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%

Un-organ-ized Retail-

ing65%

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

clothing & fashion accessories

38%

Jewellery3%

watches3%Footwear

10%

Health & Beauty care1%

Pharmaceuticals2%

Consumer Durables9%

Mobile & Accessories3%

Furnishings, untetils, furniture

6%

Food & Grocery12%

Out of home Food7%

Leisure3%

Entertainment3%

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.

MethodologyGATHERING OF PRIMARY DATA

REFERENCE FROM JOURNALS

& ARTICLES

VALIDATION OF DATA

SELECTION OF BUSINESS PROCESS

SUPPLY CHAIN & INVENTORY

MANAGEMENTDETAILED

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 Wal-mart, 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.

BibliographyPRIMARY 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)

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