inventory management of big bazaar(thane)

CHAPTER 1: INRTODUCTION INRTODUCTION 1.1 INTRODUCTION OF INVENTORY MANAGEMENT: Inventories are assets of the firm and require investment and hence involve the commitment of firm’s resources. The inventories need not be viewed as an idle asset rather these are an integral part of firm’s operations. But if the inventories are too big, they become a strain on the resources, or if they are too small, the firm may lose the sales. Therefore, the firm must have an optimum level of inventories. Inventory is actually money, which is available in the shape of materials (raw materials, in-process and finished products, equipment, storage space, wor!-time etc. Inventory is a list of goods and materials, or those goods and materials themselves, held available in stoc! by a business. Inventory are held in order to manage and hide from the customer the fact that manufacture"supply manufacture"supply delay is longer  than than deli delive very ry dela delayy, and and also also to ease ease the the effe effect ct of impe imperf rfec ecti tion ons. s. In the the manufacturing process that lower production efficiencies if production capacity stands idle for lac! of materials. #ny #ny organi$ation which is into production, production, trading, sale and service of a product will necessarily hold stoc! of various physical resources to aid in future consumption consumption and sale. %hile inventory is a necessary evil of any such business, it may be noted that the organi$ations hold inventories for  various reasons, which include speculative purposes, functional purposes, physical necessities etc.# component of supply chain management, inventory management supervises the flow of goods from manufacturers to warehouses and from these facilities to point of sale. # !ey function of inventory management is to !eep a detailed record of each new or returned product as it enters or leaves a warehouse or   point of sale. sale. Invent Inventor oryy manage managemen mentt is a scienc sciencee primar primarily ily about about speci specifyi fying ng the the shape shape and  placement of stoc!ed goods. It is required at different locations within a facility or  within many locations of a supply networ! to precede the regular and planned course of production and stoc! of materials.

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Inventory control is concerned with achieving an optimum balance between two competing ob&ectives. 'inimi$ing the investment in inventory. 'aimi$ing the service levels to customer’s and its operating departments.

1.2 CONCEP CONCEPT T OF INVENT INVENTOR ORY Y MANAG MANAGEME EMENT NT:: The dictionary dictionary meaning of )Inventory) is is *a detailed list-stoc! list-stoc! of of goods in this). this). #  practical definition from the material management angle would be )Items ) Items of stores or mate materi rial alss !ept !ept in stoc stoc!! to meet meet futu future re dema demand ndss of prod produc ucti tion on,, repa repair irs, s, maintenance, construction etc.). +ince the materials held in the inventory are idle resource, another definition of inventory would be )an idle resource of any !ind which has an economic value). The inventory means and includes the goods and services being sold by the firm and the raw materials or other components being used in the manufacturing of such goods to be offered to customers whenever demanded by them. Inventory management also means maintaining effective internal controls over inventory, including safeguarding the inventory from damage or theft, using purchase orders to trac! trac! invent inventory ory moveme movement nt,, maint maintain ainin ingg an invent inventory ory ledger ledger,, and frequ frequent ently ly comparing physical inventory counts with recorded amounts.

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1.3 TYPES OF INVENTORIES: enerally the inventories are classified into three categories and they are as follows

1. Fi Fini nish shed ed g gds ds:: ! These are the goods, which are either being purchased by the firm, or are being  produced or processed in the firm. These are &ust ready for sale to customers. Inventories of finished goods arise because of the time involved in production  process and the need to meet customer’s demand promptly. If the firms do not maintain a sufficient finished goods inventory, they run the ris! of losing sales, as the customers who are unwilling to wait may turn to competitors.

2. "#$!i #$!in!% n!%# #g# g#es ess: s: ! It refe refers rs to the the raw raw mate materi rial alss enga engage gedd in vari variou ouss purc purcha hase se of prod produc ucti tion on schedule. The degree of completion may be varying for different units. +ome units might have been &ust introduced while some others may be /0compleete or other otherss may be 1/0com 1/0comple plete te.. Th Thee wor!wor!-inin-pro progre gress ss refers refers to parti partiall allyy  produced goods. goods.

3. R&' R&' (&) (&)e# e#i& i&*s *s:: ! The raw materials include the materials, which are used in the production  process, and every manufacturing manufacturing firm has to carry certain stoc! of raw materials in stores. These units of raw materials are regularly issued transferred to production department Inventories Inventories of raw materials are held to ensure that the  production process in not interrupted interrupted by a shortage shortage of these these materials. materials.

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Inventory is very vital to every 2ompany is that without inventory no company would survive. Inventory is meant for 3protection’ and for 3economy’ in cost. 4eeping inventory of sufficient stoc!s will help to face lead times component, demand demand and suppl supplyy fluctu fluctuati ations ons and any unfor unforese eseen en circum circumsta stance ncess in the  procurement of materials. materials. Though to have have inventory is must, inventory inventory is such a thing that will pile up and creep into the area of profits to turn them as losses and can put the company in red. It is therefore, necessary to have control over  inventory to save the company from piling up of inventories and to avoid losses. Better said than done is the world that suits the inventory control. Inventories constitutes second largest category of all manufacturing operation eceeded only by plant and equipment and followed by receivables. The ob&ectives of inventory control are5 a To !eep required stoc! of materials so that production and maintenance activities do not suffer.  b 'inimum bloc!age of funds in inventory. inventory. 6ptimi$ation can be achieved and efforts need to be made to improve input output ratio of materials by scientific methods of determining.

1.+ DEFINITATIONS Inventory control can be defined as *7etermining and maintaining optimum investment in inventory given the significance of benefits and cost association with holding inventory 8. Inventory 2ontrol relates to * a set of policies and procedure by which an industries determines which materials it will hold in stoc! and the quality of each that it will carry in stoc! *. Therefore inventory control is otherwise !nown as +T624269T:6;.

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 1., FACTORS INF-UENCING INVENTORY *. +tandardi$ation @. +elective Inventory 2ontrol . Aust In Time . Cerpetual inventory system D. Inventory turnover ratio

1. INVENTORY MANAGEMENT TECHNIUES 1. En(i O#de# 4&n)i)5 If the firm is buying raw materials, it has to decide lots in which it has to be purchased on replenishment. If the firm is planning a production run, the issue is how much production to schedule. These problems are called order quantity problems, and the tas! of the firm is to determine the optimum or economic order quantity. 6&7 O#de#ing O#de#ing s): s): The term ordering cost is used in case of raw materials and includes the entire costs of acquiring raw materials. 687 C&##5in C&##5ingg s): 6

2ost incurred for maintaining a given level of inventory is called carrying cost.Economic 6rder ?uantity is given by the formula5 E6? F G>#6H2 #nd the total cost of inventory is given by the formula5 Total To tal cost of inventory F (#C J (#6HE6? J(E6?2H>

%here # F #nnual consumption (in units 6 F 6rdering cost per order (in :s 2 F 2arrying cost per unit (in :s C F Crice per unit (in :s

2.

Re#de# Pin)

The reorder point is that inventory level at which an order should be  placed to replenish the inventory. inventory. To determine reorder point5 (a ;ead time is the time normally ta!en in replenishing inventory after  the order has been placed. (b #verage usage (c Economic order quantity

3. S&9e)5 s)$  The demand for material may fluctuate from day to day. The actual delivery time may be different from the normal lead time. If the actual 7

usage increases or the delivery of inventory is delayed the firm can face  problem of stoc! out, which can be costly. costly. +o, in order to guard against the stoc! out the firm may maintain a safety stoc!. 1. STANDARDI;ATION +tandardi$ation is very essential to control the inventory, as by standardi$ation reduction in variety of material is possible. #nd because of the reduction in variety the advantages are low order cost, low inventory, less storage stoc!s, conservation of materials, variety reduction, less paper wor!, easy follow up with suppliers, less number of orders. The importance of this field has been recogni$ed since the days of K.%. Taylor, who first drew attention to this fundamental need in any organi$ation. Aust as wor! study is necessary preliminary to wor!  simplification, and a basic technique for production control, quality control, materials handling, estimated cost control, etc., *+tandardi$ation * are preliminary necessity to design a basic technique on build control and standardi$ation procedure.

1.1< SE-ECTIVE INVENTORY CONTRO- MANAGEMENT #ny manufacturing organi$ation consumes few thousand items of stores. # high degree of control on inventories of each item would, therefore neither be practical considering the wor! involved, nor worthwhile since all items are not of equal importance. A;AAR  Big Ba$aar is the largest hypermar!et chain in India. Big Big Ba$a Ba$aar ar was was laun launch ched ed in +ept +eptem embe berr, >//= >//= with with the the open openin ingg of its its first four stores in 2alcutta, Indore, Bangalore and > days.%ithin a span of ten years, there are now =D= Big Ba$aar stores in 1/ cities and towns across India.Big Ba$aar has included a wide range of products and service offerings under their retail chain.Big Ba$aar was started by 4ishore Biyani, the roup 2E6 and 'anaging 7irector of Cantaloon :etail India. Big Ba$aar is a chain of hypermar!ets in India, with more than =// stores in operation. It is a subsidiary of Kuture roup Nenture ;tdVs, and follows the  business model of Wnited +tates-based +tates-based %al-'art. al-'art. Kacilities offered by Big Ba$aar 6nline shopping5 Big Ba$aar has an official website, KutureBa$aar.com, which is one of the most favorite sites among people of India for online shopping. Kuture Ba$aar is an online business venture of Kuture roup, which sells an assortment of products such as fashion, which includes merchandise for  men and women, mobile accessories, mobile handsets and electronics li!e home theatres, video cameras, digital camera, ;27 TNs, !itchen appliances and many more. 7iscounts5 *. Big Ba$aar has released the doors for the fashion world, general merchandise merchandise li!e sports goods, cutlery, croc!ery, utensils, and home furnishings etc. at best economical prices. @. Big Ba$aar group offers more than =// stores all over the country with an amalgamation of Indian ba$aars’ feel and touch with a convenience and choice of the modern retail facilities  . The worldwide country chain, Big Ba$aar, is formed by 2E6 of Kuture roup, 'r. 4ishore Biyani. Their basic attraction associated with reasonable  prices is their their Wnique Wnique +elling Crice. Crice.  . Big Ba$aar has become a massive hit with lower middle-class and middle class people as a ma&or client base.  D. :eflect the loo! and feel of Indian ba$aars at their modern outlets GROUP VISION *To deliver Everything, Everywhere, Everytime to Every Indian 2onsumer in the most profitable manner.8 GROUP MISSION = %e share the vision and belief that our customers and sta!eholders shall be served only by creating and eecuting future scenarios in the consumption consumption space leading to economic development.

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> %e will be the trendsetters in evolving delivery formats, creating retail realty, ma!ing consumption affordable for all customer segments L for classes and for  masses.  @ %e shall infuse Indian brands with confused and renewed ambition   %e shall be efficient and cost-conscious and committed to quality in whatever  we do.

>&#d 9 di#e)#s =. 'anaging director :- 'r. 4ishore Biyani > %hole %holeti time me 7irec 7irecto torr 5-'r 5-'r opi!i opi!isha shann Biyan Biyanii 5- 'r :a!esh Biyani @ 7irec 7irecto torr 5-5- 'r 'r +hai +hailes leshh ig >&&&# •

outlets. Clanet :etail also has a multi-brand international sportswear sportswear format under the brand 3Clanet +ports’. The company is the sole licensee for sportswear   brands such as Cne# Cne#se se// S%&*di S%&*ding ng and the A)h*e)e )h*e)es s F) F) the venture has also launched other formats li!e S%#)s "&#eh4se/ "&#eh4se/ Aess#ie/ Aess#ie/ Mnsn/ Ne)/ and De8enh&(s.

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F#(&)!+ De%) This largely untapped unorgani$ed unorgani$ed mar!et for boo!s and music with very few players, throws up an enormous opportunity something that prompted Cantaloon to ma!e its foray through its own format, De%) in >//-/D. ;ocated as stand-alone stores and within most Cantaloons, 2entral and Big Ba$aar retail formats, 7epot’s vision is to be a one-stop shop where customers will find an etensive range of boo!s, multimedia, toys, gifts and stationery, stationery, thereby transforming transforming the way boo!s, music, multimedia and gifts are bought, sold and perceived in India. This would be made possible by the creation of a portfolio of eclusive titles, an Indian eperience while shopping and connecting with the mind and soul through different languages, ideas and tunes. >$s/ M4si &nd Gi9)s :eading as a habit is ingrained into the Indian psyche from time immemorial. billion people, the habit of reading can  become a strong business proposition. 7epot see!s to wor! with communities in and around the area where it is located and hopes to attract the entire family to spend quality time together. It is focusing on the introduction of old classics and boo!s in regional languages with an ob&ective to ma!e these affordable to a mass audience.

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F#(&)!, F&shin S)&)in Kashion +tation, which represents the company’s offering of the latest in fashion for  the masses, has met with reasonable success since its launch in >//-/. These thematic stores that offer the most contemporary in fashion and accessories, is another of the value added propositions that Cantaloon see!s to offer. The aspirational mass of consumers who are bombarded with the latest in style through media  penetration,  penetration, hedonism and peer emulation, need an outlet that meets their  requ requir irem emen ents ts of tren trendy dy,, late latest st and and yet yet affo afford rdab able le fash fashio ion. n. Kash Kashio ionn +tat +tatio ionn is  positioned  positioned to meet their their requirements, requirements, and thereby thereby ta!e fashion to to the masses. masses.

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F#(&)! H(e I(%#e(en) +ome of the !ey factors contributing to growth in the housing sector in India are increasing purchasing power increasing number of nuclear families, softer interest rates, easy availability of finance schemes and an overall real estate boom across the country. There is a shortage of more than @@ million dwelling units. %ith the average age of a homebuyer reducing from / to sub-@/,  million new homes are being  bought annually. annually. %ith %ith every house, a dream is planted to decorate the house. #nd #nd this creates a demand for furniture, electronics and home improvement products. 'odern retail is ideally placed to capture a significant chun! of consumer spend made by a new homebuyer. The mar!et for home dZcor and improvement is largely unorgani$ed and hence a new homeowner has to literally visit several mar!ets and stores for  meeting his home needs. This was the opportunity that Cantaloon perceived and the reason why it entered the :s. 1/,/// crore home solutions mar!et in >//-/. %ith its  presence in the modern retail and consumer space, this new concept was an opportunity for the company to leverage its eperience and offer the consumer an alternative solution to canali$e his consumption needs. In the :s.>/// crore consumer durable industry, which is growing at nearly D per  cent every year, E-Sone has already emerged as a force to rec!on with. This lifestyle retail format offers a never eperienced before environment for shopping for the best in national and international consumer electronic and durables brands. It retails  products ranging from music systems to laptops, from the latest plasma television sets to 7N7 players, from washing machines to air-conditioners to name a few. Typically in ecess of =>,/// square feet in si$e, E-Sones are primarily stand-alone concepts, but are also present within the company’s 2entral malls

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F#(&)!0 COMMUNICATION

%ith over > billion phone users worldwide, mobility has now become an intrinsic part of our personal and wor!ing lives. 'obile operators, cell phone manufacturers, content publishers, wireless application service providers and many other !ey players in the mobile industry are all wor!ing to carve out the best position in the value chain, to find the right place from where they can best serve both their own and their  customers’ needs. En route towards @ billion phones worldwide, a ma&or shift would occur in consumer interest from carriage to content and from a verbal to a growing visual world. %ith %ith more mobile cameras sold in >// than digital cameras, with more music"video players in mobiles than iCods, with more messaging reach than C2s, convergence with the online world is now very much a reality. In India, the story is no different. %ith over =/ million mobile subscribers epected by >//Y, there eists a huge potential for all players in the mobility space. 'ost of the mobile phones in India are sold through 3mom and pop 3stores, and there is a huge grey mar!et that eists.

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M>&&&# Cantaloon reali$ed this largely untapped opportunity and intended to be a dominant modern retail player in the mobile space. This is what prompted the company to set up a new division Cne#geM in >//-/D to identify, develop and bring to the mar!et, mobile products and solutions tailor-made to suit the consumers requirements at competitive prices. 2onverge' adopts a unique approach of establishing, multi-brand, multimulti-cat catego egory ry,, multimulti-for format mat and compr comprehe ehensi nsive ve solut solution ion outlet outletss to lead lead and and eponentially epand the mar!et. #s in most other formats, 2onverge' too operates in the lifestyl lifestylee and value platforms platforms.. Its value offering offering,, M>&&& M>&&&## is a format that addresses the value see!er’s quest for possessing latest technologies at lowest prices. Crimarily aimed at the replacement mar!et, a typical 'Ba$aar is located within most Big Ba$aar stores as well as stand-alone options. This This >/-// square feet offering retails both +' and 27'# and landline phones, while  providing options options of ' Cods, downloads downloads to name a few. The mission for 2onverge 2onverge ' is to emerge as the largest organi$ed retailer in the mobile space, while leading innovation in mobile applications and being the most favored destination for all communication needs.

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F#(&)! Res)&4#&n)/ -eis4#e  En)e#)&in(en) Increasing urbani$ation and rising disposable incomes are characteristics that are common in emerging economies li!e India. Estimates suggest a growth in urban consumption at potentially >/0 per annum in nominal terms for at least the net -O year period. The total number of middle to high income households is pro&ected to reach =/ million by >/=/, thereby adding a large number of people to the consuming class. These Th ese demog demograp raphi hicc number numberss repres represent ent a young young nation nation,, which which has has an incre increase asedd  propensity  propensity to spend in restaurants and other food service sectors, fuelling growth in the ;eisure, :estaurants and Entertainment industries. The company is using the collaborative approach to strengthen its position in the leisure and entertainment space. This has helped the company build a complete  bouquet of brands that span from food courts to fine dining. #s the shift from high street to malls continues, the restaurant business is epected to increase significantly. Kor Indians, shopping comes hand in hand with eating and celebrating and these formats are being developed !eeping this in mind. K=>@ is designed as a entertainment $one that can be present in every mall and this business is epected to gain traction in the coming year.

K=>@, the entertainment $one offering is a leisure solution for all age groups. The focus would be to offer a wide range of gaming options from bowling and pool, inte intera ract ctiv ivee vide videoo game gamess to bump bumper er cars cars.. Th Thee enti entire re conc concep eptt is buil builtt arou around nd international thin!ing and gaming !nowledge, with Indian pricing. Kor the year ending >//-/D, there were three K=>@’s operational, operational, with the first one opening in 9ovember  >//.

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F#(&)! S)&# &nd Si)&#& De*ie#5 F#(&)s S)&#  Si)&#& In the beauty space, the company’ company’ss offering, offering, S)&#  Si)&#& aims at pampering the  beauty conscious conscious consumer by offering offering the latest beauty products, ranging from cosmetics, s!in and hair care, aromatherapy and fragrances. +tar X +itara is set to be  part of most Big Ba$aar and every Beauty and ,/// square feet each, these centers will include pharmacies and and beau beauty ty prod produc uctt $one $oness and and a host host of othe otherr offe offeri ring ngss such such as heal health th cafe cafes, s, gymnasium, healthcare services, retailing fitness equipments, yoga centers and boo!s on health and fitness etc. The company plans to open at least three  million Indians who access the Internet on a regular basis. Kalling prices of personal computers and laptops coupled with increasing penetration of internet, and broadband services is driving more and more Indians to the Internet. In fact, Indians are no longer limiting their  Internet usage to email and chatting. 6nline shopping has finally come of age. #s the leading retailer in India, Cantaloon could ill afford to overloo! this emerging segment. There is a sufficiently large segment of online shoppers whose consumption spends needs to be captured. It’s with with this belief that the company started eploring this area. Cantal Cantaloon oon perce perceiv ives es its its online online busin business ess as yet anoth another er delive delivery ry format format that that can  potentially  potentially reach out to > million customers.Kuture Ba$aar, has modeled itself on a unique complete retailer platform. Etailing requires etensive sourcing capabilities, warehousing capacity, buying trends understanding X most importantly a robust X efficient logistic bac!end. Kuture Ba$aar leverages the offline brand equity and bric!  X mortar presence of the group via multi-channel integration to benefit on economy of scales, economy of scope in promotion X distribution and utili$ing the offline learning into online X vice-versa to grow at a faster pace. #s a new delivery format, Kuture Ba$aar can benefit from the learning’s and epertise gathered in eisting formats as well as boost sales at these formats through the online sale of gift vouchers

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F#(&)!11 -i8e#)5 Shes %ith fashion being the focus of the company, the intent is to provide a complete wardrobe eperience to the consumer that includes not &ust apparel but fashion accessories also. #ccessories spea! a lot about the personality of the individual and are a reflection of the attitude of the wearer. Kootwear is one such category in the fashion sphere that truly embodies the phrase-best foot forward. Kootwear as a category has been present in most of the company’s Big Ba$aar Kashion +tation, Cantaloons and 2entral retail formats. 7uring the year under review, Cantaloon eplored the opportunity to get into branded footwear, by partnering with the well-established footwear company ;iberty +hoes. The &oint venture named F) M&#) M&#) Re)&i* Re)&i* 6Indi& 6Indi&77 -i(i)e -i(i)edd would launch branded footwear retail chains in the country country under the BShe F&)#5 brand. F&)#5 brand. These stores would be located within most retail spaces that Cantaloon would be present in, and as stand-alone stores across the country. +hoe Kactory stores would be a destination for men, women and children of  all ages, who can choose from a wide variety of quality footwear at various price  points, suiting suiting their budgets. The The venture launched its first store in #hmedabad #hmedabad on th 'ay >//D. +pread over nearly =@,/// square feet, this value format houses a wide range of the latest and trendiest foo twear and accessories for all occasions, at unbeatable prices.

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F#(&)!12 GINI  ONY The company recogni$es that the organi$ed !ids wear category has shown signs of  si$eable growth over the past couple of years. In order to epand and consolidate its  presence in this category, category, the company entered into a &oint venture with the country’s country’s leading !ids wear retailer, ini X Aony #pparels Cvt. ;td. This equal &oint venture named G F4)4#e F&shins -i(i)ed, -i(i)ed , apart from gaining additional visibility within all eisting and upcoming Cantaloons stores and 2entral malls will set up a chain of  eclu eclusiv sivee !ids !ids wear wear stores stores throu througho ghout ut the the count country ry,, addres addressin singg fashio fashionn needs needs of  children in all age groups, from  to = years. This initiative witnessed the opening of  two stand-alone stores during the year >//-/D in Indore and #hmedabad.

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F#(&)!13 >IG >A;AAR  Isse s&s)& &4# &h& $&hin n&hi Big Ba$aar has clearly emerged as the favorite shopping destination for millions of its consumers, across the country, it’s success is a true testament to the emotional  bonding it has established established with the Indian Indian consumer, on on account of its value offerings, offerings, aspirational appeal and service levels. +hop till you drop[ Big Ba$aar has democrati$ed shopping in India and is so much more than a hypermar!et. / per cent to the company’s turnover turnover during >//-/D. Kood Ba$aar offers a variety of daily consumption items, which include staples, soaps and detergents, oils, cereals and biscuits. 6n the product category side, the primary segregation is done on the basis of staples, fresh produce, branded foods and home and personal care products.

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A#e& 9 M&in)en&ne +ince the store is fully computeri$ed, in the sense, li!e billing, inventory 'anagement, electronic equipment’s near the gates, to chec! thieves, it has to Ta!e proper care of machines. Kood items are to be regularly chec!ed. Inve Invent ntor oryy room room has has to be chec chec!e !edd regu regula larl rlyy for for any any sort sort of lea! lea!ag ages es.. #ir  conditioners