2. Contents
BIG BAZAAR- AN INTRODUCTION ...........................................................................................................2
BUSINESS ENVIRONMENT- RETAIL SECTOR............................................................................................3
ASPECT OF OPERATIONS MANAGEMENT UNDER STUDY.....................................................................11
Facility Location ................................................................................................................................11
Layout Planning.................................................................................................................................13
Supply Chain Management...............................................................................................................15
Inventory Management ....................................................................................................................17
Queuing Time....................................................................................................................................19
LOCATION PLANNING – BIG BAZAAR....................................................................................................22
ANALYSIS OF STORE LAYOUT AT BIG BAZAAR ......................................................................................24
ANALYSIS OF INVENTORY MANAGEMENT AT BIG BAZAAR..................................................................29
ANALYSIS OF SUPPLY CHAIN AT BIG BAZAAR .......................................................................................31
QUEUING TIME AT BIG BAZAAR............................................................................................................33
PROBLEMS BEING FACED BY BIG BAZAAR AND PROBABLE SOLUTIONS ..............................................35
3. BIG BAZAAR- AN INTRODUCTION
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, the company operates over 12 million square feet of retail space,
has over 1000 stores across 71 cities in India and employs over 35000 people.
The company’s leading formats include Pantaloons (a chain of fashion outlets), Big Bazaar
(a uniquely Indian hypermarket chain), Food Bazaar (a supermarket chain that blends the
look, touch and feel of Indian bazaars, with aspects of modern retail like choice, convenience
and quality). The company also owns a chain of seamless malls, Central. Some of its other
formats include Depot, Shoe Factory, Brand Factory, Blue Sky, Fashion Station, Mobile
Bazaar and Star and Sitara. The company also operates an online portal Futurebazaar.com
A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a
large-format home solutions store, selling home furniture products and E-Zone focused on
catering to the consumer electronics segment.
Pantaloon Retail was awarded the ‘International Retailer’ of the year 2007, by the US based
National Retail Federation, the largest retail trade association and the ‘Emerging Market
Retailer’ of the year 2007 at the World Retail Congress in Barcelona.
Pantaloon Retail is the flagship company of Future Group, a business group catering to the
entire Indian consumption space.
Big Bazaar
In September, 2001, Pantaloon Retail (India) Limited debuted its Big Bazaar hypermarket
concept, with the opening of its first four stores in Calcutta, Indore, Bangalore and
Hyderabad in 22 days. Big Bazaar was designed to blend elements of a typical Indian bazaar
with modern retailing features such as parking, an air conditioned shopping environment and
merchandise return privileges. The store offered a wide range of products, including
clothing, kitchenware, sporting goods, luggage and jewellery, aimed at the mass market.
Despite its emphasis on customer service and shopping ambiance, features consumers
typically associated with high prices, Big Bazaar marketed on the promise of “more or less”
and “our products at your price”.
Big Bazaar was started by Kishore Biyani, the Group CEO and Managing Director of
Pantaloon Retail. Though Big Bazaar was launched purely as a fashion format including
apparel, cosmetics, accessory and general merchandise, over the years Big Bazaar has
included a wide range of products and service offerings under their retail chain. The current
formats include Big Bazaar, Food Bazaar, Electronic Bazaar and Furniture Bazaar.
The company opened stores at a rapid pace throughout the early 2000s. Within a span of 10
years, there are now more than 210 Big Bazaar stores across 80 cities and towns in India. By
2006, Big Bazaar had evolved from a discount store into a “fashion-led, family oriented,
happy shopping destination”
Most Big Bazaar stores are multi-level and are located in stand-alone buildings in city centers
as well as within shopping malls. These stores offer over 200,000 SKUs in a wide range of
categories led primarily by fashion and food products.
4. Food Bazaar, a supermarket format was incorporated within Big Bazaar in 2002 and is now
present within every Big Bazaar as well as in independent locations. A typical Big Bazaar is
spread across around 50,000 square feet (4,600 m2) of retail space. While the larger
metropolises have Big Bazaar Familycentres measuring between 75,000 square feet
(7,000 m2) and 160,000 square feet (15,000 m2), Big Bazaar Express stores in smaller towns
measure around 30,000 square feet (2,800 m2).
Big Bazaar has the facility to purchase products online through its official web page, and
offers free shipping on some of their products.
BUSINESS ENVIRONMENT- RETAIL SECTOR
The retail sector in India is witnessing a huge revamping exercise as traditional markets make
way for new formats such as departmental stores, hypermarkets, supermarkets and specialty
stores.
The Indian Retail Industry accounts for over 10 per cent of the country’s GDP and around 8
per cent of the employment.
India is the country having the most unorganized retail market. Traditionally it is a family’s
livelihood, with their shop in the front and house at the back, while they run the retail
business. More than 99% retailers function in less than 500 square feet of shopping space.
Indian retail sector is estimated at around Rs 900,000 crore, of which the organized sector
accounts for a mere 2 per cent indicating a huge potential market opportunity that is lying in
the waiting for the consumer-savvy organized retailer.
Today, the Retail Industry in India has come forth as one of the most dynamic and fast paced
industries with several players entering the market. Retailing in India is gradually inching its
way toward becoming the next boom industry. The whole concept of shopping has altered in
terms of format and consumer buying behaviour, ushering in a revolution in shopping in
India. Modern retail has entered India as seen in sprawling shopping centres, multi- storied
malls and huge complexes offer shopping, entertainment and food all under one roof. The
Indian retailing sector is at an inflexion point where the growth of organized retailing and
growth in the consumption by the Indian population is going to take a higher growth
trajectory.
The trends that are driving the growth of the retail sector in India are
• Low share of organized retailing
• Large young working population with median age of 24 years
• Increase in disposable income and customer aspiration
• Increase in expenditure for luxury items
• Increasing working women population
• Emerging opportunities in the services sector
5. These key factors have been the growth drivers of the organized retail sector in India which
now boast of retailing almost all the preferences of life - Apparel & Accessories, Appliances,
Electronics, Cosmetics and Toiletries, Home & Office Products, Travel and Leisure and
many more. With this the retail sector in India is witnessing rejuvenation as traditional
markets make way for new formats such as departmental stores, hypermarkets, supermarkets
and specialty stores.
The growth pattern in organized retailing and in the consumption made by the Indian
population will follow a rising graph helping the newer businessmen to enter the India Retail
Industry.
The retailing configuration in India is fast developing as shopping malls are increasingly
becoming familiar in large cities. When it comes to development of retail space specially
the malls, the Tier II cities are no longer behind in the race. If development plans till 2007 is
studied it shows the projection of 220 shopping malls, with 139 malls in metros and the
remaining 81 in the Tier II cities. The government of states like Delhi and National Capital
Region (NCR) are very upbeat about permitting the use of land for commercial
development thus increasing the availability of land for retail space; thus making NCR
render to 50% of the malls in India.
There is no doubt that the Indian retail scene is booming. A number of large corporate
houses- Tata’s, Raheja’s, Piramal’s, Goenka’s have already made their foray into this arena,
with beauty and health stores, supermarkets, self-service music stores, new age book stores,
every-day-low-price stores, computers and peripherals stores, office equipment stores and
home/building construction stores. Today the organized players have attacked every retail
category. The Indian retail scene has witnessed too many players in too short a time,
crowding several categories without looking at their core competencies, or having a well
thought out branding strategy.
6. The following graph shows an overall trend of the global retail revenues.
RECENT TRENDS
• India is rated the fifth most attractive emerging retail market: a potential goldmine.
• Food and apparel retailing key drivers of growth
• Multiple drivers leading to a consumption boom:
o Favorable demographics
o Growth in income
o Increasing population of women
o Raising aspirations: Value added goods sales
• According to a research report named ‘Retail Sector in India’ by Research and
Markets, Indian retail sector accounts for 22 per cent of the country's gross domestic
product (GDP) and contributes to 8 per cent of the total employment.
• The Rs 18,673 billion (US$ 401 billion) Indian retail market entails only 6 per cent of
itself as organised retail segment as of 2010, according to Booz and Co (India) Pvt
Ltd. Hence, there is a great potential to be explored by domestic and international
players.
• Indian retail is expected to grow 25 per cent annually. Modern retail in India could be
worth US$ 175-200 billion by 2016.
• The Business Monitor International (BMI) India Retail Report for the fourth-quarter
of 2011 forecasts that the total retail sales will grow from US$ 411.28 billion in 2011
to US$ 804.06 billion by 2015.
• Ranked second in a Global Retail Development Index of 30 developing countries
drawn up by AT Kearney.
• The Food Retail Industry in India dominates the shopping basket.
• The Mobile phone Retail Industry in India is already a US$ 16.7 billion business,
growing at over 20 per cent per year.
• As per a report by KPMG the annual growth of department stores is estimated at 24%
• Rural markets emerging as a huge opportunity for retailers reflected in the share of the
rural market across most categories of consumption
o ITC is experimenting with retailing through its e-Choupal and ChoupalSagar
o HLL is using its Project Shakti initiative: leveraging women self-help groups ï
0
500
1000
1500
2000
2500
3000
2003 2008 2013 2018
Indian Retail Growth
($US)
Modern Retail
Retail
GDP
7. o Mahamaza is leveraging technology and network marketing concepts to act as
an aggregator and serve the rural markets.
• IT is a tool that has been used by retailers ranging from Amazon.com to eBay to
radically change buying behaviour across the globe.
• E-tailing is slowly making its presence felt.
RETAIL SALES IN INDIA
Figure 1: Retail Sales in India
CHALLENGES & OPPORTUNITIES
Retailing has seen such a transformation over the past decade that its very definition has
undergone a sea change. No longer can a manufacturer rely on sales to take place by ensuring
mere availability of his product. Today, retailing is about so much more than mere
merchandising. It’s about casting customers in a story, reflecting their desires and aspirations,
and forging long-lasting relationships. As the Indian consumer evolves they expect more and
more at each and every time when they steps into a store. Retail today has changed from
selling a product or a service to selling a hope, an aspiration and above all an experience that
a consumer would like to repeat.
For manufacturers and service providers the emerging opportunities in urban markets seem to
lie in capturing and delivering better value to the customers through retail. The last mile
connect seems to be increasingly lively and experiential. Also, manufacturers and service
providers face an exploding rural market yet only marginally tapped due to difficulties in
rural retailing. Only innovative concepts and models may survive the test of time and
investments.
8. However, manufacturers and service providers will also increasingly face a host of specialist
retailers, who are characterized by use of modern management techniques, backed with
seemingly unlimited financial resources. Organized retail appears inevitable.
COMPETITVE PRIORITITES OF BIG BAZAAR
In 1984 Hayes and Wheelwright suggested that companies compete in the marketplace by
virtue of one or more of the following competitive priorities:-
• Quality
• Lead-time
• Cost
• Flexibility
Many authors and practitioners have added to and adapted this list over the years.
Foo and Friedman (1992) for example proposed a set of six competitive priorities, adding
`Service' and `Manufacturing Technology' to the above while expanding `Time' into:
• `time to market' and
• `lead times'
Others have added
• `Innovation'
• `Dependability' etc.
Quality, time, cost and flexibility can be defined in various different ways.
The terms Order Winner and Order Qualifier describe marketing-oriented dimensions that
are key to competitive success.
An Order Winner is a criterion that differentiates the products or services of one firm from
those of another.
An Order Qualifier is a screening criterion that permits a firm’s products to even be
considered as possible candidates for purchase
Thus, we first do the SWOT Analysis to establish what are the competitive priorities
and thus, what are the Order Winners and Order Qualifiers for BIG BAZAAR.
9. The SWOT analysis of Big Bazaar is as follows:
Strengths:
♣ The biggest strength of Big Bazaar is EDLP- Every Day Low Price concept. It has been
positioned as ‘Is se sasta aur acha kahin nahi,’ (Nothing cheaper and better anywhere)
indicating the value of stores.
♣ They launched Big-Bazaar a hypermarket with over 1, 70,000 products as the first offering
in value retailing segment.
♣ Products are cheaper than the market price by as much as 5 to 60%. Apparels are cheaper
by 25 to 60% while the price difference on the other products varies between 5 to 20%.
♣ Big-Bazaar has been positioned to the customer as a place where the customer can shop for
each & everything for which if goes to a market. It stocks over 200,000 products that include
apparel, food products, home appliances and cosmetics.
♣ They have also launched private label initiative in Big-Bazaar. Understanding of the
apparel industrial, decades of experience & a vertically integrated structure provides with
more compelling reasons to expand the number of private labels.
♣ It is growing at a fast pace. Spread across different cities in India.
♣ Point-of-purchase promotions to increase purchases
♣ It has many outlets all over India. It has a good customer base.
10. Weakness:
♣ Big Bazaar has not yet trapped the whole market.
♣ Facing problems due to political environment
Opportunities:
♣ Huge untapped market
Threats:
♣ Competition from organized retail players which are in market and emerging like Reliance,
shopper’s stop, Wal-Mart
♣ Competition from local retailers and unorganised retail market of India
POSITIONING STRATEGY
High Service
Low Service
High PriceLow Price
High Value
Position
Low Value
Position
Price Oriented
Position
Service Oriented
Position
Target customers
Big Bazaar targets higher and upper middle class customers because there has been growth
in Indian middle class that has so far been used to buying apparel and groceries from small
and cluttered neighbourhood market shops is fast realizing the joys of visiting malls that
have redefined the freedom to shop and entertain. Such malls are the new temples of leisure
and weekend entertainment. India’s National Council for Applied Economic Research
estimates that the nation’s middle class population currently comprises about 17 million
households i.e. 90 million people, with annual earnings ranging between $4,500 and
$22,000. An additional 287 million could be termed as “aspirers” or those that hope to join
the middle class in the near term. Rising incomes, particularly in the lower and middle-
income households, are impacting retail growth in India as these groups tend to spend more
on upgrading and diversifying their lifestyles, eating out and moving on to processed and
convenience foods.
11. The large and growing young working population is a preferred customer segment for Big
bazaar. These young people are early adopters of most modern product lines.
The on-going boom in sectors such as information technology and business process
outsourcing has created a clientele with high disposable income and an increased demand
for lifestyle merchandise such as watches, cosmetics and perfumes. This is a much-travelled
and brand-savvy urban population.
Thus, on the basis of the above analysis, we can find out the Order Winner and the
Order Qualifiers of Big Bazaar
Order Winner
Low Price is the principal value proposition at these stores. “Is se sastaauracchakahinnahi”.
Nothing captures the spirit of Big Bazaar better than this one liner. It is a simple statement
and yet it positioned at the top of Indian customers mind. They buy directly from source in
bulk so that they can get best rates by keeping the margin low.
Order Qualifiers
• Product Variety: A big driver of the Big Bazaar is the product variety. This is
achieved by selling wide range of products & through the “Shop-in-Shop” format. As
a result, a typical Big- Bazaar comprises shops that stocks medicines, optical
accessories, camera rolls, bakery products, dry fruits, crockery, glassware, health &
beauty products, ladies accessories, electronics infant necessities, watches, clocks,
computer accessories, food & beverages, stationary, readymade garments, household
appliances, home furnishings, baggage. This is a win-win situation as the customer is
assured of product availability, the shop owner can benefit of the in structure & Big
Bazaar enjoys assured income without needing to stock inventory. Also the shop-in-
shop offering is able to increase the customer traffic in to the stores.
• Service: Though service is not their top priority, they provide satisfactory service for
it to account as an order qualifier. They believe in service and value for the customers.
They consider that it is their only duty to keep customer in mind at every step. Big
Bazaar provides a wide range of services to its customers like Trial rooms, elevators,
car parking, security, baggage counter, trolleys so that one could shop easily. They
even provide them with after sale services in case of buying electronic items. Big
Bazaar provides good employee service i.e. their salesmen are always ready to
provide help.
12. ASPECT OF OPERATIONS MANAGEMENT UNDER STUDY
Facility Location
Being in the right location is a key ingredient in a business's success. If a company selects the
wrong location, it may have adequate access to customers, workers, transportation, materials,
and so on. Consequently, location often plays a significant role in a company's profit and
overall success. A location strategy is a plan for obtaining the optimal location for a company
by identifying company needs and objectives, and searching for locations with offerings that
are compatible with these needs and objectives. Generally, this means the firm will attempt to
maximize opportunity while minimizing costs and risks.
A company's location strategy should conform with, and be part of, its overall corporate
strategy. Hence, if a company strives to become a global leader in telecommunications
equipment, for example, it must consider establishing plants and warehouses in regions that
are consistent with its strategy and that are optimally located to serve its global customers. A
company's executives and managers often develop location strategies, but they may select
consultants (or economic development groups) to undertake the task of developing a location
strategy, or at least to assist in the process, especially if they have little experience in
selecting locations.
Formulating a location strategy typically involves the following factors:
1. Facilities. Facilities planning involves determining what kind of space a company will
need given its short-term and long-term goals.
2. Feasibility. Feasibility analysis is an assessment of the different operating costs and
other factors associated with different locations.
3. Logistics. Logistics evaluation is the appraisal of the transportation options and costs
for the prospective manufacturing and warehousing facilities.
4. Labor. Labor analysis determines whether prospective locations can meet a company's
labor needs given its short-term and long-term goals.
5. Community and site. Community and site evaluation involves examining whether a
company and a prospective community and site will be compatible in the long-term.
6. Trade zones. Companies may want to consider the benefits offered by free-trade
zones, which are closed facilities monitored by customs services where goods can be
brought without the usual customs requirements. The United States has about 170
free-trade zones and other countries have them as well.
7. Political risk. Companies considering expanding into other countries must take
political risk into consideration when developing a location strategy. Since some
countries have unstable political environments, companies must be prepared for
upheaval and turmoil if they plan long-term operations in such countries.
8. Governmental regulation. Companies also may face government barriers and heavy
restrictions and regulation if they intend to expand into other countries. Therefore,
companies must examine governmental—as well as cultural—obstacles in other
countries when developing location strategies.
9. Environmental regulation. Companies should consider the various environmental
regulations that might affect their operations in different locations. Environmental
regulation also may have an impact on the relationship between a company and the
community around a prospective location.
13. 10. Incentives. Incentive negotiation is the process by which a company and a community
negotiate property and any benefits the company will receive, such as tax breaks.
Incentives may place a significant role in a company's selection of a site.
Depending on the type of business, companies also may have to examine other aspects of
prospective locations and communities. Based on these considerations, companies are able to
choose a site that will best serve their needs and help them achieve their goals.
COMPANY REQUIREMENTS
The initial part of developing a location strategy is determining what a company will require
of its locations. These needs then serve as some of the primary criteria a company uses to
evaluate different options. Some of the basic requirements a company must consider are:
• Size. A company must determine what size property or facility it needs.
• Traffic. If it is in the service business, a company must obtain statistics on the amount
of traffic or the number of pedestrians that pass by a prospective location each day.
• Population. Whether a service or manufacturing operation, a company must examine
the population of prospective locations to ensure that there is a sufficient number of
potential customers (if a service business) or a sufficient number of skilled or
trainable workers. In addition, manufacturers also benefit from being close to their
customers, because proximity to customers reduces shipment time and increases
company responsiveness to customers.
• Total costs. Companies must determine the maximum total costs they are willing to
pay for a new location. Total costs include distribution, land, labor, taxes, utilities,
and construction costs. More obscure costs also should be considered, such as
transportation costs to ship materials and supplies, and the loss of customer
responsiveness if moving further away from the customer base.
• Infrastructure. Companies must consider what their infrastructure requirements will
be, including what modes of transportation they will need and what kinds of
telecommunications services and equipment they will need.
• Labor. Companies must establish their labor criteria and determine what kind of labor
pool they will need, including the desired education and skilled levels.
• Suppliers. Companies must consider the kinds of suppliers they will need near their
locations. In addition, having suppliers nearby can help companies reduce their
production costs.
Besides these basic requirements, companies must take into consideration their unique
requirements of prospective locations. These requirements may correspond to their overall
corporate strategy and corporate goals and to their particular industries.
14. Layout Planning
Definition: A layout is the physical configuration of departments, workstations, and
equipment in the conversion process. It is arrangement of physical resources used to create
the product.
Success of operations depends on the physical layouts of the facilities, Flow of raw material.
Productivity and human relationship are all affected by the arrangements of the conversion
facilities.
Facility layout involves:
i) Planning and arranging facilities
ii) Improvements in existing layout to introduce new methods.
Layout decisions have long term consequences on cost and companies’ ability to serve the
customers.
Major objectives of layout
i) Providing enough production capacity
ii) Reducing material handling costs
iii) Easy supervisions
iv) Improvement in productivity
v) Efficient utilization labor
vi) Increase in morale of the employees
vii) Reducing accidents and hazards to personnel
viii) Reducing congestion
ix) Utilizing the space efficiently and effectively.
Factors Affecting Layout
1. Material – materials need storage. Layout should cater to storage and transportation of
materials.
2. Product – Layout should suit to the nature of product and its method of production i.e.
aircraft manufacturing and car manufacturing layouts will be different. Sales also
affect the layout.
3. Machinery – Size of machinery based on product, its volume and labour, affects the
layout.
4. Labor – Movement of workers, facilities for workers like canteen, toilet, restroom etc.
affects the layout
5. Location – Type of building depends on the soil condition. Location decides the
transportation and layout plan has to take care of this aspect.
6. Managerial policies – top management decides the layout objectives
7. Type of industry
15. Criteria for Good Layout
1. Flexibility
2. Maximum coordination
3. Maximum visibility
4. Maximum accessibility
5. Minimum distance
6. Minimum handling
7. Minimum discomfort- proper light, ventilation etc.
8. Inherent safety
9. Efficient process flow
10. Identification –provision of space to workers.
Types of Layouts
The layouts are differentiated by the types of workflow they entail, and workflow in turn is
dictated by the nature of product. Basic layouts are :
1. Process layout
2. Product layout
3. Grouping technology layout
4. Fixed position layout
5. Hybrid layout
16. Supply Chain Management
Supply Chain, also referred to as the logistics network, includes suppliers, manufacturers,
warehouses, distribution centres and retail outlets or “facilities”. It also includes the raw
materials, work in progress (WIP) inventory and finished products that flow between the
facilities.
A typical supply chain looks like:
Supply Chain Management can be defined as "design, planning, execution, control, and
monitoring of supply chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing supply with
demand and measuring performance globally."
In other words, supply chain management is the management of a network of interconnected
businesses involved in the ultimate provision of product and service packages required by
end customers. Supply chain management spans all movement and storage of raw materials,
work-in-process inventory, and finished goods from point of origin to point of consumption.
Supply Chain Management can be further defined as a set of approaches used to efficiently
integrate
– Suppliers
– Manufacturers
17. – Warehouses
– Distribution centers
So that the product is produced and distributed
– In the right quantities
– To the right locations
– And at the right time
System-wide costs are minimized and
Service level requirements are satisfied
Supply chain management must address the following problems:
• Distribution Network Configuration: number, location and network missions of
suppliers, production facilities, distribution centres, warehouses, cross-docks and
customers.
• Distribution Strategy: questions of operating control (centralized, decentralized or
shared); delivery scheme (direct shipment, pool point shipping, cross docking, direct
store delivery, closed loop shipping), mode of transportation (motor carrier, including
truckload, parcel, railroad), intermodal transport, ocean freight, airfreight,
replenishment strategy and transportation control (owner-operated, private carrier,
common carrier, contract carrier).
• Trade-Offs in Logistical Activities: The above activities must be well coordinated in
order to achieve the lowest total logistics cost. Trade-offs may increase the total cost
if only one of the activities is optimized. It is therefore imperative to take a systems
approach when planning logistical activities. These trade-offs are key to developing
the most efficient and effective Logistics and SCM strategy.
• Information: Integration of processes through the supply chain to share valuable
information, including demand signals, forecasts, inventory, transportation, potential
collaboration, etc.
• Inventory Management: Quantity and location of inventory, including raw materials,
work-in-process (WIP) and finished goods.
• Cash-Flow: Arranging the payment terms and methodologies for exchanging funds
across entities within the supply chain.
Importance of Supply Chain Management:
• Dealing with uncertain environments – matching supply and demand.
• U.S. firms spent $898 billion (10% of GDP) on supply-chain related activities in 1998
• Shorter product life cycles of high-technology products
o Less opportunity to accumulate historical data on customer demand
o Wide choice of competing products makes it difficult to predict demand
• The growth of technologies such as the Internet enable greater collaboration between
supply chain trading partners
o If you don’t do it, your competitor will
o Major buyers such as Wal-Mart demand a level of “supply chain maturity” of
its suppliers
• Availability of Supply Chain Management technologies on the market
18. o Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards)
with which to integrate internal processes
Inventory Management
In any business or organization, all functions are interlinked and connected to each other and
are often overlapping. Some key aspects like supply chain management, logistics and
inventory form the backbone of the business delivery function. Therefore these functions are
extremely important to marketing managers as well as finance controllers.
Inventory management is a very important function that determines the health of the supply
chain as well as the impacts the financial health of the balance sheet. Every organization
constantly strives to maintain optimum inventory to be able to meet its requirements and
avoid over or under inventory that can impact the financial figures.
Inventory is always dynamic. Inventory management requires constant and careful evaluation
of external and internal factors and control through planning and review. Most of the
organizations have a separate department or job function called inventory planners who
continuously monitor, control and review inventory and interface with production,
procurement and finance departments.
Defining Inventory
Inventory is an idle stock of physical goods that contain economic value, and are held in
various forms by an organization in its custody awaiting packing, processing, transformation,
use or sale in a future point of time.
Any organization which is into production, trading, sale and service of a product will
necessarily hold stock of various physical resources to aid in future consumption and sale.
While inventory is a necessary evil of any such business, it may be noted that the
organizations hold inventories for various reasons, which include speculative purposes,
functional purposes, physical necessities etc.
From the above definition the following points stand out with reference to inventory:
• All organizations engaged in production or sale of products hold inventory in one
form or other.
• Inventory can be in complete state or incomplete state.
• Inventory is held to facilitate future consumption, sale or further processing/value
addition.
• All inventoried resources have economic value and can be considered as assets of the
organization.
Different Types of Inventory
Inventory of materials occurs at various stages and departments of an organization. A
manufacturing organization holds inventory of raw materials and consumables required for
production. It also holds inventory of semi-finished goods at various stages in the plant with
19. various departments. Finished goods inventory is held at plant, FG Stores, distribution centres
etc. Further both raw materials and finished goods those that are in transit at various locations
also form a part of inventory depending upon who owns the inventory at the particular
juncture.
Finished goods inventory is held by the organization at various stocking points or with
dealers and stockiest until it reaches the market and end customers.
Besides Raw materials and finished goods, organizations also hold inventories of spare parts
to service the products. Defective products, defective parts and scrap also form a part of
inventory as long as these items are inventoried in the books of the company and have
economic value.
Types of Inventory by Function
20. Queuing Time
One of the most important areas in Operations Management is to understand the waiting lines
or queues and learn how to manage them. The central problem in virtually every waiting line
situation is a trade-off decision. The manager must weigh the added cost of providing more
rapid service against the inherent cost of waiting.
The figure above shows the essential trade-off relationship under typical (steady-state)
customer traffic conditions. Initially, with minimal service capacity, the waiting line cost is at
a maximum. As service capacity is increased, there is a reduction in the number of customers
in the line and in their waiting times, which decreases waiting line cost. The variation in this
function is often represented by the negative exponential curve. The cost of installing service
capacity is shown simplistically as a linear rather than step function. The aggregate or total
cost is shown as a U-shaped curve, a common approximation in such equilibrium problems.
The idealized optimal cost is found at the crossover point between the service capacity and
waiting line curves.
The queuing systemconsists essentially of three major components: (1) the source population
and the way customers arrive at the system, (2) the servicing system, and (3) the condition of
the customers exiting the system.
CUSTOMER ARRIVALS
Arrivals at a service system may be drawn from a finiteor an infinitepopulation. The
distinction is important because the analyses are based on different premises and require
different equations for their solution.
21. A finite populationrefers to the limited-size customer pool that will use the service and, at
times, form a line. An infinitepopulationis large enough in relation to the service system so
that the population size caused by subtractions or additions to the population does not
significantly affect the system probabilities.
DISTRIBUTION OF ARRIVALS
When describing a waiting system, we need to define the manner in which customers or the
waiting units are arranged for service.
Waiting line formulas generally require an arrival rate,or the number of units per period (such
as an average of one every six minutes). A constantarrival distribution is periodic, with
exactly the same time between successive arrivals. In productive systems, the only arrivals
that truly approach a constant interval period are those subject to machine control. Much
more common are variable (random) arrival distributions.
In observing arrivals at a service facility, we can look at them from two viewpoints:
First, we can analyze the time between successive arrivals to see if the times follow some
statistical distribution. Usually we assume that the time between arrivals is exponentially
distributed. Second, we can set some time length (T) and try to determine how many arrivals
might enter the system within T. We typically assume that the number of arrivals per time
unit is Poisson distributed.
SERVICE TIME DISTRIBUTION
Another important feature of the waiting structure is the time the customer or unit spends
with the server once the service has started. Waiting line formulas generally specify service
rateas the capacity of the server in number of units per time period (such as 12 completions
per hour) and not as service time, which might average five minutes each. A constant service
time rule states that each service takes exactly the same time. When service times are
random, they can be approximated by the exponential distribution.
LINE STRUCTURES
As shown in the figure below, the flow of items to be serviced may go through a single line,
multiple lines, or some mixtures of the two. The choice of format depends partly on the
volume of customers served and partly on the restrictions imposed by sequential requirements
22. governing the order in which service must be performed. It can be classified into the
following five categories:
• Single channel, single phase
• Single channel, multiphase
• Multichannel, single phase
• Multichannel, multiphase
• Mixed
EXIT
Once a customer is served, two exit fates are possible: (1) The customer may return to the
source population and immediately become a competing candidate for service again or
(2) There may be a low probability of reservice.
23. LOCATION PLANNING – BIG BAZAAR
The choice of location for Big Bazaar will have a major impact on how it performs how its
layout should be designed etc. The difference between selecting the wrong location and the
right site could be the difference between failure and success of Big Bazaar in that area.
Before choosing a location, Big Bazaar defines how they want to see their business, both now
and in the future.
• What Customers are they targeting?
o Because it is of Prime importance for choosing the location. Based on this the
location would be selected.
• How they want their building to be?
o Whether the locality that they have chosen has the space for a wider spread
store or to have a multi-story building i.e. spreading vertically
• Which products/segments they wish to sell to the targeted customer?
o It helps in deciding the location and type of assortment that facility would
have.
It is the answers to these basic questions that help them to find the perfect location for
generating the maximum amount of profit and successful operations.
Type of Goods
Big Bazaar is a mix of convenience store and a shopping store. Therefore it would require
easy access, allowing the customer to quickly make a purchase but the concept of Big Bazaar
is different from that of a typical convenience store as it has the elements of a shopping store
also. The products vary from low priced convenience goods to higher priced goods and
speciality goods like Furniture, Electronics, Upscale clothing’s etc; Therefore Big Bazaar are
generally located in a Shopping Mall ‘s because people are willing to have that complete
shopping experience of different products and variable prices and are ready to travel a
distance if they have to.
Population and Your Customer:
The choice of area’s/cities where to locate Big Bazaar is determined by the area’s population,
income and age. The location demographics are arranged from the chamber of commerce or
the Census Bureau. Big Bazaar is targeting Tier I and Tier II cities as of now.
At VasantVihar the location is surrounded by affluent customers so that have chosen
Ambience mall in order to cater their needs
Accessibility: Don't confuse a lot of traffic for a lot of customers. Therefore Big Bazaar
wants to be located where there are many shoppers but only if that shopper meets the
definition of their target market. The other important criteria are:
24. • How many people walk or drive past the location.
o Ambience mall is quite a famous destination for shopping in the nearby areas
• Is the area served by public transportation?
o It is well connected with the rest of the city
• Can customers and delivery trucks easily get in and out of the parking lot?
o It’s a relatively less dense area in terms of population and transportation is
easier
• Is there adequate parking?
o As it’s a big mall, so there is multi-level underground parking for the
customers.
Signage, Zoning and Planning
First step in this is to contact the local city hall and zoning commission for information on
regulations regarding signage. And to enquire about any restrictions that may affect the retail
operation and any future planning that could change traffic, such as highway construction etc.
Big Bazaar has to take care of government rules and regulation regarding the signage and
other advertisement methods.
Competition and Neighbours
Other area businesses in the prospective location can actually help or hurt the business.
Therefore they determine if the types of businesses nearby are compatible or not.
Location Costs
Besides the base rent, all types of costs are considered before choosing the location:
• Who pays for building maintenance, utilities and security?
• Who pays for the upkeep and repair of the heating/air units?
• If the location is remote, how much additional marketing will it take for customers to
find you?
• How much is the average utility bill?
• Will you need to make any repairs, do any painting or re-modelling to have the
location fit your needs?
• The applicable property taxes
Big Bazaar needs to provide the shoppers the cheapest price so it has to manage its cost and if
location is expensive than they would be having a high fixed cost which may be difficult to
recover with low margins on the products.
So while deciding the location Big bazaar plan it well before the area gets developed, so it
gets it at cheaper price.
25. Special Considerations
• Are restrooms for staff and customers available?
• Is there adequate fire and police protection for the area?
• Is there sanitation service available?
• Does the parking lot and building exterior have adequate lighting?
• What is the crime rate in the area?
ANALYSIS OF STORE LAYOUT AT BIG BAZAAR
Store layout is the term used to refer the interiors and the allocation or the plan in which the
products are displayed in the store .It is quite imperative for the retailers to understand the
customer and prepare a customer friendly layout.
A customer friendly layout gives an impetus to the shopper to spend more time in the store
hence increasing the chances of shoppers buying more merchandise. In the case of India
many of the independent retailers do not have or have limited spaces for customer movement.
But on the other hand, many organized retailers provide adequate space within the store for
shoppers and create layouts that facilitate a definite pattern of customer traffic .In other
words; the layout creates 'Aisles' so that the shopper can move on a predefined path inside the
store.
Layout planning caters to decisions about nature of traffic flow, kinds of product, space
available and maintenance of the space on a daily basis.
Store layout is one of the many facets of Retail Atmospherics and it is significant as it plays a
part in the cost incurred by the retail firm and also the general brand communication of the
store.
Structure
The structure of Big Bazar in VasantKunj, comprises of 2 floors and is as follows
Ground Floor
• Home care
• Personal care
• Ready to cook
• FMCG
• Staples bakery
• Stationary
Level 1
• Furniture bazaar
26. • Electronic bazaar
• Home section (pillows, cots, stationary)
• Jewellery
• Infant wear
• Kids wear
• Ladies western wear
• Men’s casuals
• Sports goods
Merchandise: Main objective of the store layout is to maximize the interface between
customers and merchandise. It provides easy accessibility to the customers to view the
offerings of the store. Layout of the store has been strategically designed in order to make
effective use of merchandise and passage to draw customers’ attention on store’s offerings
Big Bazaar has a wide range of merchandise they have both branded and unbranded products
like :
• Home line items: Like bed sheets, pillow covers, carpets to kitchen utility items like
steel utensils and crockery and other minor utility items required in a house
• Electronic items: like refrigerator,T.V, vacuum cleaner , music system, vacuum
cleaner, washing machine etc
• Mobile Zone: A wide range of mobile phones and accessories is available at lowest
possible price
• Furniture: All kinds of furniture are available that one may require for decorating
their house.
• Opticians: In this section all brands and types fashion glasses are available
• Men, Ladies and kids wear: This section includesfashion and casuals wear for men
ladies and kids both branded and unbranded.
• Foot wear: In this section footwear for men women and kids is made available.
• Music:A wide collection of CDs DVDs is made available
• Toys: All kinds of toys for children is available
• Stationary: all kind of office stationery and stationery for school going kids is
available
Interior design
27. The interior of a Big Bazaars comprises of the living space of the store which includes
ceiling, walls, flooring and lighting, fixture and fittings” The elements of the interior design
are selected economically. The general design of the interior is in uniform with the exterior.
The interior design of BigBazar is very vibrant they have a colour combination of vibrant
colors like blue and orange that leaves an impression on Indian minds. The interior of big
bazaar is truly designed as Indian hyper market that promises one stop shopping. It is
designed as agglomeration of bazaars with different sections selling different categories. The
“U” shaped section and islands have proved to be more appropriate for Indian context than
long aisle
Exterior design: The exterior design of Big bazaar is easily visible from the distance and it
can be distinguished from its competitors. The exterior is attractive enough to encourage
customers to enter in to the store. Big bazaar uses harmony between the elements of the
exterior of the store in order to deliver desired store image. Window display is used as an
effective medium to introduce new offerings of the company, so special attention is given in
designing windows of the store. The entrance of the store is designed to welcome shoppers
and to provide easy accessibility.
Service: Big Bazaar provides a wide range of services to its customers like Trial rooms ,
elevators, car parking , security, baggage counter , trolleys so that one could shop easily
They even provide them with after sale services in case of buying electronic items. One of the
major services provided by them is one stop shop as one could get a whole range of items
under one shop and at the most reasonable price. They always have their outlets in such a
location where it is easy to commute.
28. Salient features
• People often complain that Big Bazaar outlets always look very crowded. But few
realize that it is concisely designed to look just like that. When the shop looks neat
and empty, the masses never walk into it. There has to be what is called the ‘button
brush effect’, and an ‘organized chaos’. As Indians, we like bumping into people,
chatting, gossiping and eating while we shop!
• Big Bazaar layout consists of layout of long rows of parallel fixtures; with no aisles
because aisles can be boring they restrict space and can’t be dramatized. At Big
Bazaar, they create multiple cluster or mini-bazaars within every store. It was
designed as an agglomeration of bazaars with different sections selling different
categories’
o “It uses space efficiently.
o It provides easy sitting of merchandise and linking of the product throughout
the store.
o It allows more customers in the store at any time.
o Allows staff of the store to work easily alongside the customers without
disturbing them.
o Provide self-service atmosphere
29. • While displaying the assortment, Big Bazaar takes care of the needs of a family and
an individual in order they require them in a day for e.g. At the starting of the display
they have personal care items like shaving kits , soaps etc than the breakfast items like
cereals , milk, flakes. Thencomes the lunch section and so on.
• Stationary has been kept at the end of the store so that parents get enough time to shop
while they take their children up to the stationary section.
• Top and bottom of the shelves are for storage purpose or for the bundled products.
• Shelves 2, 3 and 4 are at the eye sight of the customer so gives maximum visibility of
the product to the customer. Each company is assigned its share of shelves (SOS).
• For the convenience of the customer 50 billing counters have been placed.
• Certain items have been placed near the billing counter for e.g. bottles , gloves etc. for
which customer makes a decision at the time of his bill payment and when he is
waiting at the billing counter. It is known as Impulse buying.
They have given major emphasis to provide convenience to customers in which layout has
played a major role. The layout of the store is so effective that customers find their way out
of what they want. Big Bazaar provides good employee service i.e. their salesmen are always
ready to provide help. Employee service is often neglected as part of good retail marketing
but customer and employee interaction can be used as the significant tool for retail marketing.
30. ANALYSIS OF INVENTORY MANAGEMENT AT BIG BAZAAR
Since the management at Big Bazaar was not ready to reveal the quantitative data with
respect to their handling cost, order cost, etc., we have done a qualitative analysis of the
inventory management at Big Bazaar stores with the information gathered by enquiring the
management about the same.
Product categories in Big Bazaar
Big Bazaar generally deals in national level brands like Lee, Levis etc. Other than this they
also deal in some Private label brands DJ&C in apparel, KORIA in electronics etc. The
product categories are: FMCG, FOOD & NON- FOOD junction, Staple items , fruits &
vegetables, fashion & apparels, chill section, home decorator, footwear, book zone, CDs etc
Types of inventories maintained
The inventories maintained in the outlet are different for different product categories.
Mainly Cycle inventory is maintained for FMCG product category & Food Category, Safety
level of inventory for FMCG Products, and for Apparel, Seasonal inventory is maintained,
because of fluctuation in demand.
Decision of how inventories are maintained
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 has also seen the trends in the requirement of
inventories, for e.g., that apparel 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 is required, they first ask other nearby Big Bazaar
locations. 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.
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.
Reorder points of inventories
Big Bazaar has no specific reorder points. Orders are placed as and when required. However,
there are such measures 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.
Uncertain demands of customers
The 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.
Supply chain of perishable and imperishable goods
Perishable goods like vegetables are maintained with great care. Vegetablesare bought on
daily basis on the basis of demand. Also, damaged vegetables are sold at a low cost to some
otherchannels. Whereas imperishable goods like utensils and staple goods andelectronic
items are brought more infrequently. The distribution channel used insupply chain process
31. operated by Central Distribution Channel. From there goods are supplied to every Big Bazaar
Store.
The modes of transportation which are used in supply chain process are Truck & Rails, but in
case of emergency, flights are also being used. The transportation is outsourced. Mainly the
carriers for Big Bazaar are Quick & Safe, Gati, Deluxe Roadways, and TNT.
is
Quality of Food-items
Food items are kept in a separate place, both in inventory and at store. Food items which are
required to be kept at cold places, like cold-drinks, cheese, milk products, milk, fruits, etc. are
kept in refrigerators, whereas those which can be kept anyway, are kept on proper shelves.
Conclusion
We have found that Big Bazaar’s inventory is well equipped and their cost is under their
control due to the short cycle time of ordering and buffering. Their inventory cost is very
high because of their stocking of various products. Their product range varying from mere
Rs.5 to Rs.50,000. Hence their range satisfies one and all.
If they see any fundamental changes in the demand of the products, be it desired or
undesired, their inventory is quickly refilled which is one of their strengths and also they
take less than a day to fully make their inventory a wide spectrum.
32. ANALYSIS OF SUPPLY CHAIN AT BIG BAZAAR
Being responsible for procuring the stock of all the products of the different departments, it is
the most important department of Big Bazaar. The department receives the goods from the
warehouse. The department receives the stock of different goods and verifies the quantity and
quality of the goods with the particulars given in the ‘Goods Received Statement’ which it
receives along with the stock.
It then checks for any damage in the stock received. If there is no damage in the stock, after
recording in the ‘Stock Inward Register’ dispatches the goods to the respective department
taking the signature of the Departmental Manager.
On the other hand, if there is a damage in the goods or if the goods do not match the details
given in the ‘Goods Received Statement’, it enters the ‘Stock Outward Register’ and sends it
back to the warehouse along with a ‘Goods Returned Note’, giving full information regarding
the reason for returning back the goods and the defect or damage in the goods.
The department receives two truckloads of stock every day. It is the respective departmental
managers who place an order to the Zonal head office through e-mail for stock of goods when
they feel that the stock has to be replenished.
The department works in complete coordination with all the other departments to ensure that
the stocks are received and maintained properly continuously for the smooth functioning of
Big Bazaar and avoid any inconvenience to the customers.
Managing the Supply Chain at Food Bazaar
The figure above shows the supply chain at Food Bazaar.
Food Bazaar
33. As it is depicted, the products leaving one of the manufacturer’s factories are being shipped
to Clearing and Forwarding (C&F) agent in a particular state. C&F agents act as an interface
between the manufacturer and the state government. Logistics has to be coordinated at the
state level because certain taxes and duties have to be paid on all merchandise shipped into
each state. The C&F agent is typically a local entrepreneur who is familiar with the local state
government and is usually paid a per ton handling charge of approximately 1% of company
sales.
C&F agent typically do not have the ability to service a large number of small retail outlets.
This is done by a distributor who takes supplies from the C&F agent. Distributors operate on
low gross margins (roughly 4.75% of sales to a traditional retailer, lower for modern retailers)
and achieve net margins of approximately 0.5% of sales.
Distributors sell to three types of clients: wholesalers that sell to smaller retailers in cities and
in rural areas, large traditional retailers and small modern-trade retailers, like Food Bazaar.
Traditional retailers operate on approximately 8% gross margins. Modern Retailers like Food
Bazaar are able to obtain better terms because branded manufacturers recognize that these
retailers are vital to sustaining growth in many product categories and consumer segments.
Hence, in addition to the 8% gross margin that a traditional retailer desire, Food Bazaar
receives 1%-2% of sales for “display income”, a 4% discount from the manufacturer, and a
3% discount from the distributor (that also includes a 2% quantity discount). Food Bazaar’s
total gross margin (not including display income) is approximately 15%.
34. QUEUING TIME AT BIG BAZAAR
Queuing (Waiting line) in BIG BAZAAR is an example of a multiple-channel; single-phase
model. A single line of customers queues to multiple servers in parallel. Its assumptions are:
• Two or more independent servers serve a single waiting line
• Poisson arrivals, exponential service, infinite calling population
• The number of channels x the service rate must exceed the arrival rate, sm> l
• The operating characteristics for the multiple-server model can be computed using the
following equations:
35. From our findings in Big Bazaar, DLF Promenade, VasantKunj we found out that,
Arrival rate (l, lambda) = 300 customers per hour
(For simplicity of calculation we use 280 customers per hour)
Service Rate (m, mew) = 15 minutes for 7 customers on an average (i.e. 28 customers per
hour)
Number of counters = 15
Using the above equations we find that,
Probability that no customers are in the system P0 = 0.000041119
Probability of exactly n = 10 customers in the system Pn= 0.11331314
Average number of customers in the system L = 10.1886666
Average number of customers in waiting line Lq = 0.1886666
Average time a customer spends in the system W = 0.03638809 hrs = 2.18329 minutes
Average time a customer spends waiting in line to be served Wq = 0.00067381 hrs
= 0.04043 minutes
The target for the Big Bazaar (as told to us by the manager) was to make the average time
that a customer spends in the system to be less than 2 minutes (The value calculated using the
equation above comes out to be 2.183 minutes). This can be done by increasing the number
of cash counters, but again costs are involved with that. So the decision to increase the
number of cash counters involves convenience for customers on one hand and additional
costs on the other hand which impacts profitability. The decision is to be taken by the
manager to go with which solution.
36. PROBLEMS BEING FACED BY BIG BAZAAR AND PROBABLE SOLUTIONS
FDI:
With India on the cusp of allowing FDI in multi brand retailing in India pending clearance
from the parliament it brings a huge challenge for Indian retailers as it would open the flood
gates for the International giants like Wal-Mart, Carrefour, Target, etc to enter the Indian
retail market.
This would lead to an increase in the competitive environment of the retail industry and this
change in the environment is something that Big Bazaar would have to deal with in the
future.
This is potentially going to be the biggest challenge that Big Bazaar is going to have to
handle in the years to come and the only way that this can be achieved is through operational
excellence which would allow them to continue with their model of Every Day Low Prices
(EDLP) and keep this model profitable.
The probable entry of FDI and thus increased competition in the industry can be taken care of
by leveraging the already existent robust supply chain management that Big Bazaar has and
leveraging this advantage. Big Bazaar can use the knowhow of Indian environment and the
Indian customer to create its own niche in the huge Indian market.
Innovations like the “bazaar” style layout of their stores that keeps Indian consumers in an
environment that they are used to and thus keep coming back.
Other innovations like the use of RFID (started by Big Bazaar for Indian retail) and use of
SAP would be an advantage as they were an advantage in the past.
Retailers’ margin being cut by manufacturers.
Retailers’ margin is being reduced by the manufacturers, this in essence would not allow for a
decent enough price bracket that would allow them to continue with low prices and also make
profits. The issue of margins being cut leaves very little scope for the retailers to give its
customer everyday low prices which in essence is the model being used by Big Bazaar.
Recently Reckitt Benckiser proposed to reduce the margin for their products from 13-14% to
3-4%.
Private labels can be a solution to this particular problem as it would allow some cover for
Big Bazaar while they try to negotiate with the manufacturers.
Private labels can only be successful if there is a strong link with suppliers and a strong
supply chain to complement this strong relationship with the channel partners.
Also the private labels will allow for lesser priced goods to the customers.
37. Sustainability:
“Climate change is one of the greatest challenges facing the world today. Future Group
strives to reduce environmental impact and optimize energy consumption in its stores and
strengthen green considerations in logistics operations. Our endeavour is to promote eco-
friendly products and raise awareness on environmental issues both internally and
externally.” -Future group website.
One of the problems being faced by the firm is the problem of making the operations
sustainable.
Sustainability in operations will be achieved through:
1) Using energy efficient lighting at stores
2) Developing organic products
3) Using reusable shopping bags
4) Developing strict supplier quality standards
5) Using and selling recyclable products
6) Developing a packaging scorecard for suppliers where they are rated on the quality of
packaging used by their suppliers
7) Training suppliers and developing common standards for all operations in the value
chain
Problems of operations management:
Queuing time:
It is observed that the queuing time is increased during the rush hour.
The queuing time can be reduced in the rush hours by having dedicated bays.
Bays like 3 items or less would help reduce the wait time for the customers who have fewer
items.
Dedicated bays of 3 items or less would direct the traffic to these bays thereby reducing the
queuing time.
Billing time:
The billing time can be reduced by increasing the number of cash counters. A change in the
layout at exit would allow for increased checking counters to be added at the end.
Improvements in signage:
Despite the layout ideology of a “Bazaar” the signage can be improved so that customers who
actually know what they need.
38. Supply Chain Efficiency can be increased by:
Focused assortment.
Limiting the number of SKUs is the best way to maintain an efficient supply chain. Unlike
traditional supermarkets with an average product range of 10,000 food and non-food items, or
hypermarkets with as many as 50,000 items, Big Bazaar should offer reduced number of
products (as they doand reduce this number even more).
There are several advantages to this strategy. Within production and purchasing, the biggest
advantages are lower manufacturing costs due to larger volumes, more buying power per
SKU, and smaller procurement and logistics teams. In- and outbound logistics are
characterized by the likelihood of full truckloads, more cross-docking and full pallets, and the
need for fewer delivery windows. In distribution, commissioning and re-palleting are less
necessary, thus reducing the many complexities in storage and warehouse management. The
in-store advantages include increased productivity of workers (through more efficient
stocking methods), better use of space as inventory turns faster, and less need for backroom
storage.
Standardized outlets.
All Big Bazaar stores should be standardised in operations but allow for local assortment of
products. This would allow for standard procedures be adopted even though the product
assortment may be different. Standardised outlets would allow for standard process being
carried out throughout the value chain, be it warehousing or display on shelves of the stores.
Standardisation breeds efficiency.
Efficient replenishment.
Shelf-ready packaging (SRP) reduces handling and waste and has a positive impact on
branding. All new suppliers offer SRP as a base requirement. Using mixed cases and pallets
with different product variants in a single case allows for a wider product range without
increasing handling costs or shelf space. And a new trend is emerging: cross-category
"mixing," such as salad dressing and vanilla sauce.
Product presentation also is highly logistics driven. Products are often displayed on the floor
on pallets and retail-ready; half-sized pallets are used to further optimize floor space.
Improving presentation and replenishment can lead to significant cost savings because shelf-
refill costs differ depending on product presentation and retail formats. With canned foods,
for example, shelf-refill costs are about 3 percent of net sales for single article displays, about
2 percent for shelf-ready packaging, and about 1 percent for pallet displays
39. Consistent no-frills approach.
The warehouses should have increased bay sizez which is opposite to the Big Bazaar store
“bazaar” layout approach. The large floor space allows for the use of specially designed
forklifts that can take multiple pallets at a time.
Problems in implementing these changes
Size of Big Bazaar operations:
Big Bazaar operations are spread throughout the entire length and breadth of India and would
require a huge effort for implementing the intended changes. To show any significant reward
these changes have to be rolled out nationwide and that would require huge investments and
also a lot of time.
Private Labels:
Private labels as suggested to counter the manufacturers would require building up of new
capabilities and also do have the risk of the consumer being sceptical of the products running
with it. Also huge investments would be required for the development of the new capabilities.
Developing standards for Suppliers:
Suppliers who are an intrinsic part of the supply chain need to be educated about the new
standards that need to be followed for sustainability as well as increased efficiency but all
these processes while being developed with the supplier would lead to decreased efficiencies
in the short run. It is imperative that during this period Big Bazaar helps its suppliers to meet
the standards and does not abandon them.
