BEST WAY OF PURCHASING

“FUTURE GROUP”

Research Project

Submission : Project Report

Presented to

CVS

On
Date: 20th October, 2020
In
Partial Fulfillment of the Requirement for the Three year under Graduate Degree
B. A. (VOC) Material Management

Project Guide : Submitted By:

Ms. Ruchi Sharma NAYAN AGARWAL
B. A. (VOC) Material Management
Roll No : 2K18/ MM /26

College of Vocational Studies, University of Delhi

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 ACKNOWLEDGEMENT

The present work is an effort to throw some light on the BEST WAY OF
PURCHASING “FUTURE GROUP” . The work would not have been possible to
come to the present shape without the able guidance, supervision and help given by
a number of people.

With the deepest sense of gratitude I acknowledged the encouragement and guidance
of my project received from my mentor MS. RUCHI SHARMA (Asst. Professor,
College Of Vocational Studies). She has provided me with valuable guidance,
sustained efforts and friendly approach for the completion. It would have been
difficult to achieve the results in such a short span of time without her help and
support.

I would also like to convey my heartfelt thanks to all those people who helped and
supported me during the course of completion of my project.

Place: DELHI
Date: 20th October, 2020

NAYAN AGARWAL

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 DECLARATION

I hereby declare that the Project Report entitled:

A Project Report on BEST WAY OF PURCHASING “FUTURE GROUP” submitted

in partial fulfillment of the requirement for the Three year under graduate degree of
B.A.(VOC) Material Management to College of Vocational Studies, University of Delhi,
is my original work and not submitted for the award of any other degree, diploma,
fellowship, or any other similar title or prizes.

Place: DELHI
Date: 20th October, 2020

NAYAN AGARWAL
B.A.(VOC) MATERIAL MANAGEMENT
(Roll No. : 2K18/MM/26)

3
 CERTIFICATE BY STUDENT

The report titled BEST WAY OF PURCHASING “FUTURE GROUP” is the result of
original and independent work done by
me. This report has not been submitted to any other institution for award, degree or
diploma.

Place: DELHI
Date: 20th October, 2020

NAYAN AGARWAL
B.A.(VOC) MATERIAL MANAGEMENT
Roll No. : 2k18/MM/26

4
 CERTIFICATE BY SUPERVISOR

This is to certify that the project report titled BEST WAY OF PURCHASING
“FUTURE GROUP” is being submitted by MS. RUCHI SHARMA (Asst. Professor,
College Of Vocational Studies) in partial fulfillment of the requirement for the award
of the degree of B.A. (VOC) MATERIAL MANAGEMENT in COLLEGE OF
VOCATIONAL STUDIES, UNIVERSITY OF DELHI is work that has been done
under my supervision.

To the best of my knowledge, it is and independent work and the results presented in
this report have not been submitted, in part of full, to any other university or
institution for the award of any degree or diploma.

Place: DELHI
Date: 20th October, 2020

Ms. RUCHI SHARMA

(Assistant Professor)
COLLEGE OF VOCATIONAL STUDIES
UNIVERSITY OF DELHI

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 PREFACE

One should always work with an objective in its mind. To accomplish that objective efficient
management of material, time and financial resources is very important. Above coordination
is must that determines the degree of success.

Awareness at each level of life is necessary for a human being keeping all this is in view this
report on BEST WAY OF PURCHASING “FUTURE GROUP”is prepared by me. The
rounded encouraging support by Ms. Ruchi Sharma towards this report has created in me
confidence regarding the approval of the subject matter.

The present report is well arranged in coherent manner. An attempt has been made to provide
the general public the necessary information about the future group. The main
intention behind this report is to compile the subject matter in such way that even a layman
could get the knowledge.

So I would like to say that this report is a result of an assignment, to improve and gain
confidence.

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Table of Contents
TITLE OF THE PROJECT 8

WHAT IS PURCHASING? 9
CENTRALISED PURCHASING 10
DECENTRALIZED PURCHASING 11

HISTORY OF PURCHASING 14

WHY IS PURCHASING IMPORTANT? 16

ROLE OF PURCHASING IN BUSINESS 18

STRATEGIC AND TACTICAL ROLES OF PURCHASING 31

TYPES OF PURCHASES 32

ABOUT FUTURE GROUP 35

ABOUT FUTURE GROUP 36

EASYDAY 38
BIG BAZAAR 40
NILGIRIS 1905 42
HYPERCITY 44
FOOD BAZAAR 45

JOINT VENTURE PARTNERSHIPS 47

ABOUT CEO OF FUTURE GROUP 55

PURCHASING BY FUTURE GROUP 59

OBJECTIVES OF THE STUDY 73

RESEARCH METHODOLOGY 77

SOURCES OF DATA 80

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ANALYSIS OF DATA 83

SUGGESTIONS FOR FUTURE GROUP 92

BIBLIOGRAPHY 97

ANNEXURE 100

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TITLE OF THE PROJECT

BEST WAY
OF
PURCHASING
“FUTURE GROUP”

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 Best way of purchasing.
“Future group”
Befor talking about best way of purchasing let’s first understand what is purchasing .

What is purchasing?
Purchasing is the process a business or organisation uses to acquire goods or services to
accomplish its goals. Although there are several organizations that attempt to set standards in
the purchasing process, processes can vary greatly between organizations.
Purchasing managers/directors, and procurement managers/directors guide the
organization’s acquisition procedures and standards. Most organizations use a three-way
check as the foundation of their purchasing programs. This involves three departments in the
organization completing separate parts of the acquisition process. The three departments do
not all report to the same senior manager, to prevent unethical practices and lend credibility
to the process. These departments can be purchasing, receiving and accounts payable; or
engineering, purchasing and accounts payable; or a plant manager, purchasing and accounts
payable. Combinations can vary significantly, but a purchasing department and accounts
payable are usually two of the three departments involved.
When the receiving department is not involved, it is typically called a two-way check or two-
way purchase order. In this situation, the purchasing department issues the purchase
order receipt not required. When an invoice arrives against the order, the accounts payable
department will then go directly to the requestor of the purchase order to verify that the goods
or services were received. This is typically what is done for goods and services that will
bypass the receiving department. A few examples are software delivered electronically, NRE
work (non-reoccurring engineering services), consulting hours, etc.
Historically, the purchasing department issued purchase for supplies, services, equipment,
and raw materials. Then, in an effort to decrease the administrative costs associated with the
repetitive ordering of basic consumable items, "blanket" or "master" agreements were put
into place. These types of agreements typically have a longer duration and increased scope to
maximize the quantities of scale concept. When additional supplies were required, a simple
release would be issued to the supplier to provide the goods or services.
Now purchasing can be done in two ways
 Centralised purchasing
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  Decentralised purchasing

Centralised purchasing

Centralized purchasing is the control by one headquarters department of all purchasing that is
undertaken by a business.  This allows for central management and volume purchases that
lead to better prices and terms as well as the ability to work with larger suppliers. 

This central control enables more efficient inventory control, lower staffing costs and a
decrease in overheads. Staff also benefit with better training and support and the ability to
build better relationships with suppliers.

While this may seem obvious, many large companies either have grown quickly and
organically or have grown via mergers and acquisitions.  This means that they often have
several separate purchasing departments that are each responsible for purchasing a group of
products.

Advantages of centralized purchasing

 Responsibilities and duties are well defined within the central governing body.
 Decision-making is very direct and clear.

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  The central power maintains a large "encompassing interest" in the welfare of the
state it rules since it stands to benefit from any increase in the state's wealth and/or
power. In this sense, the incentives of state and ruler are aligned
 Negotiation become easy

.
Disadvantages of centralized purchasing
 Purchase requisitions for ad hoc goods have to be sent from other areas to the
purchasing department causing delays and some irritations.
 If the company is very geographically diverse, it may not be able to take advantage of
local discounts.
 The centralized purchasing department may become too large and complex to
manage.
 Conversely, with a small company it may not be cost effective to have staff and a
computer system that only deals with purchasing.

Decentralized purchasing
Decentralization or decentralisation is the process by which the activities of an organization,
particularly those regarding planning and decision making, are distributed or delegated away
from a central, authoritative location or group.

company

unit 1 unit 2

supplier
supplier supplier

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Advantages of decentralized purchasing
Motivation of Subordinates
Decentralization improves the level of job satisfaction as well as employee morale, especially
amongst the lower level managers.
Furthermore, it strives to satisfy the varying requirements for participation, independence, and
status. Decentralization also promotes a spirit of group cohesiveness and spirit.

Growth and Diversification

Under decentralization, every single product division attains sufficient autonomy to exercise
their creative flair. In this way, the top-level management can create healthy competition
amongst different divisions.
While carrying out a discussion on the advantages and disadvantages of decentralization, it is
imperative to note that it aids subordinates in exercising their own judgment.
They even develop managerial skills and help in solving the succession problem which
ultimately ensures the growth and continuity of an organization.

Quick Decision Making

Another important pointer in the advantages and disadvantages of decentralization is that
decisions are taken and executed by authorized personnel. This, in turn, results in faster and
accurate decisions which are well aware of the real scenario.

Efficient Communication
The wider span of management under decentralization leads to fewer hierarchical level. This
makes the communication system more efficient as intimate relationships develop between
superiors and subordinates.

Ease of Expansion
Decentralization can add inertia to the expansion process of a growing business. This might
often result in the opening of new business units in varying geographical locations.
Decentralization unleashes the fullest potential of the organization and can react easily to
area-specific requirements.

Better Supervision And Control

Lower level managers can alter production schedules and work assignments with adequate
authority. They can even take disciplinary actions and recommend the promotion of their
peers.
This, in turn, leads to greater efficiency in supervision. Performance evaluation of each
decentralized unit helps in exercising adequate control.

Satisfaction of Human needs

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Decentralization serves as an important tool for satisfying our basic need of independence,
power, prestige, and status. A cadre of satisfied manager is build up by this satisfaction as
they feel responsible towards the company’s betterment.

Relief to top executives

Top executives can focus more on more on the executive level work like planning and
decision making if the lower level employees take all the responsibilities on their own. This
relieves their workload which eventually is for the greater good of the organisation.
Disadvantages of decentralised purchasing

Difficult To Co-Ordinate
While talking about the advantages and disadvantages of decentralization, it is imperative to
note that substantial autonomy is enjoyed by every single division. This, in turn, makes it
difficult to coordinate the overall activity.

External Factors
The trade union movement, market uncertainties, and government intervention might make it
impossible to benefit the most out of decentralization.

Narrow Product Lines

Decentralized product lines need to be adequately broad so that autonomous units can flourish
within the same. This might not be of much help in small business houses having narrow
product lines. Lower levels in the organization also lack competent managers thus adding to the
difficulty quotient.

Expensive
In decentralisation, every employee takes responsibility for the better of the organisation so they
work harder to achieve all the organisational objective. In return, they have to be paid more
which sometimes proves to be very expensive for the company.

Disadvantages of decentralized purchasing

 Organization losses the benefit of a bulk purchase.
 Poor layout of space.
 More finance required.
 Duplicate purchase of materials.
 Specialized knowledge may be lacking in purchasing staff.
 There is a chance of over and under-purchasing of materials.
 Fewer chances of effective control of materials.
 Less technical skill obtains.
 More clerical work, and.
 Lack of proper co-operation and co-ordination among various departments.

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History of Purchasing
Purchasing is one of the basic processes common to all organizations. It is the process of
acquiring goods, services, and equipment from another organization in a legal and ethical
manner. Purchasing was initially a tactical contributor to the organization, focusing on
transactional relationships and low price. However, over time the role of the purchaser, and
the purchasing department, has changed significantly and the function has become strategic
to organizational competitiveness.

History of Purchasing

Period Status

Late Purchasing rarely used as a different department except in the railroad.

1890s

Early Purchasing considered clerical work.

1900s

World Purchasing function increased in importance due to the importance of obtaining

War I and raw materials, services, and supplies to keep the mines and factories running.
II

1950s and Continued to gain stature, processes more refined, and more trained
1960s professionals. Still considered order placing clerical in a staff-support position.

Late Integrated materials systems introduced, materials became part of strategic

1960s– planning, and importance of department increased.
early
1970s

1970s Oil embargo and shortages of basic raw materials turned the focus of the
business world to purchasing.

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 Period Status

1980s Advent of just-in-time with an emphasis on inventory control and supplier

quality; quantity, timing, and dependability made purchasing a cornerstone of
competitive advantage.

Early Value proposition of purchasing continued to increase; cost-savings became the

1990s buzzword.

Late Purchasing evolved into strategic sourcing, contracts were more long term, and
1990s supplier relationship building and supplier relationship management started.

2000s Purchasing shifted its myopic focus on cost to much broader terms. Some of the
widely used developments: spend analysis, low-cost country sourcing,
procurement technology evolved (ERP, e-sourcing), procurement outsourcing
evolved (P2P), total cost of ownership, data mining and benchmarking, and lean
purchasing.

Globalization has forced companies to improve their internal processes, such as supply
management, to remain successful. The level of competition in the marketplace expanded to
include both domestic and international markets. Purchasers no longer discuss “lowest price”
but share information, collaborate, and talk to their suppliers about total costs, life-cycle
costs, and cost reductions. This requires a focus on process improvements instead of short-
term relationships and price reductions.

The primary goal of the purchasing organization is to purchase the right item or service, in
the right quantity, at the right price, and at the right time. An abundance of competitors and
seasoned customers demand higher quality, faster delivery, and products and services
customized to their needs, at the lowest total cost. These demands are made at an even greater
speed because of the influx of technology and social media into business-to-business
applications. Information and data flow between supply chain members are increasing,
making it challenging for organizations to continuously adapt to the ever-changing needs of
the customer.

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Getting products to customers at the right time, place, cost, and quality constitutes an entirely
new type of challenge. Technology and an improved logistics network have opened up a
world of opportunity to better enable competition through an expanded, globally oriented
network of suppliers. The availability of low-cost labor and other alternatives in emerging
countries has led to unprecedented shifts toward outsourcing and offsourcing . China has
become a major world competitor, introducing even more challenges for United States
organizations in both the manufacturing and services sectors. The services sector now
accounts for approximately 70 percent of the Gross Domestic Product (GDP), introducing
more opportunity for effective supply management involvement in this sector. In the
manufacturing sector, the vast majority of materials are purchased from sources outside the
firm. Because of this, the supply management function has grown in importance and in
complexity.

All these changes and challenges have helped propel supply management to the forefront of
strategic decision making. The importance of appropriate management of suppliers that
provide materials and services has become a key consideration for executives. There are
many instances seen daily in which companies have received negative publicity due to the
actions of suppliers, the location of suppliers, or the performance of suppliers. Competition is
now between supply chains.5 The companies that configure the best supply chains, with a
highly performing supply base, will be the market winners and gain competitive advantage.

Why Is Purchasing
Important?
Historically, purchasing has played a key role in “getting the lowest possible price.” This was
often at the expense of a positive relationship with the supplier and usually a trade-off with
quality. However, over time, the role of purchasing evolved into a cost-saving function in
which supplier relationships and contracts were developed with cost-savings in mind. These
cost-savings often came through process improvements, product improvements, or supplier
development efforts.

Today, purchasing is recognized as having an overwhelming impact on the bottom line of the
organization. It has a direct impact on the two forces that drive the bottom line: sales and
costs. Purchasing is becoming a core competency of the firm, finding and developing
suppliers and bringing in expertise that is highly valued by the organization. Purchasing is
generally responsible for spending more than 50 percent of all the revenues the firm receives
as income from sales. More money is often spent for purchases of materials and services than

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for any other expense, and the spend in services is rapidly increasing. Often, the cost of
materials is 2.5 times the value of all labor and payroll costs and nearly 1.5 times the cost of
labor plus all other expenses of running the business. In the area of services, millions of
dollars are spent on marketing and advertising, legal, information technology, logistics,
temporary labor, and other categories. Although the involvement of purchasing in the
services area is different than in a typical purchase of materials, there is significant
opportunity for most organizations to save money by involving purchasing in this area of
spend.

 how supply management can drive sales up and costs down. The impact on net income and
return on investment (ROI) have a major influence on shareholder value. The cost impacts
are easily understood because cost reduction is typically considered a “purchasing job.”
Purchasing works with internal customers to help improve processes and drive down costs.
Purchasing also works with suppliers to improve processes, look at alternative materials, and
look at different locations or transportation modes. Focusing on cost improvement is a core
competency of purchasing professionals.

However, there are also many opportunities to help drive up market share. For example,
strong relationships with the right suppliers might allow for early supplier involvement in
new product development. Therefore, the supplier is prepared for the actual launch and can
also contribute and make changes if appropriate to facilitate an easier and less costly
production launch. In 1998, for example, suppliers were involved in the product development
process and actually helped by providing inputs into the design of the Honda Accord. These
inputs were both material in nature and process-oriented. This early involvement in the

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product development stages helped to save more than 20 percent of the cost of producing the
car. In the casting industry, it was found that early involvement of suppliers in product
development saved time and cost, and improved the quality of the parts. The request for
quote process (RFQ) is reduced significantly in this industry because suppliers are more
aware of what is required, long before it is needed.

Role of purchasing in business

Purchasing is one of the basic functions common to all types of business enterprises.
Business involves coordinating and integrating the six functions listed here,22 which all fall
under the basic plan, source, make, deliver supply chain model made popular in the late
1990s.

1. Creation—The idea or design function

2. Finance—The capital acquisition, financial planning, and control function
3. Personnel—The human resources and labor relations function
4. Supply—The acquisition of required materials, services, and equipment
5. Conversion—The transformation of materials into economic goods and services
6. Distribution—The marketing and selling of goods and services produced

A number of organizational units are responsible for executing the six functions. For
example, research and design are typically engineering functions and most likely involved in
the creation aspect. There are finance and accounting departments that typically manage the
flow of financial resources into and out of the firm. The purchasing department is responsible
for supply—however, other functions are involved as well, such as marketing in the purchase
of advertising services.

Supply management has many interfaces with the different organizational units responsible
for executing the primary business functions. figure represents many of the internal interfaces
of the supply management function and just some of the many activities when the functions
are required to interface. These internal organizations represent many of purchasing’s
customers. Purchasing has a wide intra- and inter-organizational footprint.

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Purchasing and Engineering
The product costs associated with quality, material, fabrication, and production are linked to
the design specifications. Specifications can be written in a manner that reduces or enlarges
the number of firms willing to supply specific items. There can be conflict between
engineering and purchasing simply because engineering tries to design the “ideal” product or
services without regard for cost or availability of resources.

Often, differing performance metrics between purchasing and engineering generate the
conflict, and many times this conflict is not easily resolved. However, involvement of
purchasing in initial design conversations with engineering may facilitate better discussion
and ultimately results. Another service that purchasing can provide engineering is helping to
use “like components” so that there is no need to develop a new component that is already
purchased for a different product line. Purchasing can help in reducing SKU proliferation, a
problem common in many organizations.

One example of the relationship between engineering and purchasing is the case of a global
electronics manufacturer. The specifications for pallet dimensions were supplied to the
suppliers, but the suppliers were not following the specification and instead were shipping on
multiple-sized pallets in varying conditions. The purchaser held the suppliers accountable for
the appropriate pallet dimension and quality, and considered each one sent incorrectly as a

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defect. After standardization, damage from shipping decreased significantly, and the volume
shipped per truckload increased significantly. This particular project led to a number of other
improvements in packaging, waste reduction, improved container and trucking capacity
utilization, and much more.

A company in the beauty products industry was delivering products to hundreds of countries
around the world, many with different language and labeling requirements. In one instance,
the company purchased a common jar for one of its products but then had the supplier label
and ship each separately. This generated issues with SKU proliferation, and the company saw
increasing inventories. The customers in China had different preferences than those in India
and products would fall out of favor in one region before another. The purchasers worked
with the engineers and the suppliers, and decided to “postpone” the labeling of the bottles.
The volume of standard-size bottles increased significantly, the price of the bottles decreased,
and the labels were added only when customer (and regional) specific demand was known.

Purchasing and Manufacturing

The timing and quantity of the receipt of purchases often strain the relationship between
manufacturing and purchasing. Also, poor planning of requirements at the strategic level
causes a bullwhip effect (discussed in the marketing interface). Purchasing needs sufficient
time to qualify suppliers, develop competition, and negotiate and ultimately reduce
opportunity for special production or premium transportation.

Trouble in this interface often arises because of poor forecasting and therefore poor
production planning. Integrating demand and supply sides of the business in sales and

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operations planning has a tendency to improve the relationship and the outcomes. Also,
coordinating in the early design stages for new products can help alleviate this conflict. New
product development meetings are generally cross-functional and engage many members of
the organization.

There are cases of standardization of materials, standardization of components, and simply

reviewing material specifications prior to a purchase that have saved significant money over
time. Also, in some cases it makes sense to pay more for an alternative material, as long as it
is feasible to do so, and it may save in manufacturing costs in the long run.

Purchasing has to assist in achieving faster time to market and reduced time for changeovers
and tool and line setup work by working with suppliers to improve capabilities and increase
response time. Manufacturing has the goal of achieving faster time to market, decreasing
operational costs and unnecessary setup times and waste. It is also often responsible for
inventory costs and have a vested interest in keeping them at optimal levels. Shutting down a
production line is extremely costly. There are reports of parts being helicoptered to an
automobile manufacturing facility because the cost of a plant shut down was more than
$1,000,000 per day. (That is what was invoiced to the supplier.) There are many stories of
purchasers “flying” components to customers to avoid the penalties associated with shutting
down a facility. Purchasers have had to find emergency sources of supply, often paying much
higher costs to avoid a plant shutdown.

Purchasing and Marketing

Many marketing departments spend significant amounts of money on advertising and
promotion. This is what typically generates sales. The problem is that sales and marketing
activities are often not linked to supply and production activities. Customers often do not
communicate promotions and therefore create even more supply chain problems.

Hau Lee, a professor at Stanford, coined the term bullwhip effect. The bullwhip effect occurs
as even small increases in demand prompt the “whip” to get ever larger as it progresses down
the supply chain. The bullwhip is shown in

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There are four major causes of the bullwhip effect, and much of the cause is generated in the
downstream in the supply chain. Upstream members tend to overcompensate because of
historical issues with demand planning and forecasting.

 Demand forecast updating—The problem here is that as each entity in the supply
chain updates the forecast, it also includes safety stock, tends to buffer the orders of
others, and tries to replenish its own stock. An automobile company was having serious
trouble with forecasting, and the relationship among sales, marketing, operations,
purchasing, and its supply base was strained. Not one entity in the chain believed in the
accuracy of other entities’ “guesses.” The result was that at each stage, the person
responsible increased the forecast (or the plan) sometimes by as much as 10 percent. If
one person said he needed 100, the next person in line would add another 10 to that
order and so on. This process trickled down through the bill of materials and ultimately
all inventories increased: finished goods, work-in-process, and raw materials. Suppliers
increasingly had to expedite materials, and the entire supply chain was operating
inefficiently.
 Order batching—Companies often place orders in batches. Sometimes, it is to reduce
the administration of the orders, other times trying to out-guess the schedules of the
manufacturers. In this situation, suppliers face erratic ordering with frequent increases
and also frequent expediting because customers often don’t want to wait for a batch run.
This process was common in the furniture industry in which changeovers in
manufacturing were expensive to manage. The products were manufactured in batches
and the orders were often allocated to customers based on a set of criteria. Customers
knew that if they over-ordered, they would likely receive more of the batch being
manufactured.
 Price fluctuation—Special promotions and price discounts result in customers buying
in larger quantities and stocking up. When prices increase, they stop buying, and the
consumption patterns are destroyed. Retailers offer many pricing discounts and

23
 promotions to generate market demand. These promotions create demand that in effect
will shortly vanish because customers will “stock up” while prices are low. An
interesting story is about a family that bought peanut butter in bulk. When there was a
promotion, and lower prices, the family would buy an entire case of the peanut butter. At
one point, there was a salmonella scare in some of the brands of peanut butter. The
“case” that was purchased was from the batches that were produced incorrectly. All the
peanut butter was recalled and returned. All this fluctuation in demand patterns wreaks
havoc on the supply chain. In addition, the forecasters will likely continue to use these
demand patterns to forecast future demand and the problems continue to escalate.
 Rationing and shortage gaming—When supply is low, manufacturers may ration their
products. Customers, in an effort to get “the most,” will game the system by over-
ordering. Generally, those customers with the most power will try to “hold” the product
availability until their demands are known by placing unrealistic orders far in advance.
When their demand is known, the orders are changed to reflect more realistic demand
patterns. However, supplies were already ordered, labor was already scheduled, and
capacity was already fixed on one product when it should have been on another.

All these bullwhip issues still occur today with potentially larger impacts on an extended
supply chain. This is more than 15 years after the issues were identified. Prompt and frequent
communication throughout the supply chain but especially from sales and marketing to
manufacturing and purchasing about changes in sales forecast and expected changes in
demand is necessary. Information sharing is one key to minimizing the bullwhip effect on the
supply chain.

Another area in which purchasing and marketing are just beginning to interface is in applying
the purchasing process to the marketing and advertising spend. Purchasers do not interfere on
the design of these services but instead ensure contract compliance and are often involved
directly in negotiations.

Purchasing and Finance

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Finance is usually purchasing’s best friend and biggest supporter. The reason for this is that
purchasing tries to develop ways to save money; it works with the supply base to ensure that
the contracts are followed; and it helps to minimize overbilling and underbilling. There are
many reasons that purchasers are involved with finance.

Poor financial planning and execution are the major causes of business failure.27 Purchasing
is responsible for managing a lot of the financial resources available within a firm. There is a
delicate balance between economic conditions and an organization’s financial resources. In
some cases, it makes sense to allocate the organization’s finances to forward purchases to
avoid a higher price. However, this is a decision that must be made carefully. There are many
instances in which purchasers decided that forward buying made the most sense, but then
prices fell and the purchaser was “stuck” with high-priced inventory.

Finance also has to be willing to pay suppliers in a timely manner. Delayed payment of
invoices has serious implications on the buyer-supplier relationship and may also impact
future pricing. Delaying payment to suppliers is a way to improve cash reserves; however,
suppliers demand timely payments to obtain their own resources.

In later chapters, financial analysis both internally and externally on some key supply chain
metrics help to formulate strategy and mitigate risk. For example, looking at a supplier’s
cash-to-cash flow can tell you whether they are effectively managing both payments and
receipts. Managing a supplier’s change in revenue compared with a change in costs can tell
you how efficiently a supplier uses its resources. The same is true within your own
organization. Keeping an eye on days payable and receivable outstanding can help minimize
surprises.

As presented earlier, supply management has a major impact on ROI. Being efficient and
effective in purchasing can significantly reduce the funds required to operate the firm. The
timing and quantities of purchasing expenditures can significantly impact a firm’s financial
ratios.

Purchasing and Information Technology (IT)

In a later chapter, the use of technology to improve supply operations is discussed. Trending
social network sites and other open-sourcing programs make it challenging sometimes to
keep up with the many market changes. IT helps purchasing streamline processes, increase
information, and obtain access to necessary data.

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Many firms purchase business-to-business e-commerce buy-side software systems from firms
such as Arriba, Commerce One, and PeopleSoft. These systems help to streamline the
purchasing process and facilitate communication internally and externally. Many of these
systems also include database technology that provides timely and accurate input to supply
management for strategic planning and tactical activities. Chapter 4 is dedicated to supply
chain technology, and types of e-sourcing tools and trends are discussed. The relationship
between purchasing and IT is changing as quickly as the technology to effectively source
products and services.

Purchasing and Logistics

Logistics is concerned with the movement of goods, sometimes both inbound and outbound,
to the organization. Usually, it controls outbound only. The logistics professionals design and
manage a firm’s distribution system, which consists of warehouses, distribution points, and
freight carriers. In some organizations, purchasing plays a dominant role in sourcing and
pricing of logistics services. In others, the logistics department performs these services with
little or no supply management involvement.

Generally, the sourcing and logistics roles are not linked. This is primarily because
warehouse management and transportation management systems are generally not linked to
e-sourcing tools. Also, the transportation aspect is performed at the plant or facility level,

26
whereas sourcing is often centralized at a more corporate level. There is also a lot of price
volatility in the transportation industry, which requires a different type of skillset to manage
and to measure supplier performance.

The primary idea in the linkage between sourcing and logistics is that whoever does the
sourcing should use professional purchasing practices. This is a growing area of opportunity
for collaboration and cost-savings. Many organizations have set their sights on improving
their transportation spend and, as mentioned earlier, reducing their carbon footprint in the
transportation area.

Purchasing and Legal

Legal professionals are frequently involved in contract negotiations and contract formation.
They review and approve contracts developed by the purchasing professional. However, there
is often little collaboration on working with the firm’s legal suppliers.

As with the logistics area, these intra-organizational relationships vary within the area of
services spend as indicated in the following case in point. This variation is often due to
budget ownership of the service. For example, marketing and advertising spend is usually
owned by the marketing area. The involvement of purchasing is often nonexistent or minimal
in an area of spend that is potentially a significant portion of the organization’s overall
expenses.

The Purchasing Process

Purchasing is a highly complex organizational process with objectives that reach far beyond
the traditional belief that purchasing’s primary role is to obtain goods and services in
response to internal needs. The overall goals of purchasing can be categorized in five major
sections: supply continuity, manage the sourcing process efficiently and effectively, develop

27
supply base management, develop aligned goals with internal stakeholders, and develop
integrated purchasing strategies that support organizational goals and objectives.

Development of a strategic sourcing plan is driven by the recognition that tactical sourcing
will not succeed in yielding a supply base that results in the benefits of collaborative
relationships and strategic alliances. The basic steps in the strategic sourcing process follows:

1. Discover potential suppliers.

2. Evaluate potential suppliers.
3. Select suppliers.
4. Develop suppliers.
5. Manager supplier relationships.

Discovering Potential Suppliers

The ability to discover qualified and competent suppliers has increased exponentially with the
introduction of the Internet. However, purchasers should not ignore other sources of
information that are available to ensure that the supplier pool consists of the most appropriate
suppliers whether domestic, nearshore, or offshore. Following is a list of resources to use in
establishing a robust list of potential suppliers:

 Supplier websites
 Supplier information files
 Supplier catalogs
 Trade registers and directories
 Trade journals
 Phone directories
 Mail advertisements
 Sales personnel
 Trade shows
 Company personnel
 Other supply management departments
 Professional organizations

Other strategic issues to consider in determining the list of potential suppliers include

 Company policy on single versus multiple sourcing

 Company policy on buyer’s share of supplier’s capacity
 Company policy on buying from minority- and women-owned business enterprises
 Company policy on environmental, health, and safety (EHS)-qualified or certified
suppliers

Evaluating Potential Suppliers

28
After developing a comprehensive list of potential suppliers, the supply manager’s next step
is to evaluate each supplier individually. The type of evaluation varies with the nature,
criticality, complexity, and dollar value of the purchase to be made. In 1983, Peter Kraljic
developed a matrix that helped to describe the type of relationship with the supplier according
to the criteria mentioned previously. is an adaptation of this matrix.

This step in the strategic sourcing process is key because there is a direct relationship
between supplier relationship management and supplier performance, risk management, and
brand and image. Purchasing’s relationship with the supplier depends on the classification of
the commodity in the matrix. The vertical axis is based on the importance of the purchase to
the buying organization, usually talked about in terms of total spend. However, it can be high
in importance because if you can’t find the item, you cannot produce your product or service.
Complexity is determined by the number of available suppliers. Fewer available suppliers
make the purchase more complex. This matrix is discussed more in depth and is used
extensively by sourcing professionals.

Many of the uncomplicated, low-dollar-value items require only a cursory evaluation process
because of the low importance and low risk to the firm. The role of the purchaser in this case

29
is to buy at the lowest price. The idea is to streamline the buying process for these items.
Locating suppliers for items in this category may include review of the supplier website or a
look at a business database such as Mergent OnLine to gather relevant information.

In comparison, for complex or high-dollar or other critical purchases, the evaluation process
is more involved, time-consuming, and costly. A key first step is to establish some knock-out
criteria: In other words, what are some important concerns that if the supplier doesn’t have
these, they can’t do business with your organization? Some examples include the size of
facility, location of facility, past experience with similar requests, and litigation or EHS
issues. There are a number of other evaluation techniques used to assess the suppliers.

Evaluation Techniques for Potential Suppliers

Technique Description

Supplier Surveys ask a number of questions of the supplier, including referrals,

surveys references, P&L history, defect rate, and quality management system.

Financial Financial analysis can often prevent the expense of further study. This analysis
condition includes key financial metrics and ratios that assess the financial stability of
analysis the supplier. Credit ratings can also help determine whether the supplier can
meet the demands.

Third-party Trained third-party organizations are often hired to evaluate and audit
evaluators suppliers or even processes like handling of hazardous waste.

Evaluation Face-to-face discussion can help clarify specifications and determine whether
conference a supplier can meet the demands of a complex purchase.

Facility visits Many suppliers look good on paper, but visiting a site can help determine
whether there are inefficiencies. These visits usually include a crossfunctional
team with both strategic and tactical participants from the buying firm.
Weighted scorecards are often used during evaluation.

Quality The quality department and top management help to shape the quality

30
 Technique Description

capability capabilities of a firm. Understanding the supplier quality philosophy and past
analysis quality performance can help determine whether the supplier is in alignment
with the buying company.

The supplier’s strategies must also be aligned with the strategies of the buying organization.
A supplier scorecard is usually cross-functionally developed with weights assigned to the
different areas. (The scorecard and evaluative criteria are also discussed further in Chapter 2.)
The final score on the scorecard helps to narrow the supplier pool but also allows the
evaluator to focus on those things that are critically important to the buying organization.

The four focus areas listed (early supplier involvement, ethical considerations, environmental
considerations, and social considerations) need additional consideration with each of the
suppliers. It often depends on where the commodity or service is classified on the matrix,
what type of relationship you have with the supplier, and where the supplier is geographically
located because legal and cultural laws influence all these criteria.

Selecting Suppliers
When the supplier pool is reduced to a manageable level and one or more potential suppliers
has passed the initial evaluation process, the purchasing manager or sourcing team can invite
potential suppliers to submit bids or proposals. Purchasers have to decide whether to use
bidding or negotiation, or some combination of both. Reverse auctions are often utilized here
(depending on the classification).

As mentioned earlier, the final selection of suppliers is often based on a supplier scorecard or
weighted factor analysis. Developing a weighted scorecard consists of four primary activities:

 Develop the factors that serve as the selection criteria and the weight that each of those
factors carries in decision making. What areas are critical to your organization for this
type of commodity or service? For example, a paper company has to buy significant
quantities of starch for its manufacturing process. Starch is truly a commodity and the
primary consideration is price.
 Expand the subfactors or performance factors within the broader selection criteria and
the weighting of those factors. An example might be financial performance and key
ratios of inventory turnover, return on assets, or even profitability.
 Establish a scoring factor to evaluate potential suppliers. This is generally the scale used
for evaluation: 1 through 5, for example. The raters have to be clear on what a 1 is
compared with a 5.

31
  Score and evaluate each supplier. This is generally done individually by those who have
a relationship with the supplier and for those who have access to the information. For
example, on-time delivery may not be known by all members, but the person responsible
rates the supplier. The scores are all compiled and totaled to get to the scorecard
“number.”

Careful evaluation of the suppliers using the scorecard enables the appropriate selection of
the supplier that clearly supports the needs of the buying organization. It is possible that the
highest number is not the best supplier simply because the highest priority factor is what
actually matters (for example, quality).

Developing Suppliers
Supplier development is any activity undertaken by a buyer to improve a supplier’s
performance or capabilities to meet the buyer’s short- and long-term supply needs. There is
sometimes conflict between the buying firm and the supplying firm, especially if a supplying
firm does not see the need for post-development. Also, it is critical for purchasers to have a
defined set of performance metrics that are transparent to the supplier and established goals
for development. Effective supplier development requires the commitment of financial
capital and skilled personnel, timely and accurate information sharing, and process
improvement. More detail on supplier development is provided in later chapters.

Managing Suppliers
Key performance metrics are in place to help manage the suppliers. However, purchasers
must assess the supplier’s capabilities to meet the firm’s long-term needs. The buyer must be
willing to ask the supplier about general growth plans, design capabilities, and future
production capacity. An important part of managing the supplier is building and maintaining
the appropriate relationship. More detail on supplier management is provided in later
chapters.

Strategic and Tactical Roles of Purchasing

There are a number of key strategic roles and tactical responsibilities for purchasing
embedded in each of the process steps. Purchasing’s “span of control” gives them final
authority over certain matters. However, the internal customers (or budget owners) have a
strong influence over many important decisions. Some of these key strategic roles and tactical
responsibilities for purchasing are listed here. All these are discussed in greater detail in later
chapters.

Strategic Roles of a Purchaser

 Spend Analysis
32
  Demand Management and Specifications (Statement of Work)
 Category Management
 Contract Management
 Cost Management
 Managing and Improving the Procure to Pay Process
 Supplier Relationship Management
 Establish a Supply Management Strategy

Tactical Responsibilities of a Purchaser

 Supplier Identification/Evaluation/Selection
 Forecast and Plan Requirements
 Needs Clarification: Requisitioning
 Purchase Requisitions/Statement of Work
 Review Forecasts and Customer Orders
 Establish a Reorder Point System
 Stock Checks (Cycle Counts)

Types of Purchases
Organizations buy many different goods and services. As previously indicated, the challenge
for purchasing is deciding on the supplier that offers the best opportunity for items an
organization must purchase externally. lists and describes many of the items that a purchasing
department is responsible for buying. Services are a special category of spend and the
involvement of purchasing depends on the organization.

Different Types of Purchases

Type of Purchase Description Examples

Raw materials Items with a lack of processing by the Petroleum, coal, lumber, copper,
supplier into a newly formed product. zinc, gold, and silver
Often these raw materials are not of
equal quality and are purchased by
“grade.”

33
Type of Purchase Description Examples

Semi-finished All items purchased from a supplier Components, subassemblies,

products and required to support an organization’s assemblies, subsystems, and
components final that are production. systems (seat assembly, steering
assembly, doors, and posts)

Finished products Products for internal use or products Furniture, computers, cars, and
that require no major processing before carts
resale to the end customer.

Maintenance, repair, Items that do not go directly into an Spare parts, office and cleaning
and operating items organization’s product but are required supplies
(MRO) to run the business.

Production support Materials required for packaging and Tape, bags, inserts, and shrink-
items shipping. wrap

Services Services required to support the Customer support, temporary

facility or the business. labor, facilities, and legal

Capital equipment Assets intended to be used for more Machinery, computer systems,
than one year. and material-handling equipment

Transportation and A specialized type of service buying to Rail, truck, ocean, 3PL, and
third-party manage inbound and outbound multimodal
purchasing material flows.

34
35
ABOUT FUTURE GROUP

36
ABOUT FUTURE GROUP

Future Group is an Indian conglomerate company founded by Kishore Biyani, headquartered

in Mumbai, Maharashtra, India. The company is known for having a significant prominence
in Indian retail and fashion sectors, with popular supermarket chains like Big Bazaar and
Food Bazaar, lifestyle stores like Brand Factory, Central, etc. Its is now owned by Reliance
Retail. The group also has a notable presence in integrated foods and FMCG manufacturing
sectors. Future Retail Limited and Future Lifestyle Fashions Limited, two operating
companies of Future Group, are among the top retail companies listed in BSE with respect to
assets, and in NSE with respect to market capitalisation.
Future Group is a corporate group and nearly all of its businesses are managed through its
various operating companies based on the target sectors. For e.g., retail
supermarket/hypermarket chains Big Bazaar, FBB, Food Bazaar, Food Hall, Hometown, etc.
are operated by its retail division, Future Retail Limited, while its fashion and clothing
outlets Brand Factory, Central, and Planet Sports are operated via another of its subsidiaries,
Future Lifestyle Fashions Limited.[5] Furniture is retailed through HomeTown stores in major
cities and online. With these many fashion outlets and supermarkets, the group also promotes
its fashion and sports brands like Indigo Nation, Spalding, Lombard, Bare, etc.,
and FMCGs like Tasty Treat, Fresh & Pure, Clean Mate, Ektaa, Premium Harvest, Sach,
etc. It also has operating companies to cater specifically to internal financial matters and
consulting within its group of companies.
On May 2012, Future Group announced a 50.1% stake sale of its fashion
chain Pantaloons to Aditya Birla Group in order to reduce its debt of around ₹8,000
crore (equivalent to ₹120 billion or US$1.7 billion in 2019). To do so, Pantaloons fashion
segment was demerged from Pantaloons Retail India Ltd; the latter was then merged into
another subsidiary—Future Value Retail Ltd—and renamed to Future Retail Ltd.
On 21 November 2014, Future Consumer Enterprises Limited acquired the 98% from Actis
Capital and other promoters. With that, Nilgiris is a fully owned subsidiary of Future
Consumer Enterprises Limited (FCEL). Future Retail Ltd. is listed on  in S&P BSE 200. It
Belongs to A group company
On 29 August, 2020, it was announced that Reliance Retail had reached an agreement with
Future Group to acquire its retail and wholesale business, and also its logistics and
warehousing businesses for $3.4 billion. This takeover is yet to be approved by SEBI, NCLT,
CCI and other regulatory bodies.

37
Rewrite Rules, Retain Values – this simple idea has been at the core of our business since the
inception of Future Group. Today, a wide portfolio of brands in food, FMCG and fashion,
complement the country’s pioneering modern retail networks. More than 600 million
customer visits are recorded across the 2,000 Future Group retail stores, covering over 24
million square feet of space in over 400 cities and towns. Millions more interact with group’s
brands and businesses through ecommerce sites, social media and mobile apps like FuturePay
and EasyDay Club. Future Group’s food value chain operates with its nation-wide network,
reaching the smallest towns and cities with its sourcing and manufacturing units, and
integrated distribution systems. Tasty Treat, Golden Harvest, KarmiqKara, Sunkist,
ThinkSkin, Mother Earth, Kosh, Nilgiris are among the leading brands from the Future
Group. In fashion, our manufacturing facilities produce garments designed and sourced by a
talented team of trend-spotters, designers and merchandizers. Brands like Lee Cooper, John
Miller, CoverStory, Indigo Nation, Scullers, Knighthood, DJ&C, Bare, UMM, and Ancestry
are some of our key brands. The flagship retail brand Big Bazaar is ranked among the most
valuable Indian brands (Interbrand), and among the most trusted brands (Nielsen). Leading
department store network, Central, smart prices retailer, Brand Factory, and popular fashion
destination FBB are also a part of the group, along with a growing chain of small
neighbourhood stores, EasyDay and Heritage Fresh, and convenience stores WH Smith and
7-Eleven.

Stores of future group

 HomeTown, furniture retailer

 Koryo (Private Label)
 Food Bazaar
 Fashion at Big Bazaar (FBB)
 Aadhaar Wholesale
 HomeTown
 E Zone
 Foodhall
 Easyday
 Big Bazaar

38
 Nilgiris 1905
 Heritage Fresh
 HyperCity

Easyday

Easyday is an Indian retail brand that runs chains of consumer

retail supermarkets and convenience stores. The brand is wholly owned by Future Retail Ltd
Bharti Enterprises announced its foray into retail in February 2007[2] and the first store was
opened in Punjab in April 2008. Easyday presently has 523 stores across 12 states.
Future Group, that owns and operate Big Bazaar, combined retail operations with Easyday in
May 2015. The merger has created one of India's biggest retail chains with more than 890
stores in 246 cities in India.

39
In 2006, Walmart initiated talks with India-based Bharti Enterprises to enter the Indian
market[6] as India's restrictive commercial laws prohibited most foreign companies from
setting up stores to compete with domestic retailers. Subsequently, they set up an equal joint
venture to float a company called Bharti Walmart Private Limited in 2007, with the intention
of doing wholesale business, through Best Price Modern Wholesale stores.[8] It was decided
that while Walmart would work towards back-end cash & carry supply chain for the
wholesale operations of Bharti Walmart; it would also provide expertise including
technology, supply chain, logistics and management support to the retail stores, Easyday,
which will be run a wholly owned subsidiary of Bharti Enterprises named Bharti Retail
Private Limited. Bharti Retail was set up in April 2007 with the target an annual turnover of
about $3.65 billion by 2015. The major challenge for Easyday stores was the competition
from small scale retailers who controlled about 97% of the Indian retail business. They
organized protests against Easyday, which was supported by a section of politicians. Amid a
stiff resistance from the opposition political parties, the Indian government allowed
51% Foreign Direct Investment in multi-brand retail in September 2012, which could enable
Walmart to do direct retail business in India.
While deciding on naming the stores, Bharti Enterprises chose not to use the name Walmart
in the brand name, even though the operations of the store largely depended on Walmart's
collaboration. It was done to avoid any repercussions by the usage of a foreign brand name,
keeping in view the stiff opposition against potential job and business losses caused by a
foreign brand. Also, Asipac Projects, a retail consultancy commented, "Walmart prefers to be
not known by its brand name until it's not in 100% control in a country. In India, till the
Easyday stores do not look and feel exactly like a Walmart store in the US, they would not
give it the brand name."

On 25 April 2008, Bharti Retail made their first official entry in the retail business with the
inauguration of three Easyday stores in Ludhiana, Punjab, which is the hometown of Sunil

40
Bharti Mittal, the chairman of Bharti Enterprises. Those stores measured 2,500 to 4,500 sq.
ft. The first batch of the employees at the stores were local residents, who were given training
at Bharti Retail's training facility. Bharti Retail stressed that it would employ local residents
at their stores, and would also generate new employment options to vendors of fruits,
vegetables and meat, as well as to housewives and retired people. "These initiatives will help
facilitate inclusive growth in communities in which its stores operate," it said.
The company made plans to expand zone-wise, starting with the northern part of India. By
November 2008, the company had 12 stores operational and in the next month, Easyday
opened its first medium-sized retail store, labelled Easyday Market, in Ludhiana, Punjab.
In May 2009, Easyday opened its first store in Delhi NCR. Easyday had its retail operations
running in 70 stores by May 2010 in the states of Punjab, Haryana, Uttar Pradesh, Rajasthan,
among others.
Easyday currently operates in 15 states - West Bengal, Jammu and Kashmir, Himachal
Pradesh, Punjab, Haryana, Delhi, Jharkhand, Uttarakhand, Uttar Pradesh, Rajasthan, Madhya
Pradesh, Chhattisgarh, Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu in over 168
towns and cities. The number of stores functional is 523  catering to about 76,000 customers
every day.
Easyday sells items and products of various brands keeping in mind the requirements of the
local and regional needs. A typical Easyday store sells groceries including fresh produce
inclusive of fruits, vegetables & milk; cereals, meat, poultry, dairy and baked products,
canned goods, soups, grains, snacks, cookies, chips, condiments, beverages, sauces, spices,
and candy; beauty products like toiletries, fragrances, makeup, shaving and skincare items;
health care items; apparel, hosiery, shoes & accessories; books and stationary; toys; gifts;
kitchen ware; home improvement products including tools, lighting, & electronic accessories;
and items related to religion. Easyday has also partnered with Moneygram International that
provides customers the facility of money transfer at their stores. This facility was initially
launched at 121 stores in May 2011.

BIG BAZAAR

41
Big Bazaar is an Indian retail chain of hypermarkets, discount department stores,
and grocery stores. The retail chain was founded by Kishore Biyani under his parent
organisation Future Group, which is known for having a significant prominence in Indian
retail and fashion sectors. Big Bazaar is also the parent chain of Food Bazaar, Fashion at Big
Bazaar (abbreviated as fbb) and eZone where at locations it houses all under one roof, while
it is sister chain of retail outlets like Brand Factory, Home Town, Central, eZone, etc.
Founded in 2001, Big Bazaar is one of the oldest and largest hypermarket chains of India,
housing about 250+ stores in over 120 cities and towns across the country.

Big Bazaar was founded in 2001 by Kishore Biyani, the founder and chief executive officer
(CEO) of the parent company, the Future Group.
Indian actress Asin and the former captain of Indian cricket team, Mahendra Singh
Dhoni have previously endorsed for the fashion vertical of myebaymart.
In 2020, burden with debt, Big Bazaar was sold to Reliance Industries in a sale transaction of
₹27,513 crores.
A tribal girl from Tripura, Barkathal was mentally harassed by being accused of theft by Big
Bazaar, Agartala in front of many people which led the girl to commit suicide at her home.
Many youth wings protested in front of the mall in Agartala demanding justice.
In 2020, Big Bazaar was acquired by Reliance Retail, the retail division of the Reliance
Industries in a sale transaction of ₹27,513 crores($3.38 Billion).

42
Nilgiris 1905

Nilgiri's is a supermarket chain in South India. It is also one of the oldest supermarket chains
in India with origins dating back to 1905 and hence its products are sold under the brand
name of "Nilgiris 1905". It also has a store brand, and produces dairy, baked goods,
chocolates, and other products under the same name.

The origin of this supermarket chain can be traced back to Muthuswamy Mudaliar of Erode
district in Tamil Nadu. Muthuswamy Mudaliar was a mail runner for the British in colonial
India. He carried letters and cheques for the British from Coimbatore to the hill stations of
Ooty and Coonoor. As he was flooded with requests to carry dairy products and other items,
he opened a small shop in 1905, after buying the butter business of an Englishman in
Vannarpet and soon, "The Nilgiri Dairy Farm Ltd." was established.

43
In 1936, he moved his shop to Brigade Road, Bangalore. The Nilgiri Dairy Farm Ltd.
specialized in dairy, dairy products, bakery and chocolates. In 1962 Nilgiris set up a
specialized dairy plant in Erode. This pasteurization plant was used to manufacture Nilgiris'
store brand of dairy product. The produce was supplied to Bangalore on a daily basis from
Erode. Muthusamy's son Chenniappan expanded the company by setting up a modest store in
Bangalore to sell Nilgiris' own brand of products. However, after Chenniappan's visit to the
U.S. and Europe, he expanded the store into a larger supermarket. Though Chenniappan was
influenced by the supermarket concept in the U.S. and Europe, he developed the Nilgiris
supermarket to fit in with the local culture and set guidelines for its growth. Soon, the Nilgiris
supermarket chain spread to Erode, Coimbatore and Chennai.

In September–October 2008, Actis, a UK-based private equity investor, invested US$65

million in the Nilgiris Group in order to strengthen the group's manufacturing and franchising
operations in South India. This investment has given Actis a controlling interest (more than
51% stake) in the Nilgiris group. On November 21, 2014, Future Consumer Enterprises Ltd.
acquired the 98% from Actis Capital and other promoters. With that, Nilgiris is a fully owned
subsidiary under Future Consumer Enterprises Ltd(FCEL), which is a Future
Group Company.

44
HyperCity

Founded in 2006, HyperCity Retail India Ltd. was part of the K. Raheja Corp. Group (Owner
of Shoppers Stop department store) . Now Future Group owns it. Yes it does
HyperCity opened its first store in Malad, Mumbai. Today, a total of 20 stores have been
launched, since the company's founding and a presence has been established in cities
including Hyderabad, Bangalore, Jaipur, Bhopal, Navi
Mumbai, Ahmedabad , Vadodara , Pune, Delhi-NCR , Panvel and Thane 

45
FOOD BAZAAR

Food Bazaar invites you for a shopping experience in a unique ambience. At Food Bazaar
you will find a hitherto unseen blend of a typical Indian bazaar and International supermarket
atmosphere.
Flagged off in April’02, Food Bazaar is a chain of large supermarkets with a difference where
the best of Western and Indian values have been put together to ensure your satisfaction and
comfort while shopping.

46
The western values of convenience, cleanliness and hygiene are offered through pre-packed
commodities and the Indian values of ‘see-touch-feel’ are offered through the bazaar-like
atmosphere created by displaying staples out in the open.
The best of everything offered with a seal of freshness and purity will definitely make your
final buying decision a lot easier.

47
Joint venture partnerships

48
Joint venture partnerships

Amazon-Future Retail
[Amazon-Future Retail] Biyani company valued at ₹43,000 crore: Amazon gets coupons to
invest in Future Retail. ... MUMBAI: Amazon has agreed to acquire an indirect minority
stake in Future Retail, the operator of Big Bazaar and EasyDay chains, ahead of an option to
buy all or part of the promoters' holding in the company after three years. Rajan Malhotra the
President – Retail Strategy at Future Group resigned in Nov 2019.

Generali Group
Generali is an Italian insurance company, having business in India through a joint venture
with Future Group under the brand name Future Generali Insurance. Future Generali operates
in India having through two primary legal entities namely Generali India Life Insurance Co.
Ltd. (Life Insurance) and Generali India Insurance Co. Ltd. (Non-Life Insurance). Since
2013, Future Generali held talks of a possible merger with Larsen & Toubro Ltd. to form a
general insurance company but a year later, on 22 April, Future Group backed out of merger
leading to premature closure of the talks.

Staples Inc

49
Staples Inc., a United States-based office supply retailer, has a presence of over nine cities
in India under the joint venture with Future Group. As of April 2013, Future Group has 60%
stake in the partnership.

Skechers
Skechers entered India through a JV with Future Group in 2012. Sketchers ends joint venture
with Future group in February 2019 by buying 49% stakes.

Celio
French fashion Celio entered Indian markets in 2008 through a 50:50 joint venture with
Future Group's then retail hand, Pantaloons Retail India Ltd (now Future Retail Ltd). On
November 2013, Celio hiked its stake in the joint venture to 65%.

Clark
C&J Clark International Ltd. is a UK-based footwear and accessories retailer. The Future
Group has entered into a 50:50 joint venture (JV) to form 'Clarks Future Footwear Ltd'. The
JV launched its first (1,600 sq ft.) stand-alone store in Connaught Place, Delhi on 19 April
2011. The brand seeks to gain a share of the premium segment in this category. 

Reliance Retail Acqusition

On 29 August, 2020, it was announced that Reliance Retail had reached an agreement
with Future Group to acquire its retail and wholesale business, and also its logistics and
warehousing businesses for $3.4 billion.

BENGALURU: Mukesh Ambani's Reliance Industries Ltd will pay between Rs 24,000 crore

and Rs 27,000 crore ($3.2-$3.6 billion) to buy the Indian retail chains owned by Future

50
Group, a business newspaper reported on Tuesday, citing two sources familiar with details of
the deal.

Asia's richest man, Ambani has been buoyed by investments close to $20 billion from
backers including Google and Facebook in his oil-to-telecoms conglomerate, and is seeking
to strengthen his hand in India's huge retail sector.

Reliance's existing retail operation already runs close to 12,000 stores, including a cash-and-
carry wholesale business, in over 6,700 Indian towns and cities.

Owned by India's "father of modern retailing", Kishore Biyani, Future Group is home to

supermarket chain Big Bazaar, upmarket food stores FoodHall, and bargain clothing chain
Brand Factory.

A series of media reports have said the two were nearing agreement on the deal.

Ratings agency ICRA estimates https://www.icra.in/Rationale/ShowRationaleReport?

Id=95108 total debt at Future Group's listed companies had risen to 127.78 billion rupees by
September last year and the company has since faced widespread closures under India's
coronavirus lockdowns.

Mint cited its sources, speaking on condition of anonymity, as saying the sale value included
Future Group's liabilities.

Five listed entities, including Future Retail Ltd, will be merged into Future Enterprises
Ltd (FEL) before the sale to one of the retail subsidiaries of Reliance, the paper added.

In May, Reliance launched JioMart, an online grocery service in a move aimed at rivaling
Amazon.com's local unit and Walmart Inc's Flipkart in the huge Indian market. Ambani plans
to list Reliance's digital and retail units over the next five years.

Future Group did not immediately respond to requests for comment on the deal value.
A Reliance Industries spokesperson said the company evaluates various opportunities on an
ongoing basis.

51
Mumbai: Reliance Industries (RIL NSE -0.04 %) on Saturday said its unit Reliance Retail
Ventures (RRVL) is acquiring the retail & wholesale business and the logistics &
warehousing business from the Kishor Biyani-promoted Future Group as going concerns on a
slump sale basis for a lumpsum amount of Rs 24,713 crore.

Analysts say the deal marks the company’s transition away from its energy business, towards
becoming a consumer-focused retail and telecom company.

The oil-to-telecom major, which is boosting its presence in the retail segment through
Reliance Retail, said the acquisition is being done as part of the scheme in which Future
Group is merging certain companies carrying on the aforesaid businesses into Future
Enterprises (FEL).

In a separate press release, FEL said its slump sale would include key formats such as Big
Bazaar, fbb, Foodhall, Easyday, Nilgiris, Central and Brand Factory.

Reliance Retail and Fashion Lifestyle (RRFLL) and RRVL will take over certain borrowings
and current liabilities related to the business and discharge the balance consideration by way
of cash, FEL said.

Under the scheme, the retail & wholesale undertaking is being transferred to RRFLL, a
wholly-owned subsidiary of Reliance Retail Ventures, along with the logistics &

52
warehousing undertaking.

RRFLL also proposes to invest Rs 1,200 crore in the preferential issue of equity shares of
FEL to acquire 6.09 per cent of post-merger equity, and Rs 400 crore in a preferential issue of
equity warrants which, upon conversion and payment of balance 75 per cent of the issue
price, will result in RRFLL acquiring further 7.05 per cent of FEL.

RIL said the acquisition of the retail, wholesale and supply chain business of the Future
Group complements and makes a strong strategic fit into Reliance’s retail business.

“The Future Group was under pressure due to piling debt and servicing issues, and the stake
sale to RIL was best fit for them as they were compelled to sell assets. RIL had a war chest
after the mega fund raising. For RIL, they now need not build the wholesale, logistics and
warehousing unit,” said Hemang Jani, Head - equity strategy, broking & distribution at
Motilal Oswal Financial Services.

On August 24, the group managed to avert a default by making a payment of Rs 100 crore or
$14 million on its foreign bonds.

“The key businesses for RIL are now telecom and retail, and energy just remains a legacy
business. This also means oil & gas business will only contribute 20 per cent to the SOTP
(sum of the parts) valuation,” said Jani, adding that RIL shares may see an uptick on Monday.

53
Ajay Bodke, CEO-PMS, Prabhudas Lilladher, said, "RIL is marching confidently towards its
goal to emerge as a consumer-focused play, with Jio’s digital platform and now even stronger
retail business."

“The market had more or less discounted the deal, and broad contours were also known. It is
a rescue for the highly indebted Future Group and its promoters,” he added.

Bodke said the market is expecting further induction of strategic and/or financial partners in
the retail business.

“It will be no surprise if we see unlocking of value in the retail business as well,” he said.

He pointed out that the deal adds to Reliance Retail’s offline presence and they get access to
a wide network, logistics and warehousing business, and is a good fit.

“It will be interesting to find out what happened to Amazon’s minority stake in one of the
Future Group companies,” he added.

The deal will help Reliance Retail accelerate its support to millions of small merchants in
increasing their competitiveness and enhance their income during these challenging times, the
firm said in a statement.

“We hope to continue the growth momentum of the retail industry with our unique model of
active collaboration with small merchants and kiranas as well as large consumer brands,” Isha
Ambani, Director, Reliance Retail Ventures, said.

The company said Future Group’s portfolio composition in apparel, general merchandise and
FMCG brands will allow for a wider offering to its customers.

The deal could help RIL in its deep discounting strategy for JioMart, the e-commerce
venture, which was launched two months ago that competes with Amazon and Flipkart.

Experts feel if Reliance Industries controls the entire value chain, they can use their
bargaining power to beat down prices or introduce their cut-price versions to earn higher
margins.

54
This acquisition is subject to SEBI, CCI, NCLT, shareholders, creditors and other requisite
approvals, it added.

India’s retail market is expected to grow 8 per cent compounded annually to $1.32 trillion by
FY26 from $822 billion at present.

Within this, organised retail is seen growing at 17 per cent compounded annually to $230
billion from $89 billion, as the share of organised retail is seen rising to 18 per cent of the
market by them from 11 per cent.

On Friday, RIL shares closed 0.2 per cent higher at Rs 2,115.60 on the Bombay Stock
Exchange, while benchmark Sensex climbed 0.9 per cent to 39,367.31 points. They have
jumped 144 per cent from their March lows.

55
About CEO of future group

56
About CEO of future group

Kishore Biyani is an Indian Billionare businessman who is the Founder & CEO of Future
Group, one of India's biggest brick-and-mortar retailers. He is also the founder of retail
businesses such as Pantaloon Retail and Big Bazaar.
According to Forbes magazine, he had a net worth of US$1.78 billion in 2019.
Kishore Biyani comes from a family that has been involved in business since the time of his
grandfather, who opened a clothes shop in what was then called Bombay after moving there
from the village of Nimbi Jodha in Rajasthan. Growing up in the Malabar Hill area
of Mumbai, Biyani attended the city's prestigious H.R. College but thought little of his
studies, preferring instead to rely on a gut instinct and observation in business. He has said
that "I spent the better part of the day outside college with friends, wandering around new
places and understanding and interpreting the real world."
Biyani began working in the family fabric-trading business, Bansi Silk Mills, but became
frustrated with the conservative approach adopted there by his father, brothers and cousins. It
was around this time, in November 1983, that he married Sangita Rathi and also made his
first venture into business on his own account, commissioning the manufacture of some
fashionable fabric for sale to garment manufacturers. He progressed to selling his own brand
of clothing fabric and then to manufacturing trousers using it, which in turn led to the launch
of his Manz Wear garment manufacturing business in 1987. The business, which supplied a
few retail outlet, adopted the brand name of Pantaloon and soon expanded into retail itself
using a franchise model.
In 1992, Biyani floated 60% of his business on the Indian stock market to raise funds for
expansion, store improvements and marketing. He has admitted since that this expansion
across the country created logistical problems for the company, especially with regard to
managerial oversight of its franchisees. By 1994, the Pantaloon franchise was turning over 9
million rupees but with a smaller profit margin. Biyani looked to converting Pantaloon from

57
being a franchise operation to a direct retailer using the department store model, initially
renting and converting a 10,000 square feet (930 m2) property in Kolkata for that purpose.
This outlet, which was more than twice the size of any other store in the city, opened in
August 1997.
Known for a thrifty approach to running his businesses, with precepts such as modest
corporate travel and hospitality arrangements, Biyani has acknowledged the role of luck in
his business success at this time, which he says was the coincidence of his ambitious ideas
and the growth of an Indian middle-class with disposable income to spend. His success
continued with the opening of a series of stores under the Big Bazaar brand name from 2001.
These stores were designed deliberately to appear somewhat chaotic, like the
traditional bazaars with which his customers were familiar. By 2009, and despite the
worldwide economic downturn of 2008, there were over 100 of these stores across the
country, serving over two million customers each week, while Pantaloon Retail employed
over 30,000 people and had over 12,000,000 square feet (1,100,000 m2) of retail space across
1000 stores in 71 cities. Turnover in 2008 was 47 billion rupees.
Biyani, who has admitted to making "whimsical decisions", had ignored the prevailing
opinion of modelling retail businesses on those in the West and had instead concentrated on
concepts that were familiar to India. His method of communication with both the media and
financiers had been perceived as poor, as were his staff recruitment choices. Considered at
first to be an extravagant risk-taker lacking in worthy business connections, and shunned by
his peers for all of these reasons, Biyani's success with Big Bazaar had turned him into a
revered figure in the Indian retail sector and a magnet for media attention. He was running
the largest retailer in the country and was named as retailer of the year by the National Retail
Federation, which at one earlier point had refused even to admit him. He was, however,
facing a threat from the much larger resources of conglomerates such as Aditya Birla
Group and Reliance Industries, both of whom had signalled an intention to move into the
retail sector.
In addition to the threat posed by the conglomerates, the 2008 economic downturn affected
Biyani's business and his methods. There were postponements in planned expansion and
downsizing in some areas. Unlike other Indian retail chains, such as Shoppers Stop, that used
a small amount of short-term borrowing and then financed growth through cash generated
internally from sales, he had relied heavily on short-term borrowing for expansion and also
diversification into numerous retail areas, including book-selling and salons. Pantaloons
Retail had a debt-to-equity ratio of 3:1. Business journalist Samar Srivastava said of the
collapse of Lehman Brothers in September 2008 thatThe crisis that followed blew a hole in
Future group's portfolio. Sales plunged; bankers who until then had queued up at his offices
started to call in their loans; mutual funds that had invested in his companies buckled under
redemption pressures and decided to get out; sources of foreign capital dried; his market
capitalization plunged two-thirds in a matter of six months; and Biyani who had invested way
ahead of the cash flows from his network found himself trapped
Biyani reacted to the crisis with measures such as a considerable reduction in the numbers of
his mid-level management staff and a restructuring of his corporate interests. He appointed a
cousin, Rakesh Biyani, more methodical and patient than himself, to take over his
responsibility for the retail business and in particular to resolve issues with the poor supply
chain and internal distribution logistics that had resulted from rapid expansion. He
also rolled-over debt, converting it into loans that would mature in three to five years' time,

58
and pulled out of joint venture deals with companies such as Etam. In addition, he reduced
the scope, concentrating on four retail formats — fashion, food, home, and general
merchandise — rather than the 22 or more with which he had previously been involved.
[4]
 Despite his previous disparagement of the need for the professional advice of others,
Biyani turned to McKinsey and Company for assistance and also divested control to senior
staff who had been recruited from large businesses such as PepsiCo. Things appeared to be
improving after the initial shockwave of 2008.

Nonetheless, by April 2012, Biyani's business empire, including the non-retail elements, was
performing less than its competitors and there were concerns raised about its debt levels. He
announced that there were plans for a further restructuring of parts of the business to enable it
to become debt-free by March 2013. A controlling stake in Pantaloon Retail was acquired
by Aditya Birla Nuovo Ltd in May 2012 in a complex deal involving a demerger of the
business from the wider group, and there were subsequent further dilutions of Biyani's
involvement in the business. In 2016, it was renamed as Aditya Birla Fashion and Retail Ltd.
Through the Future Group — to which he has attracted talented senior employees from
companies such as ICICI and Reliance Industries – Biyani has taken an interest in business
sectors such as insurance and the media. He has had stakes in financial services, such as
the Future Capital business, and in agriculture through Future Agrovet, as well as the eZone
electronics retailer.[6] The Big Bazaar and Food Bazaar brands, which have been targeted at
cost-conscious consumers, were compared to Wal-mart.
Biyani has also had a foray into Bollywood, underwriting the critically panned box-office
failure Na Tum Jaano Na Hum and Chura Liya Hai Tumne that were released in 2002 and
2003 respectively.

59
PURCHASING BY
FUTURE GROUP

60
PURCHASING BY FUTURE GROUP
Before discussing the style of purchasing of future group let us discuss a bit about the
companies owned by future group. There are several fmcg companies and fashion companies.
We will divide the companies into categories.

Fashion and lifestyle (Brands)

Indigo Nation

Scullers

61
John Millers

All

Coverstory

62
DJ&C

Urban Yoga

Jealous 21

63
Integrated foods and FMCG (Brands)

NILGIRIS

Nilgiri's is a supermarket chain in South India. It is also one of the oldest supermarket chains
in India with origins dating back to 1905 and hence its products are sold under the brand
name of "Nilgiris 1905". It also has a store brand, and produces dairy, baked goods,
chocolates, and other products under the same name.
The origin of this supermarket chain can be traced back to Muthuswamy Mudaliar of Erode
district in Tamil Nadu. Muthuswamy Mudaliar was a mail runner for the British in colonial
India. He carried letters and cheques for the British from Coimbatore to the hill stations of
Ooty and Coonoor. As he was flooded with requests to carry dairy products and other items,
he opened a small shop in 1905, after buying the butter business of an Englishman in
Vannarpet and soon, "The Nilgiri Dairy Farm Ltd." was established.

64
Tasty Treat

Tasty Treat stands for a simple world where the sensory pleasure derived from consuming
delicious food over rules the rational idea of eating 'right'.
 
The brand is present in many ready-to-eat indulgence categories, from biscuits to namkeens,
beverages, sauces, ready-to-eat snacks, frozen snacks, candies, mithai and more. No matter
which category you try, Tasty Treat assures you of high quality deliciousness! Chak Chak
Chabao!

Fresh & Pure

Fresh & Pure products represent the raw beauty of nature in a pack. The brand evokes a
feeling of trust and solidity in your daily diet, delivered with least or no transmission loss.
Fresh & Pure sits naturally at the intersection of health and taste, in a ‘good-for-you’ space. It
makes no attempts to make things sensorially alluring, and adds no flavours, additives or
colours.

65
Ektaa

Ektaa is the common thread that unites India’s diverse cultures and regional variations, with a
commitment to providing a variety of wholesome, high quality foods for breakfast and
fasting. It is the go-to brand for the foodie generation that delights in the many micro-cultures
of India.

66
Kosh

KOSH the premium oat grain brand from Future Consumer Limited (FCL), Food and FMCG
arm of Future Group launches a nutritious range of Oats products. KOSH products are
available in various forms like Oats Atta (flour), Broken (Tukda) Oats, mixture of Wheat +
Oats Atta and Instant Oats created to help the homemaker prepare healthy and delicious food
as per the Indian palate.
KOSH Oats Atta is made by grinding and sieving whole oats into fine flour, which can be
used to make Roti, Chilla, Bhakri, Idli, Paratha, Dhokla etc. KOSH Broken (Tukda) Oats
offers the goodness of oats in smaller tukdas that can be used to prepare wholesome dishes
like Khichdi, Pulao, Biryani etc. Enriched with the goodness of fibre, KOSH is the only
brand that offers 100% Oats Atta and Broken Oats.

67
Karmiq

Karmiq is a positive approach to living. Inspired by ‘karman’, we help people take charge of
their well-being, through simple steps. Small changes they can make to welcome a world of
wellness in return. We believe it’s the small deeds that count.
 
So be it picking up dry fruits for those odd hour cravings, cooking your meal with olive oil,
or sipping on green tea when you take a break, we nudge you closer to making the healthier
choice. How? By sourcing our special range of products from all over the world, to give you
only the best!
All so that you can add some good karma in your wellness journey.
And we’ve only just started.

68
Mother Earth

In 1994, The Brand “Industree” was co-founded by Ms Gita Ram and Ms Neelam Chhiber to
tap the market of home accessories produced by artisans from rural India. In 2009, envisaging
the true potential Future Ventures invested in the company and the brand was rechristened as
“Mother Earth”.

Mother Earth is a tasteful lifestyle brand for people with an Indian design sense. Mother
Earth is one of the few lifestyle brands that represent Indian designs in a contemporary sense.

With investment from Future Ventures, Mother Earth scaled up and broadened its products
categories to include fashion, food (organic and natural) and a wider range of home linen as
well as a large range of home decor, furniture and gifts.

In 2009, Mother Earth opened its 11,000 sq ft large flagship store in Bangalore and has now
expanded into multiple sales channels selling its products via multi-brand outlets, franchisees,
online, exports and television, in addition to its own six stores.

69
Terra

Made with real whole vegetables, Terra chips are made with Non-GMO ingredients and are
gluten free. Terra Chips are:

Natural: of the earth but also beautiful and elevated made in small batch: each chip is made
in its own environment
Crafted: made with care and consideration
Modern: forward thinking but with timeless sensibility
Distinctive: you expect something different

Terra chips are manufactured at the Tumkur, Karnataka factory of Hain Future Natural
Products. The manufacturing facility makes use of the best practices for sanitation & hygiene,
allergen management and lab practices that facilitate a high quality of products.

70
Now let’s discuss the purchasing style of future group. Future group uses hybrid style of
purchasing through which they get the advantages of both centralised purchasing and
decentralised purchasing and minimise the disadvantages of both. Hybrid procurement
operating structures, which combine a central procurement base with distributed teams of
buyers, are designed to strike a balance between global and local governance. Scale and
adaptability combined.
By all measures, respondents to a series of Procurement Leaders ‘pulse’ surveys reported
hybrid operating structures to be less effective than centralised ones in supporting
procurement’s objectives. The analysis found centralised operating structures more
effectively supported the generation of cost savings, alignment with stakeholder needs,
functional efficiency, innovation rates and more.
 
What’s more, those respondents with hybrid structures were more than three times as likely
as those with centralised ones to agree that changing their operating model from its current
form would enable them to achieve their objectives faster. While there was insufficient data
to make such comparisons with decentralised structures, the findings suggest hybrid models
are at best difficult to operationalise and at worst ineffective, comparatively speaking.

The major advantage of hybrid structure is the increased efficiency. This structure makes
sure that the right quantity of work is assigned at the right time to the right professionals,
thus making the optimum use of resources and prevention of waste. This structure works
very well even when the resources are scarce. As the specialised staffs are readily
available, projects are launched quickly, thus increasing the efficiency of the organisation.
71
In hybrid structures groups are formed considering the specialisations as well as services.
Thus employees with different skills are mingled together which gives an opportunity to
learn and develop a variety of skills from many other participants. This is the main
advantage of hybrid structure in terms of the personal growth of employees, which can be
later utilised by the organisation. This also results in minimisation of projects costs, as
resources can be shared.
The hybrid organizational structure is more flexible than divisional and functional
structures. There exists a healthy relationship between the senior managers and junior
employees. This helps in addressing all employee problems easily, thus increasing the
effective output from the employees.
Means future group give authority to there branch managers to buy the goods that are
perishable in nature like eggs, paneer, milk and vegetables etc. and supply non perishable
goods from there head-branch. This will allow them to work efficiently and to attain there
organisational goals.

Effect of covid-19 on future group

Future Group founder Kishore Biyani on Wednesday said the homegrown retail major lost

nearly Rs 7,000 crore revenue in first three-four months of the COVID-19 pandemic due to

closing of stores, which led him to sell his business to Reliance Industries.

72
In August this year, billionaire Mukesh Ambani's Reliance Industries announced acquisition

of retail and wholesale business and the logistics and warehousing business from the Future

Group as going concerns on a slump sale basis for Rs 24,713 crore.

"We got into a trap to be very honest with COVID-19. In the first 3-4 months, we lost nearly

Rs 7,000 crore of revenue," Biyani said at the Phygital Retail Convention.

There was no way the company could have survived losing such an amount, he said, adding

the problem is rent doesn't stop, interest (on debt) doesn't stop.

73
OBJECTIVES OF THE
STUDY

74
 OBJECTIVES OF THE STUDY

This being a part of the food and human resource & development sector so the most
important thing in this sector is the quality material and prompt delivery of the
materials. In this regard the production, purchase, inventory department of any
organization plays the most important role. Therefore, the main objective of this study
is to know how purchase, production and storage of materials and the
information related to the product takes place in the company to improve quality and
delivery of goods.

The objectives, behind the study are as under:

1) To find the degree of Quality Control implemented in the organization.

2) To study the level of commitment of employees toward their work.

3) To find out factor influencing the commitment.

4) The Objective of the study of purchasing style used by Future group in India.

5) To know the role of purchase Management in future group.

6) To know the importance of purchasing.

7) To know the types of purchasing System.

8) To know the Development of purchase Management.

9) To gain knowledge of the various tools and their features through observation method

and through secondary data.

10) To make available the right quantity of right quality products at the right place and

time in right condition.

75
11) To offer best service to consumers.

12) To reduce the cost of operations.

13) To maintain transparency in operations.

14) To analyze the purchasing management of future group.

15) To improve the customer experience, and ensuring that employees are up to

speed with training.

16) To trace out drawbacks of the current system .

17) To make people aware of purchasing

76
 OPERATIONALISATION OF THE CONCEPT

I have studied on impact of employee’s commitment toward work and an

organization. I have explained earlier. In the company , they already have implemented
PURCHASING MANAGEMENT so through this Project report, I measured the degree
of implementation in the organization and what are the factor that are affected the
commitment lever and to check how much they are satisfaction with the STYLE OF
PUCHASING implement.

For this purpose, I have made the questionnaire which consisting of multiple - choice
questions. I have collected the data from them and after that I have tabulated them
and interpreted them and give the recommendation.

Focus of the problem:

The main emphasis will be on to find out quality employee’s commitment toward
their work as a result quality control implementation.

Review of Existing literature:

Many people have work on this topic. They sum up various finding. They found
that apply PURCHASING Management has directly increased their organisation profit;
increase the satisfaction lever and commitment toward their work. These are the
finding of various researchers. Several articles have been published in different
journals, magazines and newspaper such as ECONOMICS TIMES, NATIONAL
GEOGRAPHY etc. But the effect of PURCHASING Management on profit and
employees commitment in the company has so far not undertaken. This project
has been done first time on the Indian company.

77
 RESEARCH
METHODOLOGY

78
 RESEARCH METHODOLOGY

Research methodology is a way to solve the research problem in a

systematic manner. It may understand as a science of studying how the
research is done significantly. The methodology may differ from problem to
problem, yet the basic approach towards the research remains the same. The
sequence or steps followed have been explained as under:

A. UNIVERSE AND SURVEY POPULATION

The universe is the employee working at these future group stores. I have
selected 20 people 10 employees FROM THE STAFF, 10 FROM THE
WORKER for the survey.

B. RESEARCH DESIGN

This research is of EXPLORATARY RESEARCH DESIGN. I have used the

questionnaire method for collecting the data.

C. ANALYSIS PATTERN

Data collection: This data is primary data, which I have been collected with
the help of questionnaire. I have prepared a questionnaire on the basis of the
factors responsible for employee’s commitment in the organization

D. MACRO ANALYSIS (Inferences & Interpretation)

79
The detailed analyses of the results are explained below:

MOST OF EMPLOYEES FEELS THAT:

Most of the staff member and worker feel that organization is quality
conscious toward the employees. This also increases their commitment toward
the work and toward the organization.

Some of the employee’s feel that they have proper information about the
policies, practices followed in the organization. But some of employees feel
that there is no proper communication.

Some of the customers feel that there is no proper information regarding good
quality of food and policies

Some the customers feel that there is no awareness regarding quality concerns.

Most of the facts related with the organization are hided by the management
from the employees.

Most of the employees feel that they don’t get rewarded for their good performance.

Most of the staff’s member feels that their performance is properly measured in the
organization.

80
SOURCES OF DATA

81
 SOURCES OF DATA

To achieve the objective of studying the purchasing style of future group data has

been collected.

Research methodology carried for this study can be two types :

1. Primary

2. Secondary

PRIMARY DATA

Prime data are those which are collected a fresh and for the first time, and thus

happen to be original in character it was collected through following ways

1) Interview

2) Observation

3) Questionnaire

SECONDARY DATA
Secondary data are those which have already been collected by someone else and
which have already been passed through the starically process the data were collected
in the form in company profile and produce profile through following ways
1) Internet

2) Newsspapers

3) Journals

82
 LIMITATIONS

1. Employees of the organization may hide the fact.

2. The management did not agree to disclose all the confidential data.

3. Numbers of respondents are very less, so clear conclusion can’t be

drawn.

4. The time constraint was one of the major problems.

5. The study is limited to the different stores of the future group

6. The study is limited in selected areas only.

7. The lack of information sources for the analysis part.

8. Can not take a large sample of stores due to covid-19

83
ANALYSIS OF DATA

84
 ANALYSIS OF DATA

The data analysis of the study conducted shows that what are the verdicts of the
respondents working in these stores of future group.

Questions to the respondents to understand the workers awareness in

purchasing style of future group:-

Q1. Age group of workers :-

Particulars Below 25 years 25-35 years 35 and above

Respondents 5 12 3
Percentage 25% 60% 15%

14.00

12.00

10.00

8.00
WORKERS
6.00 PERCENTAGE

4.00

2.00

0.00
Below 30 years 30-60 years 60 and above

25% respondents were below 25 yrs age group however 60% respondents were 25 -
35yrs age group and rest 15% which are 35 and above.

85
Q2. In which department or service are you deployed ?
A. Purchasing
B. Marketing
C. Quality
D. Finance
E. Inventory
F. Other(s)

Purchasin
Particulars Marketing Quality Finance Inventory Other(s)
g

Percentage 25% 14% 19% 14% 11% 7%

8%

12% 28%

purchasing
marketing
Quality
Finance
16% Inventory
Other(s)

16%

21%

25% respondents replied that they are deployed in purchasing department however 19%
respondents replied that they are deployed in quality department which suits their job
profile.

86
Q3. What is the nature of your job ?
A. Supervisor
B. Biller
C. Marketer
D. Quality Manager
E. Inventory Manager
F. Other(s)

Quality Inventory
Particulars Supervisor Biller Marketer Other(s)
Manager Manager

Percentage 14% 25% 19% 14% 11% 7%

Nature of Job

Supervisor
Biller
Quality Manager
Marketer
Inventory Manager
Other(s)

14% of the respondents are supervisor, 25% of the respondents are Biller, 19% of the
respondents are quality manager, 14% of the respondents are Marketer, 11% of the
respondents are inventory manager and 7% of the respondents are in other specific
jobs.

87
Q4. From where people like to shop there daily need products ?

Stores of Total
Particulars Local stores Online stores
future group
Respondents 40 30 30 100
Percentage 40% 30% 30% 100%

RESPONDENTS
40

35

30

25

20 RESPONDENTS

15

10

0
store of future group
local stores
online stores

40% of the people like to buy there product from stores of future group to fullfill there daily
needs and 30% of the people like to shop from the local stores and 30% from online stores
but trend of online shopping increasing very rapidly

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Q5. What factor they keep in mind while purchasing a product?
A. quality

B. price

C. Availability

D. Other

Particulars Qaulity price Availability OTHERS TOTAL

Respondent
35 20 40 5 100
s

Percentage 35% 20% 40% 5% 100%

RESPONDENTS

Quality
price
Availability
Others

While doing a purchase of product 35% weightage is given to quality and 20% to the price
and 40% to availability of the product because it the price and quality of the product is good
and if it is not available then it make no sence and 5% is given to other factors.

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Q6. Which time there are maximum coustomers?
A. Morning
B. Noon
C. Evening
D. Night

Morning Noon Evening Night

Particulars

Percentage 10% 10% 60% 20%

Percentage
morning noon evening night

20%
10% 10%

60%

There is maximum people in store in evening time.

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Q7. Do you agree that the job you are involved in understand the quality of
work required ?
A. Strongly Agree
B. Agree
C. Neutral
D. Disagree
E. Strongly Disagree

Strongly Strongly
Particulars Agree Neutral Disagree
agree disagree
Respondents
4 8 4 3 1

Percentage
20% 40% 20% 15% 5%

Quality of work
9

6
Respondents

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

40% of the respondent said agree, 20% of the respondent said strongly agree, 20% of
the respondent said neutral, 15% of the respondents said disagree and the remaining,
5% said strongly disagree for the job they are involved in understand the quality of
work required.

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Q8. How you manage your inventory ?
A. Manually
B. By Information
C. Other(s)

Particulars Manually By Information Other(s)

Percentage 38% 60% 2%

INVENTORY

Manually

By Information

Other(s)

The inventory is managed by the efforts of the staff working there as in 38% of the
management is in their hands but majority of the inventory management is done
through the records as in the information system 60% and saving their details as per
the requirement even for further sales. And the remaining 2% inventory is managed
by other means of management in the future group.

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Suggestions for future group

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Suggestions for future group
Main competition of future fmcg stores is with different kirana stores and to compete with
them and to get a competitive edge future group should work on some of these suggestion
Kirana store is a platform to cater to different needs of the consumers. It has a catalogue of
products which is required by different groups of consumers. Additionally, Kirana stores are
mostly present at every corner of the street, which makes the competition very high.

So, in order to sell more and earn large profits, as a Kirana store owner you must know a few
tips and tricks that their competitors don’t know. It will help you have a competitive edge
over the competitors.

In today’s post, we are going to share seven business mantras for the store owner to increase
profits by 20-30% instantly.

Today, everyone is busy in their life. In their extremely busy schedule, they don’t get enough
time to spend with their family.

They don’t even get to spend quality time during the weekends with their families as they
have to go shopping for household things. To avoid such a scenario, most people these days
have opted for online shopping.

A study found, that 170 million people in India are expected to shop online in 2020. That’s
huge, isn’t it?

they can find anything you want online, whether it is a truck, bike, or a needle. Everything
available online, so should you Kirana store too.

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So, they can also think of taking your Kirana store online. The online Kirana store is not a
new concept. Many store owners have started selling their products online, and you can opt
for the same as well. 

To aware to clients, you can promote your online Kirana store on social media, run paid
Facebook campaigns, start a blog, etc.

Open Store on Weekends

store owners have a fixed timing to open their store, say from 9 AM to 8 PM, even though
they live nearby. You can open your Kirana shop at 8 AM and close it at 10 PM.

Also, you can open the store on Sundays and the other holidays to get higher sales. It is
evident that while other store owners would be busy sleeping or having fun, they are selling
and making profits.

This will also help in having more loyal customers who would sing praises about you and
bring you more sales through word of mouth.

Also, most of the customers tend to make most of their purchases on weekends as they only
get the time from their busy schedule then only. 

Store Website
To go online, they can list your store on various online shopping websites like Amazon. You
can register your shop there, and if anyone purchases the products available on your website,
you can parcel the same to them.

In addition to listing your store online, they can also have your own website. This will allow
your regular customers to shop with you from the comfort of their home. they can also allow
them to buy from your store through a phone call.

On your website, you can make the best use of good and HD pictures. You can also use the
SEO and online marketing tactics to get traffic on the website. Here, you need to understand
that the prices of most of the vegetables and other items change daily.

So you need to update them accordingly. they can also update the products daily on your
website. Online business will help you buy inventory on credit and pay your suppliers once
the products are sold.

Competition & Competitors

Assessing the competition in the locality is very important. It is not always a good option to
start the store in the near locality.

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Also, it is not a bad idea of opening a Kirana shop at a location where there are already ten
other competitors if there is still an opportunity of catering a large number of population. The
only need here is to evaluate the opportunities.

For this, you can perform research and look for opportunities. You can also research your
competitors and see what all tactics they adopt.

Customer Engagement
Many shop owners would think that the best way for customer engagement is advertisement
and marketing. However, if we talk about a Kirana store business, the way is to talk to every
customer nicely, no matter if it is a kid, elder, or age.

A one-to-one conversation coming directly from the owner of the shop impacts more
significant than Social Media or anything for that matter.

Also, consistency in communication should also be maintained- it builds brand image. In

addition to this, you can also offer discounts on the products. Discounts are also one of the
best ways to attract customers. In fact, it will also lead to the customers buying more products
from you.

Understand Customer Preference

Understanding customer preference is very important. When customers come for some petty
product, they generally do not care about the brand.

And are mostly like, any brand will do if asked. In situations like these, it is preferable that
you know the customer preferences and sells the brand that the customer’s family generally
buy.

Upon feeling that you know all their likes and dislikes, the customer would have more trust in
you and your store. And they will come again and again in your shop.

Customer Service
A few other additional services, such as delivering products to the customer’s houses during
breaks or at night would look a great effort on your part.

they can also ask the customers to return products as well if they find them defected. This
gives a good impact.

All the above said business mantras would help you to increase your business and earn 20-
30% profit.

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And to be prepared for it with inventory, you can avail a Kirana store business loan from us.
We offer loans for business at the most competitive interest rate and minimal documentation.

Additionally, you can also apply for the business loan through our online App where you can
also upload your cash transactions to get a bigger amount of business loans. The App also
sends you a reminder when the payment is due to the creditors.

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BIBLIOGRAPHY

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 BIBLIOGRAPHY

BOOKS:
1.

2.

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WEBSITES :

I. Wikipedia : https://en.wikipedia.org/wiki/Wiki
II. future group : http://www.futuregroup.in/
III. Nilgiris : https://futureconsumer.in/nilgiris.aspx
IV. Bigbazaar: https://www.bigbazaar.com/
V. And many more

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ANNEXURE

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 ANNEXURE

A copy of the questionnaire that were being asked during the survey and different

respondents from different stores of future group.

QUESTIONNAIRE :

( To be filled by supervisor / staff deployed in these future group stores )

Details of the organization
Name : ___________________________________________________________________
Location: _________________________________________________________________
__________________________________________________________________________
How long are you there in business ? __________________ Years _______________
__________________________________________________

1. Age group of workers

A.  below 25 yrs.
B.  25-35yrs
C.  35 and above

2. . In which department or service are you deployed ?

A. Purchasing
B. Marketing
C. Quality
D. Finance
E. Inventory
F. Other(s)

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3. What is the nature of your job ?

A. Supervisor
B. Biller
C. Marketer
D. Quality Manager
E. Inventory Manager
F. Other(s)

4. from where people like to shop there need products ?

A. stores of future group

B. local stores
C. online stores

5. What factor they keep in mind while purchasing a product?

A. Quality
B. price
C. Availability
D. Other

6. which time there is maximum coustomers?

A. Morning
B. Noon
C. Evening
D. Night

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7. Do you agree that the job you are involved in understand the quality of work
required ?

A. Strongly Agree
B. Agree
C. Neutral
D. Disagree
E. Strongly Disagree

8. How you manage your inventory ?

A. Manually
B. By Information
C. Other(s)

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