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INSTITUTE OF MANAGEMENT

STUDIES
DAVV, INDORE

A STUDY ON INBOUND LOGISTIC STRATEGY


OF RELIANCE FRESH

Submitted To
Submitted By
2

PROF. NEERAJ DEVEDI


YOGESH SHARMA

MBA(M
rd
M) 3 Sem

Sec-A
Roll no-43539
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A
PROJECT REPORT
OF
INBOUND LOGISTIC
STRATEGY
OF RELIANCE
FRESH

SUBMITTED TO:
PROF. NEERAJ DEVEDI
4

SUBMITTED BY:
YOGESH SHARMA
ROLL NO. 43539
SEM – 3,

1.1

Overview of Reliance:

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector
enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in
excess of US$ 30 billion. The flagship company, Reliance Industries Limited, is a Fortune Global
500 company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and growth of Reliance.
Starting with textiles in the late seventies, Reliance pursued a strategy of backward vertical
integration - in polyester, fibre intermediates, plastics, petrochemicals, petroleum refining and oil and
gas exploration and production - to be fully integrated along the materials and energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum refining and
marketing, petrochemicals (polyester, fibre intermediates, plastics and chemicals), textiles, retail and
special economic zones.

Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre
producer in the world and among the top five to ten producers in the world in major petrochemical
products.

Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance Retail
Limited) and Reliance Industrial Infrastructure Limited.
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1.2

Reliance Retail Group:

RRL launched its first store in November 2006 through its convenience store format ‘Reliance
Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of FY
2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and India’s largest
hypermarket ‘Reliance Mart’ in Ahmedabad in August 2007. This year, RRL has also launched its
first few specialty stores for apparel (Reliance Trends), footwear (Reliance Footprints), jewellery
(Reliance Jewels), books, music and other lifestyle products (Reliance Timeout), auto accessories and
service format (Reliance Autozone) and also an initiative in the health and wellness business through
‘Reliance Wellness’. In each of these store formats, RRL is offering a unique set of products and
services at a value price point that has not been available so far to the Indian consumer. Overall, RRL
is well positioned to rapidly expand its existing network of 590 stores which operate in 57 cities.

During the year, RRL also focused on building strong relationships in the agri-business value chain
and has commenced marketing fruits, vegetables and staples that the company sources directly to
wholesalers and institutional customers. RRL provides its customers with high quality produce that
has better shelf life and more consistent quality than was available earlier. RRL has made significant
progress in establishing state-of-the-art staples processing centres and expects to make them
operational by May 2008.

Through the year, RRL also expanded its supply chain infrastructure. The Company is fully geared to
meet the requirements of its rapidly growing store network in an efficient manner.

1.3

Reliance Fresh

Reliance Retail has a target to open one store for every 3,000 families within a radius of 2 km across
all locations by 2013. The company is competing directly with the large number of traditional local
provision stores. Reliance Retail is either going to set up new stores in the identified areas or take
over existing stores. The company has already done that in Mumbai and other cities.

Of the four million sq ft of retail space to be created under the "Reliance Fresh" brand (for groceries),
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one million will be through acquisitions. The retailer is also moving into laundry, personal care and
apparel product lines, in which it plans to launch private labels. Reliance is planning to roll out its
specialty format stores this year, beginning with consumer durables, for which it has struck sourcing
deals with companies in Hong Kong, the Chinese mainland and with Videocon in India.

To strengthen its links with farmers, the company is setting up integrated agri-retail business
centres, which include three processing and distribution centres, 51 retail outlets for farmers and 75
rural business hubs, all with an investment of US$445 million. Many companies, looking at the retail
boom in food and grocery, are setting up ventures to help retailers source these goods.

2.1

Reliance fresh in Indore:

Indore, the financial capital of M.P. has a population of 10,00,000 as per the 2008 census with a fair
average income. Therefore undoubtedly indore is the target of many retail chains and Reliance is not
a exceptional to it. The population and purchasing habit of indore has resulted in 10 reliance stores in
indore.

For the convenience of the project the store situated near vijay nagar square has been selected.

2.2

Product availability:

Although Reliance fresh is mainly concerned about stocking fresh vegetables and fruits but due to
some political controversy they mainly focus on the household products and FMCG products.

The product details are listed bellow.

1. Fresh fruits.

2. Vegetables

3. Chocolates

4. Confectionaries.

5. Cold drinks.

6. Freeze items like butter, icecream etc.

7. House hold products.

8. Toilet items

9. Spices and dry food


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10. Office stationeries.

The product are displayed in selves in such a height so that they can be easily availed by the
customers and customers can compare the product specifications and price.

2.3

Store Design:

The store is designed and maintained in a very systematic manner. Like as the chocolates and office
stationeries are kept just in front of the cash collector desk so that customer are lured to have some at
the last moment of their shopping.

The detailed design of the store is presented bellow.


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2.4
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2.5 Supply chain model of reliance fresh


Reliance started its retail operations of reliance fresh stores with following supply chain model.
Procuring directly from the farmers and operating with moderate margin but mass selling was key to
reliance fresh operations for first few months.

The following figure depicts the reliance fresh model


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MODEL 2
Model 2: Whole Sale Trading (WST) Reliance formalized its second supply chain model to shift
itself from grocery retailer to grocery supplier by focusing and establishing itself in Mandi’s.

STEPS IN WTS MODEL


1. Reliance has owned farms on contract basis for production of specific crop which is decided
after extensive research depending on

•SOIL CONDITIONS.

•CLIMATE CONDITIONS.

•RETURN OVER COSTS INCURRED.


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2. Different vegetables and fruits from such farms are collected through reliance own logistics and
brought to collection Processing centers where quality check and other required processing is
done. In processing centers workers wearing balaclavas, woolen trousers and bulky jackets work
inside a room kept at a constant 30 celcious, peeling and chopping vegetables, spinning them dry
and then heaping them in small plastic packets before placing them in plastic transport crates. At
the other end of the 5,000-sq-m warehouse, men unload crates of fruits from a truck pulled up to
a spotless loading dock. A quality-control expert samples every tenth crate; if the fruits are good a
team will ready them for delivery within hours to Reliance fresh stores around different places
like U.P and as far away as Hyderabad and even Mumbai (formerly Bombay). If they are not,
workers will inspect the entire shipment and discard anything below standard.

3. Merchandise from these collection processing centers are collected and loaded for Wholesale
mandi’s. As this merchandise is to be made available by 4 A.M in morning thus deliveries in
trucks are sent at time depending upon:

TRANSIT TIME. – Time required reaching destination i.e mandi’s.

MARGIN TIME. – Time period between a truck reaching mandi and then Unloads. Can be 2
to 3 hours.

4. From mandi’s where the trucks have been unloaded, roadside vendors and pull carters buy fruits
and vegetables to supply in households.

5. In case still some vegetables and fruits are not sold reliance logistics own Transportation send
them to reliance fresh stores
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Inventory management and Logistics :

The selves are refilled during the mid day (generally around 2:00 to 3:00pm) when the customer
pressure is very less. As per the store manager they generally refilled the stores twice or thrice in a
week depending upon the sales of the products. Like as the fruits and vegetables are highly perishable
items so the stock is relatively less and are refilled more often than others. The vegetables are kept in
a low volume as they stay only for a day, whereas the fruits are kept in specially designed selves
where the fruits stay fresh for a longer time.

The cycle of inventory management is described in the flow chart bellow.

Order
Order Customer
transmissio
processing order
n

Order
Order Customer
transportati
selection delivery
on

The main four sources of processes are (1)Sourcing (2)order placements and expediting (3)
transportation (4)receiving.

As per the store manager they have a particular source for all the reliance stores in indore
from that the products are distributed in each of the reliance fresh store according to the need and
requirements.

Though he has not disclosed the overall inbound logistics strategy in his store, he told reliance fresh’s
inbound logistics strategy all over the India. They have their own Reliance Logistics Ltd part of
Reliance Industries Ltd, currently handles Reliance Retail's logistics services.

2.6 Product range of reliance fresh


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 Vegetables and fruits: this is the specialty of the store as they provide fresh fruits and
vegetables at a rate lower than the market price.

 Households Items: In the stores we can get items which are at slight premium rate than
market price, but usually of high quality.

 Food and Beverages: This area of the product line they stock all the premier brands and
also their private label.

 Groceries: In this sector reliance is promoting its private label as they are promoting their
own brands and they do the packaging of the product and then label it privately and then sell
it at premium as compared it to the loose items.

 Dairy Products: The dairy products in some locations are procured from the farmers
themselves and some places they procure it from the manufacturers.

 Refrigerated products: This product line is dominated by the brands available in market
and very less private labeling is done.

 Non food items: Here we get many petty non food items at a premium than market price.
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2.7

Implementation of IT system by the organization.

Retail Store Line is an open standards, fully integrated and cross functional Point of Sale (PoS) and
store management software system. Its uniqueness is in the functionality, world wide install base, and
hardware independence.

Multi-concept functionality that delivers a fully integred POS solution to meet all your business
needs.

Opened by design support industry standard and is hardware independent and implication with other
third party retail applications is straight forward, affordable and low risk.

The software not only track the available inventory in the store but also maintain daily day outgoing
of products from each category.

Secondly, the cash dispatching system is pretty fast as the trained staff handled the customer very
efficiently and effectively.

Customer retaining:

Reliance has an unique strategy to retain its customer which differs form other retailers. It provides a
card to each customer after they registered themselves.

For each Rs.100.00 purchase a point is given to that customer against his card and he get some
special discount for producing the card. After reaching 25 points the customer can avail some special
discount/prize by any Reliance store.

RELIANCE FRESH
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Retail industry is in booming phase particularly in India, thus to reap this benefit RIL should come up
with new form of retail stores and should shed it convenient store image. By doing so they will be
able to attract a large customer base.

 Reliance fresh is a major player in the retail market and has brought revolution in the retail
industry in India.
 It has done a new thing by procuring supplies from the source i.e farmers therefore it can
procure fresh goods at less rates and pass on the benefit to the customers in form of reduced
price.
 Reliance has also done a good job as far as C.S.R is concerned as it recruits people from the
underprivileged section so that they have a fixed job and can lead a better life. For this
propose they charge nominal fees for training and refund it when they are recruited as the fees
will ensure regularity and sincerity among the students.
 They have a good supply chain which ensures that once the goods arrive in the stores within
2-3 hours gets unloaded and placed at its allotted place.

 Reliance fresh outlets are located mainly in residential areas which cater the need of people in
radius of 1- 2 km. This store promotes its private label in foods and edibles sections.

 Reliance Fresh is planning to launch their private label products in some kirana stores there
by exploring the new market of consumers.

 The Reliance retail company sources say it is setting aside Rs 50,000 crore to build its farm-
to-fork linkage.

 They have issued Biometric card to the farmers who supply them regularly the products so
that they can avail loans up to Rs 15,000 so that they have a flow of cash and reliance has
flow of supplies.

 According to officials of reliance by September reliance fresh stores will have break even
except for Mumbai as the real estate prices are very high there.

 Supply chain model of reliance fresh is strong enough to grantee them supplies round the
year.

 They have a bullish growth plans ahead so that they are able to capture on this rapidly
growing sector in India.

 FUTURE PLANS : Bring new format of food and café, ready to launch pharmacy and invest
20k cr expected sales of 2 lkh cr

From this project we come to know that any retail outlet or company should secure their supplies
which will help them in growth and will also guarantee the low cost. Companies should also have a
concern on Corporate Social Responsibility (CSR) as it works in long run.

Conclusion:
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With the growing retail concept Reliance Fresh is really a fresh air in the arena of vegetable and fruit
market. But due to some political and local problems all Reliance stores are not allowed to keep
vegetables and fruits according to their goal.