A REPORT ON “THE INVENTORY MANAGEMENT PRACTICES OF

RELIANCE RETAIL”

SUBMITTED BY:
AMISHA (MFM/20/800)

SUBJECT:
SUPPLY CHAIN, VALUE CHAIN & OPERATION RESEARCH

UNDER THE SUPERVISION OF:

MR. KISLAY KASHYAP
Professor, FMS Department

IN PARTIAL FULFILLMENT OF THE POST GRADUATE DEGREE

"MASTER OF FASHION MANAGEMENT (MFM)"

SUBMITTED TO

2020-2022
DEPARTMENT OF FASHION MANAGEMENT STUDIES (FMS)
NATIONAL INSTITUTE OF FASHION TECHNOLOGY, PATNA
 ACKNOWLEDGEMENT
We are using this opportunity to express my gratitude to everyone who supported us
throughout the course of this project. We are thankful for their aspiring guidance, invaluably
constructive criticism and friendly advice during the project work. We are sincerely grateful
to them for sharing their truthful and illuminating views on a number of issues related to the
project.

I express my warm thanks to Mr Kislay Kashyap, our course faculty for his support and
guidance at National institute of Fashion Technology, Patna.

I would also like to expand my gratitude to all those who have directly and indirectly guided
me in writing this assignment.
 TABLE OF CONTENTS

1. About reliance retail scenario

2. Inventory management in reliance retail

3. Objective of inventory management in reliance retail

4. Tools used by reliance retail for inventory control

5. Reliance Inventory Management is required at four stages

6. Conclusion

7. References
 RELIANCE RETAIL SCENARIO

Reliance retail Scenario Supply chain basically consists of three major parts: plant,
distribution or regional warehouse, and retailers/sale points. The plant is responsible for raw
materials purchase and production, and products are to be stored in the plant once they are
finished, and then they are delivered to a distribution warehouse where the retailer/sale point
can proceed with its service, and after that products are sold to customers by the retailer/sale
point. Generally, a distribution/regional warehouse is a company-owned branch, but not
necessarily for retailer/sale point. But regardless whether members of these three parts belong
to the same company, the so- called efficient “sales” must be the products sold to the main
customers by the retailer/sale points to be considered as the real sales otherwise they are just
the inventory within the supply chain.

In terms of the maximized profit on the supply chain, we must first ensure the main
customers are able to purchase goods they desired, and in order to avoid the main customers
being unable to buy goods they wish to have, we must place the inventory at places where
can reach them easily and to prepare as large inventory as possible in order to meet the peak
of demand that may occur occasionally, as shown below. In other words, factories should
produce products and deliver them to the retailer/sale point as fast as they could in order to
meet the main customers’ needs.

However in the current market that is intense and competitive, customer requirements are
getting harsher and harsher and the product life cycle is unable to grasp, in order to avoid
large inventories causing loss and damages (such as products being returned due to
decreasing sales, waste, specifications or quality failed to meet the requirements, etc),
therefore inventories must be stored at the sources of places, and to deliver the smallest
inventory to the retailer/sale point in order to prevent loss due to demand changes in the
market. In other words, the plant shall try its best to delay production and delivery, and
deliver its smallest inventory to the retailer.

Sometimes the accuracy of a retailer’s forecast of future sales is found to be lower than that
of a distribution warehouse’s forecast, and it is due to the sales of distribution warehouse is
the sum of sales of sale points, and hence the accuracy is no doubt to be higher than
individual forecast conducted by each sale point; likewise plant sales is the sum of all
distribution warehouse sales, therefore the accuracy on overall sales forecast conducted by
the plant is of course higher than the forecast of each distribution warehouse sales. In this
conflict, its very nature is not to determine which forecast is better than others, but it is about
the inventory should be placed within the supply chain, as well as how each sale point deals
with its replenishment, accounted for the reasonable issues.

INVENTORY MANAGEMENT IN RELIANCE RETAIL

Its inventory management system helps us improve and automate inventory control. It is
flexible and can be integrated to work with barcode scanners, smart phones, and tablets. Save
valuable time and money by accurately tracking your stock inventory with the most
configurable and easy-to-use inventory management solution.

• It can be used with Purchase and Sales Module, which takes decision on ordering and
selling inventory. This helps in product planning and product availability in order to
maximize sales opportunities.
• Its inventory management system also helps in effective tracking of stock items. The
module ensures sufficient stocks are maintained to satisfy demand. It is logically
classified into Purchase and Sales along with corresponding Returns. It includes a
Stock Adjustment option that reconciles physical stock with system stock in case of
any discrepancy due to loss or destruction.

OBJECTIVE OF INVENTORY MANAGEMENT IN RELIANCE

RETAIL
 The main objective to study inventory management is

1. To keep inventory at sufficiently high level to perform production and sales activities
smoothly.
2. To minimize investment in inventory at minimum level to maximize profitability.

Through the efficient Management of Inventory of the wealth of owners will be maximized.
To reduce the requirement of cash in business, inventory turnover should be maximized and
management should save itself from loss of production and sales, arising from its being out of
stock. On the other hand, management should maximize stock turnover so that investment in
inventory could be minimized and on the other hand, it should keep adequate inventory to
operate the production & sales activities efficiently. The main objective of inventory
management is to maintain inventory at appropriate level so that it is neither excessive nor
short of requirement Thus, management is faced with 2 conflicting objectives.

(1) To keep inventory at sufficiently high level to perform production and sales activities
smoothly.

(2) To minimize investment in inventory at minimum level to maximize profitability.

Both in adequate & excessive quantities of inventory are undesirable for business. These
mutually conflicting objectives of inventory management can be explained is from of costs
associated with inventory and profits accruing from it low quantum of inventory reduces
costs and high level of inventory saves business from being out of stock & helps in running
production & sales activities smoothly.

The objectives of inventory management can be explained in detail as under: -

(i) To ensure that the supply of raw material & finished goods will remain continuous so that
production process is not halted and demands of customers are duly met.
(ii) To minimize carrying cost of inventory.

(iii) To keep investment in inventory at optimum level.

(iv) To reduce the losses of theft, obsolescence & wastage etc.

(v) To make arrangement for sale of slow-moving items.

(vi) To minimize inventory ordering costs.

TOOLS USED BY RELIANCE RETAIL FOR INVENTORY

CONTROL
1. Codification

In codification the all inventories are been coded as per their identification. The inventory
can be needed for various purposes like

Project (PROJ), Free of cost (FOC), Scrap (SCRP), Generic material (GENM)

First of all, the codification request is been made for the new product, the form is to be
filled with all the information of the inventory and where it is used. After getting the form
inventory management department will check for the data validation of the inventory, if
any manipulation is there then they have to again fill the form.

Then checking of the data is been done for the existing inventory if any existing
inventory’s sub part is there. The code is been given of 10 numbers the first 2 digits are
the main code, next 2 digit is for the model number of the inventory, next 2 number is for
the company code, and then next 3 digit is for the serial number of the product, and net
single digit is for the imported and indigenous product. If the product is imported then the
code will be 1 and if it is indigenous then the code will be 3.

2. Receipts

After the order has been placed, the goods are been received. First of all the gate security
will check the truck number and they will provide them the TPN number after taking that
number the truck will go for the excise clearing where it will get the excise ID from there.
The excise person will make a entry of excise, after that the MMN entry is done and then
they will sent the goods to the stores department where the GRN (Goods Receipt Note)
will be made. Stores department will send the goods for the inspection and on that base
the inspection note is to be prepared of acceptance or rejection of the goods. That is also
known as user decision and the goods will be consider as the RIL‟s property and if the
goods are rejected then they will make the MMX exit entry

3. Inspection

Inspection of all the materials is to be done on the basis of the purchase order that have
been placed, they will check for the quality and the quantity of the material as per the
purchase order. If all the criteria are ok then they will accept the material and will send to
stores or at the where it is required. And if the material is inferior then they will reject that
material and will quote the reasons for the rejection of the materials.

4. Storage and preservation

After the materials are checked they are kept in stores or at the plant site, where due care
is been taken for the material so that they are not damaged or Obsolescence. Chemicals
and other hazardous material are kept well preserved so that they may not prove vital for
the health of the employees.
5. Issue

Issue of the materials is done as per the reservation made by the particular plant. Each
plant has to make a reservation for the material that they required and also to show how
much stock they have and how long it will last, the materials department will make the
verification of the reservation and as per the past consumption record, they will allot the
materials to the plant.

6. Scrap and disposals

After the use of the materials some materials may turn to wastages or useless due to some
reasons. So, they are to be scraped, not only the materials but also any type of inventory
like spares and mechanical will go Obsolescence with the time passing and will be
useless for the plant. First of the plant manager has to prepare MRV (Materials Return
Voucher) which include all the details of inventory, with its code and type of inventory
and where it is been used with the approval of the head that this is not usable now should
be scrapped. For the disposal of the scrap, they will invite the tender and ask them to visit
the scrap yard, the acceptance of the tender will be done by the Mumbai office.

The TOC (Theory of Constraint) followed by Reliance Retail, has provided another solution
for having control over the inventory

1) The inventory should be placed within the source of supply chain. Therefore, do not
deliver the products to the downstream companies right away by the time they are finished;
and distribution warehouses should not deliver the products to the downstream companies as
soon as products from upstream companies arrived.

(2) Each sale point only needs to store enough inventory needed for such replenishment
period. For example, if it takes three days for replenishment and according to the previous
sales record, the maximum demand for consecutive three days is 300, and then there should
be only 300 in the sale point’s inventory.

(3) Each sale point should make up the replenishment in accordance with its sales, by
replenishing how much it has sold.

(4) To monitor the sudden abnormal condition via the Buffer Management (BM) mechanism
in order to prepare for any contingency. Such as the sudden increase in the sales resulting in
low inventories, then BM can detect it right away and send out a signal for replenishment
need.

The above is the main content of the theory of constraints in terms of the supply chain
solution. Among which the first point belongs to the new theory of supply chain
management, and the second and third points are referred to a brand-new inventory
replenishment mechanism, namely the TOC supply chain replenishment system and as for the
fourth point, it is the monitoring mechanism of inventory.

The TOC-SCRS – this Mechanism contains three kinds of parameters, they are respectively
the replenishment time, maximum inventory level, and replenishment quantity.

Replenishment time: The sum of replenishment frequency and the lead time it requires.

• Replenishment frequency is the how long to replenish once, which is the time interval
from the previous replenishment order to the current replenishment order.

• Replenishment lead time: How long does it take from replenishment order is released
until products are delivered to the destination, and such time may include the
production time the upstream companies need, or the delivery time between
downstream companies and the sale point, etc.

Maximum inventory level: if the replenishment time is 3 days, and the maximum value of
the consecutive 3-day sales according to the previous sales record is defined as the maximum
inventory quantity of the sale point.

Replenishment quantity: if the replenishment frequency is once in two days, and then the
replenishment quantity is the sales of the recent two days.

RELIANCE INVENTORY MANAGEMENT IS REQUIRED AT

FOUR STAGES
Production: For production raw material is required which will treat as inventory
management.
MRO: As the machinery required spares and consumables whenever required.

Work in progress: At this stage when product travel from one machinery to another
machinery.

Finished goods: Packaging material is need for finished goods and finished goods itself.

Inventory management can be achieved by implementing

 Maximum stock level

 Minimum stock level
 Reorder level
 Danger level
 Safety stock
 Lead time

Minimum level

This means minimum level stock, which any company has to maintain to avoid the stock
out position. The minimum level is determined by the consumption of the inventory and
lead-time.

Maximum level

Maximum level is the level from where the maximum stock must be there at every time
when the order received.

Reorder level

This is the point where the order has to place again for the inventory.

Lead-time

This is the time taken from placing an order to receiving the inventory, so calculation of
the lead-time makes large importance for the availability of the inventory.

Safety stock

This is the point of safety where a firm must get the placed order; it has to be added
because the lead-time may variety as per the condition.
Economic order quantity

Economic order quantity (EOQ) is the quantity of the single order it can be calculated as
per the formula

EOQ= √2AO

C
Where A = annual consumption

O = cost per purchase order

C = carrying cost

Reliance Retail has concentrated on only one factor; reorder level. They are having
their inventory control and management through reorder level. After all the forecasting
are done and with the help of past experience, they plan the all levels. They try to
maintain one month stock, and the reorder level used to be for 4 months and the
maximum stock is for the 12 months

This figure shows the proportion of each type of inventory in the total inventory. This
shows that major part of inventory is in the form of “Raw material”. Except it the
inventory is not access, this show that company try to maintain minimum inventory so
that the amount not blocked in the inventory. Further the total inventory reduces over a
period of time. This is due to efficient management of Reliance Retail.
 CONCLUSION

Today’s market is a customer-oriented market and customer satisfaction is the most important
goal of every organization therefore it is inevitable to adopt integrated Inventory
Management approach for new product development strategy.

Inventory management has to do with keeping accurate records of finished goods that are
ready for shipment. This often means posting the production of newly completed goods to the
inventory totals as well as subtracting the most recent shipments of finished goods to buyers.
When the company has a return policy in place, there is usually a sub-category contained in
the finished goods inventory to account for any returned goods that are reclassified or second
grade quality. Accurately maintaining figures on the finished goods inventory makes it
possible to quickly convey information to sales personnel as to what is available and ready
for shipment at any given time.

Inventory management is important for keeping costs down, while meeting regulation.
Supply and demand are a delicate balance, and inventory management hopes to ensure that
the balance is undisturbed. Highly trained Inventory management and high-quality software
will help make Inventory management a success. The ROI of Inventory management will be
seen in the forms of increased revenue and profits, positive employee atmosphere, and on
overall increase of customer satisfaction.

In today’s dynamic market “Every Bench mark are dynamic, challenge them for continual
improvement”. In order to remain in market any organization needs to define the process,
Benchmark for the excellence, endeavour to achieve it by strategizing & creating
environment, providing required resources & effective monitoring.
 REFERENCES

 www.ril.com
 ANNUAL REPORT OF RIL
 Learning centre material
 Previous reports