EXECUTIVE SUMMARY

Indian retail sector is witnessing one of the most hectic Marketing activities of all times. The

companies are fighting to win the hearts of customer who is God said by the business tycoons.

There is always a ‘first mover advantage’ in an upcoming sector. In India, that advantage goes to

“BIG BAZAAR”. It has brought about many changes in the buying habits of people. It has

created formats, which provide all items under one roof at low rates, or so it claims. In this

project, we will study its Inventory management system and vendor relationship.

The research titled “A Study on Inventory management system of BIGBAZAAR” at

BIGBAZAAR, Banashankari, Bangalore helps us to understand the present inventory

management system which is responsible for fulfilling the demand of customer at

BIGBAZAAR.This study will helpful to top level management to improve the present inventory

management system at BIGBAZAAR.

The research was carried out as per the steps of Marketing Research. The well supportive

objectives were set for the study. To meet the objectives primary research was undertaken. The

data collection approach adopted was experimental research & survey research. The instrument

used for the data collection was observation, interview & analyzing previous year balance sheets

and p&l a/c. The target respondents were the Logistic manager, Inventory manger, Merchandiser

category person etc of BIG BAZAAR, with the sample size of 50 for the study of Inventory

management and relationship with vendors of the company. Tables & charts were used to

translate responses into meaningful information to get the most out of the collected data Based

on those the inferences have been drawn with peer supportive data.

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PART-A

CHAPTER-I

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INTRODUCTION

1.1 Industry Profile:

Retailing consists of the sale of goods or merchandise from a very fixed location, such as a

department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption

by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may

be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities

from manufacturers or importers, either directly or through a wholesaler, and then sells smaller

quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at

the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary

part of their overall distribution strategy. The term "retailer" is also applied where a service

provider services the needs of a large number of individuals, such as a public utility, like electric

power.

1.1.1.GLOBAL RETAIL SECTOR Retailing involves all activities accompanying to selling to ultimate consumer for their personnel

family and household use, from a fixed location such as a department store or kiosk, in small or

individual lots for direct consumption by the purchaser. Retailing is the interface between the

producer and the individual consumer buying for personal consumption. Hence the success of

retailing is highly dependent on an efficient supply chain management.

1.1.2.Growth in the Global Retail Market The confluence of market forces has created an extremely complex climate for the global retail

industry. In mature markets, retail sector is challenged by its inability to grow and maintain

profit margins as a result of a constrained operating environment, market maturity & situation,

slow population growth and more demanding consumers as well as highly volatile consumer

behavior.

According to the research conducted by MVI (Management Ventures Inc) in 2007 found that

modernizing retailers need capabilities in six core areas to win in the changing environment

Today retailing is a primary driver of the global economy and has become an essential part of

our lives. Of the world‘s 10 largest retail companies, six are from the US and four are from

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Europe. These top ten had combined sales of $978.5 billion in 2007, according to international

consulting group, Deloitte.

1.1.3. Most Preferred International Retail Markets The following table gives the top 15 countries which has the highest presence of international

players in their retail market. India ranks 44 in the list. This is because of the FDI restrictions

prevailing in the country. The situation is expected to change because of the liberalization in the

FDI for retail sector.

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Table.no-1.1Most preferred International Retail Market

Rank Country Percent of international retailers present

1 UK 552 Spain 513 Germany 494 Italy 475 Switzerland 456 Austria 427 United Arab Emirates 428 China 419 Russia 4010 USA 3911 Netherland 3912 Singapore 3813 Belgium 3814 Italy 3715 Ireland 35

It is also found that luxury goods dominated international retail scene, with almost 90 per cent

respondents in the segment having a presence in more than 10 markets. This was markedly more

than grocery, food and drinks, with just 60 per cent present in 10 or more markets.

In clothing, footwear and accessories segments, 54 per cent retailers had operations in more

than10 markets. Many luxury retailers are well-known particularly for their clothing range, such

as Hugo Boss or Versace, reflecting the historical tendency for high fashion brands to be offered

internationally. Least division was the department stores with only 5 per cent being represented

in 10 or more markets.

1.1.4. Present State of Global Retail Industry In 2009 in the retail industry Cutbacks, layoffs, closings and bankruptcy are the hottest retail

trends in 2008. History will point to 2008 as the official beginning of a massive global retail

recession. There were record-breaking declines in sales, inventories, and consumer confidence

that caused revenue losses.

As it was predicted in the Deloitte report, ―2008 Industry Outlook: A look around the corner,‖

U.S. retailing is challenging due to fears about the housing market, tightening credit, not to

mention high gas prices and cost of living increases. The big retailers have been compensated top

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U.S. CEOs in fiscal year 2008 which ranged from a high of $30.6 million to a low of $1.00,

according to Salary.com. Robert Iger, Walt Disney Co. received $30.6 million and Steve Jobs,

Apple received $ 1.00 (source: About.com – Overview of retail sector) As a result the retailers

need to struggle to enhance sales by being creative and competitive but it's not enough to just

show up. History shows that the retailers who survive economic setbacks are the ones who get

inventive, get resourceful, and get noticed. ―One of the most exciting things to watch in the

global retail landscape is the growth and influence of the BRIC emerging markets (Brazil,

Russia, India and China). China is already a strong global performer and represented in the top

10 most international markets in our study. Within the primary cities, such as Beijing, Shanghai

and Guangzhou in China, there is a significant concentration of wealth and it is around these

cities that much of the international retail activity is well centered, Mr. Davies underscored.

`Deloitte in its report, ―Global retail trends for 2009‖ has mentioned that successful retailers

will find a way to enhance their customer experience, improving risk management, cutting cost,

human resource management, multi-channel approach, thinking globally and branding.

1.1.5. OVERVIEW OF INDIAN RETAIL SECTOR India is one of the largest and highly fragmented Retail markets globally with the highest retail

outlets in the world crossing over 12 million with unorganized players accounting for around 5%

of market share. Among this unorganized player more than 80 percent of these run as small

family businesses in small towns and cities in the form of ‗kirana stores‘, ‘push cart vendors‘,

‘melas’ and ‘mandis’. In terms of employment the retail outlet in the unorganized sector feeds a

household of six to seven members. The big retail players are beginning to realize the

significance of this untapped market by entering these markets and are being accepted by these

rural consumers. The rural retail revenues are estimated to increase by 60 per cent by 2012, with

larger share of increase in demand for consumer and household products.

1.1.6. Structure of Indian Retail Sector The Indian retail industry can therefore be broadly divided into organized and unorganized

retailing. Unorganized sector constitutes of the local kiranas, hand cart, the vendors on the

pavement etc. Unorganized retailing is still the backbone of the Indian retail industry

contributing to over 95 per cent of total retail revenues. The organized sector on the other is hand

trading undertaken by the licensed retailers who have registered themselves to sales as well as

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income tax. They constitute of corporate backed hypermarkets and retail chains. This modern

retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge

complexes offer shopping, entertainment and food all under one roof.

1.1.7. Growth prospects in Indian Retail Sector The Indian retail industry today is the 5th largest retail destination and the second most

attractive market for investment in the globe after Veitnam as reported by AT Kearney's

seventh annual Global Retail Development Index (GRDI), in 2008.The growing popularity of the

Indian retail sector has resulted in a growing awareness about brands and quality products. As a

whole Indian retail sector has made life convenient, easy, quick and affordable. Indian retail

sector, especially organized retail is growing rapidly, with the customer spending growing in an

unpredicted manner. It is undergoing a metamorphosis. The diagram clearly demonstrates the

evolution of the retail industry. Till 1980 the retail industry continued in the form of kiranas that

is unorganized retailing. Later in 1990s Branded retail outlets like Food world, Nilgris and local

retail outlets like Trinetra super market, Apna Bazaar, came into existence. Now big players like

Reliance, Bharti, Tatas, ITC and other reputed companies are entering into organized retail

businesses

The big multinational retailers are slowly entering India in the form of direct entrance eg: - Nike,

Reebok, Metro etc or Joint Ventures e.g.: - Bharti with Wal-Mart and Tata‘s with Tesco. 2008

onwards the retail sector realized the significance of technology and understanding the

opportunities the retail sector had to offer efforts have been made to leverage traditional formats.

It is estimated that 2011 will see a remarkable growth in retail sector in terms of investments to

optimally benefit from the unexplored retail market .

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Graph.no-1.1Total Share of Retail Sector in India

Recent trends

Retailing in India is witnessing a huge revamping exercise as can be seen in the graph

India is rated the fifth most attractive emerging retail market: a potential goldmine.

Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes

up 3 percent or US$ 6.4 billion

As per a report by KPMG the annual growth of department stores is estimated at 24%

Graph.no-1.2

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India rank first in terms of emerging market potential in retail sector. Current retail market is US

$ 215 billion. Growth rate of retail sector in India is 8-10% per annum. Near about 12 million

retail outlets are spread across India. FDI in retail sector increases from US $ 3.1 billion in 2003

to over US $7.6 billion in 2009.

1.1.8.Key challenges impeding the growth of Organized Retail in India The key challenges facing Organized Retail in India are acceptance of Organized Retail by the

Traditional retailers (which is leading to tougher regulatory measures by the government), supply

chain inefficiencies, high real estate costs, increasing personnel costs, High cost of real

estate,High stamp duties , Multiple & complex taxation system , high execution risks in terms of

store rollouts and high shrinkage that hits Retailers' Bottom-lines. We believe that these

challenges would result in Margin contraction for most players. However, increasing economies

of scale and scope would result in savings for the Retailers and mitigate Margin contraction to a

large extent.

1.1.9. Major players of Retail sector in India:

SHOPPER’S STOP

ADITYA BIRLA GROUP

SUBHIKSHA

PROVOGUE (INDIA) LTD

TRENT LI MITED

VISHAL RETAIL LIMITED

PANTALOON RETAIL (INDIA) LIMITED

FUTURE RETAIL VALUE (INDIA) LIMITED

RELIANCE TREND

1.1.10. CONTRIBUTION TO GDP

Retail sector in India is predominantly unorganised, having one of the highest density of retail

outlets per capita in the world and lowest per capita retail space. Only 2% of the Indian retail

sector is organised while this has been 20%, 80% and 70% in case of China, United States of

America (USA) and United Kingdom (UK) respectively. The contribution of the Indian retail

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sector to the total employment has been 7% as compared to 6%, 11.7% and 11% in case of china,

USA and UK respectively. As per the existing policy of the government, foreign direct

investment (FDI) is not allowed in retail trade in any form whereas this has been allowed in

many other countries with or without restrictions. This was stated by Shri Kamal Nath, Union

Minister of Commerce & Industry, in reply to a question in the Rajya Sabha

As per study commissioned to Indian Council for Research on International Relations (ICRIER)

by the Department of Consumer Affairs, the size of Indian retail market has been estimated as

Rs.7,40,000 crore in 2002.

a. Retailing is one of the biggest private industries in the world and total sales exceeded US

$ 8 trillion in 2002.

b. It accounts more than 10% of GDP in western countries and India and 8% in China.

c. High incidence of female employment and part time employment.

d. Food and grocery constitute the largest segment of retailing

e. Rapid urbanization, income growth, increased participation of women in labor force and

improvements in infrastructure in 1980s and 1990s led to organized retailing.

f. Most countries liberalized policies for opening of FDI in retailing.

g. FDI allowed in China (1992), Brazil, Mexico, Argentina (1994), South Korea (1996),

Thailand (1997) and Indonesia (1998).

h. Total procurement by global retail chains from India is estimated to be below US $ 3

billion out of which 1 billion by Wal-Mart alone.

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1.2 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 market. Headquartered in

Mumbai (Bombay), the company operates over 12 million square feet of retail space, has over

1000 stores across 71 cities in India and employs over 30,000 people.

1.2.1 Background and inception of the company

Future Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India)

Limited. This entity has been created keeping in mind the growth and the current size of the

company’s value retail business, led by its format divisions, Big Bazaar and Food Bazaar.

Big Bazaar is a chain of department stores in India currently with 120 outlets. It is owned by

Pantaloon Retail India Ltd, Future Group. It works on the same economy model as Wal‐Mart and

has been successful in many Indian cities and small towns. The idea was pioneered by

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entrepreneur Mr.Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are

located only in India. It is the fastest growing chain of department stores and aims at having 350

stores by 2010.Big Bazaar is the destination where you get products available at prices lower

than the MRP, seeing a new level of standard in price, convenience and quality.

Big Bazaar is not just another hypermarket. It caters to every need of your family. Where Big

Bazaar scores over other stores is its value for money propos iron for the Indian customers.

At Big Bazaar, you will definitely get the best products at the best prices ‐ that’s what we

guarantee. With the ever increasing array of private labels, it has opened the doors into the world

of fashion and general merchandise including home furnishings, utensils, crockery, cutlery,

sports goods and much more at prices that will surprise you. And this is just the beginning.

Big Bazaar plans to add much more to complete your shopping experience.

About Big Bazaar Hypermarket Chain of Departmental Stores

Outlet 120 outlets in IndiaLocated in 70 Cities

Parent group Pantaloon Retail Group (PRIL)Subsidary of Future Group

Owner Kishore Biyani

Founded 2001

Headquarter Jogeshwari, Mumbai

Industry Retail

Tag Line ‘is se sasta aur achha kahin

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Man Behind Big BazaarKishore Biyani is the Managing Director of Pantaloon Retail (India)Limited and Group Chief

Executive Officer of Future Group.

He was born in August 1961.

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Kishore founded Pantaloons in 1997

onsiders ‘Indianness’ as the core value driving the group

Mr. Kishore has won following awards and honors: 2006 Ernst & Young Entrepreneur of the Year award.

2006 Lakshmipat Singhania ‐ IIM Lucknow YoungBusiness Leader

1.2.2 Nature of the business carried:

Re-tailing

Food

Fashion

Home Solutions

IT General

Leisure & Entertainment

Wellness & Beauty

Books & MusicStore Locator

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(Different lines of business carried at “BIGBAZAAR”)

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1.2.3. Vision, Mission and Quality Policy

Vision:

“To Deliver Everything, Everywhere, Every time, to Every Indian

Customer in the most profitable manner.”

One of the core values at Future Group is, ‘Indianess’ and its corporate credo

is-“Rewrite rules, Retain values

Mission: We share the vision and belief that our customers and stakeholders shall be served only

by creaRng and execuRng 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.

Core Values: Indianness : 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 Rela6onships: to build long term relationships.

Simplicity & Posi6vity: Simplicity and Positivity in our thought, business and work.

Adaptability: to be flexible and adaptable, to meet new challenges.

Flow: to respect and understand the universal laws of nature

1.2.4. Products/service profileBig 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%.

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:

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APP

ARELS

Formal wear Casual wear Night wear T shirt‐ Jeans Sarees Dressmaterials Ethnic wears Party wears

FOOD

Ready to eat Ready tocook Spices StaplesInternationafoods Tea & Cofee

HOME

AND PERSON

AL CAR

E

Shampoo Detergent Soap Liquid Wash Creams Deodrant Home cleaners Utensils Crokery Bundles

C HIL L S TA TION

S o ft d r in kP a c k a g ed ju ic e M ilk I t e m s F r o z e n f o o d s Ic e c r e a m s

E LE CT R

O NIC

B ZA R

T e le v is ion s e t s W a s h in gM a c h in es R e f r ig e ra t o r P e r s o n a l C a r e m B a z a a rM ic r o w av e sS m a l l A p p l ia n ce s L a p t o p s C o m p u te rA c c e s s o rie s K it c h e nA p p l ia n ce s

F A SH I

O N & J E

W EL L ER Y

F o o t w e ar B a z a a rB e a u t y C a r e N a v a r a ta n a S t a r P a r iv a r M e e n a B in d r e

1.2.5 Area of operation:

Big Bazaar is a chain of shopping malls in India currently with1 29 outlets, owned by the

Pantaloon Group. It works on it the economy model as Wal-Mart and has had considerable

success in many Indian cities and small towns. The idea was pioneered by entrepreneur Kishore

Biyani, the head of Pantaloon Retail India Ltd. Big Bazaar stores in Metros have a gaming area

and kids play area for entertainment..BIG BAZAAR stores are located all over the India.

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FURNITURE BAZAAR

Living RoomBed RoomKitchenDinning RoomsKids RoomBeen BagsPainRngsDecoraRveItems

OTHERS SERVICE

S

Mr. right Bakery Loot Mart Tulsi

FUTURE M

ONEY

Future MoneyFuture Generali

Agra

Ahmedabad

Allahabad

Ambala

Asansol

Bangalore

Bhubaneswar

Cuttack

Chennai

Coimbatore

Palakkad

Kolkata

Delhi

Durgapur

Ghaziabad

Gurgaon

Hyderabad

Indore

Lucknow

Kanpur

Mangalore

Mumbai

Nagpur

Nasik

Panipat

Pune

Rajkot

Surat

Thane

Thiruvananthapuram

Vishakhapatnam

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1.2.6. Ownership pattern:BOARD OF DIRECTORS

Mr. Kishore Biyani, Managing Director

Kishore Biyani is the Managing Director of Pantaloon Retail (India) Limited and the Group

Chief Executive Officer of Future Group.

Mr. Gopikishan Biyani, Wholetime Director

Gopikishan Biyani, is a commerce graduate and has more than twenty years of experience in the

textile business

Mr. Rakesh Biyani, Wholetime Director

Rakesh Biyani, is a commerce graduate and has been actively involved in category

management; retail stores operations, IT and exports. He has been instrumental in the

implementation of the various new retail formats.

Mr. Vijay Biyani, Wholetime Director

Vijay Biyani has more than twenty years of experience in manufacturing, textiles and retail

industry and has been actively involved in the financial, audit and corporate governance related

issues within the company.

Mr. Vijay Kumar Chopra, Independent Director

V.K.Chopra is a fellow member of The Institute of Chartered Accountants of India (ICAI) by

profession and is a Certified Associate of Indian Institute of Bankers (CAIIB). His banking

career spans over 31 years and he has served senior management positions in Central Bank of

India,Oriental Bank of Commerce,SIDBI, Corporation Bank and SEBI

Mr. Shailesh Haribhakti, Independent Director

Shri Shailesh Haribhakti, is a Chartered Accountant, Cost Accountant, and a Certified Internal

Auditor. He is the Deputy Managing Partner of Haribhakti & Co., Chartered Accountants and

past president of Indian merchant Chambers. He is on the Board of several Public Limited

Companies, including Indian Petrochemicals Corporation Ltd., Ambuja Cement Eastern Ltd.

etc. He is on the Board of Company since June 1, 1999.

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Mr. S Doreswamy, Independent Director

S. Doreswamy, is a former Chairman and Managing Director of Central Bank of India and

serves on the board of DSP Merrill Lynch Trustee Co and Ceat Limited among others.

Dr. D O Koshy, Independent Director

D. O. Koshy, holds a doctorate from IIT, Delhi and is the Director of National Institute of

Design (NID), Ahmedabad. He has over 24 years of rich experience in the textiles and garment

industry and was instrumental in the setting up of NIFT centres in Delhi, Chennai and

Bangalore. He is a renowned consultant specializing in international marketing and apparel

retail management.

Ms. Bala Deshpande, Independent Director

Bala Deshpande, is Independent Director, Pantaloon Retail (India) Ltd. and also serves on the

boards of Deccan Aviation, Nagarjuna Construction, Welspun India and Indus League Clothing

Ltd, among others

 

Mr. Anil Harish, Independent Director

Anil Harish, is the partner of DM Harish & Co. Associates & Solicitors and an LLM from

University of Miami. He also serves on the board of Mahindra Gesco, Unitech, IndusInd Bank

and Hinduja TMT, among others.

Competitor’s information:

The Big Bazaar operates in a competitive environment. For each line of business, they face

competition from established national and regional companies.

1.2.7. Major Competitors

Shoppers Stop.

Trent (Star India Bazaar).

Lifestyle.

RPG (Spencer).

Subhiksha.

Vishal Mart.

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Shah Bazaar.

1.2.8. Achievement / Award:

Most Admired Retailer of the year: Hypermarket ‐ BigBazaar‐2009

Indian Retail Forum Awards 2008

The INDIASTAR Award 2008

Retail Asia Pacific 500 Top Awards 2008

Coca-Cola Golden Spoon Awards 2008

The Reid & Taylor Awards For Retail Excellence 2008

Platinum Trusted Brand Award Images Retail Award 2005,06

CNBC Awaaz Consumer Awards 2009

Images Fashion Forum 2009

National Retail Federation Awards 2007

World Retail Congress Awards 2007

Hewitt Best Employers 2007

PC World Indian Website Awards 2007

Reader’s Digest Trusted Brands Platinum Awards

1.2.9. Work flow model (At BIGBAZAAR):

Generally the workflow model at BIGBAZAAR starts with customer and ends with customer .

depending upon the customers demand BIGBAZAAR predict the sale for particular period and

order to suppliers. Suppliers get all the goods/product from manufacturer and send to the ware

house of BIGBAZAAR, again from ware house it comes to particular store. Ultimately the

goods

reach to the customer at last.

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1.2.10. Future growth and prospects:

Aggressive growth –Food bazaar

Company planned to grow to over 400 FB stores by 2010 and annual revenues Of $1250 million

•To rent properties from shop owners in exchange of profits generated from store

•Purchase food grains directly from manufactures

•To develop private label brands and devote 60 % shelf space to it.

1.3. FUNCTIONAL ANALYSIS:

Administration Department

Store administration comes under Store Manager its functions are store maintenance, House

Keeping, Security etc. Store manager has to control all the activities within the store. He has to

communicate all the departmental managers and assistance departmental managers regarding

any new offers, regarding their targets etc. Sore manager has to see the operation at the store is

being performed in coordination and cooperation he has to communicate with the corporate

office regarding any changes being applied at the store.

Information Technology

This department is responsible for the maintenance of the systems of the stores. All billing

machines their functioning networking with the master machine etc. If there is any problem

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with the machine then this department comes into function.

Cashing Dept:

This department is responsible for the collection of sales amount i.e. cash sales, Credit sales, etc

under this department all billing machines of the stores comes. The sales amount collected

throughout the day by the cashier’s has to be submitted to the department.

Marketing

This dept is responsible for the marketing of the store in different media like Television,

Newspaper, and Holdings etc. the authorized person has to visit different companies and has to

look after for tie-ups etc. The executives arranges rally’s.

Visual Merchandise:

This department is responsible for the product arrangement at the store with respect to their

nature. The basic function of this dept is it divides the store into several departments based on

the nature of the product and within the department it decides how the products should be

arranged

by keeping in mind the customer should not suffer.

Human Resource

Human Resource basically works for the welfare of the employees. It acts to organize the

manpower and work to increase productivity of the employees. Basically Human Resource

performs the functions of Recruitment, Hiring, Induction, Training and development,

Performance appraisal of the employees. Human Resource studies and involves in inter life

cycle of the employee from his joining the organization to till his end from the organization.

CSD (Customer Service Desk):

This is the separate unit, which is mainly focuses on customer service like if the customer find

difficulty in finding any product, Customer complaints any replacement, Customer assistance

etc.

Supply chain management:

Company’s supply chain was split into the broad categories of fashion, food and general

merchandise, leading to a more focused approach to businesses, improved service levels, better

customization of logistic and supply chain related needs, and finally deliverables. Further, with

new concepts and lines of business being included during the year, as well

as strategic alliances with other companies, the process of gradually integrating them have

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either been completed or close to completion.

The existing supply chain design consists of a Master Distribution Centre (MDC) and city

warehouses upgraded to Regional Distribution Centers (RDCs) and additional Distribution

Centers (DCs). The company had one MDC and 16 RDCs and DCs The company has also

appointed leading international and domestic players in the warehouse infrastructure and

technology front. The company also introduced the concept of reverse logistics that looks at

setting up a process to transfer finished goods from the consumption point to the point of origin.

This reduces wastage and can lead to significant cost savings. On the technology front, all the

existing MDCs,RDCs and DCs are live on SAP, thereby facilitating standardization, real time

data management and reporting, as well as optimum operational efficiencies.

Finance Department:

Prepares the budget for expenditure at all levels.

Decides and gives the sales targets for all the departments periodically.

Maintains the books of accounts Collects & deposits the cash received daily through

sales in the Company’s bank account

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CHAPTER-II

The McKinsey 7S model

The McKinsey 7S model was named after a consulting company, McKinsey and Company,

which has conducted applied research in business and industry. The McKinsey 7S Framework

was created as a recognizable and easily remembered model in business. The seven variables,

which the authors term "levers", all begin with the letter "S":

These seven variables include structure, strategy, systems, skills, style, staff and shared values.

Structure is defined as the skeleton of the organization or the organizational chart. The authors

describe strategy as the plan or course of action in allocating resources to achieve identified

goals over time. The systems are the routine processes and procedures followed within the

organization. Staff are described in terms of personnel categories within the organization (e.g.

engineers), whereas the skills variable refers to the capabilities of the staff within the

organization as a whole. The way in which key managers behave in achieving organizational

goals is considered to be the style variable; this variable is thought to encompass the cultural

style of the organization. The shared values variable, originally termed super ordinate goals,

refers to the significant meanings or guiding concepts that organizational members share.

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From above 7, three are called Hard ‘S these are such as

Strategy Structure System

And other four are called Soft ‘S’, namely

Skills Staff Shared value Style

McKinsey’s 7s at BIGBAZAAR:

STRATEGY:

Strategy is the plan of action an organization prepares in response to, or anticipation of, changes

in its external environment. Strategy is differentiated by tactics or operational actions by its

nature of being premeditated, well thought through and often practically rehearsed.

In store:

Food – Fill rate strategy

APPS – MPM/VM &Impulse strategy

HSRIL – Display & Derive strategy (for furniture)

Electronics - Demonstration strategy

Value for money

Service

Profitability (Returns, productivity)

Service to society (Exchange policy, Old to new offer, demonstration)

SYSTEM:

They are wing, many type of procedure for different-different department. Every department

carries Asst manager, dept manager, team leader and team member etc. to look after the

particular department. It’s very easy to handle work and they work in a systematic way. The

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coordination between the staff member is very good which make the big bazaar system perfect. E.g.-Inventory control system at Logistic department, order execution system by Vendor Help Desk etc.

Structure:

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Skills:

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SOUTH ZONE HEAD

BUSINESS MANAGER

UNIT HEAD SUPER CENTER

ASST STORE MANAGER

DEPARTMENT

MANAGER

ASST DEPT.

MANAGER

MANAGEME

NT TRAIN

EE

TEAM

LEADER

TEAM MEMBER

BUSINESS MANAGER

They have to be able to understand the customer and proper communicating people and taking

corrective action and solving problems like accountability.

1. Core Competence of Big Bazaar

Festival type creation Fight competition (price) Keeping customer busy Creating desire

2. Job description and Strength

Staff:

Organizations are made up of humans and it's the people who make the real difference to the

success of the organization in the increasingly knowledge-based society. The importance of

human resources has thus got the central position in the strategy of the organization, away from

the traditional model of capital and land. All leading organizations.

There are totally 335 employees or staffs. They have out of this, 210 on roll of employees and 35

securities, 35 housekeeping and 55 promoters. The coordination between the staff member is

good which make the corporate perfect. This also helps the store to work in a better way. Every

staff knows there work nicely and they do all the work on time and systematically according to

the order of head of department.

Style:

KRA of Managements staff

Top down / Bottom up. – Both

Authoritarian / Participative.  – Participative

Any one decision making parameter should be studied pertaining to day-to-day operation,

to conclude the style of functioning. – Style of functioning- MBO (Management by

Objective) - a process of agreeing upon objectives within an organization so

that management and employees agree to the objectives and understand what they are in

the organization

Shared value:

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Vision:

To Deliver Everything, Everywhere, Every time, to Every Indian Customer in the most

profitable manner.”

One of the core values at Future Group is, ‘India ness’ and its corporate credo is

– “Rewrite rules, Retain values.”

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 trendseaers in evolving delivery formats, creating retail realty, making

consumption affordable for all customer segments

We follow Management by Objectives, where in the organization goals are formulated with the

company’s mission & vision. These Org. goals are further broken into departmental goals, from

which the KRAs (Key Result Areas) are arrived for each individual based on the role he/ she

performs.

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CHAPTER-III

SWOT analysis:

It is an acronym for the internal strength and weakness of affirm and the environmental

opportunities and threats facing that firm. It is a technique through which a manager creates a

quick overview of a company’s strategic situation. So SWOT analysis of BIGBAZAAR is

fllows.

Strengths

Bearer understanding of customers helping the company to serve them bearer.

Vast range of products under one roof helping in aerating customer and their family to

shop together and enjoy the experience.

Benefit of early entry into the retail industry.

Diversified business operating all over India in various retail formats.

Ability to get products from customers at discounted price due to the scale of business.

Weaknesses

High cost of operation due to large fixed costs.

Very thin margin.

High attrition rate of employee.

Specific items are not consistently available

Low incentives are provided to the sales executives

Opportunities:

Lot of potential in the rural market.

Can enter into production of various products due to its in depth understanding of

customers’ tastes and preferences.

Can expand the business in smaller cities as there is a lot of opportunity .

Threats:

High business risk involved.

Lot of competitors coming up to tap the market potential.

Margin of business reducing all the time.

High taxes in India suppress consumption

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CHAPTER-IV

(Financial Highlights)

Profit & Loss Summary…..

So from above profit and loss account it is shown that the sales of BIGBAZAAR is increased

compared to previous year. But interestingly the PBIT is increased where as PAT is decreased

compare to its previous year which shows company had pay more interest on loans as there is no

Significant increase in Tax. Again the cash profit is increased compare to its previous year which

shows company having more liquidity. The company can use that money for expanding business.

This shows company’s competitiveness from other company.

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Balance Sheet Summary…

Cash Flow Summary .......

CHAPTER-V

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My Learning Experience in the company

I am very happy to express my practical experience at Big Bazaar. Before going to share my

practical feelings regarding project work. I would like to say heartily thanks to CMR Institute of

Technology and Visvesvaraya Technological University. Who have given one of the good

opportunity to learn a knowledge in practical environment and along with that I would like to say

heartily thanks to company guide Mr.Mukund Logistic manager, of BIG BAZAAR.

I had under gone a glorious 70 days project at Big Bazaar And along with that I had learn a lot of

practical things from the corporate world. From this project I came to know that Inventory

Management system and taste, Procurement system, Vendor relationship and competition level in

the sector and along with that I had learn how management is responsible for increasing sales

and revenue of the company And also I learned the functional department like HR,

Finance and Marketing.

From this project now I came to know that how to carried out business process in a

systematic manner in the competition level This practical knowledge of project made me to

perfect in future to stand in a any corporate world. And Finally I thanks to My Internal

guide Mr Sravana Krishnan and Company guide Mr.Mukund.

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CHAPTER-VI

INTRODUCTION

Project title:

“Study on Inventory Management System of BIGBAZAR”

.

6.1. PROBLEM STATEMENT:

Although “BIGBAZAR” having special software system called “SARATHI” made by “SAP” to

manage the whole Inventory Management system still they have

Number of issues with supplier

Continuous loss due to inadequate Inventory management system

No special ordering system

6.2. Objective

You are in trouble if you have to keep telling customers, "I'm sorry we're out of that size. May

we order it for you?" Even though the shirts are selling briskly, you will lose customers if you

don't have an item in stock. When the customer spends, you have got to be ready with the goods.

This is what inventory management is all about. In many retail and wholesale operations, the

single largest asset is inventory. Control of this investment is vital. It will eliminate a number of

the problems associated with capital shortages and will also provide capita lto permit expansion

of operations for increased sales and profit.

The objectives are

To study the current practise of inventory management in Retail industry.

To study the inventory control techniques.

To analyze the current performance of inventory management at BIGBAZAAR

To analyze the growth of inventory level at BIGBAZAAR

To study the inventory turn over ratio

To analyze the cost of inventory at BIGBAZAAR

To suggest measures to better inventory management system

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6.3. Scope of study:

Merchandise stocks in a retail store contribute to profits only when their sale puts money into the

cash register. In a literal sense, inventory refers to stocks of anything necessary to do business.

These stocks represent a large portion of the business investment and must be well managed in

order to maximize profits. In fact, many small businesses cannot absorb the types of losses

arising from poor inventory management. Unless inventories are controlled, they are unreliable,

inefficient and costly.

Inventory management is primarily about specifying the size and placement of stocked goods.

Inventory management is required at different locations within a facility or within multiple

locations of a supply network to protect the regular and planned course of Sales against the

random disturbance of running out of materials or goods. The scope of inventory management

also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset

management, inventory forecasting, inventory valuation, inventory visibility, future inventory

price forecasting, physical inventory, available physical space for inventory, quality

management, replenishment, returns and defective goods and demand forecasting

Such an analysis would lead to newer and better strategies to increase satisfaction of Suppliers

and decrease the loss due to Internal Stock management. Focus on such Issues can lead

BIGBAZAR more strategic and more profitable compare to its competitor.

6.4. Research methodology:

6.4.1. Type of research: Explorative Research Design

Explorative Research Design:

Research typically conducted early in a research program. Designed to uncover basic viewpoints,

perceptions, behaviours, attitudes and so forth in a market place. Exploratory research provides

insights into and comprehension of an issue or situation. It should draw definitive conclusions

only with extreme caution. Exploratory research is a type of research conducted because a

problem has not been clearly defined. Exploratory research helps determine the best research

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design, data collection method and selection of subjects. Given its fundamental nature,

exploratory research often concludes that a perceived problem does not actually exist.

6.4.2. Sources of data collection:

In BIGBAZAAR for analyzing whole project I collected data from both the source i.e.

Secondary data

Sources for secondary data:

Collecting financial reports

Surfing the websites, comments on the blogs

Reading articles from books, newspaper and magazines

Five year Balance sheets.

Five year Profit & loss a/c.

6.4.3.Graphs Used to Interpret the data:

Bar

Column

Line

Pie

Cone

6.4.4. Ratios used to analyze the data

Inventory turn over ratio

Current asset to level of inventory ratio

Inventory holding period

Level of inventory

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7. Limitation of the Study

Analysis of present inventory management system.(2008 -09)

Different present methods to reduce the loss of internal stock management

Analysis of present Stock or Inventory

This Study is only limited to Big Bazar, Banashankari

This study is only applicable to Retail industry only.

All ratios are calculated on the basis of five years balance sheets.

 

 

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CHAPTER-VII

Inventory Management

What is inventory:

Inventory is a list for goods and materials, or those goods and materials themselves, held

available in stock by a business. It is also used for a list of the contents of a household and for a

list for testamentary purposes of the possessions of someone who has died. In accounting

inventory is considered an asset. Inventory refers to any kind of resource having economic

value and is maintained to fulfill the recent and future needs of organization. Fred Hansman,

defined inventory as: An idle resource of any kind provided such a resource has economic value.

Such resources may be classified into three categories

Physical resources such as raw materials, semi-finished goods, finished goods, spare parts, lubricants etc.

Human resources such as unused labor (manpower).

Financial resources such as working capital, etc.

Inventory management in BIGBAZAAR can be briefly described as:

· Acquiring an adequate supply and assortment of merchandise from which customers

can buy.

· Providing safety stocks to meet unexpected demand or delays in inventory

replenishment.

· Maintaining clear, correct, and current records.

· Purchasing the proper assortment of goods in quantities that will maintain inventory

levels consistent with business requirements, while providing adequate safety stocks.

· Reducing excessive inventories promptly, so that the dollars realized from clearing

overstocks can be invested in merchandise with a greater market potential.

There are three basic reasons for keeping an inventory in BIG BAZAAR:

1. Time - The time lags present in the supply chain, from supplier to user at every stage, requires

that you maintain certain amount of inventory to use in this "lead time"

2. Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply

and movements of goods.

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3. Economies of scale - Ideal condition of "one unit at a time at a place where user needs it,

when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying,

movement and storing brings in economies of scale, thus inventory.

Buffer stock is held in individual workstations against the possibility that the upstream

workstation may be a little delayed in long setup or change-over time. This stock is then used

while that change-over is happening.

Inventory Expectations of BIGBAZAAR from various Departments:

Top Management

Higher inventory turn-over, Lower operating cost, Excellent customer service

Marketing Department

Quick delivery, No stock out, Varieties & volumes, Frequent & small deliveries

Logistic Department

Less damages, Economic batch qty, Quick off-take, No rejection & Cancellations

Finance Department

Lower inventory levels, Low operation cost, Higher inventory turn-over, Lower cost of delivery.

Inventory of resources is held to provide desirable service to customers and

to achieve sales turnover target. Investment in large inventories adversely affects the

organization’s cash flow and working capital as investment in inventory represent substantial

portion of total capital investment in business. It is therefore necessary to balance the advantage

of having inventory of resources and the cost of maintaining it so as to determine an optimal

level of inventory of each resource’s so that total inventory cost is minimum.

Inventory costs of BIGBAZAAR:

Inventory costs money. The cost factor must be considered while taking any decision regarding

inventories. Inventory costs includes

Ordering cost: This type cost are caused due to placing an order with vendor . Every

organization has to purchase materials. Thus ordering cost refer to cost associated with

preparation of purchase requisition by the user department, transportation of the material

ordered, inspection and handling. It also includes the cost for not lifting the material in

time. If the concern has capacity to produce the required components internally, then

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ordering cost refer to cost associated with preparation of requisition forms by the user

department, transportation, inspection, handling cost. Above all ordering cost remain

more or less constant irrespective of size of order although transportation and inspection

cost may vary depending upon the size of the order.

Carrying cost: These types of costs are directly related to the inventory. It includes

obsolescence cost, Deterioration cost. These are the expenses of storing the goods. Once

the goods have been accepted, they becomes the part of firm’s inventories. These cost

include insurance, rent of the warehouse, salaries of the storekeeper and security

personnel financing cost of money locked-up in inventories. It is generally considered as

the percentage of value of inventory held in the warehouse. Approximately carrying cost

are considered to be 25% of value of inventory held in store

Capital cost: It includes the money invested in inventory, Tax money, Insurance money.

Storage spaces costs: It includes rent on ware house, cost of maintainance,utility

charges, salary to security personnel.

Out –of –stock cost: it includes the cost arise due to back ordering, lost sales.

Inventory Management and Control at BIGBAZAR:

After interviewing the store manager I got to know that the store manager decides the level of

inventory, the store manager inspects the stocks time to time and also the demands of customers.

Manager maintains the Stock – in & Stock – out, so that he can decide the level of inventory. He,

also has seen the trends in the requirement of inventories, as for e.g. he told that apparels are

ordered approximately after 45 days. For every sample of clothes they have a back up of 10

pieces.

However in case, if more number of pieces are required, they first ask other BIGBAZAAR

which is closer to that. but if, even then they fail to meet the demands of customers, they go for

“Transfer of Interest”. In this they prefer sending the customers to pantaloons, as it is also of

Future Group, instead of losing them.

And recently BIGBAZAAR has undergone tremendous technological advancement, as its

supply chain has become completely computerized. Once the product is sold, automatically, the

computer sends the request for back up.

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Decision flow for Inventory Management at BIGBAZAAR:

Generally the decision for inventory management is taken by taking concern of all the people

from all the hierarchy that is from Top management peoples to Department manager. Below

diagram shows how the decision flows in BIGBAZAAR for Inventory management.

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PLANNING BY MERCHANDISER AT ZONAL LEVEL

ORDERING TO SPPLIERS ACCORDING TO DEMANDBY CATEGORY PEOPLE

PURCHASING

GOODS/PRODUCT COMES TO WARE HOUSES

FIRST LEVEL DITRIBUTION OF GOODS TO EACH CENTER

SECOND LEVEL DISTRIBUTION TO EACH DEPARTMENTON A PARTICULAR CENTER

Planning:

Generally this decision is taken by all the peoples from top management at zonal level called

Merchandiser. They consider demand of the customer for a particular product, seasonal demand,

the amount of stock in the ware house and in each store etc for taking this decision.

This decision is very important for inventory management as it determines the amount of

goods /product to be ordered.

Ordering:

These types of decision are taken by the Category people at BIGBAZAAR. Generally they

discuss with merchandisers about the demand for a particular product and they give order to

respected suppliers.

Purchasing:

In this phase purchasing of particular goods happens. There are certain requirements for

suppliers that they have to disclose at the time of purchase, these are such as

Purchase order

Invoice copy

GI

First level distribution to each store:

This phase starts from the ware house after good received from respective suppliers. According

to demand at different store goods are distributed to all the stores. There some certain

requirements at the time of arrival of goods to particular store ,these are such as

Invoice copy

STN ( Stock Transfer Notice )

Purchase order

Second level distribution to each department of a particular store:

After good received from warehouse goods are distributed to each Department. The respective

department manager comes with an Inter stock transfer note to take the goods. This phase is fully

controlled by the logistic department at BIGBAZAAR.

This concludes the whole decision flow for inventory management at BIGBAZAAR.

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Factors affecting the Level of Inventory at BIGBAZAAR:

Generally there are number of factors which affect the level of inventory at BIGBAZAAR, these

are such as

Nature of the product

Demand for the product

Seasonal variation

Reorder points for each product

Supply chain of perishable and imperishable goods

Nature of the product:

Big Bazaar generally deals in national level brands like Lee, Levis etc, Other

than this it also deals in some Private label brands DJ&C in apparel, KORIA

in electronics etc. apart from that there are different product categories , that are

FMCG

FOOD

NON- FOOD junction

Staple items

fruits and vegetables

fashion & apparels

chill section

Home decorator

footwear

book zone, CDs etc

So depending upon different product the level of inventory varies.

Demand for the product:

Uncertain demands are met by either by getting it through other outlets of big bazaar or through

transfer of interest, to other outlets of future group, like Pantaloons which again affects the level

of inventory.

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Seasonal variation:

Depending upon seasonal demand due to festival, Republic day, Dusherra, Diwali the level of

inventory is increased due to boom in demand .

Reorder points for each product:

The manager in charge told me that there is no such reorder points. Orders are placed as and

when required. However he told that there are no such measures, except in a few items.

Previously apparels were ordered once there stock fell below 4 per item piece. For general

merchandise, which includes, food and non-food items, it was 7 days. However they always keep

In mind the transit time of 2 days. Vegetables are taken on a daily basis, form local vendors and

hence for above items again the level of Inventory is affected.

Supply chain of perishable and imperishable goods:

Again this aspect of particular goods and product affects the level of inventory a lot.

Various Inventory Management practices followed by BIGBAZAAR are as following:

There are some selective Inventory control methods to have an effective control on the

inventory.Inventory Management Techniques are

ABC Analysis

VED Analysis

FSN Analysis

HML Analysis

SDE analysis

SOS Analysis

XYZ Analysis

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ABC Analysis:

ABC analysis is a business term used to define an inventory categorization technique often used

in materials management. It is also known as Selective Inventory Control.

ABC analysis provides a mechanism for identifying items which will have a significant impact

on overall inventory cost whilst also providing a mechanism for identifying different categories

of stock that will require different management and controls

When carrying out an ABC analysis, inventory items are valued (item cost multiplied by quantity

issued/consumed in period) with the results then ranked. The results are then grouped typically

into three bands. These bands are called ABC codes.

Is based on the cost (or value) of items consumed

Very high value items are “A” class items and may require tighter control

Medium value items are categorized as “B” class and the low value items as “C” class

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ADVANDAGES:

• Preference for keeping inventory can be placed properly after ABC analysis.

• Store personnel are placed better with this analysis i.e their time can be utilized better.

• Storing, handling and delivery of materials to production department become better.

VED Analysis: ( Vital, Essential and Desirable )

Is done to determine the criticality of an item and its effect on production and other

services

It is specially used for classification of spare parts

If a part is vital it is given ‘V’ classification

If it is essential it is given ’E’ classification

and if it is desirable the part is given ‘D’ classification

For ‘V’ items a large stock of inventory is generally maintained, while for ‘D’ items

minimum stock is enough.

FSN Analysis:

FSN stands for fast moving, slow moving and non-moving

Classification is based on the pattern of issues from stores and is useful in controlling

obsolescence

To carry out FSN analysis, the date of receipt or the last date of issue, whichever is later ,

is taken to determine the number of months , which have lapsed since the last transaction

The items are usually grouped in periods of 121 months

FSN analysis is useful in identifying active items which need to be reviewed regularly

and surplus items which have to be examined further

Non moving items may be examined further and their disposal can be considered.

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HML Analysis:

This analysis is done for classifying the products based on their prices.

H-High price products

M-Medium price products

L- low value products

Procurement department is more concerned with prices of products so this analysis helps them to

take them the decisions such as, who will procure what based on the hierarchy and price of

material .

When it is desired to evolve purchasing policies then also HML analysis is carried out i.e.

whether to purchase in exact quantities as required or to purchase in EOQ or purchase only when

absolutely necessary When the objective is to keep control over consumption at the department

level then authorization to draw materials from the stores will be given to senior staff for H item,

next lower level in seniority for M class item and junior level staff for L class items. Cycle

counting can also be planned based on HML analysis. H class items shall be counted very

frequently, M class shall be counted at lesser frequency and L class shall be counted at least

frequency as compared to H & M class.

SDE analysis:

The SDE analysis is based upon the availability of items and is very useful in the context of

scarcity of supply.

S-Scarce Material i.e. hardly available

D-Difficult material i.e. difficult in sourcing

E-Easy materials i.e. materials available easily

SDE analysis is done based on purchasing problems associated with items on day-to-day basis.

Some of the purchasing problems are as under: -

Long Lead Times.

Scarcity and hardly available

Sourcing the same material from many geographically scattered sources

Uncertain and unreliable sources of supply

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Purchasing department classifies these materials and formulates the strategy and policy of

procurement of these items accordingly. So classification of materials is done based on level of

difficulty in sourcing

S Class Materials:

These materials are always in shortage and difficult in procurement. These materials sometimes

require government approvals, procurement through government agencies. Normally one has to

make the payment in advance for sourcing these materials. Purchase policies are very liberal for

such materials

D Class Materials: These materials though not easy to procure but are available at a longer lead

times and source of supply may be very far from the consumption. Procurement of these

materials requires planning and scheduling in advance. Particular OEM spares of the machinery

may fall under this category as that OEM may be very far from the ordering or consumption

location.

E Class Materials:

These materials are normally standard items and easily available in the market and can be

purchased anytime.

SOS Analysis:

S- For seasonal Materials

OS - For non-seasonal Materials

Purchase planning has to be done if the material is seasonal as material shall be available for a

particular time period of the year.

Purchase planning has to be done if the material is seasonal as material shall be available for a

particular time period of the year.

Leechee is seasonal fruit which is available only for one month in year. If any Juice and

pulp company wants to buy this fruit then the procurement department shall have to plan

in advance the requirement and procurement job becomes concentrated only for one

month. Other than this issue, shelf life and storage is also a big problem as the plan is

consume is throughout the year while the buying time available is only one month.

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Some materials are seasonal but are available throughout the year such as grains, and

other non perishable items. These items are bought during season and these items are

cheaply available during season. The company can take the advantage of economies of

scale in buying these materials in bulk. But at the same time the inventory carrying cost

should not go beyond the profit margins while holding the large inventory

Non-seasonal materials are available throughout the year without any significant price variation.

Non seasonal items can be Plastics, Metals etc. The prices of these materials are independent of the season.

XYZ Analysis :

XYZ analysis is calculated by dividing an item's current stock value by the total stock value of

the stores. The items are first sorted on descending order of their current stock value. The values

are then accumulated till values reach say 60% of the total stock value. These items are grouped

as 'X'. Similarly, other items are grouped as 'Y' and 'Z' items based on their accumulated value

reaching another 30% & 10% respectively. The XYZ analysis gives, you an immediate view of

which items are expensive to hold. Through this analysis, you can reduce your money locked up

by keeping as little as possible of these expensive items.

Inventory Turnover Ratio of BIGBAZAAR:

Inventory Turnover Ratio:

Inventory turnover means how many times the inventory is cycled through in a given time

period. In most instances the time period that is used is the previous twelve months. It is often

calculated at the end of the year.

Inventory Turn and Profitability

The more times an inventory turns, the more it adds to the company’s profitability. A faster

turning inventory uses fewer dollars and increases the owner’s return on investment. If fewer

dollars are on spent on inventory, those extra dollars can be used for other investments or other

assets to generate more revenue.

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If a high percentage of the inventory remains idle for a long period of time, it can cause a slower

turn in proportion to the rest of the inventory. The period of time for judging idle inventory can

vary depending on the industry and type of merchandise. Items that have a short shelf like, like

perishable food items for example, must have a very fast turn rate. Idle inventory is a major

cause of slow inventory turn.

The inventory-turnover ratio gives a general view on the inventories of a company. In order to

calculate it you should divide the annual sales of the company by its inventory.

Inventory Turnover = Sales / Inventory

The result represents the turnover or inventory or how many times inventory was used and then

again replaced. This number is representative for a one year time period. If the value of the

inventory-turnover ratio is low, then it indicates that the management team doesn't do its job

properly in managing inventories.

Inventory Turnover ratio in BIGBAZAAR is decreasing continuously from five years. It is easily

understood from the below table and graph.

Tab No-

This table shows how the Inventory Turnover ratio is decreasing year by year.

YEAR INVENTORY TURN OVERJun-2005 94Jun-2006 98Jun-2007 99Jun-2008 102Jun-2009 101

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Jan/05 Jan/06 Jan/07 Jan/08 Jan/09

90

92

94

96

98

100

102

104

INVENTORY TURN OVER

INVENTORY TURN OVER

Analysis :

A higher Inventory Turnover Ratio is indicates that the performance of BIGBAZAAR is better

compare to its previous year. Since Inventory Turnover Ratio indicates that the firm's inventories

are being sold more quickly as it is increasing.. However, if the ratio is too high then the firm

may be losing sales to competitors due to inventory shortages. When comparing one firm's

Inventory Turnover ratio with that of another firm it is important to consider the inventory

valuation method used by the firms. Some firms use a FIFO (first-in-first-out) method, others use

a LIFO (last-in-first-out) method, while still others use a weighted average method.

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Procurement procedure/Ordering system of BIGBAZAAR:

Procurement is the acquisition of goods and/or services at the best possible total cost of

ownership, in the right quality and quantity, at the right time, in the right place and from the right

source for the direct benefit or use of corporations, individuals, or even governments, generally

via a contract, or it can be the same way selection for human resource. Simple procurement may

involve nothing more than repeat purchasing. Complex procurement could involve finding long

term partners – or even 'co-destiny' suppliers that might fundamentally commit one organization

to another. Procurement can refer to buying, outsourcing, etc of any resources.

Below chart shows how ordering system is working throughout the BIGBZAAR.

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Need identification

Vendor selection

Order placement

Order reciept

order acceptance

Payment and vendor rating

Need identification:

Procurement process get initiated when users of the Merchandiser express a demand to

category people.

In the case of regular sailing items , inventory control policies that are in vogue

(trend)will trigger a procurement process

Vendor selection:

Once the exact requirements are identified, the procurement process focuses on

identifying an appropriate source of supply

Begins with search for potential vendors

Existing set of vendors are considered initially

Additional sources could be identified through professional contacts, trade directories,

and B2B portals

The sources are contacted and are subjected to a request for proposal (RFP)and request

for quotation(RFQ)

Order placement:

Order placed with selected vendor

It Includes

Fixing all terms of contract such as price, payment and delivery terms and other

engineering specifications

Obtaining required authorization for spending

For orders with high monetary value the decision making is done at highest level

in the organization

Purchase order is generated

Payment and vendor rating:

In this phase supplier are paid their payment

Again in this phase vendor rating takes place.

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Vendor rating:

• Selecting a right vendor is difficult but an important part of purchasing and supply

management process in an organization

• Is a systematic method to evaluate suppliers performance using data from delivery of

items in response to the purchase orders placed

Reorder points of inventories:

The manager in charge told us that there is no such reorder points. Orders are placed as and when

required. However he told that there are no such measures, except in a few items. Previously

apparels were ordered once there stock fell below 4 per item piece. For general merchandise,

which includes, food and non-food items, it was 7 days. However they always keep in mind the

transit time of 2 days. Vegetables are taken on a daily basis from local vendors.

Recently big bazaar has undergone tremendous technological advancement, as its supply chain

has become completely computerized. Once the product is sold, automatically, the computer

sends the request for back up.

Before six month BIGBAZAAR started using a new inventory management system software

called “SARATHI” made by SAP which helps a lot to all the management throuhiut the

organization.

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VENDOR/ SUPPLIER SELECTION AT BIG BAZAR :

What truly separates successful competitors from the "also rans" in today's global competitive

race is suppliers. Many companies that the years have thrown "everything" into the battle for

competitive advantage are only now coming to admit that their best and strongest resources are

their suppliers.

These are the silent partners hat every day back them with the ideas, quality, and dependability

that make them competitors. Nowhere is this recognition of the relationship between supplier

excellence and competitive success better realized than in the purchasing offices of corporate

America. In fact, it is becoming a generally accepted principle that the companies with the best

competitive records are usually the ones with the best and brightest suppliers.

Pre-requisites/must for Suppliers of BIGBAZAAR:

Vendor Registration

Dispatch from supply partners

Quality checking

Bar coding

DON’TS FOR SUPPLY PRTNERS:

Not to follow non SAP commitments

Should not dispatch goods without inbound number

Should not ask for change in ASN once given

Dispatch must not be done without any quality checking

The dispatch should not be done without missing of any document like Po,Invoice,ASN

etc

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BENEFITS TO SUPPLY PARTNERS:

Single point delivery

Easy tracking of goods

Shorter delivery lead time

Faster processing of bills

Easy back office job like documentation and monitoring

Less material handling

Win –win situation to both the parties

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Data analysis and Interpretation

Table. No-7.1

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VALUE OF STOCK IN EACH DEPARTMENT IN RELATION TO TOTAL

INVENTORY:

Generally the value of stock in each department plays an important role in determining the

level of inventory in convince store like BIGBAZAAR .

Below table shows the value of stock at each department with relation to total inventory for the

year 2008-2009.

Name of the Dept. Value of the stock

(In lakhs)

Total Inventory

(In lakhs)

Percentage

Apparels 15455.2 304854.00 5.069

Food Bazaar 13225.6 304854.00 4.338

Electronics 50624.2 304854.00 17.00

Furniture Bazaar 45524.4 304854.00 15.00

Jewellery 180024.6 304854.00 59.05

Analysis-

This table shows the measure stock is held in jewellery department compare to other which

carries 59.05 percentage of Total Inventory . Electronics bazaar follows Jewellery department

Which carries 17 percentages of total inventory. Other department like apparels , food

bazaar ,furniture bazaar carries 5 ,4.5,17 percentage respectably.

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Graph .no-7.1

Apparels

Food Baza

ar

Electr

onics

Furn

iture

Bazaar

Jewell

ery0

50000

100000

150000

200000

250000

300000

350000

Value of the stockTotal InventoryPercentage

Interpretation-

This shows there is more stock in jewellery department which shows these are the slow moving

product and it incurs more cost to handel and manage inventory compare to other product

because the cost incured in managing inventory is directly related to the amount of product in

case of precious metal like Gold and Diamond. Other department having average inventory in

relation to customer demand.

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Tab.no-7.2

GROWTH OF INVENTORY LEVEL IN LAST FIVE YEAR AT BIGABAZAAR :

In inventory management the level of inventory plays an vital role . It determines the Iinventroy

control technique , Inventory cost and many more things.

Below table shows how the level of inventory is increasing year by year.

Year Level of Inventory

(In cores)

Growth in Percentage

April 2004 157.60 100

April 2005 275.93 175.08

April 2006 507.02 321.71

April 2007 885.96 562.15

April 2008 1,429.84 907.25

By calculating level of inventory we can use the formula , which is given below

LEVEL OF INVENTROY = INVENTORY AT CURRENT YEARINVENTORY AT BASE YEAR

×100

Ex: the level of inventory for the year 2005 becomes

100*507.02/157.60=175.08

Analysis-

So from above table it shows that how fast the level of inventory is increasing year by year in

big bazaar. Generally the trend shows it is increasing rate which is un predictable. In the year

2008 it is increased to closely 9 times more if you take April 2004 as base year. And in other

years like in 2005 it is 175 percentage, in 2006.2007the level of inventory becomes 321 and 562

percentage respectably.

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Graph. no-7.2

Level of Inventory

04/01/200404/01/200504/01/200604/01/200704/01/2008

Interpretation-

So from above graph it is shown that the level of inventory is increasing year by year which act

as a competitive edge over other competitors because it can enhance the responsiveness which

increase the profit and same time increase in level of inventory increases inventory cost . So it is

important to note that BIGBAZAAR should have a strategy which can increase the level of

inventory and as well as the profit or surplus.

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Table. No-7.3

Value of total inventory to total current asset at BIGBAZAAR from five year

The ratio between the current asset and inventory plays an important role in inventory

management traditionally. It tails how much should the company carry the inventory in order to

make balance between the current asset and liabilities.

The underline table shows how the level of inventory varies current asset in BIGBAZAAR.

Particulars Level of inventory

(In cores)

Current Asset

(In cores)

Percentage

April -2004 157.60 229.98 68.52

April -2005 275.93 403.87 68.32

April -2006 507.02 844.48 60.03

April -2007 885.96 1,749.45 50.04

April -2008 1,429.84 2,628.58 54.39

Analysis-

The above table shows that the ratio of level of inventory to current asset is decreasing year by

year in BIGBAZAAR. In between both the year 2004 and 2005 there is no significant change but

suddenly in the year 2006 it is decreased to 60 percent which is 68 percent in previous year. And

that followed in the year 2007 which is 50 percent but dramatically again the level of Inventory

is increased with respect to Current asset.

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Graph no-7.3

37987 38353 38718 39083 394480

500

1000

1500

2000

2500

3000

Level of inventoryCurrent AssetPercentage

Interpretation-

The above graph shows how the level of inventroy is increased with the level of Current asset.

As we know inventory the real blood of any type of retail chain store, so it is increasing as sales

increase . but in the case of bigbazaar the level of inventory fall down at a rate of 10 percent in

2006 compare to its previous year 2005 which is 60 percent of total current asset. The cause

behind this is due to increase in other current asset factor like loan advances, cash and bank

balance and debtor . but it is again increased in the year of 2008 due to increase in inventory

compare to other factor in current asset.

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Table.no-7.4

Inventory Turnover ratio at BIGBAZAAR for last five years

Inventory Turnover Ratio indicates that the firm's inventories are being sold more quickly as it is

increasing.. However, if the ratio is too high then the firm may be losing sales to competitors due

to inventory shortages. So the company should maintain a particular inventory turnover ratio

which neither loose the sales nor decrease profit due to high inventory.

Years Sales

(In cores)

Avg.Inventory

(In cores)

Inventory turnover

ratio

April -2004 658.31 2481.28 3.77

April -2005 1,052.80 3948.8 3.75

April -2006 1,868.97 7307.67 3.91

April -2007 3,236.74 12655.5 3.91

April -2008 5,048.91 1,999.84 3.96

We can calculate inventory turn over ratio by using this formula which is given below

INVENTROYTURNRATIO

= NET SALESAVG. INVENTORY

×100

Analysis-

So the above table shows how the inventory turn over ratio is varying compare to its previous year for last five years . it is shown that it is increasing year by year which creates an sense of competitive edge over the other competitor. In the year 2004 it is 3.77 percent. It is followed by 2005, 2006, 2007 and 2008 and the respective inventory turnover ratioare3.75, 3.91, 3.91and 3-96 which shows an increase in the turn over ratio.

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Graph no-7.4

Years Apr-04 Apr-05 Apr-06 Apr-07 Apr-080

0.5

1

1.5

2

2.5

3

3.5

4

Series1Series2

Interpretation-

The above graph shows the the product of BIGBAZAAR are sale at a faster rate as it is

determined by the inventory turnover ratio. It creates a competitive edge over other competitor. It

also determines that what type of product is sailing more or which is a slow moving, fast moving

product etc.

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Table. No-7.5

Inventory holding days at BIGBAZAAR for last five years

Even the holding period of inventory plays an important role in inventory management system at

any company. It identifies the nature of product, it determines current asset, profitability. Helps

in prediction for future demand.

The below table shows how the inventory holding period varies with respect to last five years.

Particular Sales

(In cores)

Inventory

(In cores)

No.of inventory

holding days(in days)

April -2004 658.31 157.60 86

April -2005 1,052.80 275.93 95

April -2006 1,868.97 507.02 99

April -2007 3,236.74 885.96 99.90

April -2008 5,048.91 1,429.84 103

Analysis-

This above table shows the till how many days BIGBAZAAR held product as inventory is called

inventory holding period. Generally the Table tell us that the no of holding days are increasing

year by year.

It can be calculated as by using the formula

DAYSOF INVENTORY HOLDINGS= INVENTORYSALES

× 365 DAYS

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Graph.no-7.5

Jan-04 Jan-05 Jan-06 Jan-07 Jan-0875

80

85

90

95

100

105

No.of inventory holding days(in days)

No.of inventory holding days(in days)

Interpretation-

The above graph shows the no of inventory holding days which is increasing year by year.it

enhances the responsiveness time for the customer, it add slight advantage that not to loose any

customer but still it incurs inventory cost.so company should find out a strategies which can

make the inventroy holding days low at ahiher responsive time to customer.

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Table.no-7.6

Total inventory cost at BIGBAZAAR for last five year

The major part of the inventory management is inventory cost. It determines what should be the

optimal Inventory management system. The change in Inventory cost fluctuation affects the

surplus or profit alot. According to this the whole Inventory management system is designed.

The table shows how the Inventory cost varies in different year with reference to Total cost.

Year Total Inventory cost

(In cores)

Total cost

(In cores)

Percentage

April -2004 320.59 602.50 53.32

April -2005 567.38 961.94 58.98

April -2006 1234.67 1,722.34 71.68

April -2007 1943.41 3,021.14 64.32

April -2008 2098.53 4,588.39 45.73

Analysis-

This table shows the inventory cost at different year at BIGBAZAAR ,which is 53.32 percent of

total inventory in the year 2004. In the year 2005 t is about to 59 percent of total cost. and in the

year 2006 the trend of growing inventory cost is decreased which is 71.68.both the year

2007,2008 follow 2006 and shown there is a huge decrease in inventory cost.

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Graph. no-7.6

Year Apr-04 Apr-05 Apr-06 Apr-07 Apr-080

10

20

30

40

50

60

70

80

Percentage of Inventory cost to Total cost

Percentage

Graph.No-7.7

Total Inventory cost

04/01/200404/01/200504/01/200604/01/200704/01/2008

From both the graph we got to know that the the inventory cost is incrasing year by year but not

in the same rate as some of the cost which determines inventory cost like labor

charge ,transportation coct are volatile in nature. But from 2007 onwards the cost of inventory is

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decreasing compare toits previous year as the company adopts new information system,

SARATHI by SAP and other certain devlopment software which fetch the Inventory cost a liitle

down.

.

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CHAPTER-VIII

Findings:

There has been tremendous increase in the level of inventories year by year.

There is a increase in inventory turnover ratio from previous year.

There is no special inventory management technique.

SARATHI a software now take care about all the Ordering, Maintaining and Logistic

decision.

There are no specialized people to take care about the inventory.

There is no reverse logistic process which causes a significant part of loss in inventory

for damaged goods.

No special reordering system

The various items and products are stored at different warehouse according to the

suitability of their use near to respective Stores. But same are controlled from central

location i.e. from zonal center.

As and when product received in the store, the same is given product as well as SAP

code. These codes are decided in company itself.

Still there number of issue with suppliers

Generally BIGBAZAAR not shares its strategic information with its suppliers.

There are no proper specialized people to handle problem caused in a product at the time

of the sale.

There is no product care center for BIGBAZAAR

There is no special inventory costing method

There is a significant decrease in transportation cost.

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There is a in Reduced material obsolescence

The satisfaction level of suppliers is increased from previous year

Number of suppliers also increased compare to previous year

Ordering system is quite flexible compare to other buyer.

Many of the suppliers are not satisfied with vendor help desk of BIGBAZAR

Company’s inventory holding period is increasing year by year.

The cost of inventory increasing continuously from last 5 years.

Increase in inventory turnover ratio.

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Suggestion:

The company should make realistic prediction about the sales and there should not be

frequent changes in the same.

Suppliers should be given schedule for the supply products and other supplies in time.

Still better co-ordination should be there among various departments.

A large part of company’s investments are tied up with the loan, the company should try

to pool its capital investments.

It should start its own subsidiaries for producing all the product.

It should start making partnership with its suppliers.

It should change its current system for damaged goods.

It should have a look on vendor help desk

Standardized tools should in inventory management

There should be more standardization in procurement decision

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Recommendation:

There should be a proper department for inventory

The company should employ the qualified people for inventory management as

well as supply chain management

The warehouse of the BIGBAZAAR should be modernized with new storage

technique like JIT.

The software system should be modernized in order to increase the clarity of

communication among various departments

There should be a specialized team to take decision like procurement.logistic.and

supply chain management

The vendor help desk should be supplier friendly

There should be an adequate MIS to fulfill the customer order.

The company should have a modernized ERP system.

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Conclusion:

Indian retail sector is witnessing one of the most hectic Marketing activities of all times. The

companies are fighting to win the hearts of customer who is God said by the business tycoons.

There is always a ‘first mover advantage’ in an upcoming sector. In India, that advantage goes to

“BIG BAZAAR”. It has brought about many changes in the buying habits of people and

changing a number of aspects in Store Management, Inventory Management and Product

Delivery . It has created formats, which provide all items less than one roof at low rates.

The consumer’s preferences are changing & they are moving from Traditional Kirana stores to

Modern Retail outlet. It’s the main challenge to the Modern retail outlets to attract the customers

towards them from that of competitors. To attract more customers companies have more

Inventory or stock at the store in order to satisfy the customers demand. Again it is important the

inventory should be managed in proper manner as it act as life blood for hyper market like

BIGBAZAAR. BIG BAZAAR has maintained that uniqueness & has succeeded in attracting

customers.

What truly separates successful competitors from the "also rans" in today's global competitive

race is suppliers. Many companies that the years have thrown "everything" into the battle for

competitive advantage are only now coming to admit that their best and strongest resources are

their suppliers. So Now –a-days it is important to have a good relationship with suppliers to be

successful.

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