RESEARCH PROJECT REPORT

ON

“STUDY OF SUPPLY CHAIN IN HYPER STORE ”

[BIG BAZAAR]

SUBMITTED IN THE PARTIAL FULFILLMENT

TOWARDS THE AWARD
OF

POST GRADUATE DIPLOMA IN MANAGEMENT

2008-10

UNDER THE SUPERVISION OF – SUBMITTED BY –

Mr. ANKIT AGRAWAL VIKAS SHARMA

G.L.A. INSTITUTE OF TECHNOLOGY AND MANAGEMENT,

MATHURA

[Link]
 PREFACE

I as a part of curriculum of post graduate diploma in management at g.l.a.i.t.m.,

Mathura submit our research report. I did my research work on the subject “study
of supply chain in hyperstore,[big bazaar]” such projects are expected to
improve my efficiency over a period of time in future.
 ACKNOWLEDGEMENT

I would like to express our deep gratitude and sincere thanks to Mr. Anil Singh,
Program co-coordinator and Mr. Ankit agarwal for giving kind permission to do
project Work on the topic “STUDY OF SUPPLY CHAIN IN HYPER STORE ” [BIG
BAZAAR]
In Gla institute of technology & management, Mathura (up). I also elicit our deep
regards to all the faculty and staff members of Glaitm, Mathura for the kind
cooperation without which this project would not have been possible.
 DECLARATION

I, am the students of P.G.D.M. VI th Trimester Of GLA INSTITUTE OF TECHNOLOGY &

MANAGEMENT, Batch 2008-2010, Roll No. 57 are hereby declare that the Research
Report Project titled as “STUDY OF SUPPLY CHAIN IN HYPER STORE ” [BIG
BAZAAR] are my original report and the same has not been submitted to any
university/Institution for the award of any degree.
 CONTENT

CHAPTER 1
Introduction to the topic

CHAPTER 2
Significance of the study

CHAPTER 3
Research Methodology
a. Research Methodology used
b. Sample Size
c. Research Design
d. Collection of data [Primary Data & Secondary Data]

CHAPTER 4
Objective
Importance

CHAPTER 5
Data Analysis & Interpretation

CHAPTER 6
Findings, Suggestion

APPENDIX
Questionnaires
 CHAPTER 1

Introduction to Supply Chain Management

If your company makes a product from parts purchased from suppliers, and those
products are sold to customers, then you have a supply chain. Some supply chains
are simple, while others are rather complicated. The complexity of the supply chain
will vary with the size of the business and the intricacy and numbers of items that
are manufactured.

Elements of the Supply Chain

A simple supply chain is made up of several elements that are linked by the
movement of products along it. The supply chain starts and ends with the customer.

 Customer: The customer starts the chain of events when they decide to
purchase a product that has been offered for sale by a company. The
customer contacts the sales department of the company, which enters the
sales order for a specific quantity to be delivered on a specific date. If the
product has to be manufactured, the sales order will include a requirement
that needs to be fulfilled by the production facility.

 Planning: The requirement triggered by the customer’s sales order will be

combined with other orders. The planning department will create a
production plan to produce the products to fulfill the customer’s orders. To
manufacture the products the company will then have to purchase the raw
materials needed.

 Purchasing: The purchasing department receives a list of raw materials and

services required by the production department to complete the customer’s
orders. The purchasing department sends purchase orders to selected
suppliers to deliver the necessary raw materials to the manufacturing site on
the required date.
  Inventory: The raw materials are received from the suppliers, checked for
quality and accuracy and moved into the warehouse. The supplier will then
send an invoice to the company for the items they delivered. The raw
materials are stored until they are required by the production department.

 Production: Based on a production plan, the raw materials are moved

inventory to the production area. The finished products ordered by the
customer are manufactured using the raw materials purchased from
suppliers. After the items have been completed and tested, they are stored
back in the warehouse prior to delivery to the customer.

 Transportation: When the finished product arrives in the warehouse, the

shipping department determines the most efficient method to ship the
products so that they are delivered on or before the date specified by the
customer. When the goods are received by the customer, the company will
send an invoice for the delivered products.

Supply Chain Management

To ensure that the supply chain is operating as efficient as possible and generating
the highest level of customer satisfaction at the lowest cost, companies have
adopted Supply Chain Management processes and associated technology. Supply
Chain Management has three levels of activities that different parts of the company
will focus on: strategic; tactical; and operational.

 Strategic: At this level, company management will be looking to high level

strategic decisions concerning the whole organization, such as the size and
location of manufacturing sites, partnerships with suppliers, products to be
manufactured and sales markets.

 Tactical: Tactical decisions focus on adopting measures that will produce

cost benefits such as using industry best practices, developing a purchasing
strategy with favored suppliers, working with logistics companies to develop
cost effect transportation and developing warehouse strategies to reduce the
cost of storing inventory.
  Operational: Decisions at this level are made each day in businesses that
affect how the products move along the supply chain. Operational decisions
involve making schedule changes to production, purchasing agreements with
suppliers, taking orders from customers and moving products in the
warehouse.

Supply Chain Management Technology

 If a company expects to achieve benefits from their supply chain

management process, they will require some level of investment in
technology. The backbone for many large companies has been the vastly
expensive Enterprise Resource Planning (ERP) suites, such as SAP and
Oracle.

 Since the wide adoption of Internet technologies, all businesses can take
advantage of Web-based software and Internet communications. Instant
communication between vendors and customers allows for timely updates of
information, which is key in management of the supply chain.
Role of Supply Chain in Indian Organized Retail

The role of supply chain in Indian organized retail is very significant for on it
depends the growth of this sector. The Indian Supply Chain Council have been
formed to explore the challenges that a retailer faces and to find possible solutions
for India.

The role of supply chain in the organized retail sector in India should be a shelf-
centric partnership between the retailer and the manufacture for this will create
supply chains that are loss free. This will also give rise to top and bottom line
growth. In the organized retail sector in India the presence of fresh produce
(vegetables and fruits) is very small. This is so for the nature of supply chain is very
fragmented. This shows the important role of supply chain in the organized retail
sector in India.

In the organized retail market in India the role of supply chain is very important for
the Indian customer demands at affordable prices a variety of product mix. It is the
supply chain that ensures to the customer in all the various offerings that a company
decide for its customers, be it cost, service, or the quickness in responding to ever
changing tastes of the customer.

The infrastructure in India in terms of road, rail, and air links are not sufficient. And
so warehousing plays a major role as an aspect of supply chain operations. To
overcome these problems, the Indian retailer is trying to reduce trans portion costs
and is investing in logistics through partnership or directly. The Indian organized
retail sector is growing so the role of supply chain becomes all the more important.
It should become all the more responsive and adaptive to customers demand. There
is also need for the supply chain to be more cost efficient and collaborative to win
the immense competition in this sector.

The role of supply chain in Indian organized retail has expanded over the years with
the boom in this industry. The growth of the Indian retail industry to a large extent
depends on supply chain, so efforts must be made by the Indian retailers to maintain
it properly.
Quality in the Supply Chain

To help improve customer satisfaction, greater emphasis is given to the aspect of

quality in the supply chain. The articles on this page will help you understand some
of the quality issues and methodologies that are relevant in current supply chain
management.

Benchmarking In The Supply Chain

Supply chain operations within an organization should be constantly reviewed to

identify where improvements can be made or deficiencies eliminated. One method
to help do this is to perform a series of benchmarking tests on their supply chain
processes. This article reviews the methods involved in benchmarking supply chain
processes.

Total Quality Management (TQM)

Total Quality Management (TQM) is an approach that seeks to improve quality and
performance which will meet or exceed customer expectations. TQM looks at the
overall quality measures used by a company including managing quality design and
development, quality control and maintenance, quality improvement, and quality
assurance. This article looks at the history and implementation of TQM.
Benchmarking In the Supply Chain

Benchmarking Overview

Supply chain operations within an organization should be constantly reviewed to

identify where improvements can be made or deficiencies eliminated. One method
to help do this is to perform a series of benchmarking tests on their supply chain
processes. Benchmarking or goal setting allows a company to assess the
opportunities they may have for improving a number of areas in their supply chain
including productivity, inventory accuracy, shipping accuracy, storage density and
bin-to-bin time. The benchmarking process can provide a company some estimate of
the benefits achieved by the implementation of any improvements.

History of Benchmarking

Benchmarking is the process whereby an assessment of an act or performance is

measured by some means, whether this is by a measurement of time, value or
quantity. For example, an assessment of moving items from one storage location to
another can be measured by time for a single movement or by quantity if the
performance is over a set period. A benchmarking project will gather the
assessments and develop a plan of action to improve the process that was assessed.
The popularity of benchmarking was spearheaded by the Xerox corporation in the
1980’s and is now used in corporations throughout the world.

Types of Benchmarking

Three types of benchmarking can be identified; internal which is focused on the

processes of a single company, external which examines processes outside of a
company’s direct industry and competitive, which examines processes at firms
within the same industry.

Internal Benchmarking

The internal benchmarking process allows a company with a number of facilities

that operate the same supply chain processes to compare and contrast the ways in
which the process is performed in those facilities. For example if a company
operates five distribution centers in the US and Canada, the benchmarking process
can examine a number of operations that take place at each of the distribution
centers and compare how they are performed and what improvements can be made
by comparing the results of the benchmarking. If a company benchmarks the
processes around inventory accuracy, shipping accuracy and storage density, the
results of the assessments of the facilities can help a company to improve on those
processes at all of the facilities.

External Benchmarking

For companies that have performed internal benchmarking and want to investigate
new ways in which to improve performance of their internal processes, external
benchmarking can produce significant improvements. Many companies believe that
their processes are as efficient as possible, but quite often, the efficiencies are
limited by the knowledge within the company. The external benchmarking process
takes a company outside of its own industry and exposes them to different methods
and procedures. For example, a manufacturer and distributor of electrical
components have internally benchmarked their warehouses for a number of years
and have exhausted ideas on improving efficiencies. They approached a very
successful retail company to visit their central warehouse and benchmark the
processes that occur there to compare to their own warehouse processes. The
external benchmarking allowed the manufacturer of the electrical components to
assess the processes seen in the retailer’s warehouse and develop an improvement
plan for their own facilities based on the results.

Competitive Benchmarking

For companies that are not performing as well as their competitors they may want
to identify the reasons why their processes are not as efficient. Consulting and
research firms can perform competitive benchmarking studies for companies that
will identify the strengths and weaknesses of their processes based on those of their
competitors. The company can then produce improvement plans based on the
results of the competitive benchmarking.

Components of Benchmarking

There are a number of components to a benchmarking study. Not every

benchmarking project will incorporate these components, but a combination of
these can be used.

 Financial benchmarking – This involves a financial analysis of the

operations that are assessed. For example, a company can compare the cost
of storing a component in each of its warehouses.
 Performance benchmarking – This can compare the efficiency of
performing a task in one company location to another, or to a competitor’s.
 Product benchmarking – This method compares the product of one
company against another, or comparing between facilities in the same
company.
  Strategic benchmarking – This method observes how other companies
compete. This can be within the same industry or outside of the companies
industry.
 Functional benchmarking – This is considered to be traditional
benchmarking where a company will benchmark a single process at a
location or a number of locations to identify where efficiencies can be made.

Total Quality Management (TQM)

Total Quality Management (TQM) is an approach that seeks to improve quality and
performance which will meet or exceed customer expectations. This can be achieved
by integrating all quality-related functions and processes throughout the company.
TQM looks at the overall quality measures used by a company including managing
quality design and development, quality control and maintenance, quality
improvement, and quality assurance. TQM takes into account all quality measures
taken at all levels and involving all company employees.

Origins of TQM

Total quality management has evolved from the quality assurance methods that
were first developed around the time of the First World War. The war effort led to
large scale manufacturing efforts that often produced poor quality. To help correct
this, quality inspectors were introduced on the production line to ensure that the
level of failures due to quality was minimized.

After the First World War, quality inspection became more commonplace in
manufacturing environments and this led to the introduction of Statistical Quality
Control (SQC), a theory developed by Dr. W. Edwards Deming. This quality method
provided a statistical method of quality based on sampling. Where it was not
possible to inspect every item, a sample was tested for quality. The theory of SQC
was based on the notion that a variation in the production process leads to variation
in the end product. If the variation in the process could be removed this would lead
to a higher level of quality in the end product.

After World War Two, the industrial manufacturers in Japan produced poor quality
items. In a response to this, the Japanese Union of Scientists and Engineers invited
Dr. Deming to train engineers in quality processes. By the 1950’s quality control was
an integral part of Japanese manufacturing and was adopted by all levels of workers
within an organization.

By the 1970’s the notion of total quality was being discussed. This was seen as
company-wide quality control that involves all employees from top management to
the workers, in quality control. In the next decade more non-Japanese companies
were introducing quality management procedures that based on the results seen in
Japan. The new wave of quality control became known as Total Quality
Management, which was used to describe the many quality-focused strategies and
techniques that became the center of focus for the quality movement.

Principles of TQM

TQM can be defined as the management of initiatives and procedures that are aimed
at achieving the delivery of quality products and services. A number of key
principles can be identified in defining TQM, including:

 Executive Management – Top management should act as the main driver

for TQM and create an environment that ensures its success.
 Training – Employees should receive regular training on the methods and
concepts of quality.
 Customer Focus – Improvements in quality should improve customer
satisfaction.
 Decision Making – Quality decisions should be made based on
measurements.
 Methodology and Tools – Use of appropriate methodology and tools
ensures that non-conformances are identified, measured and responded to
consistently.
 Continuous Improvement – Companies should continuously work towards
improving manufacturing and quality procedures.
 Company Culture – The culture of the company should aim at developing
employees ability to work together to improve quality.
 Employee Involvement – Employees should be encouraged to be pro-active
in identifying and addressing quality related problems.

The Cost of TQM

Many companies believe that the costs of the introduction of TQM are far greater
than the benefits it will produce. However research across a number of industries
has costs involved in doing nothing, i.e. the direct and indirect costs of quality
problems, are far greater than the costs of implementing TQM.

The American quality expert, Phil Crosby, wrote that many companies chose to pay
for the poor quality in what he referred to as the “Price of Nonconformance”. The
costs are identified in the Prevention, Appraisal, Failure (PAF) Model.
Prevention costs are associated with the design, implementation and maintenance
of the TQM system. They are planned and incurred before actual operation, and can
include:

 Product Requirements – The setting specifications for incoming materials,

processes, finished products/services.
 Quality Planning – Creation of plans for quality, reliability, operational,
production and inspections.
 Quality Assurance – The creation and maintenance of the quality system.
 Training – The development, preparation and maintenance of processes.

Appraisal costs are associated with the vendors and customers evaluation of
purchased materials and services to ensure they are within specification. They can
include:

 Verification – Inspection of incoming material against agreed upon

specifications.
 Quality Audits – Check that the quality system is functioning correctly.
 Vendor Evaluation – Assessment and approval of vendors.

Failure costs can be split into those resulting from internal and external failure.
Internal failure costs occur when results fail to reach quality standards and are
detected before they are shipped to the customer. These can include:

 Waste – Unnecessary work or holding stocks as a result of errors, poor

organization or communication.
 Scrap – Defective product or material that cannot be repaired, used or sold.
 Rework – Correction of defective material or errors.
 Failure Analysis – This is required to establish the causes of internal
product failure.

External failure costs occur when the products or services fail to reach quality
standards, but are not detected until after the customer receives the item. These can
include:

 Repairs – Servicing of returned products or at the customer site.

 Warranty Claims – Items are replaced or services re-performed under
warranty.
 Complaints – All work and costs associated with dealing with customer’s
complaints.
 Returns – Transportation, investigation and handling of returned items.
Major Retail Players 

Comprised of organized and traditional retail formats,Indian Retail market is

estimated to be worth USD 350 billions.

o Organized Retail is estimated at USD 8 [Link] Retail is

growing at over 30% annually.
o Of India’s 12 millions retail outlets, more than 80% are operated by
small family business using household labor.
o The retail industry represents 13% of GDP and accounts for 6% of
India’s work [Link] growth rate in the retail industry are
attributed to growth in India economy, rising income and changing
consumption and expenditure patterns.                       

Top Major Retail Players

Retailer Existing Brand No. of Total Total Expansions

formats Names Store Retail Sales Plans
s Space(‘00 2004-
0 sq ft) 05(US
D mn)

Pantaloon Department Pantaloon 13 1,948 241 Invest

Retail store around
Indian USD125 mn
Ltd between
FY06-FY08.
Open 80-100
more stores
across
formats.
 Hypermarket Big Bazaar 18 N/A N/A Triple total
Retail area by
FY08 to 6.5
mn Sq. ft.

Supermarkets Food 9 N/A N/A Enter into

Bazaar Furniture
and home
retailing.

Seamless Central 3 N/A N/A  

Malls

RPG Hyper Spencer’s 3 480 96 Open 21

Retail markets hypermarket
s and
supermarket
s

Music Stores Music 225 N/A N/A Open another

world 100 Music
Stores in
FY08.

Super Spencer’s 49 N/A N/A  

markets

Shopper’s Department Shopper’s 20 1000 96 Add 2 mn Sq.

Stop Ltd. stores Stop Ft. of Retail
Space in
FY08

Books & Crossword 33 N/A N/A Entering

Music Stores s Hypermarket
format, 18
Stores
planned by
FY08
 Home Home Stop N/A N/A N/A Setting up
furnishing Speciality
Stores for
Home
Solutions.

Landmar Department Lifestyle 8 370 67 Set up 25

k Group Stores New
(Based in Departmental
Dubai) stores by
FY08. Invest
USD 65mn
over next 5
years.

Trent Department West side 19 350 52 Add 640,000

India Ltd Stores [Link]. of Retail
Space.

Hypermarket Star India 1 N/A N/A Open 17

s Bazaar Stores under
the
departmental
and
Hypermarket
formats by
FY08.

Books & Land Mark 4 N/A N/A  

Music Stores

Company Profile:-
Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple
retail formats in both the value and lifestyle segment of the Indian consumer
marker.  Headquartered in Mumbai (Bombay), the company operates over 5 million
square feet of retail space, has over 450 stores across 40 cities in India and employs
over 18,000 people.

The company’s leading formats include Pantaloons, a chain of fashion outlets, 

Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket
chain, blends the look, touch and feel of Indian bazaars with aspects of modern
retail like choice, convenience and quality and Central, a chain of seamless
destination malls. Some of its other formats include, Depot, Shoe Factory, Brand
Factory, Blue Sky, Fashion Station, aLL, Top 10, mBazaar and Star and Sitara. The
company also operates an online portal, [Link].

A subsidiary company, Home Solutions Retail (India) Limited, operates Home

Town, a large-format home solutions store, Collection i, selling home furniture
products and E-Zone focused on catering to the consumer electronics segment.

Pantaloon Retail was recently awarded the International Retailer of the Year 2007
by the US-based National Retail Federation (NRF) and the Emerging Market Retailer
of the Year 2007 at the World Retail Congress held in Barcelona.

Pantaloon Retail is the flagship company of Future Group, a business group catering
to the entire Indian consumption space.
Future Group Manifesto

“Future” – the word which signifies optimism, growth, achievement, strength,

beauty, rewards and perfection. Future encourages us to explore areas yet
unexplored, write rules yet unwritten; create new opportunities and new
successes. To strive for a glorious future brings to us our strength, our ability to
learn, unlearn and re-learn, our ability to evolve.

We, in Future Group, will not wait for the Future to unfold itself but create future
scenarios in the consumer space and facilitate consumption because
consumption is development. Thereby, we will effect socio-economic
development for our customers, employees, shareholders, associates and
partners.

Our customers will not just get what they need, but also get them where,
how and when they need. We will not just post satisfactory results, we will
write success stories. We will not just operate efficiently in the Indian
economy, we will evolve it. We will not just spot trends, we will set trends by
marrying our understanding of the Indian consumer to their needs of
tomorrow. It is this understanding that has helped us succeed. And it is this
that will help us succeed in the Future. We shall keep relearning. And in this
process, do just one thing.
Rewrite Rules. Retain Values.

Group Vision
Future Group shall deliver Everything, Everywhere, Everytime for
Every Indian Consumer in the most profitable manner.

Group Mission
 We share the vision and belief that our customers and
stakeholders shall be served only by creating and executing
future scenarios in the consumption space leading to
economic development.
 We will be the trendsetters in evolving delivery formats, creating
retail realty, making consumption affordable for all customer
segments – for classes and for masses.
  We shall infuse Indian brands with confidence and renewed ambition.
 We shall be efficient, cost- conscious and committed to quality in
whatever we do.
 We shall ensure that our positive attitude, sincerity, humility and
united determination shall be the driving force to make us
successful.

Core Values
 Indian ness : confidence in ourselves.

 Leadership: to be a leader, both in thought and business.

 Respect & Humility: to respect every individual and be humble in our conduct.
 Introspection: leading to purposeful thinking.
 Openness: to be open and receptive to new ideas, knowledge and information.
Valuing and Nurturing Relationships: to build long term relationships.

 Simplicity & Positivity: Simplicity and positivity in our thought, business and action.
 Adaptability: to be flexible and adaptable, to meet challenges.

 Flow: to respect and understand the universal laws of nature.

Hierarchy of Pantaloon (Future Group)

Mr. Kishore Biyani, Managing Director

Mr. Gopikishan Biyani, Wholetime Director

Mr. Rakesh Biyani, Wholetime Director

Mr. Ved Prakash Arya, Director

Mr. Shailesh Haribhakti, Independent Director

Mr. S Doreswamy, Independent Director

Dr. D O Koshy, Independent Director

Ms. Anju Poddar, Independent Director

Ms. Bala Deshpande, Independent Director

Mr. Anil Harish, Independent Director

Big bazaars, small customer

With its high decibel 'sabse saste 3 din' campaign last month, India's top retailer
Pantaloon Retail clearly has no problem attracting customers to stores, but getting them to
buy is a different matter altogether.

Sales from the Rs 3,237 crore (Rs 32.37 billion) retailer's existing stores ('same store', in
jargon) grew a mere 3.6 per cent in January (on a year-on-year basis) as compared to 29
per cent in January 2007, and the last six month's average of 10 per cent.

October, the festival season, saw a similarly dismal performance when sales fell 25 per
cent -- things picked up with Diwali in November but sales for the value segment (Big
Bazaar and Food Bazaar) for the two-month period rose just 2.8 per cent as compared to a
much higher 15 per cent in 2006. For the Lifestyle segment (Pantaloon and Fashion
Station), things were marginally better with sales in these two months rising 9 per cent in
2007 as against over 20 per cent in 2006.

For the entire company, of course, sales have grown faster in 2007-08. Overall sales for the
year are expected to grow 78 per cent as compared to 71.3 per cent in 2006-07 -- but this
includes sales from new stores as well. It's true that in mature western markets where the
penetration of organized retail is high, growth in same-store sales does peter off after three
years or so, and settle at around 1-2 per cent. In India, however, where the penetration of
organized retail is very low, the slowdown is alarming.

Since consumer spending is clearly on the rise, the only reason for sluggish sales is the
greater competition and the possibility that organized retail is still not offering the kind of
value propositions which will make it unbeatable. While the penetration of organized retail
is 3-4 per cent at the all-India level, it is true that in major cities, there are pockets where
organized retailers are located close to each other and offer more or less the same
merchandise.

Pantaloon Retail has tried to beat this slowdown through rapid expansion. The overall sales
growth shows the strategy is working, but this is happening at a huge cost -- the company's
profit margins are getting eroded and revenues per square foot of space are declining. Total
sales for the last four quarters show that the revenue per square foot has been slowing.

While a sequential comparison may not be strictly in order for  the lifestyle segment which
is, to some extent, a seasonal business, the value segment (Big Bazaar and Food Bazaar) is
much less so.

The result is that sales are not growing fast enough to leave the retailer with a decent gross
margin. The gross margin, which does not reflect real estate costs or start-up costs for new
stores, has been falling.

From 33 per cent in FY06, it slipped to 31.7 per cent in FY07, and in the June 2007 quarter
this fell 550 basis points y-o-y. Even in the first two quarters of the current year, gross
margins fell by 266 basis points y-o-y and 180 basis points y-o-y, respectively.

One reason for this is the gradual shift in the product mix towards the value segment -- Big
Bazaar and Food Bazaar -- where products are far less profitable. Value retailing today
contributes approximately 72 per cent to turnover, up from 68 per cent in FY06 -- lifestyle
retailing accounts for the rest.

Another reason is the higher promotional offers required to sustain same store sales in the
value-retail formats. Besides, the increasing contribution from the relatively low margin
consumer electronics business is also partly to blame.

With real estate and salary expenses on the rise, operating margins too have not been
really robust averaging 7 per cent over the last eight quarters.

However, of late, some scale benefits and better supply chain efficiencies appear to be
creeping in, boosting margins in the first half of FY08. One of the main reasons for the
bounce back in operating profit margins in the first quarter of FY08, when they  expanded
after four quarters of margin contraction, is lower staff costs and other overheads. In the
second quarter of FY08 too, the ratio of employee costs to sales improved significantly -- it
dropped from 6.5 to 5.7 per cent.

Besides, there was a less-than-proportionate increase in marketing and general overheads.

While margins could remain flat as grocery-based formats proliferate, the advantage with a
format like Big Bazaar is that it can do higher inventory turns. However, that too doesn't
seem to be happening in any significant manner. In fact, one of the key concerns of analysts
is the high level of finished goods inventory.

The company's inventory rose by Rs 160 crore (Rs 1.6 billion) in Q2FY08 and the
inventory-to-sales ratio stood at 12. 8 per cent, compared with 13 per cent in Q2FY07. In
Q1FY08 too, there was a sharp rise in inventory, by Rs 140 crore, and the inventory-to-
sales ratio rose to 12.9 per cent compared with 6.5 per cent in Q1FY07.

Stocks as per cent of sales have been rising since the third quarter of FY07. While some of it
can be attributed to stocking up for new rollouts, it is nonetheless disconcerting. What
makes things worse is that Pantaloon persists with an inventory accounting policy that is
less prudent than those of its competitors.

The valuation method overstates inventory and therefore, profits -- Pantaloon values its
inventory at the retail price less a markdown  (about 15 per cent) compared with the
standard retail practice that values inventory at the cost of bringing it to the point of sale or
the selling price, whichever is lower.

Pantaloon can protect its margins by increasing the share of private and store brands --
which it is doing. The share of store brands for the value segment is currently 38 per cent
and should go up to 50 per cent by FY2010. For the lifestyle segment, however, there isn't
much scope for further increases since such brands are already at around 70 per cent.

The competition in the food and grocery segment, which accounts for 40 per cent of
consumer spending at the all-India level, is keen with chains such as TruMart, Reliance
Fresh and Subhiksha growing. The Pantaloon group itself is launching KB Fair Price shops.
All of this will hit margins since each chain tries to woo customers through huge discounts.

The result is that, while Pantaloon's gross margins are over 30 per cent, net margins are
under 3 per cent. So, even if the company is in a growth phase, there can be little doubt
costs are completely out of whack. Unless the benefits of scale are seen quickly, the
company's growth may be painful. And if, as expected, the economy starts to slow down, it
will hurt the retailer even more.

7 p and SWOT analysis of Big Bazaar

7P Analysis of Big Bazaar

7P Marketing Mix is more useful for services industries and knowledge intensive
industries. Successful marketing depends on number of key issues. The seven keys issues
are explained as: -

Product

 Big Bazaar offers a wide range of products which range from apparels, food, farm
products, furniture, child care, toys, etc. Products of all the major brands are
available at Big Bazaar. Also, there are many in house brands promoted by Big
Bazaar. Big Bazaar sold over 300,000 pairs of jeans, 50,000 DVD-players and 25,000
microwave-ovens. In all, the fashion, electronics and travel segments made up about
70% of sales. Last year, these categories made up only about 60%.

Price

The tag-line is “Is se sasta aur accha aur kahin nahi”. They work on the model of economics
of scale. There pricing objective is to get “Maximum Market Share”. The various techniques
used at Big Bazaar are: -

 Value Pricing (EDLP - Every Day Low Pricing): Big Bazaar promises consumers
the lowest available price without coupon clipping, waiting for discount
promotions, or comparison shopping.
 Promotional Pricing: Big Bazaar offers financing at low interest rate. The concept
of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Big
Bazaar also caters on Special Event Pricing (Close to Diwali, Gudi Padva, and Durga
Pooja).
 Differentiated Pricing: Time pricing, i.e., difference in rate based on peak and non-
peak hours or days of shopping is also a pricing technique used in Indian retail,
which is aggressively used by Big Bazaar.
 Bundling: Selling combo-packs and offering discount to customers. The combo-
packs add value to customer.

Place

 Big Bazaar stores are located in 50 cities with 75 outlets. Big Bazaar has presence in
almost all the major Indian cities. They are aggressive on their expansion plans.

Promotion

 Big Bazaar started many new and innovative cross-sell and up-sell strategies in
Indian retail market. The various promotion techniques used at Big Bazaar include
“saal ke sabse saste teen din”, Future Card (the card offers 3% discount), Shakti Card,
  Brand Endorsement by M. S. Dhoni, Exchange Offer - ‘Junk Swap Offer’, Point-of-
Purchase Promotions.
 Advertising has played a crucial role in building of the brand. Big Bazaar
advertisements are seen in print media, TV, Radio (FM) and road-side bill-boards.

People

They are one of the key assets for any organization. The salient features of staff of Big
Bazaar are: -

 Well-trained staff, the staff employed by Big-Bazaar are well-suited for modern
retail.
 Well-dressed staff improves the overall appearance of store.
 Employees are motivated to think out-of-the-box. Retail sector is in growth stage, so
staff is empowered to take innovative steps.
 Employs close to 10,000 people and recruits nearly 500 people every month.
 Use of technology like scenario planning for decision making.
 Multiple counters for payment, staff at store to keep baggage and security guards at
every gate, makes for a customer-friendly atmosphere.

Process

The goods’ dispatch and purchasing area has certain salient features which include: -

 Multiple counters with trolleys to carry the items purchased.

 Proper display / posters of the place like (DAL, SOAP, etc.).
 Home delivery counters also started at many places.

Physical Evidence

It deals with the final deliverable or the display of written facts. This includes the current
system and available facilities.

CHAPTER 2
Significance of the study

This is a limited study which takes into consideration the responses of 20 employees of big
bazaar. This data can be explorated to take in the trends across the industry. The
significance for the industry lies in studying these trends that emerge from the study. It is a
rapidly changing and evolving sector. A study like this can attempt to guide the future of
the industry based on current trends and need .This study is helpful to find out the effect of
supply chain in hyper store like big bazaar and customer satisfaction.

CHAPTER 3
Research Methodology

This research involved a study, which was descriptive in nature. This study mainly focuses
upon the Plans and Strategies using by retailer [hyper store] regarding supply chain
management for fulfilling the need and demand of the customer.

Methods of Data Collection:

There are mainly two types of data:

Primary Data

Secondary Data

1. Primary Data Collection:-

Primary data can be collected by three methods:

 Observation

Area of Survey: - I am doing my survey in big bazaar which is in Agra city.

Sampling Unit: - Employees who are working in BIG BAZAAR.

Sampling Procedure: - Convenience sampling procedure has followed.

Sampling Method: - I am collecting data by Employees. I am meeting with the employee to

know about the supply chain which is follow in big bazaar and other hyper store.
2. Secondary Data Collection: - Secondary data are collected from different books,
company journals, company records and other magazines and websites.

CHAPTER 4
Objective of the Study

 Study of existing system of supply chain management of BIG BAZAAR.

 How can existing system suggest to make the existing system more efficient.
 How supply chain reduce the holding cost.

Importance of the study

 Through this study hyper store are able to manage their inventory level.
 This is helpful to know the different sources of merchandise.
 By having good supply chain hyper store are able to manage the cost, quality and
time of merchandise.
 By this study hyper store are able to maintain good customer relationship
management.