ICFAI Business School, Hyderabad

Academic Year 2019-21

MANAGEMENT CONTROL SYSTEMS

SEMESTER-IV
Course Faculty: Dr. Pramod Meher Mantravadi

PROJECT REPORT
On
“Management Control Systems at D-MART”

Student Name Enrolment No

Damandeep Kour 19BSPHH01C0309
Darshana Jhajharia 19BSPHH01C0312
Dibyajyoti Sahoo 19BSPHH01C0351
Pranav Bokade 19BSPHH01C0801
Ranadheer Vunnam 19BSPHH01C0889
Varun Kurup 19BSPHH01C1363

DECLARATION:
We declare that this assignment is our work and we have not copied it from any other student’s work
or from any other source except where due acknowledgement is made.

For Course Instructor’s use only:

Marks Obtained: Max. Marks: ……………………

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ABSTRACT:

The main objective of this project report is to discuss and present the different Management
Control Systems involved in D-Mart Retail supply chain systems and provide insights about
their success in India. The control systems being followed at the Indian retail industry is helping
them to emerge as one of the most dynamic and growing industries due to market size and
economic power. D-Mart is the increasingly profitable retail supermarket chain in India that

aims to offer customers a wide range of basic home and personal products under one roof
with the objective to offer products at reasonable prices. D-Mart is termed as Indian Wal-Mart
and its accomplishment is largely due to their business philosophy, long term vision, pricing
strategy, regimented model, innovative planning and product categories. The main reason that
led to selecting this particular topic for the research was the fact that back in 2016, where most
of the Indian retail sector was disrupted because of the old managerial practices and notion
about consumer behavior which was turned to heap by the incoming army of e-commerce
players, the 14 year old brand D-mart, owned by Avenue Super Mart, managed to stay
profitable and grow bigger. Smart pricing with better supply chain control systems was the sole
reason that led to this increment. The success of D-mart primarily depends on 3 major pillars
customers, vendors and employees.

Vendor Customer

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STRATEGIES FOLLOWED AT D-MART:
Hypermarket:

Hypermarkets are combination of a supermarket and a departmental store. The concepts of

Supermarkets were introduced by the British Colonial government to facilitate Officers to get
everything under the one roof top. This headed to the event of super-supermarket or trendy
market. Most of those Hypermarkets sell branded product of each, domestic and international
makers.

Hypermarkets in India varied outlets marketing differing kinds of essential commodities

together with luxury things. These Hypermarkets square measure primarily focused in urban
areas solely. Hypermarkets operative here usually includes a heterogeneous mixture of huge
and little individual retailers. Hypermarkets of India provide product with completely different
value bands for every and each sections of urban society

In India some of hypermarket channels are like Big Bazaar, Reliance, D-Mart, Hyper-City,
Lulu Hypermarket, Spar Hypermarket, Spencer's Hyper, Star Bazaar and More. As per the
market capitalization in retailing segment, Avenue Supermarket has the highest value, followed
by Trent, Aditya Birla, Future retails, V-Mart etc.

D-MART:
D-Mart is a high valued hypermarket chain that aims to supply customers a large variety of
basic home and private product underneath one single roof. These stores supplies home value
products including foods & beverages, cosmetics products, garments, kitchen appliances, bed
and bath products, home, and toilet appliances at competitive prices. Core objective of D-Mart
is to offer customers good products at great value.

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D-Mart is widely known to be a one-stop shopping destination to meet all the household needs
of a family. It offers variety of products like – home utility products, foods, toiletries, beauty
products, garments, kitchenware, bed and linen, home appliances, Toys & Games, Stationery,
Footwear, and tons more.

➢ D-Mart always wanted to create its image amongst the people, of a discount store that
offers most of the products from across all major brands. Basically, a store that offers
value for money!
➢ D-mart stores are operational in high traffic areas and across three formats including –
Hypermarkets, that are spread across 30,000-35,000 sqft, Express format, that is spread
over 7,000-10,000 sqft. and lastly, the Super Centres, that are set up at over 1 lakh sqft
➢ D-Mart’s targets middle income group, and uses Discount offers as a promotional tool
to attract the customers and boosting sales.
Overall – D-Mart’s success is focused on three things: Customers, Vendors and Employees!
Customers. Since D-mart is targeting middle income households, all their stores are in,
or on the brink of, residential areas and not in malls. Their idea isn't to satisfy every
consumer need like other competitors, but instead, D-mart aspires to satisfy most
regular consumer needs, while providing value for his or her money.
One of the striking features of functioning of D-Mart is 90% of these stores are owned
directly by D-mart, they don’t pay monthly rentals. Additionally, this helps them book
assets on their books. All the cash that is saved is eventually offered back to the
customers in the form of discounts!
Vendors- Vendor relationships are the second pillar of their model. As Damani
comes from a background of trade, his strength is his relationship with the vendors.
D-Mart pays on 11th day to its vendor where the term is of 12-21 days in FMCG.
This helps him stay in the priority list of the vendors. Since D-Mart buys in bulk and
pays its vendors on time, they also get to earn higher margins. Their strategy is to
“Buy it low, stack it high and sell it cheap”!

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 Out of the all the stores it runs, D-mart owns majority of the properties, which helps
them to save a huge chunk of money on rent. They don’t open stores inside malls to
avoid the highly inflated rent unlike other hypermarkets. Since rent is added to the
operations costs of a retailer, that burden goes away, and helps D-mart to boost its
profits further. This amounts for almost 6-10 % of its sales.

Since most D-Mart stores are in the suburbs in the metros and in tier II & tier III cities,
the operational costs remain low.

D-mart also saves an honest amount of 2-3% from the suppliers by paying them
upfront in about 48 hours of delivery, when all other organized retailers, buy goods
on credit of 30- 60 days.

Unlike bigger retailers, costs are further kept low by keeping a basic and economical
layout without any high investments

In spite of its gigantic size, D-mart has managed to keep its financials at check and
grounded too. They have kept their debts to a bare minimum and have also cut their
marketing spends by 30-40 % in the last couple of years to save costs.
Product Strategies:
1. Low cost
2. Daily Needs
3. Sell them less than MRP
4. No private levels in the major categories
5. Limited Assortment (less variety)
6. Quicker inventory turnover in the motto of all products
7. Sell Products less than 6-12% less than MRP
Pricing Strategies:
1. The prices offered are economical in D-mart
2. EDLP (Everyday Low Pricing) pricing strategy is followed
3. Except grocery, vegetables and fruit items D-Mart offers minimum 2 per cent to 10 per
cent discount on MRP and straight 5 per cent on medical product
4. (Bundled Price) Two or more products are packed and are available at a discounted
price. E.g. Santoor soap bundled along with a Wipro CFL bulb
Operation Strategies:
1. Close category shelves
2. Warehouse like structure
3. No frills
4. Hard working employees
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 5. Self-service
6. No hassles in the check out
7. Global standard store equipment
Advertising and Promotion:
1. D-Mart hoardings can be found on the lamp post on major roads of the big/posh area
of that city
2. D-Mart usually advertises in major newspaper giving information about their latest
offers
3. Promotion and sales offers were present for most of the items.
e.g. there was a discount of 10% on all CINTHOL products and Cadbury chocolates
CRM Strategies:
1. Setting up of image of DISCOUNT STORE:
People now-a-day are more attracted towards the discount stores. D-Mart is retail store
which come with the discount rate of product.
On all daily usage product, they give discounts. Because of this customer are
automatically attracted towards this

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PERFORMANCE MANAGEMENT SYSTEMS INVOLVED:
In today’s scenario D-Mart is one of the fastest growing hypermarket retail chain companies
in India not only just is terms of spread and size but also in terms of performance and
management.
The super markets and hypermarkets are observed that they eventually bring diversification
into their merchandise. With a strong sales inventory turnover ratio of 12.64, D-Mart has
terrific efficacy in their marketing strategies, robust inventory management and business
friendly supplier/vendor management.
Purchase Strategy:
In case of a retail chain business, purchase strategy plays a vital role in inventory management.
If the purchases haven’t been made on time,
then the inventory takes the immediate heat
which then passes on to adversely effect
sales and revenue. This phenomenon is quite
often experienced in small stores when a
good is not available and the owner and staff
begin to explore the reasons of unavailability
with each other. Such type of instances
reflect lack of internal procedures and such
instances happen rarely with some
professionally managed brands like D-Mart who not only robust procedures but also business
friendly purchase policies and strategies.
D-Mart shortened the industry standard time of payment to suppliers and vendors from weeks
to days. Such commitments thereby served as a motivation for the supplies and vendors to play
their part diligently. With the improved payment cycle mode, the distributors and suppliers
were willing to deliver more and quicker
Inventory Management:
Inventory management plays a very crucial role in making or breaking a retail business. It
becomes necessary in maintaining the optimum
level of inventory consistently. The deficiency
of stock in stores would make the customers
look elsewhere while excessive stock will
result in space crunch and unnecessary increase
in holding costs.
D-Mart with wide range of products which they
offer in their stores, it becomes manually
impossible to keep a track on flow of inventory. To overcome these problems, D-Mart
leverages through technologies to ensure a fine balance between stock-out situations and
inventory spoilage.

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Auto-Replenishment System(ARS) helps in managing and storing the inventory and to ensure
proper stock levels are consistently maintained or not. The re-order levels are pre-defined anf
when a product falls below a specified number, the stock or the item gets reordered
automatically for replenishment. The ARS system helps to track different products on display
and in stock and accordingly place the order thereby automatically reducing manpower efforts
and saving time and money. The customers rarely get to see any stock-out board inside D-Mart
retail outlets which is thereby an indication of efficient inventory management system.
Retail Chain operations management:
D-Mart’s strong middle level management system gives the company a strong shade right in
its organizational structure. These management people oversee the various business operations
at one end and work closely with the people leading the company on the other. They serve as
a connecting medium between company wide strategies and the grass root implementations.
There comes utmost several important reasons when we talk about a large number of stores,
maintaining uniformity and consistency of store operations.
• All the customers are to be delivered with the same quality of service and experience
across all stores.
• It becomes easier for the internal management of the stores when all the services and
procedures are operating under same set of rules.
• It becomes easier for the nation wide suppliers and distributors to interact with all the
ongoing business processes of the company.
This all processes are conceivable with store operations manuals. These manuals
characterize the SOPs of the different retail location activities like buy, stock
administration, client care, worker the board, and so forth these manuals should be
arranged, recorded, plain as day, or more everything, basic to all the stores in the nation.
The consistency and consistency in-store activities appeared by D-Mart mirror the
contribution of SOPs and store operations manuals.
Robust IT Systems:
Talking about the modern day business-IT systems, D-Mart leverages through technologies
with the ERP and Analytics systems.
Enterprise Resource Planning (ERP) alludes to any business programming application to
oversee business tasks and exercises. There are
standard, independent ERPs for every business
cycle like HR, Finance, Project the executives,
and so on with the total ERP suite, the
administration of all the business measures is
brought under one umbrella. The whole range
of business activities information gets put away
midway and dispersed to every business cycle
according to prerequisites. For instance, an

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organization's HR finance information can be imparted to its Finance division for additional
preparing like endorsements and instalment. Furthermore, after the pay rates are paid by
the Finance division, a similar will likewise ponder the HR frameworks. For a retail
location network organization, close operational coordination between different divisions
like promoting, money, buy, stock and production network is the way to keeping up the
store tasks and client support flawless. ERP can make such ongoing coordination
conceivable.
To come up with the best methodologies and ad libs, entrepreneurs and administrators need
the most important and explicit data and bits of knowledge. Information from which
significant bits of knowledge can be produced are not outside yet especially inside the
association. For instance, a retail departmental store may realize that during different happy
seasons the deals typically go up. In any case, with retail investigation apparatuses, they
can be more exact with what products were bought more during various happy seasons
before or the ascent in the quantity of representatives in and around the merry occasions in
the earlier year. Such itemized data helps head supervisors settle on preferred choices rather
over depending on broad presumptions which are genuine yet not exact.
Bigger Stores:
Big stores in size have numerous favourable circumstances over more modest stores.
Bigger stores can put resources into trend setting innovations like exceptionally highlighted
CCTV reconnaissance frameworks, RFID labels on items, investigation apparatuses for
better bits of knowledge and dynamic.
One fascinating feature of the retail business
anyplace on the planet is the income per square
feet or benefit per square feet. Greater stores
have a superior rate of profitability (RoI) when
contrasted with more modest stores because of
economies of scale. The gross benefit per
square feet is higher in bigger stores than their
more modest partners as a wide assortment of
products can be marketed in one store to create
more deals open door at a marginally additional cost prompting higher gross benefits. On
the off chance that we think about just space and lease, it is regularly seen that the rents of
greater spaces are more practical than the equivalent for more modest spaces. The lease
charged for a major store might be higher yet gives a superior arrangement as far as space.
On a note, bigger stores means wider merchandise, ability to handle more footfall,
flexibility for visual merchandising, aisle space and etc.

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CORPORATE CULTURE AND SYTEMS DESIGNED:
D-Mart place strong emphasis on excellence in customer service. Their employees believe in
the values of Action, Care and Truth (ACT) to get all the job done with full dedication and
determination.
With a mission to provide the best value posssible for their customers, they conduct research,
identify, and make available different new products and categories that suits the everyday needs
and demands of the indian families so that every rupee the customers spends on shopping with
them gives them more valanue for money than they would get anywhere else.
D-Mart had regarded a few essentials as gospel and on the off chance that they could prevail
with their straightforward way to deal with retail, there was no explanation behind a store in
India not to do as such.

Factory D-Mart Consumer

D-Mart has the following unique selling proposition tools designed:
• Selling Tool: Heavy discounts and has managed to sell cheap
• Market Segment: Price sensitive group
• Target Market: Middle income households
• Market Positioning: One-stop value retail store chain
D-Mart is a one-stop general store tie that expects to offer clients a wide scope of essential
home and individual items under one rooftop. Each D-Mart store stocks home utility items
including food, toiletries, magnificence items, pieces of clothing, kitchenware, bed and shower
cloth, home machines and more accessible at serious costs that clients appreciate.
Suppliers and Manufacturers inside the supply chain synchronize their interest projections
under a collective arranging, anticipating and renewal plot, and each connection in the chain is
associated through innovation that incorporates a focal information base, store-level retail
location frameworks, and a satellite organization.
Cross-docking is a coordination practice that is the highlight of D-Mart’s methodology to
renew stock productively. It implies the immediate exchange of items from inbound or
outbound truck trailers without the requirement for additional capacity, by emptying things
from an approaching semi-18 wheeler or railroad vehicle and stacking these materials
legitimately into outbound trucks, trailers, or rail vehicles (and the other way around), with no
capacity in the middle. Suppliers have been conveying items to D-Mart's appropriation places
where the item is cross-docked and afterward conveyed to the stores. Cross-docking keeps
stock and transportation costs down, decreases transportation time, and dispenses with failures.

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D-Mart's supply chain the board methodology has given the organization a few manageable
upper hands, including lower item costs, discounted stock conveying costs, improved in-store
assortment and choice, and exceptionally serious evaluating for the customer. This procedure
has helped D- Mart become a prevailing power in a serious worldwide market. As innovation
advances, D-Mart keeps on zeroing in on creative cycles and frameworks to improve its
gracefully chain and accomplish more prominent effectiveness.

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HUMAN RESOURECE DEPLOYMENT AND COMPENSATION DESIGNED:
Human resource management is process of management of people working in any company or
organization. All the human resource management models emphasizes on following important
things:
• searching new ways of working
• role of manager in change making
• managing the activities of employees
• In current competitive business world that is always dynamic organizations have
to keep them advance with the pace of development in this changing environment.
• In companies,department of human resource play a crucial role as they are
responsible for dealing with diversity of staff.

HRM at D-MART:
The basic features of the human resources at D-mart are as follows-
• Employees are in store personnel
• 4225 full time employees
• It is a mix of full time and contract based employees
• The company has its in house training programme for the employees
• It also uses Employees Stock Option Plan scheme.

DMART follows a dual system for its manpower requirement:

• It hires key employees on its own payroll, and
• Obtains employees in job roles where attrition is high on contract basis. Currently,
it has ~4,200 employees on its payroll. A large part of its floor staff and security
staff is on contract basis, which also helps to keep costs low.
• DMART’s employee cost has consistently been below 2% of sales.

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Compensation planning at D-Mart:
A department store manager is responsible for managing the day-to-day activities of the retail
store. They typically report to a regional director or regional manager, who they may interact
with on a daily basis or less frequently. They hire and manage store personnel, as well as direct
them in carrying out their employer’s vision. They may also be responsible for merchandising,
training new employees, and completing scheduling and payroll. Some businesses create sales
goals for department managers that must be met on a yearly or monthly basis.
Department managers in retail stores often work varying hours. They may be required to work
nights and weekends to meet customer needs, depending upon their store’s hours. They may
have to be present when the store is not open to complete paperwork or to receive shipments.
They often have to make bank deposits and transactions away from the store location. Traveling
for meetings and special projects may be required.
Typically, department store managers in a retail store environment must be highly organized
and flexible. Energy and leadership potential are two of the most important qualities for a
department manager in a retail store. They are expected to model the store vision for employees
and customers alike. They have several years of experience in retail management and may be
asked to have an associate’s degree or higher. They have to have excellent communication
skills to deal with the customers and be an effective manager of their subordinates.
The basic structure of compensation of a store manager at D-MART is as follows-

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ORGANISATIONAL STRUCTURE OF D-MART:
Front-line managers in retail either manage a store, a department or an area within a
retail store. Store managers have responsibility for profit and loss of their store location,
as well as responsibility to motivate employees to top performance. Department
managers within a retail store usually supervise staff within their areas and have
responsibility for the general cleanliness, sales and service performance within their
departments.

Determining the company structure for a retail store is an important part of a successful
business plan. Laying out a clear and well-defined operational and reporting structure will help
you establish individual responsibilities and a chain of command. The complexity of a retail
store company structure will depend on the size of the operation, management philosophy and
type of management desired. Some possible elements of this structure include executive, sales,
marketing, finance and operations.

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Executive:
The executive module of a retail company structure will include the department heads who
exercise ultimate control over their area of responsibility. Department designations may
include operations, finance, sales, marketing and human resources. The title of director or
officer will depend on the structure of the company and executive ownership options. The
president or chief executive officer serves as the head of the entire company structure.

Operations
Operations can refer to a wide range of responsibilities within a retail company structure,
such as store operations, warehousing and shipping, security, logistics and facility
maintenance. These functions are responsible for the physical aspects of a retail store
operation.

Finance
The accounting and bookkeeping arm of a retail store company structure is responsible for
all financial issues. This may include numerous employees, located in the retail stores and
within the corporate structure. Retail store employees are responsible for daily accounting
and record keeping, which is then passed to the corporate level. This information is
combined with corporate accounting to create an overall picture of the retail store
company's financial health.

Sales
Sales is typically a store-level part of a retail store structure but may also include regional
or district sales managers for multi-unit companies. The sales force also may be divided
up into departments or product-specific areas of expertise.

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FINANCIAL CONTROL SYSTEMS AT D-MART:
D Mart is using Point of Sale Software (PoS). All the commercial store and malls uses POS or
EPOS software.

PoS Software
POS software is what brick and mortar retailers use to conduct sales. It's sometimes a cash
register, computer, or even an iPad where cashiers input your products, tally the cost, and
conduct the financial transaction. Most POS software will also communicate with inventory
levels to keep everything in balance. A lot of big box stores have wildly expensive POS
solutions, some of which were custom built for their needs. Smaller retailers are moving away
from these traditional POS systems and toward cloud based point of sale solutions.
EPOS:
EPOS stands for Electronic Point of Sale digital system and is a computerised system used in
shops, restaurants and other retail outlets. Essentially it’s an electronic way of letting people
pay for goods or services. EPOS systems have a variety of uses such as –
• Helping to improve the way a business performs
• Allows information and stock to be stored securely
• Information can be retrieved immediately as and when needed
• Allows a business to see what products are in demand
• It can print out receipts and vouchers for customers
• It can also be linked to a company website or any terminal within the business

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CORPORATE FINANCIAL MANAGEMENT SYSTEM AT D-MART-
Corporate Financial Management Systems, is a financial management systems company that
has been setting new standards in the IT industry, offering their Cloud Solution for data
management to help corporations to effectively collect and structure their data. Optimised for
performance management and business intelligence, Control accelerates the analysis and
reporting through best practice Data Warehouse design and implementation. This amazing
solution is built incorporating the cutting-edge technology that revolutionises the way
Performance Management is approached. It is coupled with extraordinary speed, dexterity and
agility. Key features of their Control solution include –
• Fast implementation.
• Industry and application specific templates
• Pre-built cubes for finance and business verticals
• Easy access to your BI tools
• Less reliant on specialist IT skills
Other Management Control Systems involved at D-Mart are:
Auto-Replenishment System
or ARS: It helps in managing
the store inventory to ensure
that required stock levels are
consistently maintained. The
re‐order levels are pre‐defined
and when a product falls
below a specified number, it
gets reordered automatically
for replenishment. The ARS
system can track the different
products on display and in
stock and accordingly place
the order automatically reducing manpower efforts and saving time and money.
Customers rarely get to see any stock-out board inside D-Mart stores indicating the
efficiency of the inventory management system of D-Mart.
Robust IT Systems: D-Mart
leverages through technology.
When we talk of modern-day
business-IT systems, two
technologies we would like to
bring to the fore are ERP and
analytics. Enterprise Resource
Planning (ERP) refers to any
business software application to
manage business operations and
activities. There are standard,
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stand-alone ERPs for each business process like HR, Finance, Project management, etc. With
the complete ERP suite, the management of all the business processes is brought under one
umbrella. The entire gamut of business operations data gets stored centrally and disseminated
to each business process as per requirements. For example, a company’s HR payroll data can
be shared with its Finance department for further processing like approvals and payment. And
after the salaries are paid by the Finance department, the same will also reflect on the HR
systems. For a retail store chain company, close operational coordination between multiple
departments like marketing, finance, purchase, inventory and supply chain is the key to
maintaining the store operations and customer service intact. ERP can make such real-time
coordination possible.

To come up with the most effective strategies and improvisations, business owners and
managers need the most relevant and specific information and insights. Data from which
meaningful insights can be generated are not outside but very much within the organization.
For example, a retail departmental store may know that during various festive seasons the sales
usually go up. But with retail analytics tools, they can be more precise with what goods were
purchased more during different festive seasons in the past or the rise in the number of
employees in and around the festive times in the previous year. Such detailed information helps
store managers make better decisions rather than relying on general assumptions which are true
but not precise.

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REFERENCES:
1. https://www.dmartindia.com/about-us
2. https://www.motilaloswal.com/site/rreports/HTML/636337193984127111/index.htm
3. https://www2.slideshare.net/DurbarDasgupta1/strategy-analysis-of-
dmart?qid=1ae5ce40-22df-402a-80c7-8c6fc7413af9&v=&b=&from_search=15
4. https://www2.slideshare.net/singhuttam/business-reasearch-about-dmart-
ppt?qid=1ae5ce40-22df-402a-80c7-8c6fc7413af9&v=&b=&from_search=4
5. https://www.linkedin.com/pulse/5-key-success-factors-develop-brand-like-dmart-dr-
rupal-agarwal/?articleId=6674921801136656384
6. https://www.researchgate.net/publication/340081826_Strategy_and_Success_of_DMa
rt_The_Case_of_Retail_Chain_in_India

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