logistics at big bazzar.docx

1、logistics at big bazzarABSTRACTInterdependence is a higher value than Independence Stephen R. CoveyAs rightly said by Stephen Covey the value of interdependence is as much important in the business of Retail as it is important in the business of life. Standing on the threshold of a retail revolution

2、 and witnessing a fast changing retail landscape, the retail sector is poised for a big leap. Currently retail sector in India accounts for Rs. 55,000 crore ($12.4 billion) business at current prices in the calendar year 2006, increasing its share to 4.6% of the total Indian Retail Value that stood

3、at Rs. 12,00,000 crores ($270 billion). With the potential of crossing Rs 2, 00,000 crores ($45 billion) business by the Year 2010, generating employment for some 2.5 million people in various retail operations and over 10 million additional workforce in retail support activities including contract

4、production & processing, supply chain & logistics, retail real estate development & management etc.; the retail sector is growing at a scorching pace of about 37 percent in 2007 and expected to grow by 42 per cent in 2008. With this enormous growth, the retail sector is also facing challenges on the

5、 fronts of escalating real estate cost, scarcity of skilled workforce and structured supply of merchandise.1. INTRODUCTION TO LOGISTICS One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management. The importance can be understood by the fac

6、t that the logistics management cost component in India is as high as 7% -10% against the global average of 4% - 5% of the total retail price. Therefore, the margins in the retail sector can be improved by 3% - 5% by just improving the supply chain and logistics management. In India, with demand for

7、 end-to-end logistics solutions far outstripping supply, the logistics market for organized retail is pegged at $50 million and is growing at 16%. It is expected to reach $120-$130 million by 2010. Organized retail on the other hand is growing at 400% and is expected to reach around $30 billion by 2

8、010.Even supply chain and logistics firms like Hong Kong based Heng Tai Consumables and ABS Procurement Co and ACM China (the greenhouse specialist) is also eying the opportunity for managing the supplies. The supply chain management is logistics aspect of a value delivery chain. It comprises all of

9、 the parties that participate in the retail logistics process: Manufacturers, Wholesalers, and Third Party Specialists like Shippers, Order Fulfillment House etc. and the Retailer. Here, logistics is the total process of planning, implementing and coordinating the physical movement of merchandise fr

10、om manufacturer to retailer to customer in the timeliest, effective and cost efficient manner possible. Logistics regards order processing and fulfillment, transportation, warehousing, customer service and inventory management as interdependent functions in the value delivery chain. It oversees inve

11、ntory management decisions as items travel through a retail supply chain. If a logistics system works well, the retail firm reduces stock outs, hold down inventories and improve customer service all at the same time. Logistics and Supply Chain enables an organized retailer to move or store products

12、more effectively. Efficient logistics management not only prevents needless movement of goods, vehicles transferring products back and forth; but also frees up storage space for more productive use. Retail analysts say on-time order replenishments will become even more critical once the Wal-Mart/ Bh

13、arti combine begins operations - the American retailer works almost entirely on cross-docking and is likely to demand higher service levels, including potential levies for delays in shipment. The efficiency and effectiveness of supply chain and logistics management can also be understood by the fact

14、 that modern retail stores maintain lower inventories than traditional retail. In India, generally in the traditional kirana stores, three weeks inventories are kept; while in a modern retail store like Hypercity, its nine days and its under two weeks for Food Bazaar. Now, it is beneficial for both

15、the manufacturer as well as the retailer. If we go through the following food supply chain in India, we find that a lot can be improved by maintaining the supply chain and logistics.their availability on a relatively large scale and supplying them to customers on a relatively small scale. Retailer i

16、s a Person or Agent or Agency or Company or Organization who is instrumental in reaching the Goods or Merchandise or Services to the End User or Ultimate Consumer. 2 SCENARIO OF LOGISTICS IN INDIAThe logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technolog

17、y and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services (which are also growing). Changing government policies on taxation and regulation of service providers are going to play an important r

18、ole in this process. Coordination across various government agencies requires approval from multiple ministries and is a road block for multi modal transport in India. At the firm level, the logistics focus is moving towards reducing cycle times in order to add value to their customers. Consequently

19、, better tools and strategies are being sought by firms in order to enhance their decision making. In this paper, we provide a perspective on these issues, outline some of the key challenges with the help of secondary information, and describe some interesting initiatives that some firms & industrie

20、s are taking to compete through excellence in managing their logistic.2.1 Some Peculiarities of the Indian Supply ChainsThe Indian logistics sector has typically been driven by the objective of reducing transportation costs that were (and often continue to be) inordinately high due to regional conce

21、ntration of manufacturing and geographically diversified distribution activities as well as inefficiencies in infrastructure and accompanying technology. Freight movement has slowly been shifting from rail to road with implications on quality of transfer, timeliness of delivery and consequently cost

22、s except for commodities which over long distances, predominantly, move through the extensive rail network. More on the nfrastructure issues later. Figure 1 shows the relative value of transportation costs vis-vis other elements of the logistics costs in India. The transportation industry is fragmen

23、ted and largely un- organized a large number of independent players with regional or national permits that carry freight, often with small fleet size of one or two single-axle trucks. This segmentcarries a large percent of the national load andalmost all of the regional load. This fragmented segment

24、 comprises owners and employees with inadequate skills, perspectives or abilities to organize or manage their operations effectively. Low cost has been traditionally achieved by employing low level of technology, low wages (due to lower education levels), poor maintenance of equipment, overloading o

25、f the truck beyondcapacity, and price competition amongst a large number of service providers in the industry. Often, one finds transportation cartels that regulate supply of trucks and transport costs. However, the long run average cost of transport operations across th entire supply chain may not

26、turn out to be lowFigure 1: Elements of Logistics Cost in India3 PROFILE OF THE COMPANYName of the company :- Area :- RetailingProduct :- DEPARTMENTAL STORES AND GROCERY SHOP Background :- Big Bazaar is a unique chain, currently more than 75 stores in all around the India . Owned by pantaloon retail

27、 (INDIA) limited , future group . Headquarter is situated in Jogeshwari Mumbai, Idea was pioneered by entrepreneur KISHORE BIYANI, the CEO of future group, born in middle class Marwari family, began career with selling stonewash fabric to small shops in Mumbai . He Launched Pantaloon , biggest liste

28、d retailer of the country . Pantaloon is credited with launching many retails formats in value and lifestyle retailing brand names in country, including big bazaar, food bazaar , central , e-zone and home town . In 1993, he experimented with a small store format , and Pantaloon Shoppe was launched i

29、n Panjim , Goa . Then a large familys store in 1998 in Kolkata , after a great success he launch a BIG BAZAAR “ Is se sasta aur accha kahi nahi ” in the year of 2001. Now total revenue of the company was $249 million in the year, Groups vision to to deliver everything , everywhere , everytime to eve

30、ry Indian consumer in most profitable manner” . The group considered Indianness as a core value and its corporate code is Rewrite rules , Retain values.3.1 SWOT ANALYSISStrengths Low costCost cutting by reducing intermediaries Promotional offers on WednesdayLocation Home delivery facility WeaknessLo

31、w customer loyaltyTime gap between order and processingLow internal warehouse capacityEmployees not trained.Less Conversion levelFrauds in RetailOpportunitiesPercolating downRural Retailingkids and teens retailing segment.Organized retail is only 3% of the total retailing market in IndiaThreats Shop

32、ping CultureUncertainty in market positionNew entrants like reliance 4 TITLE OF PROJECT :- Study of Logistics and Distribution in “Big Bazaar” storesBig bazzar is a part of future group so most of its logistics and distribution is done by future logistics.Logistics Logistics is the art and science of managing and controlling the flow of goods , energy, information and other resources like products, services and people from the source of production to the marketplace. marketplace. Its Important to hav