supply chain in retail industry

8/10/2019 Supply Chain in Retail Industry

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Study of Operations at Retail Industry

Acknowledgement

A task or project cannot be completed alone. It requires the effort of many

individuals. I take this opportunity to thank all those who helped me

complete this project.

I express my sincere gratitude to Prof. C.S.Patnaik for giving us the

opportunity to undergo this project. I further thank his for lending a helpinghand when it came to solving my problems related to the project. This

project would not have been possible without his valuable time and

support.

I also thank IFIM Business Schoolfor an opportunity to undertake a Soft

skills project at the start of our !A course which helped us to understand

deeply for those topics which are untouched.

This project is an attempt to talk about the Scenario of "etailing and its

#perations in India.

Any suggestions to improve are always welcome.


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Executive Summar

$emographics continue to show a positive report to spur retailing growth.

%onsumers aged &'()* years is emerging as the fastest growing consumer

group and the mean age of Indians is now pegged at &+, a mean age that

reinforces spending across all the retailing channels of grocery, non(grocery

and non(store.

The government stance of protecting local retailers and prohibiting -''

foreign direct investment in retailing continued in &''*, restraining

international retailers/ entry. 0owever, there was gradual economic reform,

giving way to easier and faster franchising agreements as well as the

loosening of 1onal regulations on retail expansion, thus stimulating retailing.

2on(store retailing is expected to continue its fast(paced growth from a

miniscule base. Across all channels, growth in retailing is expected to be

boosted heightened competition during the forecast period due to the growing.


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Introduction

India3s retail market which is seen as T04 5#6$I24 by global players has grabbed

attention of the most developed nations. This is no wonder to the one who knows that

the total Indian retail market is 7S 89*'bn. :-;, '',''' crore I2" approx.< of which

organi1ed retailing is only around 9 percent i.e. 7S 8=bn :9;,''' crore I2" approx"etailing includes all activities involved in selling goods or services directly to final

consumers for personal, non(business use. A retailer or retail store is any business

enterprise whose sales volume comes primarily from retailing.? "etail is India/s largest

industry, accounting for over -' per cent of the country/s 5$@ and around eight per cent

of the employment. "etail industry in India is at the crossroads. It has emerged as one

of the most dynamic and fast paced industries with several players entering the market.

The presence of -*million kirana stores brings into light the very fact that the Indian

retail industry is highly fragmented unorgani1ed. "etailing in India is gradually inching

its way toward becoming the next boom industry, organi1ed retailing in particular. The

whole concept of shopping has altered in terms of format and consumer buying

behavior, ushering in a revolution in shopping in India. odern retail has entered Indiaas seen in sprawling shopping centers, multi(storied malls and huge complexes offer

shopping, entertainment and food all under one roof.

The future of Indian retailing may even witness the concept of &) hour retailing. 4ven

though this concept has been in existence in few retail segments like pharmaceuticals

and fuel, it still remains to be a challenge for other segments like food and groceries,

apparel etc to adopt this trend.

Although the organi1ed retailing in India is coming up in a big way, it cannot simply

ignore the competition from the conventional stores because of various factors like

reach, extending credit facility and other intangible factors like the human touch which

are provided only by the conventional stores.


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The urban retail market has been embracing various new formats and the malls turned

out to be the trend setters by promising the concept of shoppertainment. The trends in

the rural market also have been changing from the old 0aats and elas to the rural

malls like B%haupal Sagar3 launched by IT%, $% Shriram 5roups one(stop shopping

destination called B0ariyali !a1aar3, 5odrej groups agri store BAdhar3 etc.

Introduction to !"eration

Management

#perations management is an area of business that is concerned with the production of

good quality goods and services, and involves the responsibility of ensuring

that business operationsare efficientand effective. It is the management of resources,

the distribution of goods and services to customers.

A@I%S The Association for #perations anagementalso defines operations

management as Cthe field of study that focuses on the effectively planning, scheduling,

use, and control of a manufacturing or service organi1ation through the study of

concepts fromdesign engineering,industrial engineering, management informationsystems, quality management, production management, inventory

management, accounting, and other functions as they affect the organi1ationC.

Additionally, The #perations anagement !ody of Dnowledge :#!#D< Eramework

defines the scope of operations management and the activities and techniques that are

a part of the operations management profession.

#perations also refer to the production of goods and services, the set of value(added

activities that transform inputs into many outputs. Eundamentally, these value(adding

creative activities should be aligned with market opportunity for optimal enterprise

performance.
http://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/APICS_The_Association_for_Operations_Managementhttp://en.wikipedia.org/wiki/Design_engineeringhttp://en.wikipedia.org/wiki/Industrial_engineeringhttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Production_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Business_operationshttp://en.wikipedia.org/wiki/Efficienthttp://en.wikipedia.org/wiki/Effectivehttp://en.wikipedia.org/wiki/APICS_The_Association_for_Operations_Managementhttp://en.wikipedia.org/wiki/Design_engineeringhttp://en.wikipedia.org/wiki/Industrial_engineeringhttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Management_information_systemshttp://en.wikipedia.org/wiki/Quality_managementhttp://en.wikipedia.org/wiki/Production_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Inventory_managementhttp://en.wikipedia.org/wiki/Accounting


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!"erations as a #ransformation Process

Inputs Transformation #utput

#perations management is about the way organi1ations produce goods and services.

4verything you wear, eat, sit on, use, read or knock about on the sports field comes to

you courtesy of the operations managers who organi1ed its production. 4very book you

borrow from the library, every treatment you receive at the hospital, every service you

expect in the shops and every lecture you attend at university all have been produced.

This definition reflects the essential nature of #perations anagementF it is a central

activity in organi1ing things. Another way of looking at an operation is to consider it as a

transformation process.

#perations are a transformation processF they convert a set of resources :I2@7TS< into

services and goods :#7T@7TS


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Information

A tourist office gathers and provides information to holiday makers, and assists in

advising on places to stay or visit.

Customers

At an airport, you are one of the many resources being processed. The operation

you are involved in is about processing your ticket and baggage, moving from

ticket desk through the customs and duty(free areas, to deliver you to the

awaiting plane.

Extending the "rocess...

If we add a few more parts to the transformation process, we can see the key elements

that operations managers need to consider. #perations is about designing services,

products and delivery systemsF

-. anaging and controlling the operations system.

&. Einding ways to improve operations.


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!"erations Management is all a%out "roviding customers with "roducts and

services.

Gou survive by giving customers with what they want

4very @roduct or Service is really a bundle of different attributes.

@roduct, place, price, performance, quality, timing, service, etc.

%ustomers are looking for a bundle of characteristics

Total bundle provides the level of value customers deem appropriate

!uying products with the attributes they want at the lowest price possible

Attributes

@rice

Huality

Image

@erformance

Safety

@lace distribution

Time delivery, availability

0ow do you decide which product to produceJ

0ow do you find out what attributes your product should haveJ

0ow do you get those attributes into your productJ

Khat processJ


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Khat resources do you needJ

Khere do you get those resourcesJ


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Exam"les of !"erations &ecisions

#perations managers must make decisions on three levels

Strategic

Tactical

#perating

S#$A#E'IC &ECISI!(S)

6onger term decisions

7sually made at the senior management level

@roduct and service strategy

%ompetitive priorities

@ositioning strategy

6ocation, capacity

6ong term partnerships

Huality system and overall approach to quality

#AC#ICA* &ECISI!(S

edium term decisions

Tactical in nature

ade by middle and senior managers

@rocess design

Technology management


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Lob design and workforce management

%apacity management

Eacility location

Eacility layout


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!PE$A#I(' &ECISI!(S

Shorter term decisions

ade at middle and lower management levels

Eorecasting

aterials management

Inventory management

Aggregate planning

aster production scheduling

@roduction control

Scheduling

+hat is $etail,

The word /retail/ is derived from the Erench word /retailer/ meaning /to cut a piece off/ or

/to break bulk/. In simple terms it involves activities whereby product or services are sold

to final consumers in small quantities. Although retailing in its various formats has been

around our country for many decades, it has been confined for along time to family

owned corner shops.

4nglishmen are great soccer enthusiasts, and they strongly think that one should never

give Indians a corner. It stems from the belief that, if you give an Indian a corner he

would end up setting a shop. That is how great Indians retail management skill is

considered.


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#he Facts

"etailing in more developed countries is big business and better organi1ed that what it

is in India. "eport published by cDinsey M %o. in partnership with %onfederation of

Indian Industry :%II< states that the global retail business is worth a staggering 7S 8 +

trillion. The ratio of organi1ed retailing to unorgani1ed in 7S is around =' to &', in

4urope it is +' to 9', while in Asia it comes to around &' to ='.

In India the scenario is quiet unique, organi1ed retailing accounts for a mere * of the

total retail sector. Although there are around * million retail stores in India, N' of these

have a floor space area of *'' sq.ft. or less. The emergence of organi1ed retailing in

India is a recent phenomenon and is concentrated in the top &' urban towns and cities.

#he $eason

This emergence of organi1ed retailing has been due to the demographic and

psychographic changes taking place in the life of urban consumers.

5rowing number of nuclear families, working women, greater work pressure, changing

values and 6ifestyles, increased commuting time, influence of western way of life etc.

have meant that the needs and wants of consumers have shifted from just being %ost

and "elationship drive to !rand and 4xperience driven, while the Oalue element still

dominating the buying decisions.

'lo%al Scenario"etail stores constitute &' of 7S 5$@ M are the 9 rd largest employer segment in

7SA.

%hina on the other hand has attracted several global retailers in recent times. "etail

sector employs + of the population in %hina. ajor retailers like Kal(art M %arrefour

have already entered the %hinese market. In the year &''9, Kal(art M %arrefour had

sales of 7S 8 +'.) %rore M 7S 8 -;' %rore respectively.


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The global retail industry has traveled a long way from a small beginning to an industry

where the world wide retail sales is valued at 8 + x -' * %rore. The top &'' retailers

alone accounts for 9' of the worldwide demand. "etail turnover in the 47 is

approximately 4uros &,'',''' %rore and the sector average growth is showing an

upward pattern. The Asian economies :excluding Lapan< are expected to grow at ;

consistently till &''*(';.

#n the global "etail stage, little has remained same over the last decade. #ne of the

few similarities with today is that Kal(art was ranked the top retailer in the world then

M it still holds that distinction. #ther than Kal(art/s dominance, there/s a little about

today/s environment that looks like the mid(-NN's. The global economy has changed,

consumer demand has shifted M retailers/ operating systems today are infused with far

more technology than was the case six years ago.

Scenario of $etailing in India

"etailing is the most active and attractive sector of last decade. Khile the retailing

industry itself has been present since ages in our country, it is only the recent past that it

has witnessed so much dynamism. The emergence of retailing in India has more to do

with the increased purchasing power of buyers, especially post(liberali1ation, increase

in product variety, and increase in economies of scale, with the aid of modern supply

and distributions solution.

Indian retailing today is at an interesting crossroads. The retail sales are at the highest

point in history and new technologies are improving retail productivity. though there are

many opportunities to start a new retail business, retailers are facing numerouschallenges.

-E C/A**E('ES)


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-< 6#%ATI#2P

0$ight Place1 $ight choice0

6ocation is the most important ingredient for any business that relies on customers, and

is typically the prime consideration in a customer3s store choice. 6ocations decisions are

harder to change because retailers have to either make sustainable investments to buy

and develop real estate or commit to long term lease with developers. Khen formulating

decision about where to locate, the retailer must refer to the strategic planP

Q Investigate alternative trading areas.

Q $etermine the type of desirable store locationQ 4valuate alternative specific store sites

&< 4"%0A2$IS4P

The primary goal of the most retailers is to sell the right kind of merchandise and

nothing is more central to the strategic thrust of the retailing firm. erchandising

consists of activities involved in acquiring particular goods and services and making

them available at a place, time and quantity that enable the retailer to reach its goals.

erchandising is perhaps, the most important function for any retail organi1ation, as it

decides what finally goes on shelf of the store.

9< @"I%I25P

@ricing is a crucial strategic variable due to its direct relationship with a firm/s goal and

its interaction with other retailing elements. The importance of pricing decisions is

growing because today/s customers are looking for good value when they buy

merchandise and services. @rice is the easiest and quickest variable to change.


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)< TA"54T A7$I42%4P

C%onsumer the prime moverC

C%onsumer @ullC, however, seems to be the most important driving factor behind the

sustenance of the industry. The purchasing power of the customers has increased to a

great extent, with the influencing the retail industry to a great extent, a variety of other

factors also seem to fuel the retailing boom.

*< S%A64 #E #@4"ATI#2SP

Scale of operations includes all the supply chain activities, which are carried out in the

business. It is one of the challenges that the Indian retailers are facing. The cost of

business operations is very high in India.

P$ESE(# I(&IA( SCE(A$I!

Q 7norgani1ed marketP "s. *=9,''' crores

Q #rgani1ed marketP "s.*, ''' croresQ *R growth in organi1ed retailing between &'''(&''*

Q #ver ),''' new modern #utlets in the last 9 years

Q #ver *,''',''' sq. ft. of mall space under development

Q The top 9 modern retailers control over +*',''' sq. ft. of retai l space

Q #ver )'',''' shoppers walk through their doors every week

Q 5rowth in organi1ed retailing on par with expectations and projections of the last *

GearsP on course to touch "s. 9*,''' crores :7S8 + !illion< or more by &''*(';

Ma2or "laers

( Eood and grocery

( Eashion


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consumers are rapidly evolving and accepting modern formats overwhelmingly. "etail

Space is no more a constraint for growth. India is on the radar of 5lobal "etailers and

suppliers brands worldwide are willing to partner with retailers here. Eurther, large

Indian corporate groups like Tata, "eliance, "aheja, IT%, !ombay $yeing, urugappa

M @iramal 5roups etc and also foreign investors and private equity players are firming

up plans to identify investment opportunities in the Indian retail sector. The quantum of

investments is likely to skyrocket as the inherent attractiveness of the segment lures

more and more investors to earn large profits. Investments into the sector are estimated

at I2" &''' ( &*'' %rore in the next &(9 years, and over I2" &',''' %rore by end of

&'-'.

Eew of India/s top retailers areP

-. Big Ba3aar4Pantaloons)!ig !a1aar, a division of @antaloon "etail :India< 6td is

already India/s biggest retailer. In the year &''9('), it had revenue of "s ;*=.9- crores

M by &'-'F it is targeting revenue of "s =,='' %rore.

5. Food +orld)Eood Korld in India is an alliance between the "@5 group in India with

$airy Earm International of the Lardine atheson 5roup..

6. A"na Ba3aar)It is a "s -)'(crore consumer co(operative society with a customerbase of over -& lakh, plans to cater to an upwardly mobile urban population.

7. Margin Free)It is a Derala based discount store, which is uniformly spread across

&)' argin Eree franchisees in Derala, Tamil 2adu and Darnataka.

Kholesale trading is another area, which has potential for rapid growth. 5erman giant

etro A5 and South African Shoprite 0oldings have already made headway in this

segment by setting up stores selling merchandise on a wholesale basis in !angalore

and umbai respectively. These new(format cash(and(carry stores attract large

volumes from a si1eable number of retailers who do not have to maintain relationships

with multiple suppliers for all their needs.


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I(&IA( $E#AI* IS M!8I(' I(#! SEC!(& 'EA$

9: FI$S# 'EA$)

:%reate awareness@eople? is that aspect of the marketing mix which adds tangibility to the service of

creating an experience

th P) P$!CESSES


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Dth P ) P/SICA* E8I&E(CE

anaging Appearance of the building M 6ocation

aintaining Temperature , usic, 6ighting and Eragrance inside the store

Availability of services like @rams, Kheel %hair, Oalet @arking etc

Stylish Stocking of erchandise

C/A('ES I( $E#AI*I('


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Conclusion

Eor a start, these retailers need to invest much more in capturing more specific market.Intelligence as well as almost real(time customer purchase behavior information. The

retailers also need to make substantial investment in understandingacquiring some

advanced expertise in developing more accurate and scientific demand forecasting

models. "e(engineering of product sourcing philosophies(aligned more towards

collaborative planning and replenishment should then be next on their agenda. The

message, therefore for the existing small and medium independent retailers is to closely

examine what changes are taking place in their immediate vicinity, and analy1e Khether

their current market offers a potential redevelopment of the area into a more modern

multi(option destination. If it does, and most commercial areas in India do have this

potential, it would be very useful to form a consortium of other such small retailers in

that vicinity and take a pro(active approach to pool in resources and improve the overall

infrastructure. The next effort should be to encourage retailers to make some

investments in improving the interiors of their respective establishments to make

shopping an enjoyable experience for the customer.

As the retail marketplace changes shape and competition increases, the potential for

improving retail productivity and cutting costs is likely to decrease. Therefore, it will

become important for retailers to secure a distinctive position in the marketplace based

on value, relationships or experience.

$ $ain check

E Esta%lishment

# #rade

A Affiliated Chains

I Investment !""t

* *ow Price 'uarant


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