Food Supply Chain of Big bazaar.docx

Food Supply Chain of Big bazaar.docx

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FoodSupplyChainofBigbazaar

FoodSupplyChainManagementofBigBazaar

Abstract

BigBazaarhasemergedasoneoftheleadingretailchainstoresinIndiaforfood,generalmerchandiseandhomeproducts.ThesuccessmantraforBigBazaarhasbeentoprovidequalityproductsatthecheapestprices.Anditdependsonitsefficientsupplychaintosqueezeoutprofits,whichitfurtherpassesontothecustomers.AlthoughBigBazaardealswithfourdifferentcategoriesofsupplychains–food,fashion,generalmerchandiseandhome,themostcriticalisthefoodsupplychain.BigBazaarbroughtrevolutionarymethodsofprocurementanddistributioninthefoodsupplychain,bydirectlyprocuringfarm-freshproductsfromfarmers,anddistributingthemdirectlytotheretailstores.Italsomaintainsaworld-classcold-chaininfrastructureandhighlyefficientFMCGsupplychain.Thispaperfocusesontheabovematters,andgivesinsightaboutthefoodsupplychainofBigBazaar.Wehavealsotriedtogiveabriefinsightintotheaspectsoffoodsupplychainthatmayariseinthefuture.

Keywords:

foodsupplychain,cold-chain,farmfresh,agroproducts,logistics,anddistribution.

Introduction

BigBazaarisachainofhypermarketsinIndia,withmorethan100storesinoperation.ItisasubsidiaryofFutureGroupVentureLtd's,andfollowsthebusinessmodelofUnitedStates-basedWal-Mart.

BigBazaarisledbyPantaloonRetail,thegroup’sflagshipcompany,andthecompanyoperates 120BigBazaarstores,170FoodBazaar stores,amongotherformats,inover 70citiesacrossthecountry,coveringanoperationalretailspaceofover 6millionsquarefeet.

Thecompanyfollowsamulti-formatretailstrategythatcapturesalmosttheentireconsumptionbasketofIndiancustomers.Inthelifestylesegment,thegroupoperatesPantaloons,afashionretailchainandCentral,achainofseamlessmalls.Inthevaluesegment,itsmarqueebrand,BigBazaarisahypermarketformatthatcombinesthelook,touchandfeelofIndianbazaarswiththechoiceandconvenienceofmodernretail.

In2008,BigBazaaropenedits100thstore,markingthefastesteverorganicexpansionofahypermarket.ThefirstsetofBigBazaarstoresopenedin2001inKolkata,HyderabadandBangalore.

Thegroup’sspecialityretailformatsincludesupermarketchain–FoodBazaar,sportswearretailer-PlanetSports,electronicsretailer-eZone,homeimprovementchain-HomeTownandruralretailchain,Aadhaar,amongothers.Italsooperatespopularshoppingportal-.

Thislargeformatstorecompriseofalmosteverythingrequiredbypeoplefromdifferentincomegroups.Itvariesfromclothingandaccessoriesforallgenderslikemen,womenandchildren,playthings,stationaryandtoys,footwear,plastics,homeutilityproducts,cosmetics,crockery,hometextiles,luggagegiftitems,othernovelties,andalsofoodproductsandgrocery.TheaddedadvantageforthecustomersshoppinginBigBazaristhattherearealltimediscountsandpromotionaloffersgoingonintheBigBazaronitssalableproducts.

ShoppingintheBigBazarisagreatexperienceasonecanfindalmosteverythingunderthesameroof.Ithasdifferentfeatureswhichcatersalltheneedsoftheshoppers.SomeofthesignificantfeaturesofBigBazarare:

∙TheFoodBazarorthegrocerystorewiththedepartmentsellingfruitsandvegetables

∙Thereisazonespeciallymeantfortheamusementofthekids

∙FurnitureBazaroralargesectiondealingwithfurnitures

∙ElectronicsBazarorthesectionconcernedwithelectronicgoodsandcellularphones

∙FutureBortheonlineshoppingportalwhichmakesshoppingeasierasonecanshopmanyproductsofBigBazaratthesamepricefromhome

∙Wellregulatedcustomercaretelecallingservices

CompanyProfile

FutureGroup,whichisledbyitsfounderandGroupCEO,Mr.KishoreBiyani,wasestablishedin1994withavisiontoprovidediverseservicesinIndianandGlobalmarketsandisnowoneofIndia’sleadingbusinesshouseswithmultiplebusinessesspanningacrosstheconsumptionspacewithanetsalesfromoperationsofabout5934.37crores.WhileretailformsthecorebusinessactivityofFutureGroup,groupsubsidiariesarepresentinconsumerfinance,capital,insurance,leisureandentertainment,branddevelopment,retailrealestatedevelopment,retailmediaandlogistics.

Ledbyitsflagshipenterprise,PantaloonRetail,thegroupoperatesover16millionsquarefeetofretailspacein73citiesandtownsand65rurallocationsacrossIndia.HeadquarteredinMumbai（Bombay）,PantaloonRetailemploysaround30,000peopleandislistedontheIndianstockexchanges.Thecompanyfollowsamulti-formatretailstrategythatcapturesalmosttheentireconsumptionbasketofIndiancustomers.Inthelifestylesegment,thegroupoperatesPantaloons,afashionretailchainandCentral,achainofseamlessmalls.Inthevaluesegment,itsmarqueebrand,BigBazaaristhehypermarketformatthatcombinesthelook,touchandfeelofIndianbazaarswiththechoiceandconvenienceofmodernretail.

Supply-ChainmanagementofBigBazaar

ThesupplychainofBigBazaarismanagedbyFutureSupplyChains,whichhasdevelopedexpertiseinSupplyChainManagementofconsumerproductcategoriessuchasFashion,Food,HomeandGeneralMerchandise.Thecompanyoperatesfrom60strategicallylocatedhubs,servicingmorethan2600retailoutletsspreadacrossthelengthandbreadthofthecountry.Itsnetworkoffacilitiesandspecializedexpertiseenableittomanagemorethan3millionSKUs.Thisrequires30distinctsupplychainstobemanagedsimultaneously,eachwiththeirownspecificrequirementsthatneedcustomizedsolutions.

BigBazaar’sSupplyChain’stransportationcapabilityenablesittoimplementFactory-Gatelogisticsinvolvingpick-upofgoodsfromvendorsacrossthecountry,nationaldistributionofgoods,andcitylogisticsthatincludesstoredeliveriesandhomedeliveries.BigBazaar’sSupplyChainsisthefirstorganizedintra-citytransportationservicescompanyinIndia-carryingoutnotonlyB2BdeliveriesbutalsoB2Cdeliveriesintheformofthousandsofhomedeliverieseverydayacrossthecountry,especiallyforFurnitureandConsumerDurables.

BigBazaarisalsoworkingonthevendornetworkaswellasthelogisticsnetwork.Thecompanyhasidentifiedupto40anchorvendors,eachwithturnoversofUS$45million,toachieveeconomiesofscale.ThegroupisalsokeentoensurethatitssmallervendorsareabletoreachturnoversofaroundUS$1millionandagrowthrateof40%annually,tobeabletopassonthebenefitsofscales.Thecompanyisalsoworkingtowardsbringingits1,200vendorsonline,likeWal-Mart.

InIndia,BigBazaarderivessignificanteconomiesofscaleinmanagingtheirsupplychain.Withmorethan170000products,thecompanymaintainsastrongsupplierrelationshipinapartnershipmode,avoidingtheexploitativesupplier–buyertransactionalphilosophy.TheITenabledback-endoperationsandsupplychainmanagementincreasesthereliabilityandefficiencyofthebusiness.

Aspartoftheoperation,BigBazaarisalsoundertakingtoreduceitswarehousingcoststhroughaconsolidationprocess.InacountrylikeIndia,wheremostretailstoresarelocatedintheheartofthecity—whererentsarehighandstoragespaceisscarce—supplychainmanagementhasevenmoreseriousbusinessimplications.FutureLogisticsnowhandlestwo-and-a-halfmillionSKUs（orstockkeepingunits）adayacrosstheFutureGroup'svariousretailformatsaroundthecountry.By2010,thisnumberisexpectedtoincreasetomorethan30millionSKUsaday.Evenwith98%accuracy,some600,000pieceswillnotbedeliveredcorrectly,resultinginanestimatedsaleslossofmorethanRs4croreaday.

BigBazaar’sfourmainconsumersectors–Fashion,Food,HomeandGeneralMerchandisehavevariedproductlines,eachwiththeirownuniqueneedsthatrequire30distinctsupplychainsolutions.

WehaveconcentratedourstudiesontheFoodsupplychainmanagementofBigBazaar.

FoodSupplyChain

Inthepresentcompetitiveenvironmentcustomershavebecomemoredemandingandaskingforqualityfoodwhichguaranteesthesafety.Ontimedeliveryisbecominganormtoreducetheinventoryholdingcosts.Thefoodindustryisfacingchallengesduetoincreasingoperationalcomplexity,frequentlychangingconsumerneeds,governmentregulationsandshortproductlifecycles.Itrequiresaverysmart,efficientandagilesupplychaintomanagetheeverchangingneedsoftheendcustomers

WhymanagingFoodSupplyChainisachallenge?

Thefoodsupplychainiscomplexanddifficulttomanageduetoitsperishablenatureandshortshelflifeoftheproductsascomparedtoothersupplychainslikeelectronics,homeneeds,consumerdurablesetc.Italsorequiresarobustinfrastructureofwarehousesandtransportationnetworkconnectingsuppliers,manufacturers,distributorsandretailers.

Thecomplexityoffoodsupplychainincreasesfurtherbecauseofthebelowmentionedparameters

1.Foodsafetyrequirements

    2.Regulatoryrequirements

    3.Shortshelflifeofproductsleadingtoexpiryandwastage

    4.Productrecalls

    5.Producttraceabilityrequirements

    6.Effectivehandlingofcustomercomplaints

7.Highorderfrequencyandlowvolumes

FoodSupplyChaincategorization

ItisbasicallycategorizedintotwobroadcategoriesPerishableandnonPerishable

PerishableSupplyChain

Inperishablesupplychaintheshelflifefortheproductsisverylow.Itrequiresmanagingtheendtoendsupplychainwithutmostcare.Theperishablesupplychaintypicallyrequiresacoldchaintomanageitproperl