CASE STUDY OF

WAREHOUSING
AT SAVE-MART

STUDY GROUP 2
• ACHIN CHATTERJEE (2112039)
•ANSHUL AGARWAL (2112007)
•PINAKI PRIYADARSHINI (2112016)
• ROHIT GIRI (2112021)
• SACHIN SHETTY (2112023)
WHAT ARE THE MAJOR
ISSUES AT SAVE-MART
WAREHOUSE?
 Late Delivery to
Stores
High Inventory &
Space
Shortage
PROBLEMS Poor Operational
Process

Low Throughput

High Packaging
Cost
Problem No : 1 - Late delivery to stores:

• Accepting orders From Vendors beyond PO Date : The warehouse accepted goods from vendors beyond the last date due to
pressure from store and category managers. As a result of which they did not have a visibility regarding the delivery date of goods
ordered.

• Multiple Shipment for Single Product : Venders sent multiple shipments against a single purchase order without intimating in
advance.

• Improper Tracking : No prior tracking information about the shipment was provided as a result the warehouse came to know about
the arrival of a particular consignment against a PO after the truck reached.

• Issue of GRN : Warehouse did not follow the company’s policy and prepared goods receipt note (GRN) after 3-4 days of truck’s
arrival

• Issue of Barcodes : Goods receipt process also get delayed due to wrong or no barcodes on items that arrived. So, manpower is
utilized for putting the correct barcodes.
Problem No : 2 - High Inventory & Space Shortage:

• Wrong Demand Forecasting: Wrong forecasting by category managers as their 1st priority is to avoid stock-
outs rather than to avoid excess inventory. Category managers made PO more than realistic demands especially in
apparels category

• Dead Stock: Some parts of the warehouse was occupied by damaged goods, return from stores and obsolete
fashion products..

• Indiscipline in Store Opening Timing: Another cause is delay in new store opening, as a result of which
warehouse space is occupied by new store products.

• Indiscipline in Storage : There was no discipline in storing items in their earmarked location.
Problem No : 3 – Poor Operational Practices :

• Mismatch in System stock and physical stock : The inventory in the system did not match with that of the
physical stock and affected the warehouse performance. It indicates the Poor Operations at Warehouse.

Problem No : 4 – Low Throughput:

• Problem in warehouse throughput : The throughput of the warehouse was very low because it followed
piece-in and piece-out model

Problem No : 5 – High Packaging Cost:

• Adoption of Conventional Cartons : The warehouse used cartons to send goods to the store which added to
cost as each piece of carton cost Rs. 55 and moreover these cartons are not recyclable. Hence the cartons cannot
be reused.
 WHAT INITIATIVES CAN RAJESH GUPTA
SUGGEST FOR REDUCING THE RECEIVING,
EXCESS INVENTORY, STOCK-OUT AND
THROUGHPUT ISSUES?
Options for Improvement :
• Demand Forecasting Improvement: The Accuracy of demand forecasting needs to be improved by large scale to reduce unwanted inventory getting
stocked at warehouse.

• Resolving the issue of Excess Inventory: To reduce excess inventory He should instruct category managers to prepare PO matching realistic demand .
Along with that , he needs to aware and educate category managers on the cost burden of keeping excess inventory at warehouse. Another solution to
avoid excess inventory would be to ensure completion of New projects/ warehouse on time. If project is delayed, also delay procuring of items to the
New Warehouse.

• Resolving Stock – Out Issue : Stock-out situations can be avoided by proper Channelizing the Suppliers schedules to the warehouse. Suppliers should
update AGN (Advance Goods Notice) on their system, so that Warehouse will receive prior information and can schedule their inward plan accordingly.

• Improvement of Throughput : Through Put time can be regularized by changing over to Case in and case out process. For this he needs to come on
agreement with Stores Managers for their cooperation to achieve optimum results.

• Continuous Audit and Quality Monitoring: Next to ensure reconciliation of Stock by adopting efficient inventory management system to count stock
in warehouse. Ensure Physical stock is rightly recorded in the system. Continous audits and surprise visits shall be planned to ensure the functioning

• Classification of locations as per category: Similar items together to increase efficiency. Cycle count Receiving of items within the same day.
 HOW DOES INVENTORY DISCREPANCY
AFFECT THE WAREHOUSE PERFORMANCE
AND HOW TO OVERCOME THE SAME?
Inventory discrepancy can cause severe problems in the warehouse. These problems include:
 
• Low order Fill Rate : Loss of sales opportunity because of low fill rate of order.

• Delay in Picking : Time is spent to find a particular item if it is not available at the location.

• Audit Problems : Correcting inaccurate inventory counts wastes valuable time and resources.

• Poor employee morale : Employees have poor morale when they are not able to find a particular item, leading to
frustration

• High/low inventory carrying costs : Under or over-reporting of inventory misrepresent inventory value in accounting.

• Loss in revenue and efficiency : Time spent rectifying inventory discrepancy uses unnecessary manpower that could
better be used elsewhere.

• Dissatisfied customers : Mistakes in inventory lead to customer dissatisfaction due to delayed  shipping and
mismatches in ordered vs delivered product.
To avoid inventory discrepancy, following actions should be performed:
 
• Cycle Counting : Regular audit of products with an automated system keeps accurate data with less chance of error. If
any mismatch is found, physical and book stock are updated instantly.

• Proper location boundary : Clear boundaries should be placed to differentiate one from the other to avoid any
confusion during picking or put away.

• Update of inventory : Whenever stocks are taken from the inventory or returned, the inventory system must be
updated accordingly.

• Immediate Put away : Products which are received should be immediately put away to the location to avoid
misplacement or loss of products.

• Training to employees : Staff training is also essential so that processes and procedures are executed effectively.

• Use of Information system : There should be proper system in place which can tell us the items lying on the floor
which are not put away at the location ( Items which are received but not put away at location).
 
WHAT ARE THE BENEFITS OF IMPLEMENTING
CASE-IN AND CASE-OUT MODEL AND HOW
TO IMPLEMENT IT?
Case-in and case-out model has several benefits , following are the details :

• Total time required to process the goods inside the warehouse would be reduced. Here the Goods of same
commodity will be packed in cases and scanned as one lot. Due to this huge time is saved by avoiding
scanning products individually.
• To implement it warehouse must instruct Suppliers to pack all goods in bundle. Bundled goods will be of
appropriate sizes such that its weight and dimension are in accordance with its physical location and
placement in the shelves.
• To implement it successfully , Stores receiving these products in cases should coordinate by placing orders
in bundles as maintained by the warehouse.
• Further warehouse has to follow FIFO process. If this coordination between Stores and warehouse is
maintained , Throughput time will be reduced, and total order processing time also can be reduced.
 
REGARDING THE PACKAGING
A .WHAT IS THE CURRENT ANNUAL COST OF BUYING THE CARTONS FOR REPACKAGING?
B. WHAT IS THE PAYBACK PERIOD OF BUYING THE RECYCLABLE PLASTIC CRATE?
C. HOW MANY RECYCLABLE PLASTIC CRATES THE COMPANY WILL HAVE TO BUY TO
ELIMINATE THE PURCHASE OF CARTONS?
D. WHAT WOULD BE THE COST SAVINGS OVER 3 YEARS IF THEY ONLY USE RECYCLABLE
PLASTIC CRATES AND STOP BUYING CARTONS?
A. What is the current annual cost of buying the cartons for repackaging?    
     
Monthly Buy Quantity = 15,000.00
Yearly Buy Quantity = 1,80,000.00
Rate / Carton = 55.00
Total Cost (Yearly) = 99,00,000.00

B. What is the payback period of buying the recyclable plastic crate?    

     
Recycle time of Plastic Crate / Month = 15
Monthly Demand = 15,000.00
Plastic Crate Required = 1,000.00
Cost Per crate = 500
Total Cost(Monthly) = 5,00,000.00
Cost Of Conventional Carton(Monthly) = 8,25,000.00
Payback Period = 18.18
C. How many recyclable plastic crates the company will have to buy to completely
eliminate the purchase of cartons?    
     
Recycle time of Plastic Crate / Month = 15
Monthly Demand = 15,000.00
Plastic Crate Required = 1,000.00

D. What would be the cost savings over 3 years if they only use recyclable plastic crates
and stop buying cartons    
     
Requirement of Conventional carton in 3 Years = 5,40,000.00
Rate / Carton = 55.00
Total Cost = 2,97,00,000.00
     
Requirement of Plastic carton in 3 Years = 1,000.00
Rate / Carton = 500.00
Total Cost = 5,00,000.00
     
Savings = 2,92,00,000.00
THANK YOU