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ABSTRACT

"Interdependence is a higher value than


Independence"
Stephen R. Covey

As rightly said by Stephen Covey the value of


interdependence is as much important in the business of
Retail as it is important in the business of life. Standing on
the threshold of a retail revolution and witnessing a fast
changing retail landscape, the retail sector is poised for a
big leap. Currently retail sector in India accounts for Rs.
55,000 crore ($12.4 billion) business at current prices in
the calendar year 2006, increasing its share to 4.6% of the
total Indian Retail Value that stood at Rs. 12,00,000 crores
($270 billion). With the potential of crossing Rs 2, 00,000
crores ($45 billion) business by the Year 2010, 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 &
processing, supply chain & logistics, retail real estate
development & management etc.; the retail sector is
growing at a scorching pace of about 37 percent in 2007
and expected to grow by 42 per cent in 2008. With this

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enormous growth, the retail sector is also facing
challenges on the fronts of escalating real estate cost,
scarcity of skilled workforce and structured supply of
merchandise.

1.INTRODUCTION TO LOGISTICS
One of the most important challenge in organized retail in
India is faced by poor supply chain and logistics
management. The importance can be understood by the
fact that the logistics management cost component in
India is as high as 7% -10% against the global average of
4% - 5% of the total retail price. Therefore, the margins in
the retail sector can be improved by 3% - 5% by just
improving the supply chain and logistics management.
In India, with demand for end-to-end logistics solutions
far outstripping supply, the logistics market for organized
retail is pegged at $50 million and is growing at 16%. It is
expected to reach $120-$130 million by 2010. Organized
retail on the other hand is growing at 400% and is
expected to reach around $30 billion by 2010.Even supply
chain and logistics firms like Hong Kong based Heng Tai
Consumables and ABS Procurement Co and ACM China
(the greenhouse specialist) is also eying the opportunity
for managing the supplies.

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The supply chain management is logistics aspect of a
value delivery chain. It comprises all of the parties that
participate in the retail logistics process: Manufacturers,
Wholesalers, and Third Party Specialists like Shippers,
Order Fulfillment House etc. and the Retailer. Here,
logistics is the total process of planning, implementing and
coordinating the physical movement of merchandise from
manufacturer to retailer to customer in the timeliest,
effective and cost efficient manner possible. Logistics
regards order processing and fulfillment, transportation,
warehousing, customer service and inventory
management as interdependent functions in the value
delivery chain. It oversees inventory management
decisions as items travel through a retail supply chain. If a
logistics system works well, the retail firm reduces stock
outs, hold down inventories and improve customer service
– all at the same time.
Logistics and Supply Chain enables an organized retailer
to move or store products more effectively. Efficient
logistics management not only prevents needless
movement of goods, vehicles transferring products back
and forth; but also frees up storage space for more
productive use.
Retail analysts say on-time order replenishments will
become even more critical once the Wal-Mart/ Bharti
combine begins operations - the American retailer works
almost entirely on cross-docking and is likely to demand
higher service levels, including potential levies for delays
in shipment.

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The efficiency and effectiveness of supply chain and
logistics management can also be understood by the fact
that modern retail stores maintain lower inventories than
traditional retail. In India, generally in the traditional kirana
stores, three weeks inventories are kept; while in a
modern retail store like Hypercity, it's nine days and it's
under two weeks for Food Bazaar. Now, it is beneficial for
both the manufacturer as well as the retailer. If we go
through the following food supply chain in India, we find
that a lot can be improved by maintaining the supply chain
and logistics.
their availability on a relatively large scale and supplying
them to customers on a relatively small scale. Retailer is a
Person or Agent or Agency or Company or Organization
who is instrumental in reaching the Goods or Merchandise
or Services to the End User or Ultimate Consumer.

2 SCENARIO OF LOGISTICS IN INDIA


The logistics industry in India is evolving rapidly and it is
the interplay of infrastructure, technology and new types of
service providers that will define whether the industry is
able to help its customers reduce their logistics costs and
provide effective services (which are also growing).
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Changing government policies on taxation and regulation
of service providers are going to play an important role in
this process. Coordination across various government
agencies requires approval from multiple ministries and is
a road block for multi modal transport in India. At the firm
level, the logistics focus is moving towards reducing cycle
times in order to add value to their customers.
Consequently, better tools and strategies are being sought
by firms in order to enhance their decision making. In this
paper, we provide a perspective on these issues, outline
some of the key challenges with the help of secondary
information, and describe some interesting initiatives that
some firms & industries are taking to compete through
excellence in managing their logistic.
.2.1 Some Peculiarities of the Indian Supply
Chains
The Indian logistics sector has typically been driven by the
objective of reducing transportation costs that were (and
often continue to be) inordinately high due to regional
concentration of manufacturing and geographically
diversified distribution activities as well as inefficiencies in
infrastructure and accompanying technology. Freight
movement has slowly been shifting from rail to road with
implications on quality of transfer,
timeliness of delivery and consequently costs except for
commodities which over long distances, predominantly,

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move through the extensive rail network. More on the
nfrastructure issues later.
Figure 1 shows the relative value of transportation costs
vis-à-vis other elements of the logistics costs in India. The
transportation industry is fragmented and largely un-
organized – a large number of independent players with
regional or national permits that carry freight, often with
small fleet size of one or two single-axle trucks. This
segment
carries a large percent of the national load andalmost all of
the regional load. This fragmented segment comprises
owners and employees with inadequate skills,
perspectives or abilities to organize or manage their
operations effectively. Low cost has been traditionally
achieved by employing low level of technology, low wages
(due to lower education levels), poor maintenance of
equipment, overloading of the truck beyond
capacity, and price competition amongst a large number of
service providers in the industry. Often, one finds
transportation cartels that regulate supply of trucks and
transport costs. However, the long run average cost of
transport operations across th entire supply chain may not
turn out to be low

Figure 1: Elements of Logistics Cost in India

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3 PROFILE OF THE COMPANY

Name of the company :-

Area :- Retailing

Product :- DEPARTMENTAL STORES


AND GROCERY SHOP

Background :- Big Bazaar is a unique


chain, currently more than 75 stores in all around the India
. Owned by pantaloon retail (INDIA) limited , future group .
Headquarter is situated in Jogeshwari – Mumbai, Idea
was pioneered by entrepreneur KISHORE BIYANI, the
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CEO of future group, born in middle class Marwari family,
began career with selling stonewash fabric to small shops
in Mumbai . He Launched Pantaloon , biggest listed
retailer of the country .

Pantaloon is credited with launching


many retails formats in value and lifestyle retailing brand
names in country, including big bazaar, food bazaar ,
central , e-zone and home town .

In 1993, he experimented with a small store format ,


and Pantaloon Shoppe was launched in Panjim , Goa .
Then a large family’s store in 1998 in Kolkata , after a
great success he launch a BIG BAZAAR “ Is se sasta
aur accha kahi nahi ” in the year of 2001. Now total
revenue of the company was $249 million in the year,

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Group’s vision to
to deliver everything , everywhere , everytime to every
Indian consumer in most profitable manner” . The group
considered ‘Indianness’ as a core value and its corporate
code is Rewrite rules , Retain values.

3.1 SWOT ANALYSIS

Strengths Weakness
Low cost Low customer loyalty

Time gap between order and


Cost cutting by reducing processing
intermediaries Low internal warehouse capacity
Promotional offers on Wednesday Employees not trained.
Location Less Conversion level

Home delivery facility Frauds in Retail

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Opportunities Threats
Percolating down Shopping Culture

Rural Retailing Uncertainty in market position

kids and teens retailing segment. New entrants like reliance

Organized retail is only 3% of the


total retailing market in India

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4 TITLE OF PROJECT :-

Study of Logistics and Distribution in “Big Bazaar”


stores
Big bazzar is a part of future group so most of its logistics
and distribution is done by future logistics.

Logistics
• Logistics is the art and science of managing and
controlling the flow of goods , energy, information and
other resources like products, services and people from
the source of production to the marketplace. marketplace.
• It’s Important to have professional logistical support
logistical
• The operating responsibility of logistics is the
geographical repositioning of raw materials, work in
process and finished inventories where required at the
lowest cost possible.

Distribution
Distribution is one of the 4 aspects of
marketing.marketing.
• Traditionally, distribution has been seen as dealing with
how to get the product or service to the customer. the
customer
• Distribution is done by distributor who is is the

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middleman between the manufacturer and retailer the
manufacturer and retailer.
Supply Chain
• Supply chain, is a coordinated system of organizations,
people, activities, information and resources involved in
moving a product or service in physical or virtual manner
from supplier to customer.
• Supply chain activities transform raw materials and
components into a finished product that is delivered to the
end customer.

Warehouses
Warehouses of big bazzar are located at Boomanahalli
and Hasketta. Suppliers of various products to
warehouses from warehouses goods supplied to internal
warehouses.
In some cases as in food items vendors directly sell to
retailers.

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Logistics helps a lot in maintaining 4Ps

The four Ps of marketing mix


Product mix :- A product has both tangible and
intangible components . Customers view product as “
boundless of satisfaction ” rather then just physical things .
• Quality , technology
• Packaging
• Labelling
• Branding
• Trademark
• Merchandising
• Size, design , colour , features
• Service
• Warranty
• Product line and range

Price Mix :- Price is an important consideration


in buying decisions . Price also denotes quality in the
costumers’ mind – a psychological factor. For some
product

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• Pricing policies
• Credit terms
• Cost and profit
• Allowances and discounts
• Competition
• Terms of delivery

Place Mix :-The marketer has the responsibility of


making his product available near the place of
consumption so that consumer can easily by it. If the
brand proffered by the consumer is not easily available at
the convenient location.
• Distribution Channels
• Transportation
• Warehousing and Storage
• Inventory level
• Positioning

• Promotion mix

• Advertising

• Sales promotion

• Personal relations
• Publicity
• Direct responses

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Promotiom Mix :- Marketing promotion is a management
process through which an organisation develops,
presents, and evaluates a series of messages to an identified
audience. So, effective promotion depends on :

• The nature of communication


• The target audience
• The environment in which it is received
• The receivers’ perception of the source as. eg.,

friends, reference group, etc.


• The medium used to transmit the message

5. RESEARCH OBJECTIVE
The research objective is to
○ Study of Logistics and Distribution of Marketing
○ Knowing how logistics is done in Big Bazzar.

6. RESEARCH METHODOLOGY:
Data was collected using two approaches:

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1. Observational method
Observations were made in the Big Bazaar store
regarding the customer groups present there, retail
formats adopted by the store, various verticals inside the
store for each category of product, ambience, services
provided to buyers and discount techniques
2.Survey method
Personal meeting with store manager and assistants.
Questinnare was prepared for the staffa at Big Bazaar
which included several open-ended and close-ended
questions aimed at knowing the following:
• Why Big Bazaar
• Loyalty level
Effect of logistics

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7. Indian Retail Industry

Indian retail industry is going through a transition phase.


Most of the retailing in our country is still in the
unorganized sector. The spread out of the retails in US
and India shows a wide gap between the two countries.
Though retailing in India is undergoing an exponential
growth, the road ahead is full of challenges.

What is retailing?

The word "Retail" originates from a French-Italian word.


Retailer-someone who cuts off or sheds a small piece
from something. Retailing is the set of activities that
markets products or services to final consumers for their
own personal or household use. It does this by organizing
their availability on a relatively large scale and supplying
them to customers on a relatively small scale. Retailer is a
Person or Agent or Agency or Company or Organization
who is instrumental in reaching the Goods or Merchandise
or Services to the End User or Ultimate Consumer.
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8 SCENARIO OF RETAILING IN INDIA :-

Retailing is the most active and attractive sector of last


decade. While 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-liberalization,
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 it
position and new technologies are improving retail
productivity. Though there are many opportunities to start
a new retail business retailers are facing numerous

BIG BAZAAR
FOR THE INDIAN MIDDLE CLASS FAMILY

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It is a unit of Pantaloon Retail (India) Ltd and caters to the
Great Indian Middle Class. It was started as a
hypermarket format in Mumbai with approx. 50,000 sqft of
space. Its values and missions are to be the best in Value
Retailing by providing the cheapest prices and hence goes
the tag-line

“Is se sasta aur achcha kahin nahin”

It sells variety of merchandise at affordable rates, the


prices of which it claims are lowest in the city but the level
of services offered is also very low. Usually the items are
clubbed together for offers as on the lines of Wal-mart and
Carrefour and it also offers weekend discounts. It currently
operates out of 64 stores and top 15 stores register a
cumulative footfall of 27 lakh a month on an average.

The following graph shows the retail life cycle and we can
say that Big Bazaar is currently at the Growth Stage.

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Time
Introducti
Grow
Maturi
Declin
Cash
on
th
ty
e
flow
Flows

Fig. :- Showing Retail life cycle

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9 OBSERVATIONS

There were various observations made from the time I


entered the store. They can be summed up as follows:
Verticals inside the store relates to each category of
product
Food Bazaar
Depot- books
M-bazaar
Electronic Bazaar
Furniture Bazaar
Footwear Bazaar

• Trolleys are not easily available, especially on other than


ground floor.
• Little attention to cleanliness. Dust on shelves as well as
some product items.
• In-house packaging not efficiently done.
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• Crowded store interiors. Items are arranged in a cluttered
way. Tried to stock maximum number in limited area.
• Sign boards are not prominent. Lack of direction creates
confusion.
• Family crowd is evident. Youth comprises of only around
10% of the crowd.
• Food Bazaar very efficiently managed. It is a bit over-
staffed but layout is very good. Shelf space is used very
well to stock products with clear distinction.

Supply chain

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Supply in big bazzar occurs by two methods:
1. Suppliers Warehouse Internal
Warehouse
This type of supply chain is used in crockery items and
other durable goods.

2. Vendors Big bazzar

This type of supply chain is used in food items and other


fmcgs.

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10 PROBLEMS AT BIG BAZZAR
LOGISTICS.

Significant losses/damages during shipping.


The next problem in setting up organized retail operations
is that of supply chain logistics. India lacks a strong supply
chain when compared to Europe or the USA. The existing
supply chain has too many intermediaries: Typical supply
chain looks like:- Manufacturer - National distributor -
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Regional distributor - Local wholesaler - Retailer -
Consumer. This implies that global retail chains will have
to build a supply chain network from scratch. This might
run foul with the existing supply chain operators. In
addition to fragmented supply chain, the trucking and
transportation system is antiquated. The concept of
container trucks, automated warehousing is yet to take
root in India
Inadequate infrastructure
The lack of proper infrastructure and distribution channels
in the country results in inefficient processes. This is a
major hindrance for retailers as a non-efficient distribution
channel is very difficult to handle and can result in huge
losses. Infrastructure does not have a strong base in India.
Urbanization and globalization are compelling companies
to develop infrastructure facilities.
The storage infrastructure, too, is severely restricted. In
2006, India had a total warehousing capacity of 81 million
tonne. Like the rest of the infrastructure sector,
warehousing is highly fragmented and unorganised
Transportation, including railway systems, has to be more
efficient. Highways have to meet global standards. Airport
capacities and power supply have to be enhanced.
Warehouse facilities and timely distribution are other areas
of challenge. To fully utilize India's potential in retail
sector, these major obstacles have to be removed
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Almost 78% of total freight is transported by road.
Almost 78% of total freight is transported by road . But,
according to the FICCI-E&Y retail report, roads connect
less than half of the half a million Indian villages. The
normal distance covered by trucks and trailers in India are
250-300 km a day, whereas the international norm is 600-
800 km a day. Most roads in India are designed to carry a
maximum gross weight of 16.2 tonnes, which allows for a
maximum loading of about 9 tonnes. This severely
restricts the ability to transport goods on larger vehicles.

Warehouses located far from city:


Some of the warehouse are located in villages and are far
from the city so it takes time for goods to reach mall.

11 RECOMMENDATIONS

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Improvement in supply chains:-
Big bazzar should use more better techniques for
improvising its supply chains. The organisational structure
and the business model of Wal-Mart are its winning-
formula for some markets. But this also dooms it to failure
in others. The heart of the matter is high-volume-low-cost
strategy, which made it a success in cost-conscious
smaller, everybody-knows-everybody cities in the US. But
this very strategy doomed it to failure in larger (anonymity,
high consumerism) cities in the US. A very high real estate
cost in big cities was also detrimental to its strategy in
such cities.
Warehouse location :-
Though it is a cost cutting formula of big bazzar, but now
the Indian scenario has changed. Though it has its own
logistics called Future logistics, it should try some other
ways to improve its in housing of goods. Many a times it
happens that goods are not available to customers as the
time taken between ordering and processing is very long.
Improvement in packaging:-
Big Bazzar should ask suppliers to send goods with good
packaging so that losses due to breakage should be
avoided. Moreover its own handling and carrying should
be improved.
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Infrastructure
Internal ware house of big bazzar has very low capacity.
Its completely hoch- poch. Due to insufficient space of
storage losses are very frequent. Shop lifting especially
internal is very high. It should allow its suppliers to have a
track of their goods so that when stock finishes they will
automatically supply.
Use of RayMedi Head Quarter
RayMedi HQ is designed to manage your chain of shops
more easily. RayMedi HQ is a web-based, easy-to-use
software which gives you more control in managing your
chain of shops. It works seamlessly with your individual
shops data (RayMedi RPOS/RE/DE data) and gives you a
consolidated and centralized way of managing your chain
bett RayMedi HQ gives you the Real-time business
status at HQ from about every point of sale. From the
head office, you can monitor sales & inventory position at
each one of your store. The software helps you in
consolidating the data from your various branches into one
system and do an integrated analysis of sales, inventory
and purchase. RayMedi HQ primarily focuses on
managing your branch wide sales, purchase, inventory,
receivables and profits. It helps in controlling expenses,
decreasing costs and increasing your profits.

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12 Conclusion
Big bazzar is having its own logistics called future logistics
but in near future to cope up with changes it have to do a
lot.The logistics companies at present provide services
from transportation to warehousing and inventory
management. But, in the near future, they will have to
expand their products basket to include new value-added
services, such as packaging, labelling and reverse
logistics.
The biggest challenge that faces these companies is that
they should quickly imbibe latest technologies, such as
GPC/GIS tracking of consignments, and uncork new
services to cater to corporates seeking to outsource their
logistics needs. Also, the Government should come out
with a sound policy that facilitates the operations of the
logistics companies.

13 BIBLIOGRAPHY

1. Company annual report

2. Journals
(a) http://search.ebscohost.com

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1. Magazines

(a) Business Today


(b) Business World
(c) Bazaar.com
2. News papers
(a) Standard Charted
(b) Economics Times
(c) Business Line
(d) Financial Express
3. Websites
(a)http://pantaloon.com
(b)http://bigbazaar.com
(c)http://retailbiz.com
6. Marketing Management
Philip Kotler, PEASON PUBLICATION

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