Jaipuria Institute of Management, Jaipur

Course: Operations Management

Term: II Term (Year: 2020-22)
Section: B
Group 8
“INVENTORY MANAGEMENT OF VISHAL MEGA MART”

Submitted by:
ROLL NO. NAME
PGFB2002 Abhishek Khator
PGFB2014 Dinesh Kumar Yadav
PGFB2031 Navratan Agarwal
PGFB2038 Prashant Kumar Tiwari
PGFB2051 Simanta Goswami
PGFB2052 Sourabh Choudhary

Submitted to: Dr. Lokesh Vijayavargy

Date: 31-01-2021

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 TABLE OF CONTENTS

PAGE
SR. NO. PARTICULAR
NO.

1 Executive Summary 3

2 Introduction of Vishal Mega Mart 4

3 Inventory Management (Brief Overview) 5-7

4 Research Methodology 8-9

5 Data Analysis & Findings 10 - 13

6 Conclusion 14

7 References and Sources 15

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 EXECUTIVE SUMMARY
This project is regarding the ‘Inventory Management’ in the retail chain stores
of VISHAL MEGA MART (Research Location – Gopalpura, Jaipur). Wherein,
‘Inventory Management’ connotes the process of selection as well as
combination of ordering, storing, and using of inventory that includes the
management of finished goods, work in progress components, or raw materials,
etc. And this project mainly surrounds the managerial aspect of inventory
management of this retail player.

Retail industry is one of the most fast paced and thriving industry all around the
globe and similarly even in India this is a growing segment. There are already
few existing retail giants like Reliance Retail Ltd., Aditya Birla Fashion &
Retail Ltd., D-Mart Retails Chains, etc holding the prime spot in this segment.
Vishal Mega Mart is one part of this growing industry that holds a tough and
strong position with more than 192 stores spread around the country.

In the list of retail industry companies ‘VISHAL MEGA MART’ can be

considered one the most famous key player in this sector. Here, inventory
management played a crucial role in its survival and journey till date. This
project is an analysis of the various methods and parameters used/set in the
overall inventory management systems implemented while tackling the day-to-
day operations. It also assists us in comprehending the functioning that takes
places while handling the inventory and the possible problems that may arise
while managing inventory in a retail store.

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 INTRODUCTION OF VISHAL MEGA MART

VISHAL MEGA MART is one of the leading retails store

chains in country. The original founder of this retail chain
company is Mr. Ramchandra Agarwal who sold this debt-
ridden Vishal Retail to the TGP Capital and Shriram Group
in the year 2010.
The entity was incorporated as Vishal Mega Mart Pvt. Ltd.
on 31st May 2010 and is classified as Non-government Mr. Ramchandra Agarwal
Founder (Vishal Mega Mart)
Company, registered under the Registrar of Companies,
New Delhi. Directors of Vishal Mega Mart Pvt. Ltd. are
Gunender Kapur, Manas Tandon, John Thomson Wyatt, Sanjeev Aga and
Nishant Sharma.

Vishal Mega Mart is one of India’s largest fashion-led hypermarket chain

founded in 2001 and now has over 192 stores and cumulative trading area of
more than 3 million square feet across 110 cities and towns in India, serving
mainly to the middle class and lower middle-class strata of the society.

It provides for wholesale products including specialized product offering

lucrative deals in various category of the products such as clothing, accessories,
kitchen products, home & décor items and many more. Vishal Mega Mart also
has an online e-commerce shopping presence under the platform
“myvishal.com” which provides many offers as such other e-commerce sites in
online shopping.

The story of Vishal Retails is one of many ups and downs, and that of a major
turnaround in its relatively young history but this entity is still resilient on its
feet and survives on by spearing challenges head on.

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 INVENTORY MANAGEMENT (Brief Overview)
Inventory

Inventory is the stock of any item or resource used by an organization that can
include things like raw materials, finished products, component parts, supplies,
and work-in-process items.

Inventory Management

Inventory management is the process of sourcing, storing, and selling inventory

and it includes both raw materials and finished goods.

There are various types of inventory and they are mentioned below:

 Cyclic Inventory: Cyclic stock inventory can be defined as the level of

inventory which a retailer and manufacturer uses for their standard
business cycle to meet their regular sales orders and sales forecast. The
periodic replenishment causes cyclic inventory.

 Seasonal Inventory: Seasonal Inventory can be defined as the stock or

inventory which is in high demand during a particular time of a year.
Seasonality in demand is absorbed using inventory.

 Pipeline Inventory: Pipeline inventory can be defined as the stock that is

currently in the transit between the two locations and which has not yet
been purchased by the customer. It exists due to lead time.

 Safety Stock: Safety stock can be defined as the additional quantity of an

item held in the stock to minimize the risk that the item will be out of
stock. It acts as a buffer stock as if sometimes the sales are higher than
the planned or expected and at that time the supplier is unable to deliver
additional units at the expected time. It is used to absorb fluctuations in
demand due to uncertainty.

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There are also various types of inventory costs associated in inventory
management and they are mentioned below:

 Holding (or carrying) costs: Holding costs is the cost which is concerned
with storing the inventory that remains unsold. Or we can say that it is the
costs for storage, handling, insurance, etc.

 Setup (or production change) costs: Setup costs is the cost which is
incurred only when the production or assembly lines are changed, for
example when the manufacturing department must change equipment for
a different product or part to be manufactured. Or we can say that it is the
costs for arranging specific equipment setups, etc.

 Ordering costs: Ordering costs is the cost which is incurred to create and
process an order to a supplier. ordering costs are always included in the
determination of the economic order quantity for an inventory item. Or
we can say that it is the costs of someone placing an order, etc.

 Shortage costs: Shortage cost can be defined as when the demand of a

product exceeds the available inventory for a product, the demand and
customer goodwill may be lost. We can also say that shortage costs as
equal to the product's contribution margin. Or we can say that it is the
costs of cancelling an order, etc.

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Inventory Control Systems

Inventory Control Systems can be defined as the technology solutions which

integrates all the aspects of an organization’s inventory tasks, and includes the
shipping, purchasing, receiving, warehouse storage, turnover, tracking, and
recording.

The two types of Inventory Control Systems are as follows:

Continuous system (fixed-order-quantity): It is the constant amount ordered

when inventory declines to predetermined level.

Periodic system (fixed-time-period): It is the order placed for variable amount

after fixed passage of time.

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 RESEARCH METHODOLOGY

Introduction

Research methodology is basically a way of systematically solving the research

problem which may be understood through science of studying and analyzing as
scientifically on how research is performed.

This case study on Vishal Mega Mart is the topic was being chosen for the
study of inventory management technique being used in retail industry. The
research methodology basically contains area of study, research design, method
of sampling collection and sampling technique. Adoption of suitable mode is
very necessary for the study. So, we adopted a Personal Interview method (PI)
of the Assistant Store Manager (Vishal Mega Mart) for the analysis of the given
problem.

Research Design

A research design is basically arranging conditions for both collecting and

analyzing data in a manner that solely aims relevant combination of the purpose
of the research with the economy which is involved in the procedure.

To fulfill the project’s objective, descriptive research design is being adopted.

Descriptive research design basically concerns about the description of the
characteristics of a problem or a particular individual’s or a group’s
characteristics. Descriptive research’s major purpose is the description of the
situation as it exists presently.

Area of Study

It refers to the geographical location or any place in which the research work is
being performed. In this project report the area of study is particularly confined
to Vishal Mega Mart Retail Store in the location of Gopalpura, Jaipur.

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Sampling Design

Sample design refers to a definite plan where a sample is being obtained from a
given population. It refers to the adoption of the procedure or technique in the
selection of items for the sample by the researcher. In our research project report
convenience sampling technique is being used for the collection of data.
According to our requirement this technique is very helpful in collection of
data. In the short period of time this technique was of great help in the
collection of appropriate data.

Research Tool

To collect the data for our research project we took a personal interview of
Assistant Store Manager (ASM) of Vishal Mega Mart Miss. Suchi Agarwal
who is also an alumnus of our college of batch 2013-15.

Collection of data – Collection of data consists of two sources which are:

(A) Primary source – There are number of ways through which primary data
can be collected. Under these common techniques include interviews, self-
administered surveys, experiments, and field observation. The limitations of
primary data collection are that its time consuming and quite expensive as
compared to the secondary source.

(B) Secondary source – secondary data basically refers to the data which is
already available and being analyzed by someone else. In our research study the
data is being obtained from the secondary source. This secondary data is being
collected by our group from the concerned authority of Vishal Mega Mart that is
the Store manager of Vishal Mega Mart by way of personal interview.

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 DATA ANALYSIS & FINDINGS
We have visited Vishal Mega Mart Retail Store on 28 th January 2021 to get the
practical aspect, where we had a conversation with the Assistant Store Manager
(ASM) – Ms. Suchi Agarwal and subsequently we queried about the different
issues regarding the inventory management techniques that they follow.

After the conversation, the following data is obtained. The presentation of this
data is in the form of Question/Answer (Q/A) format as follows:

Q1. How many types of product range does Vishal Mega Mart have in their
inventory at present?

Ans 1. The Assistant Store Manager of Vishal Mega Mart, Gopalpura, Jaipur
did not disclose the number of merchandise and products that they have at that
moment but did gave us with the approx. value of the total inventory which is
approximately around Rs. 3 Crore (Rupees Three Crore).

Q2. Which type technology or software is used by Vishal Mega Mart to

manage their inventory systems?

Ans 2. The ASM of the store reverted that company uses the SAP software
provided by IBM for the inventory management of FMCG product. For the
general and apparels merchandize inventory management, the frequent reports
of sale are sent to the headquarter and the requirement is fulfilled by
headquarter itself.

The ordering frequency for FMCG product – According to the requirement

every Saturday the purchase order is prepared through SAP software and sent to
the pre decided vendors of different FMCG companies and then order is
delivered by Saturday in the stores.

The company therefore purchases in advance and maintains the inventory to

meet with the peak days demand.

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Q 3. What are the types of methods the organization follow to arrange their
product?

Ans 3.

The ASM told us that the company follows different method for different
categories, like:

For FMCG products – The Organization uses the Planogram method to

arrange their FMCG product segments which is prepared by the headquarter by
analyzing the store’s past performance. The arrangement of product in the store
changes every month.

For General and Apparels – These categories of product get arranged by

Standard display pattern in the store.

Planogram

It is visual merchandising tool. Planograms are detailed diagram of store layout

is prepared with special attention to product arrangement.

Product Arrangement in stores by using Planogram Technique

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Using Planogram, the retail stores get benefits in term of –

 Maximizing Sales – The retails stores use the visual merchandising

method to collect the data and see the responses of product and their
displays work. This technology helps Vishal Mega Mart in mapping the
products by which sales of the product gets increased over the time it also
impacts the purchasing behavior of consumers. It also provides highest
converting locations in the store.
 Maximizing Space – High cost is incurred in storing the inventory, better
arrangement of product increases space and more merchandise is stored.
However apart from the rental expenses, maximum use of space helps the
retails to run a cost effective and lean business. Vishal mega mart use
planogram to be organised and allocate a purpose to utilise every area of
the store.

Q 4. How much percentage of inventory management cost gets reduced by

using these tools and techniques?

Ans 4.

The ASM of Vishal mega mart said that by implementing these tools and
techniques the cost incurred in managing the inventory is reduced by 15- 20%.
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Q 5. What types of problems does face by stores in managing the
inventory?

Ans 5.

The ASM specified that no major problems occur generally in the store while
managing the inventory, but one common downside that got highlighted is the
shrinkage cost due to malpractices of theft and shoplifting by the customers
which discounted annually could become a substantial burden for the company.

The permissible annual percentage of such shrinkage cost is around 0.35%.

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 CONCLUSION

In conclusion it can be that VISHAL MEGA MART (Gopalpura Store, Jaipur)

has been successful in maintaining its overall day-to-day operations over the
years by effectively implementing the various inventory management methods
and techniques, which has helped them in maintaining the annual store revenues
as well as handle the overall shrinkage costs. And with the proper
implementation of good inventory management techniques, they have been
successful in providing wholesale products including specialized product and
offer deals in various category of the products such as clothing, accessories,
kitchen products, home & décor items and many more.

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 REFERENCES AND RESOURCES

Links:

 https://medium.com/@entsuccessstory/vishal-mega-mart-inspiring-story-
a63016fe6ff
 https://www.forbesindia.com/article/hidden-gems-2019/vishal-mega-
marts-incredible-comeback/54855/1
 https://www.ibm.com/case-studies/vishal-mega-mart
 https://www.livemint.com/Companies/pT6na5LmKC2gmA4uys9kuL/Ke
daara-and-Partners-set-to-acquire-Vishal-Mega-Mart.html
 https://www.indiaretailing.com/2015/02/10/whos-who/ram-chandra-
agarwal/
 Offline source – Vishal Mega Mart Store (Location – Gopalpura, Jaipur)

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