Symbiosis Centre for Information Technology

Report entitled

A Study on the Inventory Management Process with particular reference to

Big-Bazaar
Submitted by
Name : Aanchal Jindal PRN# 15030241157
Name : Ayushi Goyal PRN# 15030241163
Name : Debashis Mishra PRN# 15030241165
Name : Ritika Sharma PRN# 15030241188
Name : Sarangi Desai PRN# 15030241192

Division :D
Batch : 2015 - 17
Subject/Code : Business Process Management
Semester :I
Date : 9/9/2015

For Office Use only

Name of the Faculty : Suneel K Prasad

Signature of the Faculty :

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Contents
1. Introduction to BPM ......................................................................................................................... 3
2. Objectives of BPM ............................................................................................................................ 3
3. About the Company .......................................................................................................................... 4
4. Why Inventory Management Process Re-engineering at Big Bazaar? ............................................. 5
5. Organizational Hierarchy of Big Bazaar Inventory Management .................................................... 5
6. Business Process Architecture for Inventory Management at Big Bazaar........................................ 6
6.1 Level 1 ............................................................................................................................................ 6
6.2 Level 2 ............................................................................................................................................ 7
6.3 Value Chain .................................................................................................................................... 8
7. APQC Process Classification ............................................................................................................ 9
8. BPMN Models for the identified processes .................................................................................... 10
8.1 Inventory Procurement AS-IS Process.......................................................................................... 10
8.2 Inventory Procurement To-Be Process ......................................................................................... 11
9. Relational write up about our learning in the subject and the findings of the Project: ................... 13
10. References and Bibliography: ..................................................................................................... 14

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1. Introduction to BPM

Business Process Management (BPM) is the conception, design, observation and continuous
improvement of business processes. Improved business performance is delivered by streamlining
a process to remove causes of ‘waste’, and managing both its human and technological agents.
Often achieved with a degree of automation, BPM allows businesses to measure process
performance with real-time statistics, and update their processes to optimize efficiency or
respond to new ideas or external business events. BPM solutions consistently deliver impressive
results, primarily because there is so much intrinsic inefficiency in business processes that has
evolved in a paper-based, manually intensive environment.

The most significant BPM benefits encompass:

• Efficiency

• Visibility

• Control

• Flexibility

• Speed

• Production Management

• Performance Management

• Resource Management

2. Objectives of BPM

The objective of the study is to identify the current Procure-To-Pay processes of the
inventory management system at Big Bazaar (Future Group) and to re-engineer them in
order to achieve efficiency in terms of optimization, reduced costs and better customer
satisfaction. The current manufacturing paradigm demands high productivity and the
company’s ability to respond to unstable market settings. For most of the industries, high
competition led ways to optimize the manufacturing processes and structure their own
inventory management plans accordingly. Inventory management is managing the parts
or stocks of materials in any form inside the plant and stabilizing the flow of materials
considering the variability in demand. It is very important that the inventory plans are

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 structured in such a way that they accommodate variability in demand especially when
the company deals with multiple products. Also improper stock management leads to
shrinkage of goods and hence Shrinkage management is also included within the purview
of the project. The ‘As-Is’ processes of the organization need to be identified discovered
and analyzed so as to re-design them into optimized ‘To-Be’ processes.

3. About the Company

 Big Bazaar is the largest hypermarket chain under Future Group (headed by Kishore
Biyani) in India founded in 2001 with headquarters at Mumbai. It is a subsidiary of
Pantaloons Retails Ltd, Future Group and follows the business model of US based Wal-
Mart.
 Current employee strength is about 36000 with 214 divisions.
 Big Bazaar made revenue of $110 bn in 2012. It is ranked 3rd amongst India’s service
sector brands in Most Trusted Brands 2012 Survey by Brand Equity.
 The 13-year-old hypermarket chain combines a supermarket and a department store
resulting into a large retail facility with a diverse range of products all under one roof.
 Big Bazaar has total 165 outlets all over India.
 Big Bazaar offers a wide range of products from apparel to general merchandise, like
plastics, home furniture, utensils, cookery, cutlery, sports goods, car accessories, books,
music, computer accessories and many more. Big Bazaar is the destination where you get
products available at prices lower than the MRP, setting a new level of standard in price,
convenience, and quality.
 Big Bazaar is a great platform for fashion conscious buyers, who want great clothes at
great prices. Leveraging on the companies inherent strength of fashion, Big Bazaar has
created a strong value for money, proposition for its customer. This highlights the
uniqueness of Big Bazaar as compared to top traditional supermarkets, which principally
revolves around food, groceries and general merchandise.
 The Big Bazaar distribution centers are warehouses themselves. This is unlike Walmart
where these centers act as developers of suppliers.

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4. Why Inventory Management Process Re-engineering at Big Bazaar?

The current business process for Inventory Management requires Re-Engineering to achieve the
following objectives:-

 Increased Order Fill Rate

 Improved Inventory Turnover
 Supply Chain Cost optimization
 Higher Product Availability
 Better handling of unexpected demand
 Wider choice for customers
 Reduce storage space of piled up goods in the warehouses
 Improved compliance with Inventory Replenishment procedures
 To improve the process of Stock-Take in inventories
.

5. Organizational Hierarchy of Big Bazaar Inventory Management

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6. Business Process Architecture for Inventory Management at Big Bazaar

6.1 Level 1

Page 6
6.2 Level 2

Page 7
6.3 Value Chain

Page 8
7. APQC Process Classification

Page 9
8. BPMN Models for the identified processes

8.1 Inventory Procurement AS-IS Process

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8.2 Inventory Procurement To-Be Process

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Problems Identified with the As-IS model of the Inventory Procurement
Process:-

 Purchase Order (PO) is raised for a fixed vendor only. Many a times there might be other
vendors who are supplying the required materials at a lower cost.
 The stock received from vendor is checked 15 days after they arrive at the warehouse.
Hence there is no proper tracking that whether the vendor only sent the defective goods
or they have been damaged in transit or after arriving into the warehouse.
 Also a problem identified in Big Bazaar Inventory is improper Shrinkage Management.
The quantity of goods is verified after they are received at warehouse. This means that it
has already travelled from Vendor to CDC and from CDC to warehouse.

Solutions implemented in the To-Be model of the Inventory Procurement

Process:-

 Quote from each vendor is obtained and the one with the best quote is selected. This
leads to better management of the cost of procured materials and also provides flexibility
in selecting the vendor at each time of procurement.
 The procured stock is verified twice. Once at the CDC and again at the warehouse. This
leads to better shrinkage management. The source of the shrinkage is easier to trace.
 Defect and Damage Management is isolated. The ones which have been supplied
defective by vendor are identified at the CDC itself. Then at the store the damaged ones
are identified.
 Also the To-Be process incorporates a distinction between the Perishable and the Non-
Perishable goods. The Perishable ones have to be discarded anyways. For the non-
perishable ones whether they are in warranty is checked. For in warranty goods
replacement charges are not incurred. Hence this too leads to cost saving.

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9. Relational write up about our learning in the subject and the findings of
the Project:

During the course of subject, we have learned about how work is performed in an organization
through collection of related, structured activities or tasks that produce a specific service or
product for a particular target customer. We learned how to identify three types of business
processes namely Management process, such as corporate governance and strategic management
, Operational processes such as taking orders from customers and Supporting process such as
accounting and technical support. We learned decomposition of a business process into several
sub processes having their own attributes, and contributing towards the goal of the super process
and how the process and sub-processes are mapped down to the activity level. Furthermore, we
learned how to efficiently model the aforesaid business process with the help of Business Process
Modeling Notation in a workflow.

During the course of this project, we learned practical implementation of what we have learned
thus far in the subject, namely we identified the critical process of inventory management system
at Big Bazaar such as Procure-To-Pay process and re-engineered the process to achieve reduced
costs, improved customer satisfaction and optimization. We designed To-Be process for
Inventory Procurement Process, Demand Management Process after identifying and analyzing
the As-Is process. We identified the problems associated with the above processes and
implemented solutions for them in our To-Be Process. We understood what is the importance
and role of inventory management at Big Bazaar and identified the goals of re-engineering the
same and we learned the use of BPM, process modeling tool such as Signavio through hands- on
experience.

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10.References and Bibliography:

 http://academic.signavio.com/p/login
 http://www.oracle.com/us/solutions/index.html
 http://www.bigbazaar.com
 http://www.performancedesignlab.com/business-process-architecture-definition
 http://www-03.ibm.com/software/products/en/category/BPM-SOFTWARE
 http://www.slideshare.net/romeo_reet/stock-management-at-big-bazaar
 http://www.scm-institute.org/booksamples/ch.5.pdf
 http://www.scribd.com/doc/25708920/Report-on-the-inventory-management-of-BIG-
BAZAAR
 White Stephen, Introduction to BPMN, IBM
 Fundamentals of Business Process Management, Springer.

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