Bazaar group recognized that sourcing is an element that is important area for
decreasing costs and increasing efficiency. The group also realized that purchasing
products at bulk from the suppliers and then packing it with their own brand names can
decrease cost and reduce the overheads associated with the branded products. Private
brands also joined with Big Bazaar in supplying them their products, and large amount of
private label products filled out most of the requirements at the store from fashion trends
to electronic items at much faster rate than the branded products. The group promoted
these private labelled products so as to cut the lead time. Also these brands gave customer
the option of low price compared to highly branded products tis also improved the ret ailers
margins and the power of negotiation went in the hands of the retailers and forced the
branded products companies to provide a superior value proposition to the customers.

VI. Distribution network

The group has the largest service providers, wide spread network with strategic location
facilities.

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The Group has an wide spread network of about 46 distribution centers that also includes four
temperature controlled distribution centers, these distribution centers facilitate 105 branches
across India, casing 11,228 pin codes which covers 29 states & about 5 union territories resulting
in Pan India supply Chain.

The group facilitates its customer to access multiple destinations from where they can book and
get delivery across India, this is possible because of the facilities and delivery network of the
supply chain. Most of the delivery vehicles and locations are taken on lease which helps them to
adapt to any changes in the industry or customer needs or environment and also enables them
to scale their operations. This scaling enables them to reduce costs and get higher margins and
is all possible by leveraging the benefits from automation for the service they offer. They key
differentiating factors are reliability, use of advanced technology and efficient operations and
also have won many industry awards for the same.

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Supply chain performance of future group-

SOCR model of Future group-

FSC (Future Supply Chain Solutions Ltd.) is India's first fully integrated and IT enabled end- to-
end Supply Chain and Logistics service provider in India. It provides services to large corporates
in Food & FMCG; Apparels, Footwear & Accessories; Consumer Electronics & Hi- Tech;
Automotive; Pharma and Light Engineering domain.

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 Promoted by Future Group and Fung Capital, FSC has been a pioneer in modernizing supply
chain and logistics by implementing global best practices in the Indian context. This has enabled
FSC to provide customized Supply Chain Solutions & Services which reduce Time- to- Market™
and Cost- to- Market™ of customers

FSC Supply Chain Solutions team studies the business imperatives of customers and designs
customized supply chain solutions in collaboration with the customer’s like-

 Supply chain consulting to define business needs and logistics opportunities.

 Distribution and Transportation network analysis and design
 Warehouse and Facility modeling and layout, including evaluation of Infrastructure and
mechanization needs
 Evaluation and implementation of Technology.
 Labor management opportunity assessment.
 Operational analysis and improvement
 3PL capabilities of high-end Warehousing, Express and Customized Movement Solutions. Etc…

Although SCOR model speaks about Plan, Source, Make, Delivery, Return and Enable as a
introduction of this I have discussed above.

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Supply chain performance of Reliance Retail-

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