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» logistics in big bazaar
logistics in big bazaar
This is a research report on
logistics in big bazaar
Domestic and International Logistics
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Logistics and Supply Chain Management in “Big Bazaar” stores
Logistics management is the part of supply chain management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods,services, and related information between the point of origin and the point of consumption in order to meet customer's requirements. A professional working in the field of logistics management is called a logistician. 1. 2. 3. 4. Materials management Channel management Distribution (or physical distribution) Supply-chain management
Definition of logistics: Logistics is the art and science of managing and controlling the flow of goods , energy, information andother resources like products, services and people fromthe source of production to the marketplace. marketplace.• It’s Important to have professional logistical supportlogistical• The operating responsibility of logistics is thegeographical repositioning of raw materials, work inprocess and finished inventories where required at thelowest cost possible.
Distribution Distribution is one of the 4 aspects of marketing. • Traditionally, distribution has been seen as dealing with how to get the product or service to the customer. • Distribution is done by distributor who is is the middleman between the manufacturer and retailer the manufacturer and retailer. Supply chain management Supply chain management (SCM) is the management of an interconnected or interlinked between network, channel and node businesses involved in the provision of product and service packages required by the end customers in
a supply chain. Supply chain management spans the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption. It is also defined as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."
Indian industries due to globalization facing lot of competition, in order to protect the business interest, every industry is trying to improve their process it could make the cheaper product with better quality. For that purpose industries are trying to redefine, reorganize and reengineering their traditional processes. More emphasis is given on the effectiveness of the whole supply chain rather than single function of the supply chain. Supply chain management is complex process of different function; involves so many issues at different levels. And many organized retail stores adopted six sigma concepts to reduce the cost, defect, cycle time reduction and to increase the customer relationship management, market growth share, productivity and product and service management. The objective of present work is to find out the importance of logistics and supply chain management in organized retail markets and impact of logistics and supply chain management on organized retail markets. And to find out the problems areas in supply chain management on organized retail store. (Critical to customer, critical quality and voice of the customer) In the organized retail market in India the role of supply chain is very important for the Indian customer demands at affordable prices a verity of product mix and it is ensure to the customers in all the various offering that company decides for its customer, be it cost, service, or the quickness in responding to ever changing taste of the customer.
RESEARCH METHODOLOGY Data is collected using two approaches: Observational method Observations were made in the big bazaar stores regarding the customer groups present there, retails formats adopted by the store, various verticals inside the store for each category of product, ambience, services provided to buyers and discount techniques Survey method Personal meeting with stores manager and assistants. Questinnare was prepared was prepared for for the staffing at big bazaar which included several open-ended and close-ended questions aimed at knowing the following: •Why Big Bazaar •Loyalty levelEffect of logistics
INTRODUCTION TO LOGISTICS AND SUPPLY CHAIN:
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 Indian Middle Class 1984-85 By 2005 < 10% of total population Approx 40%
Organized retail which presently account for only 4-6 percent of the total market is likely to increase its share to over 30% by 2013. it offers huge potential for growth in coming years. India is becoming most favored retail destination in the world. Generating employment for some 2.5 million people in various retail operations and over 10 million additional workforce in retail support activities including contract production and processing, supply chain and logistics, retail real estate development and management etc.; the retail sector is growing a scorching pace of about 37 percent in 2007 and expected to grow by 42 per cent in 2008. With this enormous growth, the retail sector is also facing challenges n the fronts of escalating real estate cost, scarcity of skilled workforce and structured supply of merchandise.
Future Group is one of the country’s leading business groups present in retail, asset management, consumer finance, insurance, retail media, retail spaces and logistics. The group’s flagship company, Pantaloon Retail Future Group’s vision is to, “deliver Everything, Everywhere, Everytime to Every Indian Consumer in the most profitable manner.” The group considers ‘Indian-ness’ as a core value and its corporate credo is - Rewrite rules, Retain values. (India) Limited operates over 7 million square feet of retail space, has over 1000 stores across 53 cities in India and employs over 25,000 people. Some of its leading retail formats include, Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, eZone, Depot, Future Money and online retail format, futurebazaar.com. Kishore Biyani popularly known as India’s “King of Retail” has started multiple retail formats in both value and lifestyle segments under the flagship Pantaloon Retail. The company operates across multiple segments including –Food, Books & Music, Fashion, Telecom & IT, Home & Electronics, General Merchandise, Leisure & Entertainment, Wellness, Health & Beauty and E-tailing. The gross sales of the company are Rs. 2,019 crores for the financial year ending June 2006.
Big Bazaar is a chain of department stores in India, currently with 75 outlets. It is owned by the Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal-Mart and has considerable success in many Indian cities and small towns. The idea was pioneered by entrepreneur Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are located only in India. It is the biggest and the fastest growing chain of department store and aims at being 350 stores by the end of year 2010.
Type Founded Headquarters Industry Products Owner Parent Slogan Website
Subsidiary of Pantaloon Group 2001 Jogeshwari, Mumbai, India Retail Department store, Grocery store Kishore Biyani Pantaloon Group Is se sasta aur accha kahin nahin http://www.pantaloon.com/bigbazaar.htm
Big Bazaar is not just another hypermarket. It caters to every need of your family. Where Big Bazaar scores over other stores is its value for money proposition for the Indian customers. At Big Bazaar, you will definitely get the best products at the best prices - that’s what they guarantee. With the ever increasing array of private labels, it has opened the doors into the world of fashion and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods and much more at prices that will surprise you. And this is just the beginning. Big Bazaar plans to add much more to complete your shopping experience. Big Bazaar is estimated to end this financial year with a turnover of Rs 4,000 crore and expects to double it over the next year. Big Bazaar, the largest retail chain of Future Group, is eyeing a turnover of Rs 8,000 crore by the next financial year. The company hopes to achieve this mark by mutliplying the number of stores and implementing cost-cutting measures. Speaking on the sidelines of Images Fashion Forum in Mumbai, Kishore Biyani, CEO, Future Group, said, “We want to introduce new value culture, manage operating costs better and boost profitability of Big Bazaar. Hence, we have hived off the business. However, to fund our expansion, we are not looking at listing Big Bazaar.” Profits grew at a compound annual growth rate (CAGR) of about 35 per cent over the past five years and Pantaloon appears set to record similar levels in the next couple of years. With its high decibel ‘sabse saste 3 din’ campaign last month, India’s top retailer Pantaloon Retail clearly has no problem attracting customers to stores, but getting them to buy is a different matter altogether. Sales from the Rs 3,237 crore retailer’s existing stores (‘same store’, in jargon) grew a mere 3.6 per cent in January (on a year-on-year basis) as compared to 29 per cent in January 2007, and the last six month’s average of 10 per cent. For the entire company, of course, sales have grown faster in 2007-08. Overall sales for the year are expected to grow 78 per cent as compared to 71.3 per cent in 2006-07 — but this includes sales from new stores as well.
in % Sales growth Gross Profit Margin
Q1FY07Q2FY07 Q3FY07Q4FY07Q1FY08 Q2FY08 65.4 34.1 59.5 32.2 7.6 5.8 89.1 32.5 7 2.1 77.3 29.3 5.6 1.8 80.1 31.5 8.8 2.7 63 30.4 8.9 2.6
Operating Profit Margin 6.9 Net Profit Margin 6.4
Presently, around 80 Big Bazaars are operating countrywide and by the end of this year, company anticipates 100 percent growth by taking it to 160. Big Bazaar has a 25% of market share in retail hypermarket in India in competition with the reliance fresh, Subhiksha, 6 ten, spencer, big apple, more of Aditya Birla group. EXCHANGE GUARANTEE Big Bazaar guarantee the exchange of any product that you have bought from big bazaar and are not satisfied with. Customer has to return it with the cash memo within 7 days of purchase. PRICE GUARANTEE Within 2 days of purchase if customer find a product of the same brand/quality available at the lesser price, bring it back within 10 days along with the cash memo & big bazaar will give you a gift voucher which will be double the value of the price difference QUALITY GAURANTEE All products sold at Big Bazaar are guaranteed to be at a good price and of good quality.
Logistics helps a lot in maintaining 4Ps
Product mix:A product has both tangible andintangible 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 considerationin buying decisions . Price also denotes quality in thecostumers’ 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 thebrand proffered by the consumer is not easily available atthe 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 managementprocess through which an organisation develops,presents, and evaluates a series of messages to an identifiedaudience. 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
PRODUCT VARITIES OF BIG BAZAAR
Apparel Men: Casual Shirt, Party Shirt, Formal Shirt, More... Women: Mix Match, Salwar Suit, Lingerie, More... Plus Size: Men’s, Woman’s T-shirts:Men: Collared, Plain, More... Women: Plain, Zodiac, More... Luggage: Airbags, Laptop Bags, Soft Trolleys Accessories Men, Women, 2008 Diaries Watches:Fastrack, Titan, Timex, Citizen, Sonata, Omega, Cube Health & Personal:Body Care, Cosmetics, Health Care Home & Decor:Office Furniture, Furnishings, Bed Linen, Bath Linen
Consumer Durables Washing Machine, Refrigerator, Iron, Air Conditioners Kitchen Appliances:Food Processor, Microwaves, Juicer Mixer Grinder Kitchenware:Casseroles, Container, Kitchen Utilities, Cooker iPod & MP3 Players:iPod, MP3, MP4
Home Entertainment Flat TV, LCD TV, DVD Player, Home Theatre Books:Comics, Children, Fiction, Non-Fiction Movies:English, Hindi, Toys & Games:Board Games, Dolls, Soft Toys, Infant Toys, Gaming Laptops Sony, HP/Compaq Presario, Acer, Lenovo, Apple Mobiles Nokia, Motorola, Samsung, Sony Ericsson, Cameras Digital Camera, Video Camera, Digital SLR, Memory & Storage:Pen Drive, Memory Card
Sales promotion and advertisements are the two main promotion strategies which Big Bazaar adopts. Prices of every goods in the store are available at less then what it is available at any other store. Some of the examples of the sales promotion are:1) Wednesday Bazaar, hafte ka sabse sasta din, providing various goods at the lesser price as compare to the other days in the week. 2) The great exchange offer, i.e, exchange any old item & get anything new at much lower prices. Customer gets coupon in exchange of goods sold and the customers have to shop for 4 times the value of exchange coupons to avail of this offer. This is one of the best strategies adopted by big bazaar. 3) Mobile exchange offer- Exchange any mobile & get recharge worth Rs.100 absolutely free. These are some of the examples which show that based on offers which the company provides order size of the company varies.
VENDOR SELECTION Big Bazaar has their own form for vendor selection. There are no such particular & specific criteria which a Big Bazaar has fixed for a vendor selection. Here BRAND & MARGIN play a vital role in order to be a part of Big Bazaar. The basic requirement which a Vendor needs to have or company is looking for is:
TIN NUMBER ACCOUNT NUMBER
FINANCIAL TERMS MARGINS Margin is one of the important components for vendor selection, higher the margin more it is profitable for the company and higher is the chance for that supplier to be preferred & selected. Since margins for a company vary from product to product. Margins on branded products are maximum upto 15%. Margins on non branded/local brands are upto 50%.
MODE OF PAYMENT Payments are made to the vendors through cheque and the credit period enjoyed by Big Bazaar is normally 3 weeks and even 12 weeks in case of some of the products. Big Bazaar is now changing the mode of payment. Company will now directly transfer the amount from their account to the vendor’s account. That’s why account number of the vendor is one of the important requirement which the Big Bazaar looks for while vendor’s selection.
DAMAGED MERCHANDISE Responsibilities for the damaged merchandising are different in different companies. In Big Bazaar vendors are responsible for every damages and expiry of the product. Damages may be due to mishandling, while transportation and even if the product is not sold before its expiry, it is vendor’s responsibility to replace the damaged or expired product.
REPLACEMENTS Big Bazaar provides 100% replacements to the customers. If the customer complaints increases up to 3 to 4 times for any particular product that product gets removed by the company and is not kept by the company. SHELVES SPACE ALLOCATION Big bazaar charges nothing from brands for space allocations but they charge from non brands products for space allocation. Sometimes brand themselves pay a certain amount to big bazaar as a promotional strategy or some offers for the display of the product at the place of their own choice, but this is only for a certain period of time. For Example: Amul don’t pay for space but if sum offer is there like 26th January Amul might pay something . Various factors are taken into consideration while allocating the shelve space:
? ? ? ? ?
Output of the brand Costing of the brand (profitability per sq.feet) Demand of the product Space utility Response of the product
MINIMUM ORDER SIZE Big Bazaar does not have any fixed order size for any particular product. Since the order of the product depends upon the some of the factors such as: 1. 2. 3. 4. type of product life of product duration of transporting demand etc
Order size of the Big Bazaar mainly depends upon the offers & scheme which its gives on the particular day. STOCK ASSESSMENT Order is placed once or twice in a week based on requirements of a company. There is no such fixed period of placing an order.
Floor Incharge looks after the requirements of the different sections on the floor available. These requirements are then passed on to the team leader (TL) and based on these requirements he fill up the requirement forms,ie, purchase order(PO). The purchase orders are signed by the department manager and are sent to the supplier only after the prior approval of the department manager.
Validity of the purchase order is 3 days.
It means that if any supplier fails to deliver the product within 3 days of order being made, then the vendor will have to get a new purchase order.
? ? ?
Quantity supplied by the supplier can be less than what has been ordered by the company but not more than the order. Finally based on the purchase order bill is made by the vendor. M.R.P cannot be changed.
If M.R.P changes then purchase order will have to be amended & Big Bazaar will have to change all its system for billing purpose for that specific vendor.
Electronic Bazaar Furniture Bazaar Footwear Bazaar Trolleys are not easily available, especially on other thanground floor. •Little attention to cleanliness. Dust on shelves as well assome product items. •In-house packaging not efficiently done. •Crowded store interiors. Items are arranged in a clutteredway. Tried to stock maximum number in limited area. •Sign boards are not prominent. Lack of direction createsconfusion. •Family crowd is evident. Youth comprises of only around10% of the crowd. •Food Bazaar very efficiently managed. It is a bit over-staffed but layout is very good. Shelf space is used verywell to stock products with clear distinction. Supply chain Supply in big bazzar occurs by two methods: Suppliers Warehouse InternalWarehouseThis type of supply chain is used in crockery items andother durable goods.2.Vendors Big bazzar This type of supply chain is used in food items and other fmcgs
TRANSPORT OWNERSHIP & RESPONIBILITY Vendor is responsible for the transportation of the goods and he is responsible of mishappening if any. One thing which is noticeable is that if the product is branded then the vendor has the upper hand. That means Big Bazaar has to take pain for the display of such products and if the products are not branded then the vendor will have to take pain for the display of their product. WAREHOUSING Company has its own warehouse. Since the warehouse is not big enough as orders are placed frequently. Different store of Big Bazaar has different warehouse. Once the product reaches the warehouse it is checked by the warehouse incharge and inward checklist is filled accordingly. This checklist includes:
? ? ? ?
Purchase order number Vendor name Invoice number Date, quantity & amount 1. Security
Invoice Purchase order
2. Quality check (packed food/non food items)
o o o o
Date of manufacturing Date of expiry Batch number ISI mark/ EGG mark
Problem at big bazaar 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 channel since the country results in inefficient processes. This is a major hindrance for retailers as a nonefficient distribution channel is very difficult to handle and can result in huge losses. Infrastructure does not have a strong base in India. Urbanization and globalization are compelling companies to develop infrastructure facilities .The storage infrastructure, too, is severely restricted. In2006, India had a total warehousing capacity of 81 million tonne. Like the rest of the infrastructure sector , warehousing is highly fragmented and unorganized Transportation, including railway systems, has to be more efficient. Highways have to meet global standards. Airport capacities and power supply have to be enhanced. Warehouse facilities and timely distribution are other are as 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 FICCIE&Y retail report, roads connectless than half of the half a million Indian villages. The normal distance covered by trucks and trailers in India are250-300 km a day, whereas the international norm is 600-800 km a day. Most roads in India are designed to carry a maximum gross weight of 16.2 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.
RECOMMENDATIONS: Improvement in supply chains:Big bazaar should use more better techniques for improvising its supply chains. The organisational structure and the business model of Wal-Mart are its winningformula 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 costconscioussmaller, everybody-knows-everybody cities in the US. But this very strategy doomed it to failure in larger cities in the US. A very high real estate cost in big cities was also detrimental to its strategy in such cities. Warehouse location :Though it is a cost cutting formula of big bazaar, but now the Indian scenario has changed. Though it has its own logistics called Future logistics, it should try some other ways to improve its in housing of goods. Many a times it happens that goods are not available to customers as the time taken between ordering and processing is very long. Improvement in packaging:Big Bazaar should ask suppliers to send goods with good packaging so that losses due to breakage should be avoided. Moreover its own handling and carrying should be improved. Infrastructure Internal ware house of big bazaar has very low capacity .Its completely hochpoch. Due to insufficient space of storage losses are very frequent. Shop lifting especiallyinternal is very high. It should allow its suppliers to have attract 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. Ray Medi 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.
Conclusion Big bazaar is having its own logistics called future logistics but in near future to cope up with changes it have to do alot. The logistics companies at present provide services from transportation to warehousing and inventory management. But, in the near future, they will have toexpand 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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