ROLE OF INFORAMATION TECHNOLOGY IN
SUPPLY CHAIN MANAGEMENT
(AHMEDABAD)
Reliance Retail
•Reliance Retail, Ltd. operates retail outlets in India. Its
retail outlets offer foods, groceries, apparel and footwear,
lifestyle and home improvement products, electronic
goods, and farm implements and inputs.
•The company’s outlets also provide vegetables, fruits, and
flowers. It focuses on consumer goods, consumer durables,
travel services, energy, entertainment and leisure, and
health and well-being products, as well as on educational
products and services.
• The company was founded in 2006 and is based in
Mumbai, India. Reliance Retail, Ltd. operates as a
subsidiary of Reliance Industries, Ltd
Introduction
• Retailing is one of the pillars of the economy
in India and accounts for 35% of GDP. The
retail industry is divided into organized and
unorganized sectors
Organized
Retailing
35%
Unorganized
Retailing
65%
Cont..
• Organized retailing refers to trading activities
undertaken by licensed retailers. These include the
corporate backed hypermarkets and retail chains, and
also the privately owned large retail businesses.
Organized retail segment has been growing at a
blistering pace, exceeding all previous estimates.
• Unorganized retailing, on the other hand, refers to the
traditional formats of low-cost retailing, for example,
the local kirana shops, owner manned general stores,
paan/beedi shops, convenience stores, hand cart and
pavement vendors, etc.
IMPORTANCE OF IT
(Information Technology)
in RETAIL INDUSTRY
• With the increase in globalization of retailers
both in terms of their points-of-sale, as well as
their points-of-supply, the Information
Technology (IT) spend in the retail sector has
increased considerably and plays an increasingly
important role in managing the complexity of
retail operations
• IT systems are at the heart of retail operations
and hence play a central role in alleviating
pressure points in the retail sector
Consumption Pattern of Indian Retail Industry
Out of home Food
7%
Leisure Entertainment
3%
3%
clothing & fashion
accessories
38%
Food & Grocery
12%
Furnishings, untetils,
furniture
6%
Mobile &
Accessories
3%
Consumer Durables
9%
Pharmaceuticals
Health & Beauty care Footwear
2%
1%
10%
watches
3%
Jewellery
3%
Objectives
• Basic Objective of this project is to understand the Business Process
of Reliance Mart Ltd. In the area of Supply chain management &
Inventory management.
• We have also captured the Billing process, Logistic & Transportation
Process and IT implications in overall business process.
• Understanding of cost implications in each business process, Speed
& Quality and Extent of human involvement is also one of the
implied objectives of the project.
• By the completion of the project, we are able to understand that
how the ERP or SAP technology has transformed the overall process
scenario of Retail industry.
Scope
• Scope of this project is limited to the Supply chain process,
Inventory process and billing process of Reliance Mart Ltd.,
Ahmadabad.
• We have made a detailed focus on Supply chain process &
Inventory management process of Reliance Mart Ltd.
• We have explained in depth analysis of supply chain & Inventory
management of food & beverages department.
• Our findings and analysis is limited to the information given by Mr.
Zubin and Mr. Ruchir Safi in the form of interview talk at Reliance
Mart Ltd., Ahmedabad.
Methodology
GATHERING OF
PRIMARY DATA
REFERENCE
FROM JOURNALS
& ARTICLES
VALIDATION OF
DATA
SELECTION OF
BUSINESS
PROCESS
SUPPLY CHAIN &
INVENTORY
MANAGEMENT
DETAILED
ANALYSIS OF
PROCESS
FINDINGS
Supply Chain Process
Inventory Management
Process
Role of SAP in
Strategic Decision Making
•
Daily tracking of stock movement for each category of product
•
Sales forecasting by Sales trend analysis and DSS technology
•
Assumption of Sales for the next week or next month
•
Formation of scheme or combo offer
•
Frequency of selling for particular product and highest selling product
•
(SKU-single key unit decision)
•
Popularity of product based on colour, features, design and brand
•
Margin of profit on various discount schemes
Billing Process
Merits:
•Supply chain process of Reliance Mart Ltd. is very efficient in terms of
cost, time, speed and quality. Because they follow the direct procurement
process, from company to specific store or location., this mitigates the
cost of inventory, cost of transportation and holding cost in ware house
or rental payment of storage.
•Removal of intermediaries like distributor or retailer and major
discounts because of bulk purchasing helps to increase the profit margin
and saving of cost is passed to customer in form of discount on MRP.
•SAP has hugely reduced the transaction and processing cost for the
company.
•SAP system helps to maintain the Purchase documents, data ware house
for future use.
Demerits:
•Reliance should do proper use of Data mining technology or analytical
usage of SAP or ERP system to be way ahead of the competitor.
•CRM – Customer Relationship Management is not effectively
implemented in the store. Each process should be centred around 100%
customer satisfaction.
•Proper training for the usage of SAP should be given to take strategic or
leveraging the advantage of IT.
•E-Commerce transaction is properly or aggressively promoted by the
company which reduced the sales because of distance or location barrier.
MAJOR FINDINGS
• Supply chain process of Reliance Mart Ltd. is very efficient in terms of cost,
time, speed and quality. Because they follow the direct procurement
process, from company to specific store or location., this mitigates the
cost of inventory, cost of transportation and holding cost in ware house or
rental payment of storage.
• Removal of intermediaries like distributor or retailer and major discounts
because of bulk purchasing helps to increase the profit margin and saving
of cost is passed to customer in form of discount on MRP.
• SAP has hugely reduced the transaction and processing cost for the
company.
• SAP system helps to maintain the Purchase documents, data ware house
for future use.
Cont…
• Sales data analysis by using the various tools
of statistical and quantative moderately
reduced the inventory holding and ordering
cost by proper estimate of sale and order is
placed according to demand forecasted.
• Company maintains its own logistic which
again reduced the margin of transporter.
Conclusion
• In the conclusion, we would like say that EDLP (Every day low
pricing) strategy is the most effective strategy to grow speedily in
competitive environment.
• Cost saving at each process or procedure by implementing system
or strategic IT (Information Technology) in the retail chain, company
can increase their margin and can pass the saving cost to customer
in the form of low pricing compare to other retailer.
• This in turn increase the volume for the retail chain. Retail is volume
driven business instead of price or margin driven business.
• In short, smooth business process at the lowest possible cost is
heart of any retail chain in such a competitive environment
Assumption
• We have assumed that all Retail mart of Reliance Ltd.
across Ahmedabad used the same Technology and
business process for their supply chain and inventory
management.
• Our analysis is based on the current competitive
environment prevailing in the country. In the future it
may be possible that many global competitor like Walmart, K-Mart, comes into India with their latest IT
technology which makes the current SAP system of
Reliance vulnerable or ineffective.
Suggestions
• CRM – Customer Relationship Management is not effectively implemented
in the store. Each process should be centred around 100% customer
satisfaction.
• Proper training for the usage of SAP should be given to take strategic or
leveraging the advantage of IT.
• E-Commerce transaction is properly or aggressively promoted by the
company which reduced the sales because of distance or location barrier.
• In spite having implemented the SAP, store manager goes of physical
verification which makes no sense in any way to take the advantage of IT
technology.
Bibliography
PRIMARY SOURCES:
• We have gone to the Reliance Mart Ltd. for gathering the
real time information from the store manager Mr. Ruchir
Safi. We have interviewed him for 25 minutes with
questionnaire and try to get the as much information as
possible.
SECONDARY SOURCES:
• Web site of Reliance Retail Ltd.
• Article published by Wal-mart in 2008-09
• Cover story of BW – Jan.2009 for Indian Retail Scenario
• Book on BPR (Business Process Reengineering)