Download - Shoppers Stop Supply Chain
Competitive Advantage through Supply Chain
Presented by Shoppers’ Stop
Flow of Presentation• Retail Scenario• Shoppers’ Stop• The Pentagon Triangle Model• Dimensions of Our Business• Supply Chain Objectives• Past Situation• Strategic Actions based on the Triangle
– Systems– Logistics– Partners
• Impact & Benefits
Indian Retail Scenario• Retail Market valued at Rs 900,000 cr
• Only 2% is organized with a value of Rs 18,000 cr
• Unorganized independent stores dominate the retail trade structure
• Highest number of outlets per capita in the world– There are ~ 12 million retail outlets in India
• Only 4% stores are larger than 500 sq ft in size
Global Retail Scenario• World’s largest private industry at $6.6 trillion (25
times the Indian Market)
• Organized retail market holds 40% of the market
• 50 of the top Fortune 500 companies and 25 of the top 200 Asian companies are retailers
• The retail industry is one of the largest employers
We pioneered a revolution….• From 2,800 sq. ft. to over 680,000 sq. ft.• From 1 store to 15 international class stores.• From unknown customers to creating a relationship
programme with over 300,000 loyal customers.• From being just a departmental store to being the only
Indian store represented in the IGDS.• From One company to Group companies.
All this has been possible due to our constant endeavour to EXPAND OUR HORIZON and become the No. 1 global retailer in India.
C R O S S W O R D
Our Vision…….
“To be a global retailer in India and maintain its No. 1 position in the Indian Market in the Department Store Category.”
“Nothing but the best.”
Our Mission…….
Snapshot
• 2003-2004 Annual Turnover Rs 404 cr.
• Retail Space 680,000 sq. Ft.
• Number of Stores 15
• Customer Care Associates 1610
• Year Founded 1991
Our Sales Performance
Company Performance:1992-2004
0.6 4.7 17.0 27.947.2
76.1 90.7127.0
148.4
210.3249.6
303.8
404
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
No. of Stores
Rev
enue
s (R
s C
r.)
1 1 1 2 13982 2 3 5 7
• Supply Chain Award for the Second best Supply chain Co. in the Country across all Industries by S.P.Jain Institute of Management in 2004.
• CMAI industry honours in 2003& 2004 for
– CEO of the Year - Retail- Mr. B S Nagesh
– Retailer of the Year– Retail Outlet of the Year- Delhi (2003) &
Hyderabad (2004)
– Top Management Team of the Year (2003) • In 2003 NASSCOM award for the “Best IT User” in the retail
vertical(2003)• Lycra Images Fashion Award to Shoppers’ Stop for “Best Retail
Chain of the Year” and Mr. B S Nagesh for “Retail Professional of the Year” in February 2004
Industry Honours
Communication
People
Place
Value
ProductSystems
Logistics Partners
The Eight Ways To Win In Retailing
The Pentagon & The Triangle Model
• The Pentagon is customer centric and customer facing• The retailer can impact the customers’ perceptions, by
leveraging the above elements
The Pentagon
Positional
PromotionalCommunication
Service
Knowledge
ClimatePeople
Size
Location
Layout & DesignPlace
Price
QualityValue
Style & FashionIntensity
AssortmentProduct
The Triangle
• The Triangle is organization centric
• A strong and differentiating triangle would result in better service offering to customer
Systems
Logistics Partners
Dimensions of Our Business • 2 primary and 6 secondary seasons
• 85 merchandise categories
• over 260,000 SKUs
• 400 vendors
• 15 stores across India
• 33,000 customer walk ins everyday
Customer profile Shoppers’ Stop caters to consumers who are
demanding and discerning
• Age group: 25 to 50 years (77% of total customers)
Customer Philosophy
“Feel the experience. While you shop.”
Service Philosophy
“It’s Magical. It’s Comfortable. It’s My Store.”
Our Positioning
Bi-annual tracks for Customer Satisfaction Index
The Supply Chain Objectives covers 3 main areas
• Customer Objectives
• Partner Objectives
• Organization Objectives
Supply Chain Objectives
The Customer Objectives• Customer always gets the merchandise of his / her
size and choice
• Merchandise is always presentable and ready before customer entry
• Customer easily locates price tags and product information
• Price on the price tag and Point of Sale System always match
• Timely replenishment of fast moving merchandise
The Partner Objectives• Partners always deliver the right quantities as per
schedule
• Partners are always paid as per credit terms
• Sharing of information with partners related to sales stocks and purchase orders
Organization Objectives• Customer Response Time
• Merchandise Availability
• Distribution Cost
• Shrinkage
• Efficiency of executive time
• Collaboration with Partners
The Past Situation of SCMIn 1999, Shoppers’ Stop implemented the ERP; JDA -MMS, well ahead of time and its capabilities
– 3 stores and a turnover of Rs 127 cr only
• Turnaround time: 4 days
• Poor hit rate from partners
• Difficulty in tracking merchandise
• No sharing of inventory data with partners
• High Distribution Cost
Contd...
The Past Situation of SCM contd.
• High inventory
• High Shrinkage
• Shutting down all operations for 48 hours for annual stock take
• High variance between books stock and physical stock
• Inefficient use of executive time
Strategic Actions
Systems
Logistics Partners
JDA - MMS - WMS
PICS
B2B
Source Tagging
Receipts
Direct Store Delivery
Infrastructure
Delivery Mechanism
Intake Consolidation
Systems
• Shoppers’ Stop implemented the JDA Retail Merchandise Management System (MMS)
• First retailer in Asia to implement the state-of-the-art ERP
Systems JDA - MMS - WMS
PICS
Merchandise Management System
• An end to end solution for managing merchandise throughout the chain
• Right from purchase orders, to sales, to replenishment, to markdown and inventory management
• A integrated online system connected with the back end, front end (stores) and the distribution centers.
MMS Triggers• Auto Purchase Order
– Pre-determined level of minimum stocks for core styles at distribution center
– Drop in level generates an Auto Purchase Order to the vendor
• Auto Replenishment– Pre-determined level of minimum stocks for core
styles at each store– Drop in level generates an Auto Replenishment
command at SKU level to the concerned distribution center
– Daily Auto Replenishment to all 15 stores
• Warehouse Management System
– Prior to WMS, inventory was monitored manually and transfers required more than 96 hours
– With WMS, entire process controlled electronically
– Transfers are executed in 24 hours
The WMS
The WMS Process– Distribution Center mapped onto a rack and bin system
– Calculates storage capacity
– Allocates designated area to each product category through PUT AWAY document
– PICK LIST identifies exact location of merchandise at SKU level
– Maintains records of perpetual inventory online
– Minimize shrinkage
– Reduces turnaround time to 24 hours
Perpetual Inventory Control System
• Also known as PICS• Distribution Center scans one department per day• All departments scanned in a quarter• Pre-determined schedule of all departments• Operations process not affected• Helps in checking pilferage• Variances are known everyday• Major tool for reducing shrinkage resulting in cost
savings
Ability to match physical stock with systems stock on a daily basis without affecting day to day operations
Logistics
• 4 Dedicated Distribution Centers, covering 85,000 sq ft, supply merchandise to 15 stores across the country
• Distribution Center Management is outsourced to and managed independently by regional service providers
• Regional Distribution Centers connected online to the central systems.
LogisticsInfrastructure
Delivery Mechanism
Intake Consolidation
Shoppers’ Stop Footprint
Mumbai LocationsAndheriBandraChemburKandiviliMulundMalad
Pune
Bangalore
Hyderabad
Chennai
Kolkata Locations
Elgin Rd.
Salt Lake
Jaipur
DelhiGurgaon
Distribution Centers
33,000 customers per day
Western Region
Northern Region
Eastern Region
Southern RegionStore Store
Store Store
Store Store
Store Store
Mumbai DC
Delhi DC
Kolkata DC
Bangalore DC
Partner 2
Partner 3
Operations Outsourced
Reverse Logistics
Outbound Logistics
Distribution & Logistics
Partner 0
Partner 1
WMSWin DSS / MMSBConnectB
New Initiatives• Intake Consolidation
– Also known as the Milk Run– Currently for Own Brand Partners– Delivery Authorization indicating quantity to be
received for the week– National Transporter to follow up with vendors for
merchandise– One truck to visit and collect goods from the vendors– Distribution center is informed of the ETA– Delivery status monitored and tracked through website
Reduction in turnaround time to 24 hrs
Savings of Rs 1 Lac per month
Partners
• To ensure smooth flow of merchandise through the entire supply chain
• To improve the visibility and velocity of information through supply chain
• Partners can proactively improve efficiency and business results
Partners B2B
Source Tagging
Receipts
Direct Store Delivery
B2B
• BConnectB from Siemens• Launched in 2002 with less than 10 partners• Currently 150 partners connected online with
Shoppers’ Stop• Features include
– Order Processing• Purchase Orders• Receipt Details
– Payment• Ledger Details
– Sales & Stock• Style-wise / location-wise
B2B Advantages• Reduction in communication expenses
• Faster information exchange with Business Associates
• Frees up executive time for other value added activities
• On line information of sales and stock to vendors which increases service levels
• Bar codes capturing style and price details are attached to the merchandise at the partners’ premises
• Ensures smooth flow of merchandise through the supply chain and reduces turnaround time
Source Tagging
Reduction in turnaround time from 96 hrs to 24 hrs
Reduction in Manpower cost
Receipts & Payments• Payment against Receiver’s Confirmation
– Receiver’s confirmation report prepared on receipt of goods at the distribution center
– Report sent to the corporate office against which payment is released
100% reconciliation of receipts ensuring timely payment to vendors
• Ability to receive the merchandise directly at the stores
• Bypassing the distribution center further reduces turnaround time to 12 hours
• Reduction in distribution cost
Direct Store Delivery
Reduction in lead time
• Auto Style Set-up– Currently Shoppers’ Stop team creates styles manually– The printed barcodes are then sent through courier– In Auto Style Setup partner sets up the style codes
(based on a standard template) and prints the barcodes at his end
– The entire file is sent electronically to Shoppers’ Stop– Details of style codes to be uploaded directly into the
ERP– Shoppers’ Stop B&M team to only fill in quantities– Reduces courier cost and turnaround time
New Initiatives
Frees up 30% executive time
Error reduction process
Strategic Actions - Summary
Systems
Logistics Partners
JDA - MMS - WMS
- Improved Efficient Consumer Response
PICS
- Shrinkage beats global standards
B2B
- Seamless Integration
Source Tagging
- Seamless merchandise flow
Receipts
- 100% reconciliation
Direct Store Delivery
- 20% of merchandise
Infrastructure
- Scalability to 50 stores
Delivery Mechanism
- Turnaround time 24 hrs
Intake Consolidation
- Cost Savings
Financial Impact
A financial cumulative saving of Rs 1.21 cr
TURNOVER EXPENSE % toYear Turnover
(Rs Crores) (Rs Crores)2001-02 249.5 2.64 1.06%2003-04 404.5 3.35 0.83%
D&L Expenses
– No Shrinkage at Distribution Center
Financial Impact
A financial cumulative saving of Rs 1.2 cr
TURNOVER Shrinkage % toYear Turnover
(Rs Crores) (Rs Crores)2001-02 249.5 1.65 0.66%2003-04 404.5 1.62 0.40%
Shrinkage at Store Level
Service Standards
Month Allocated Shipped PercentageApril-01 2,410 2,187 91%April-04 11,537 11,366 99%
Shipments Allocated v Shipments Executed
• Customer– Improvement in CSI from 62 to 65 through better
availability of merchandise.
• Partner– B2B, Auto P.O and Source Tagging ensures faster
transactions– B2B will drive seamless integration between
Shoppers’ Stop and Partners in the future– Partner Satisfaction Index will strengthen partnership
• Stakeholder– Leverage SCM strength for multi-fold growth at lower
cost– Reduction in shrinkage resulting in higher profit
Competitive Advantages
Results of SCM Initiatives
Objective IntangibleBenefits
TangibleBenefits
Customer q Latest merchandiseavailability
q MerchandiseAvailability
q Correct Product andPrice information
Partner q Transparencyq Partnership
q Timely Paymentsq Greater Efficiencyq Growth
Stakeholder q Higher CustomerSatisfaction levelsthrough CSI(Customer SatisfactionIndex)
q Profitabilityq Lower distribution costq Greater efficiency in
executive timeq Scalability to 50 stores