Chapter 1

Executive Summary
The warehouse or distribution centre plays a key role in an organizations logistical strategy, properly designed; planned, organized and managed distribution centre can offer higher levels of service with lower inventory and lower costs. It is a facility where goods are constantly moving towards their ultimate destination, thereby minimizing storage and its attendant costs. Warehousing is integrally involved in four distinct Supply-chain processes: sourcing/inbound logistics, processing/manufacturing, outbound distribution, and reverse logistics (returns, recycling etc.) Principle functions that takes place at warehouse are Receiving - that includes functions like quality and quantity checks, Storing - includes attendant task of moving goods from receiving to the storage location, Order Picking - includes transportation from storage to and order picking location and other tasks like further checking and packing and Dispatch which often includes staging or interim storage. This study on Warehouse Management in a Retail Industry was carried out at Pantaloon City Warehouse, which is located at Kondhwa Budruk, Pune. Pantaloon has a chain of retail stores all over India; now Pantaloon has its four retail stores in Pune. Stock replenishment to these four Pantaloon retail sites is done from Pantaloon City Warehouse, Kondhwa. In this study warehousing processes like Inbound- outbound processes, storage and material handling, cross docking, Goods receipt and reverse logistics implemented at pantaloon warehouse was studied. In Pantaloon City Warehouse finished goods like Apparels, Home accessories, Plastic items, Utensils, sports and toys are stored, these storage areas are divided as Central, Pantaloons Outlet, Home Solutions and Big Bazaar. During the study of warehousing activities, Material handling and storage systems at Big Bazaar Warehouse was observed. Inventory status at Big Bazaar warehouse was studied by classifying SKUs with respect to their categories and Stock status of each category items was observed. At Big Bazaar warehouse all merchandise items are kept in boxes on wooden pallets, for easy material handling and order picking manual tracking system is implemented. This study report would help to put light on Warehouse management processes and storage systems at Pantaloon warehouse.

Chapter 2

Objectives of the study.

This Study is an attempt to illustrate the warehouse management processes and practices in the Retail Industry including physical distribution The objective of warehouse Management Study is to know and understand warehouse processes such as Information Systems, GRN Accounting, Bar coding, Unitization, etc. This study is an attempt to minimize Storage and inventory carrying cost, Material handling and labor cost by analyzing flow of inventory at warehouse. To find out ideal systems in warehouse that will improve productivity through cost reduction. To recognize the strategic importance of storage and material handling in fulfilling the demand from retail site.

Chapter 2

Statement of the Problem.

1. Inventory Control: At Pantaloon City Warehouse, Category Management manages procurement of Inventory in PRIL; Category is responsible for replenishment of stock to Warehouses and retail sites, category gives allotment of finished goods to central warehouse or suppliers. Therefore, finished goods are received continuously at warehouse, without considering previous stock dump and non moving stock at Warehouse. There is lot of excess stock and non-moving stock lying at warehouse; at Big Bazaar warehouse, stock is not differentiated or identified as per their consumption value and monthly consumption. 2. Order Picking: As the finished goods are inwarded, the inwarded stock gets updated in ERP system and it is viewed at retail store and Stock Transport Order for replenishment of material is created against warehouse from retail store. When a staff from warehouse receives an order, order pick list is generated, which gives details about the product (article code, description, category etc.) to be dispatched, There are thousands of products with different SKUs and barcodes (article codes) at Big Bazaar Warehouse, and after receiving stock transfer order for a particular item, it is difficult to find out an item of particular description from storage area, as there are thousands of SKUs in warehouse this material is to be taken from the storage area. In storage area the material is kept category wise, as per the merchandise category of the product, but it is practically time consuming to take out goods with particular description and article code from boxes, thus the material to be dispatched is taken out from the storage area, scanned and delivery challan is prepared. Due to in adequate storage space and storage equipments, this process consumes more time. 3. Optimum Utilization of Warehouse Space At Big Bazaar warehouse finished goods are stored on wooden pallets on warehouse floor horizontally, this space is inadequate to stag the stock available at warehouse, due to shortage of storage space, the finished goods boxes are required to place between aisle space and on the top of each other, this will led to damages and sometimes it is difficult to move material handling equipments during order picking and put away process. At Big Bazaar warehouse, finished goods after moving from the inwarding 3

Chapter 2 area, are packed in boxes as per the merchandise category and placed on wooden pallets, There are around 120 pallets placed on warehouse floor horizontally in the storage area, on each Pallet 18 boxes can be staged by placing boxes on each other, therefore in big bazaar warehouse approximately 2000 boxes can be placed for smooth movement of material and efficient functioning. Warehouse required holding more boxes, than the capacity of pallets. Due to such type of storage, material movement and material picking is very difficult, as there is no proper tracking system to find out a particular item code.

Chapter 2

Scope and Limitations of the Study

This study would help future managers to understand warehousing procedures and activities in Pantaloon Retail India Limited. This study would help to understand the relative importance of different processes in warehouse management. This study would help to increase usable capacity i.e. cubic capacity of warehouse and this will help to minimize warehouses operating cost. All the processes mentioned in study are practical practices observed in Pantaloon warehouse and Big Bazaar warehouse, for interpretation and analysis data from Big Bazaar warehouse, five months stock status report is used. The study and analysis for finished goods is done according to their product category and monthly consumption, as the study at item or SKU level will be very vast, consumption of products is determined from material outwarded to retail store. Procurement of finished goods and ordering cost for items at Big Bazaar is not studied as procurement is managed at Head Office through category management. In this study classification and identification of inventory levels is done to find out type and category of stock stored at warehouse.

Chapter 2

Introduction.
Warehouse management monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems and communication between product stations. Warehouse management deals with receipt, storage and movement of goods, normally finished goods to intermediate storage locations or to final consumer. Many retail organizations, have large chain of retail stores, flow of finished goods to these retail stores is accomplished by network of warehouses and distribution centers. This distribution management of finished goods to the required store plays important role in business. Activities in distribution include freight transportation, warehousing, material handling, protective packaging, plant & warehouse site selection, order processing, marketing forecasting, and customer service.

Materials Management

Warehouse Management
Inventory C O N S U M E R

Raw Material Packaging Materials

Finished Product

Storage Facilities Unitization Transportation Communication

Logistic Management

The case of distribution, in practical terms, is all of those operations involved from the receipt of the request for goods to be shipped from the finished products warehouse to the actual satisfactory receipt of goods by the customer. The faster goods move through the pipeline the less cost is incurred in storage and transport and the faster the business gets paid. Handling and delay

Chapter 2 adds costs, not value. Distribution clearly has a vital role to play in attaining a smooth and rapid flow. Consumer revolution and modern retailing concept puts pressure on organizations Logistics and supply chain to serve customer better, Logistics Management deals with Network Design, Information Systems, Inventory Control, Transport and Distribution (warehousing, materials handling, packing). The growing importance of warehousing function is the increasingly demanding nature of the business environment. In the past it was not uncommon for companies to hold large inventories of raw materials and components. Although industries and individual firms differ widely in their stockholding policies, nowadays, stock levels are kept to a minimum wherever possible. Holding stock is wasting working capital for it is not earning money for the company. A more financially analytical approach by management has combined to move the responsibility for carrying stock onto the supplier and away from the customer. Processes in Warehouse Management: 1. Inbound Processing and Receipt Confirmation Inbound processing covers the physical inbound delivery processing that succeeds the procurement process. It includes ASN processing, physical Goods Receipt and put away of materials in Warehouse Management up to sending the proof of delivery to the business partners 2. Outbound Processing Outbound processing comprises the preparation of goods to be delivered from a warehouse to a receiving location. Outbound processing within the scope of warehouse management typically comprises activities like the notification of goods to be supplied from a warehouse to a customer for which the outbound delivery serves as the reference document, picking, packing, physical goods issue in warehouse, loading, goods issue and goods issue posting to IM, advising advanced shipping notifications to business partners and, obtaining a proof-ofdelivery from the receiving business partner. 3. Warehousing and Storage Warehousing and Storage includes multiple processes throughout the warehouse from the time materials enter the warehouse via Goods Receipt until they exit the warehouse with a Post Goods Issue. Specifically covered in this process you will find the management of inventory including put away strategies and replenishment. Possible variants include task and resource management and Radio Frequency (RF) support. Optional steps include support for production supply, Value Added Services and Yard Management. 7

Chapter 2

4. Cross Docking Cross docking is a way to move materials directly from the goods receipt area to the shipping area without first being stored. Cross docking can be planned or opportunistic, as well as executed in one step (directly from GR to GI) or two steps (going first to a specified cross-docking storage type for repacking or labeling for example). 5. Physical Inventory Physical Inventory is a process that all companies with their own stocks or special stocks in their warehouse eventually face. In this case, a rough statement is given on the storage location level, without further detailed information.

Chapter 2

Distribution Network in PRIL

V1

V2

V3

V4

V5

West Zone Central Warehouse

City Warehouse

City Warehouse

City Warehouse

S1

S2

S3

S4

S5

Home Solutions Retail India Limited

Vx - Vendors Sx Retail Stores

Chapter 2 Pantaloons retail stores in Pune are Central, Pantaloons Factory Outlet, Pantaloons-Indias family store and Big Bazaar, and it is planning to launch few new stores soon. For holding, storage, and distribution of material and finished goods, PRIL City Warehouse is situated in 20000 sq. ft. area at Kondhwa Bk., Pune. That manages flow of finished goods to all these Retail Stores. This warehouse supplies finished goods to all pantaloon retail sites in Pune (like Big Bazaar, Central and Pantaloons Factory Outlets). This warehouse stores different types of finished goods like Garments and General Merchandise stock like toys, gifts, stationary, Plastics, utensils etc. Pantaloons FO, and Pantaloons are mega Stores that has merchandise categories like Clothing and Fashion accessories. Central is a Shopping Mall that has entertainment outlets and stores, these stores includes merchandise like Garments, General Merchandise, electronics, furniture etc. Big Bazaar is a hypermarket it has products of categories from Apparel, fashion accessories, books, stationary, Plastics, toys, crockery, footwear, furniture, electronics etc. Food Bazaar has products ranging from grocery, cosmetics, personal care, and daily consumable items. Another company from PRIL group, Home Solutions Retail India Limited supplies finished goods like furniture and electronics goods to Central and Big Bazaar Store.

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Chapter 3

Company Profile
Pantaloon Retail India Limited.
Corporate Vision: We will provide Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner. Corporate Manifesto: Knowledge is the only weapon at our disposal. Everything else is temporary, transient and misleading. Our quest for knowledge will be focused, systematic and unwavering. But, it will never be at expense of our values or our beliefs. Core Values: Indian-ness confidence in ourselves Dedication to customer satisfaction Leadership to be a leader both in thought and business Self Development by continuous hard work Respect for every individual Introspection leading to purposeful thinking Pantaloon Retail India Limited has its retail chain stores all over India with production factory situated at Tarapur and head office situated at Jogeshwari, Mumbai. The company has shares in other major brands in garments such as Indigo nation, skullers etc. company plays a vital role in the retail field and also build the economic structure of a society. The company operates multiple retail formats catering to a wide cross-section of the Indian society. In the Lifestyle retailing segment it has Pantaloons (department store), Central (seamless malls), Blue Sky (fashion accessories) and aLL (fashion apparel for plus size individuals). The companys value retailing ventures include Big Bazaar (hypermarket), Food Bazaar (supermarket) and Fashion Station (popular fashion). The company operates through 3.5 million sq ft of retail space and has over 100 stores across 25 cities in the country. Till date, PRIL has secured about 10 million sq ft of retail space that will be operational by end of 2008. PRIL employs over 12,000 people and has a customer base of over 12 crore Indians.

11

Chapter 3 The company was incorporated on October 12, 1987 as Manz Wear Private Limited. It was converted into a public limited company on September 20, 1991 and its name was subsequently changed to Pantaloon Retail (India) Limited.

Future Group
Pantaloon Retail (India) Limited is part of Future Group, a diversified conglomerate with presence in multiple consumer-centric businesses. The Future Group operates through six verticals: Future Retail, Future Capital, Future Brands, Future Space, Future Media, and Future Logistics. Future Capital is the financial arm of the group and is involved in asset management (both private equity and real estate funds) with plans to get into other financial services including insurance, credit and other consumer related financial services.

Joint Ventures & Partner Companies.

The Company has a stake in Galaxy Entertainment that operates chains like Chamosa, Rain, Lush, F123, Bowling Company, Sports Bar, and Brew Bar. It also has a stake in Planet Retail Holdings that owns the franchisee of brands like Marks & Spencer, Guess, Debenhams, The Body Shop, and Puma in India. PRIL has entered into joint ventures with kids apparel manufacturer - Gini & Jony and Liberty Shoes. Pantaloon Industries owns a majority stake in Indus League that markets brands like Indigo Nation, Scullers, Urban Yoga, and Jealous

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Chapter 3

Milestones
1987: Company incorporated as Manz Wear Private Limited. Launch of Pantaloons trouser, Indias first formal trouser brand. 1991: Launch of BARE, the Indian jeans brand. 1992: Initial public offer (IPO) was made in the month of May. 1994: The Pantaloon Shoppe exclusive mens wear store in franchisee format launched across the nation. The company starts the distribution of branded garments through multi-brand retail outlets across the nation. 1995: John Miller formal shirt brand launched. 1997: Pantaloons Indias family store launched in Kolkata. 2001: Big Bazaar, Is se sasta aur accha kahi nahin - Indias first hypermarket chain launched. 2002: Food Bazaar Wholesale Prices - the supermarket chain is launched. 2004: Central Shop Eat Celebrate In The Heart Of Our City - Indias first seamless mall is launched in Bangalore. 2005: Fashion Station Fashion Ka Big Bazaar - the popular fashion chain is launched aLL a little larger - exclusive stores for plus-size individuals is launched MeLa celebrate your home - the company's foray into the home solutions market 2006: Future Capital Holdings, the companys financial arm launches real estate funds Kshitij and Horizon and private equity fund Indivision.

13

Chapter 4

Background of Study
Warehousing
Storage of goods raw material and finished goods is necessary for every business. It involves the making of proper arrangements for preserving goods in a condition of safety from any loss or damage. When storage of goods is done on a large scale and in a specialized manner, it is called warehousing. The need for warehousing arises due to various reasons. In retail industry, retailers facilitate continuous availability of goods to consumers, to maintain customers needs & demand. Warehouse Management monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems & communication between product stations. Warehouse Management deals with receipt, storage, & movement of goods, normally finished goods to intermediate storage locations or to final customer. Pantaloon Retail India Limited has different formats in its stores, Big Bazaar is a Value retailing format, where customer can have cheap priced goods that have good value for money, it has products from local brands and pantaloons own brands, Central and Pantaloon Stores are Lifestyle retailing formats which have products for higher class consumers from well known and reputed brands like Indigonation, John Player, Scullers etc.and pantaloons own brands. Home Solution Retail India Limited is another part of PRIL, which deals with goods related Furniture and electronics, and supply these goods to Central and Big Bazaar Stores. HSRIL has different retail formats like Creation-I, ezone and Future Bazaar India Limited (FBI), FBI deals with e-retailing through e-commerce. Each format of pantaloon have different types, pricing and quality of products, to avoid misplace of merchandises and for effective storage and handling of goods material for each Store format, finished goods of separate formats are stored separately as Big Bazaar, Pantaloons, Pantaloons Factory outlet, Central. PRIL City Warehouse is divided into Big Bazaar City Warehouse and Pantaloon City warehouse for Storage and operating. Big bazaar material is stored in 9000 sq ft area. And other formats material is stored in 11000 sq ft area.

14

Organization structure in PRIL warehouse:

Warehouse Manager Asst. Warehouse Manager

WH Supervisor Inward/Outward Common

SR Executive Big Bazaar

SR Executive Central/ Inox / F.O.

Sr Executive Central

WH Asst. Dispatch /RTV

WH Asst. Inward/ GRN A/c

WH Supervisor Inward/Outward Documentation

WH Supervisor Pantaloon

WH Supervisor Inox/FO

WH Supervisor Barcoding/ Scannong

WH Supervi Templa

Helper 2

WH Asst. Inwarding

WH Asst. Outwarding

WH Asst. Scanner

WH Asst. picking/ Staging

WH Asst. Scanner

WH Asst. Barcoding

WH Asst. WH Asst. Scanner Templati ng

Helper 3

Helper 3

Helper 1

Helper 6

Helper 1

Helper 4

Helper Helper 2 5

Chapter 4

15

Warehouse Functions:
The principle functions that take place at PRIL City warehouse are receiving and inwarding, storage, Order Picking, dispatch and Transportation.

Receiving and Inwarding:

City warehouse stores Finished Goods (Saleable Goods) as well as Consumable goods (Non Saleable Goods) such as Carry bags, Staff Uniforms etc. Both saleable and nonsaleable goods are required to inwarded by the security in charge. When any consignment arrives, Security in charge checks the challan of goods received as per the goods Inwards security checklist

GOODS INWARD SECURITY CHECKLIST Are the goods accompanied with following items? Copy of challan LR Packing list Invoice QC certificate PO Is the waybill attached along with the LR (Lorry receipt/Docket/Consignment note) and invoice? Have all the invoices been endorsed on the waybill? Is the value appearing in the waybill matching with the value of the invoice? Is the number of cartons received, matching with that mentioned in challan/docket/waybill? Is the carton under the jute packing damaged?

YES

NO

Chapter 4 16

In case of any discrepancy observed as per the goods inward security checklist, executive withholds the LR and report the matter to the warehouse Manager. The Warehouse manager conducts adequate checks with the vendor and ensures that all the missing documents are provided as agreed between them. Security in charge allows the goods to enter only with consent of Warehouse manager in case of any discrepancy. In case of any documents are missing the warehouse manager coordinates with the vendor and the concerned Category Manager to procure the document within 48 hours. Security in charge makes entry of material in inward register and enters details like supplier details, item summary, total quantity, total weight, PO number, receiving date, time and Inward reference Note (IRN) as per the format. Separate registers are maintained for inward of saleable and non-saleable goods. After security inward received goods are taken for Inwarding in system, stock delivered at warehouse is mainly from Central warehouse, from Vendor through Purchase Order (P.O.) or On Approval basis (O.A.). If the material received is from Central Warehouse Tarapur. In case the products received are from Pantaloons Central Warehouse through delivery challan each piece is scanned/counted against the delivery number of that material. And GRN is created. If the received material is from vendor (through PO). First Rough Goods receipt Note is Created through Purchase Order by checking quantity of material received Each piece is scanned in system and GRN is created. If the goods received contain items that are not ordered then for those items, a goods outward is done. It is noted in the outward register by the security. Such goods are rejected and returned to the supplier. Once GRN is created it cannot be amended if there is any mistake or left over item. Rough GRN gives a chance to correct. If the received material is from vendor (through OA) After receiving of stocks the same are counted for any discrepancy and then the template sheets are prepared. Chapter 4 17

Template are entered into a Microsoft excel format & are sent to Bangalore warehouse for cataloguing. At Bangalore cataloguing is done & articles are created for the catalogued items. The same created articles are then sent to Mumbai at HO for creation of idocs (Inventory Documents) these idocs files are received and imported locally in system which is done by the local IT administrator.

After importing of idocs the barcodes are generated article wise through REM system. Barcodes are placed on the products as per the specified norms i.e. size, color, mrp, style brand etc. These products are now ready to get inwarded into the system. The material along with the invoice is taken for inwarding. GRN (Goods Receipt Note) is prepared by scanning each product and the quantity is tallied with invoice of vendor. If any discrepancy is found while inwarding stocks then the Discrepancy report is generated through the system and sent to the respective vendors. GRN quantity and Invoice Quantity is matched, if there is discrepancy in received Quantity, Discrepancy note is prepared. One copy of this note is sent to accounts department, one copy is sent to vendor and one copy is kept for warehouse reference. Here could be two cases; either there be excess delivery or it could be short supply Excess delivery in case where excess is more than 10% of PO qty (subject to max 100 pcs) then a formal approval should be obtained from SC or category before accepting goods In case of shortage (>10%) intimation should go to supplier and GRN/inward process should be completed only after clearance from vendor. A period of 48 hrs could fixed for clearing such disputed cases. If vendor does not respond within 48 hrs, the goods may be inwarded (actually received qty only) and a formal discrepancy note should be sent to vendor with shortage communication and/or remarks. Till GRN is approved, goods will be stored in specified location (i.e. Aisle, Bin, & level number for inward bay) for that particular item. There should not be any carry forwards. It is a procedure that RGRN of that material must complete within 24 hours and GRN must be done within 48 hours after receiving the material. The GRN along with the documents received from the vendor is entered in a GRN to Account register and sent to the accounts department and signatures of the receiver is taken in the register. Accounts person books amount for payment of vendor and send it to zonal Office. Chapter 4 18

Ensuring printing & Pasting of barcodes on each SKU. When goods are received from vendor at warehouse, the warehouse manager ensures barcodes on the products, barcode printing is assigned to one person in warehouse, or sometimes barcodes are generated from vendors. For each consignment received, it is checked whether products carry pantaloons barcodes, If not then the barcodes are received from the category, or generated for the PO against which the goods have been received. Barcodes generated to be pasted on the main label of the product for apparel, next to statutory information printed on Packaged products, or at a place easily accessible/visible for scanning. The barcodes to be pasted neatly so as not to obscure product information. If the product carries AIC (Automatic Identification Code), then it is confirmed whether it is captured in the system against SKUs of correct item name, brand, color, size, MRP. If there is no AIC code or it is not capturing it then barcode for the correct SKU code-checking Brand, Item name, color, size, MRP is generated.

Chapter 4

19

Material Handling and storage:

Material handling refers to all movement of finished goods within a warehouse; in pantaloons warehouse movement of goods is done with the help of balancing truck trolleys and pallets. There are few storage areas created at PRIL City Warehouse described as: Security Inwarded Material: After unloading the vehicle and security inward, this material is stored in primary inward area; warehouse staff pastes a label mentioning I.R.N. number, I.R.N. date and number of boxes in that lot. Inwarded material: After RGR and scanning of goods are packed in boxes and a label mentioning GRN number, GRN date, and total boxes in that lot is pasted on these boxes. After GRN completion, material is stored in inwarded goods area, there is no fixed storage area in for a particular item or product as the demand for finished goods is changing according to the season and customer demand (e.g. rainwear, Winter wear, sun coats etc.) therefore storage location is created as per the availability of material. As material is stored warehouse staff gets location display data prepared and displays it at that location. These goods are stored in shelves or pallets; it is made sure by the warehouse staff that there are no goods lying on the floor. Warehouse staff maintains a first In First out (FIFO) concept for stacking goods. Goods are stacked from one side of the storage stack and retrieved from the other side. Inwarded goods may have non-saleable goods (consumable goods) these goods are stored separately in non-salable goods storage area. These goods involve Staff Uniforms, Consumable Stationary, Carry Bags, hangers etc. Outward Area: After order picking, material ready for dispatch is kept in this area, this dispatch area may have Return to Vendor goods, and these goods are kept ready with documentation on pallets as per the dispatch location and loaded with the help of trolleys in the vehicles. Work In Progress area: In WIP area activities like templating, bar coding, and repacking of products for promotion, assembly of products etc. happens.

Chapter 4

20

Return from stores: Store returns are in two cases first is excess & the second is damage or return to vendor consignments. The stocks are received at warehouse counted & the same is inwarded in the system. If it is excess it is stacked in their respective locations. If it is to be returned to vendor then the same is done through Return to Vendor Procedure. The goods that returned from store may be fall under any of the following classification. a. Goods damaged in the store. b. Slow moving stock c. Dead stock d. Price change e. Defective products.

Chapter 4 21

Order Picking:
Order picking is a task of selecting items from bulk of the items the customer wants, in the quantities he wants, when he wants them. It is the breaking down of neatly packed and often bulk into handfuls. It generally involves taking cartons from a pallet or items from a carton, often these have to be marked, checked, and then repacked. Sales staff keeps a track of all the products on display in the store and identify products that need to be replenished on a continuous basis. Sales staff from stores gives requisition for the specific products, through mail, by phone or by visiting to warehouse and Stock Transport Order of that products is created in system. On receipt of the STO, the warehouse staff creates pick list for that products and collects the required product from pallets or shelves at warehouse in required quantity, each piece of product from the pick list is scanned against that Stock Transport Order. Outbound delivery of these items is saved and this material is packed and marked placing one or more items of an order in to appropriate container with store shipping data as well as other handling information that may be required.

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Chapter 4

Transportation:
Transportation physically moves products from warehouse to the retail stores, where they are needed. If the product is not available at the precise time it is needed, there may be expensive repercussions such as lost of sales and customer dissatisfaction. Transportation moves products to retail sites that are geographically separated and provides added value to customer when they arrive in time, undamaged and in the quantities required. For PRIL City Warehouse two LCV vehicles are contracted for transportation of goods to all the stores in Pune. And for outstation dispatches vehicle is hired or it is dispatched through companies authorized transporters.

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Chapter 4

Inventory Control:
Inventory (or stockholding) can be described as the accumulation of an assortment of items today for the purpose of providing protection against what may occur tomorrow. In retail chain of pantaloon variety of products are sold and these products are divided into different categories; inventory flow of each category of products at warehouses and retail sites is maintained by that particular category. Planning for EOQ and reorder level is done at category level; by studying demand at each retail site, category creates order for a particular stock. A) Procurement process for saleable Goods:

INVENTORY FLOW

BIG BAZAAR

P R I L WAREHOUSE

SUPPLIER X1 SUPPLIER X2

PANTALOONS PHYSICAL DISTRIBUTIO N CATEGORY MANAGEMENT PROCUREMENT

FACTORY OUTLET

SUPPLIER X3

CENTRAL

SUPPLIER X4

INFORMATION FLOW

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Chapter 4 Each product group is divided in four divisions as Clothing and Fashion, General Merchandise, Communication and Home & Hard Goods; these divisions are differentiated into different departments, Sub departments, Category & Classes according to type of Merchandise Products. In Pantaloons, Category Management manages procurement system of finished goods for all the Pantaloon retail sites; Departmental Managers from respective departments sends their requisition as per customer demand for finished goods to the respective Category Manager. Category Management is in process of buying finished goods for a firm, by getting feedback from retail store Managers and customer demands. Pantaloon stores have a central warehouse located in Tarapur. Big Bazaar Chain doesn't have a central warehouse All Private label products in case of Pantaloon Stores are routed through central warehouse. Based on allocation by category, merchandise is distributed to city warehouses. Other label vendors may deliver the merchandise at the central warehouse (Central Purchase) or directly at the city warehouse or store (in case of Local Purchase or Consignment) In case of Big Bazaar the products are directly delivered at the city warehouse or store. A respective category head raise purchase order at Head Office as per the requirement from stores. Copy of P.O. is sent to vendor and supply chain and transporter is intimated about the same . After receiving Purchase Order from category, vendors dispatch their consignments to the respective locations through authorized transporter; supply chain follows up with the transporter about the status of consignment, when stocks are delivered to the Central Warehouse in Tarapur. Central warehouse staff generates pick list as per the stock allocation to various stores by category, items from the list are picked and material is dispatched to the respective warehouses. At City Warehouses stock is received and inward is done. Store may request material from warehouse over phone, email or by personal visit. For these required items Stock Transfer Order is raised at warehouse and lot is dispatched to the Store. Store receives material and inward of material at store is done. In some cases of branded goods vendor takes approval of the category and send their consignment to the city warehouse this material is inwarded at city warehouse as On Approval (OA) basis.

25

Chapter 4 B) Procurement process for Consumables (non-saleable): Future logistics that is a part of pantaloon retail India limited develops/reviews EOQ, inventory norms for consumables based on consumption pattern. Warehouse sends request for consumables by 7th of every month for the next month, Future Logistics receive request for consumables, feed the requirement in the system, SAP system checks if the requirement within the norms, if it is not, approval from procurement in charge is taken and purchase order is placed. GRN process is completed and material is stored in warehouse, Retail Stores place requirement for consumables to the warehouse, warehouse creates STO and dispatches material to stores At stores this material is inwarded and stock level in system updated

26

Chapter 4 Bar-coding: Pantaloon stores have more than 50000 SKUs of products, almost 75% of consumer products that pantaloon retail sell currently already come from suppliers with EAN barcodes source-marked on their products packaging which helps in receiving, stocking, tracking, transferring and sale of merchandise. Such transactions are seamlessly integrated in the supply chain enabling common access to both the relevant suppliers and the retailers. This helps in faster identification of needs and the resultant actions on replenishment of stocks on the shelves of retail stores. The balance 25% of products come from suppliers who do not have compliant EAN barcodes or any barcodes at all on them and hence retailers are required to affix barcode stickers at their end so as to achieve 100% compliance level, which is essential for their efficient operations. In pantaloon, it constantly try to achieve greater levels of customer satisfaction that often results in larger consumer spends in their stores in an effort to respond to customer need faster, pantaloon resort to efficient business processes driven largely by retail automation Consumer billing has been fully automated at many retail checkout counters using barcode scanners and point-of sale (POS) systems. By virtue of this automation, the stock at the retail outlets and warehouses are closely monitored and to timely action to avoid under-stocking or overstocking is taken. This also enables to monitor demand and develop more reliable sales forecasts, which in turn allows sufficient time for stock replenishment by suppliers avoiding out of stock situations. If retailers and suppliers come together and have standard tools like EAN (European Article Numbering) barcodes, timely exchange of information will become possible and as a result customer response cycle times will be shortened. Uniform and unique product identification using EAN product codes will also facilitate exchange of updated and accurate product information electronically between suppliers and retailers, critical for ordering, dispatching and invoicing processes. In turn, this will ensure faster new product introductions and withdrawal of absolute products along with updated or revised price lists. Modern retailers handle increasing product volumes and variants (SKUs) across their retail chains; this will prevent incurring avoidable costs, errors and delays in the process of having shelf ready merchandise. The main advantage of bar coding is that a voluminous amount of data can be entered and retrieved with practically no error by just scanning through a series of black and white lines. The overall productivity of a warehouse can improve immensely not in terms of speed but in the fact that the element of human error is completely eliminated.

27

Chapter 4 At pantaloon warehouse each SKU is inwarded and outwarded by scanning their barcodes, therefore every time a material is added to or removed from a shelf the data gets updated in the system. Stock Transfer to Pantaloon Stores: A major function of the physical distribution system is transportation shipping products to consumers, after order picking is done that packed material is kept on pallets in Outward area, all documentation of these goods are completed and this material is loaded in outbound vehicle. If sufficient load is not available for a particular store, material from two stores is clubbed together and dispatched. Gate Pass for the loaded material is prepared along with delivery challan. Security incharge makes entry in outward register. On approval of warehouse manager material is shipped to a store. Return to Vendor (RTV): Warehouse staff initiates action of goods return to suppliers only after receiving confirmation from the category manager or Brand relation team from that product category. Stocks, which are to be returned to suppliers, are outwarded from stores. The stocks are received at warehouse, counted for no of piece, number of cartons & inwarded in the system. Details of all the stocks received back from stores are intimated to the Brand relation team. The nominated transporters of the vendors are intimated about the material that is to be lifted from the Warehouse and are to be delivered to the respective vendors. All the RTV consignments are sent to the Vendors on to pay basis.

28

Chapter 4

Reverse Logistics:
Pantaloon has Central Return Center (CRC) which is a dedicated specialized building/area within Central warehouse to handle returns and Zonal Return Center (ZRC) which handles returns of each zone at these warehouses recycling, reconditioning, remanufacturing and refurbishing of products are done which areCustomer return items, Defective items and Unsold goods/excess stocks. Reverse logistics is the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. Warehouse returns defective items and unsold/excess stock to CRC/ZRC, accompanied by Goods return forms Customer Returns: reverse logistics warehouses receives the returned item with the Customer return note and decides whether these products to be sold as scrap locally at stores/ dispatched to vendor or dispatched to CRC(non apparel items)/ZRC(Apparel items) Defective items: after quality inspection, CRC/ZRC takes decision about disposition of these items by Scrap sale Auction sale Return to vendors Refurbish/ rework and sale in factory outlets/RL store Refurbish/rework and sale as fresh stock

29

Chapter 4

GRN Accounting:
The main objective of GRN accounting is Correct & Timely disbursal of payments to the vendor After completion of inwarding of goods, GRN note is prepared by the warehouse staff and it is submitted to accounts department along with vendors bills, the accounts receives GRN along with all the vendor invoice. If there is any discrepancy found in the material supplied by the vendor; discrepancy note is prepared by warehouse staff and submitted to accounts along with bills, stores accounts person checks invoice and discrepancy note and debits that discrepancy amount from vendors account. If there is excess quantity in goods received from vendor these products are returned to vendor. In some cases material received by warehouse staff from vendor is in damaged condition, in this situation this material is returned to vendor by taking approval from category of that product. Store accounts manager should ensure all relevant entries are made into the system. GRN gives cost figure payable to the vendor this figure along with PO and purchase bill should be a basis for passing and verifying vendors bill. Store accounts manager ensures timely disbursal of payments to the vendor. Commercial manager/store account manager generates statement showing bill wise due dates for payments and vendor wise age analysis of overdue on weekly basis, this forms the primary basis for payments scheduling to the vendors.

30

Chapter 4

Information:
Information flow is a key element of logistics operations, in physical distribution management; common forms of information include customer and replenishment orders, inventory requirements, warehouse work orders and transportation documentation. In the past, information flow was largely paper based and resulted in slow, unreliable, and error-prone information transfer, paper based information flow both increases operating cost and decreases customer satisfaction. Information systems combine hardware and software to manage, control and measure the logistics activities. Hardware includes computers, input/output devises, and storage media. Software includes system application programs used for processing transactions, management control, decision analysis, and strategic planning. The information base contains purchase orders, inventory status, and customer orders. The Data warehouse contains information describing the past activity levels and the current status, and is the basis for planning future requirements. The execution components initiate, monitor, and measure the activities required to fulfill customer and replenishment orders. These activities take two forms the first are the Planning and coordination activities to produce and deploy inventory and the second are the operating activities to receive, process, ship, and invoice customers orders. Previously PRIL using REM (Retail Enterprise Manager) system for transactions in warehouses and in retail sites, Now PRIL implemented SAP as the solution provider due to its ease of use and long-term tactical relationship,

31

Chapter 4 With implementation of SAP certain store operation processes have been changed as indicated in the table below Previous REM Processes Single item can have multiple item codes depending on site and individual doing the cataloguing. No tax masters maintained through system Local and central cataloguing All stocks at retail site reflect as stocks on floor Damaged inventory goods inflate the store SAP Processes Every item will have single article number, independent of site and person. Multiple EANs (European Article Number) can be created from one article. Tax masters can be specified through article masters Central article creation Separate storage locations can be maintained like stocks on floor and Store Warehouse Damaged goods can be shifted into a separate storage location and thereby have a right inventory value High level of clarity of goods movement from PO stage to receipts and transfer Goods receipt can be undertaken at Handling Unit level Articles created for both of these can be tracked like any other merchandise.

No transparency of goods in transit Goods received at store from warehouse are inwarded to DNH file Negative inventories can be disallowed in REM

With the help of SAP Implementation: Automatic PO/STO generation is possible Stores can trigger replenishment from Distribution Centre Stock replenishment will primarily happen through a push mechanism at DC level, but can also be triggered at store. Dumping of stocks at store and delivery challans can be avoided There will be a transparency of stock movement across the chain Carton level scanning will be enabled for receipts. IRN and gate pass will be system generated (Rough GR) Pick list /STO/delivery management will happen from all warehouses Stocks can be received and placed On Hold, thereby reducing exception handling A provision has been made to book damages and non-saleable stocks separately. Advance shipment notice to sites for inbound delivery, ASN (Advance Shipment Notices) indicates: PO information, Expected arrival time, Carton contents Vendor and item descriptions Truck/transporter information, these details are filled by the vendor and ASN is dispatched along with material.

32

Chapter 4

Application of new techniques

Unitization of Products: It is an important part of packaging as it relates to storage and material handling is the concept of unitization. Unitization describes the physical grouping of master cartons into one restrained load for material handling and transport. UOM and Prepack are the terms used for the packaging of finished products that are implemented in Pantaloon warehouses. For better control on inventory, easy handling and for easy PO creation packaging of products are done in such a way that Carton/bag has n number of SKUs e.g.1carton is equal to 100 EA (100 SKUs). Unit of Measurement: It contains SKUs of same article, hence same article code, only with different EAN. Prepack: Prepacked articles are groups of variants of one or more generic articles that are purchased as separate articles that are purchased as separate articles and as such have an article number, a purchase price. Unlike a display, the components must belong to the same merchandise category as the prepack itself. Stock is managed at Prepack level at the distribution centre, and at the component level at the store e.g. shirts of different sizes or color clubbed together in a predefined ratio. It contains SKUs of different article than those of consisting in the prepack. Benefits from UOM and Prepack: Application of UOM and Prepack reduces scanning, results in faster work at different stages of supply chain, as individual pieces need not to be counted/scan every now and then. Reports could be seen at both UOM used, thus better visibility of inventory.

Chapter 5

33

Presentation and Interpretation of Data

1. Study of monthly consumption to classify Item Categories as per their monthly Usage value: Merchandise products at Big Bazaar are differentiated into different departments and item categories as shown in Table A

Department

Sub Department

Category

Class

Clothing & Fashion

Accessories Boys Acc Girls Acc Boys Belts, Boys Handkerchief Boys Brief, Boys socks, Boys Vest Girls Belts, Girls Caps Girls Brief, Slips, Socks Ladies Belt,Caps, Handkerchief, Essentials Scarf, Socks Ladies Bras, Lingerie set, Panties, Lingerie slips Mens Boxer shorts, Briefs, socks, Inner Vest Mens Belt, Cap, Handerchief, Other Mens Ties,Wallets Boys Btm wear, Coordinates, Nightwear, Occasion wear, RW & Boys Wear WW, Shirts, T shirts Girls Blouses, Btms, Coordinates, Frocks, Nightwear, T shirts, RW & Girls Wear WW Infant Boy, Girl, Necessities, Infant Seasonal Ladies Mix N Match, SKD, Suit Ladies Ethnic Pcs, Sarees Ladies Nightwear Ladies Nightwear Ladies Seasonal Ladies Seasonal Rain wear Ladies Seasonal Winter wear Ladies Sportswear Ladies SportswearBottoms Ladies SportswearTops Ladies Western Casuals Ladies Casual Bottomwear Ladies Casual Tops (Blouses) Ladies Jeans, Tshirts Boys Essential Boys Innerwear Girls Essential Girls Innerwear

Ladies Acc

Mens Acc

Clothing

Childrens Wear

Ladies

34

Department

Sub Department

Category
Ladies Western Formals Mens Formal

Class
Ladies Formal Tops, Btms, Suits & Jackets Mens Formal Shirts Mens Formal Suits & Blazers Mens Formal Trousers Mens Jeans, T- Shirts Bottom, Sets Rainwear Gear, Winterwear Mens Sports Sets, Bottoms, Topwear Ethnic, Party Bottomwear, Topwear

Mens Jeanswear Mens Nightwear Mens Seasonal Mens Sportswear Ocassion Wear

Communications
Hardware(Commnicatio n Devices) Mobile Mobile Handsets

General Merchandise
Books & Multimedia Books Activity, Board & Picture Books, Children Regference, Craft, Junior Children Books fiction, Senior Fiction Fiction Books Adult Fiction Literature Gen Ref. Books Art, Language, self help Management Books Business, HR , News Periodicals Books General News, women Regional Books Regional Fiction Home Video Home Video DVD, VCD Home Video VCD Music Hindi Music Cassettes , VCD, CD Software General Games CDROM 2 Wheeler Acc Protective Gear 4 Wheeler Acc DIY Acc, Installable acc. Gadget & Accessory Charges, Handsets Cutlery & Cooking Tools, Knife & Cutlery, Kitchenware Kitchenware Loose Steel Utensils Copper Bottom, Plain Hard Anodised, Nonstick, Brass Nonstick/Hard items, Copper items, Stone items, Anodised Wooden Items Pressure Cooker Aluminium, Steel Kids Jewelley Ladies Jewellery Men Jewellery Kids Ladies Kids Fashion 1 Gm Gold, Ladies Fashion, Pearl Jewellary Men Fashion Kids fashion Ladies Fashion

Multimedia

Car & Bikes Communications Electronic & Hardgoods

Auto Acc Mobiles Household Utensils

Fashion Accessories

Fashion Jewellery

Hair Acc

35

Department

Sub Department
Sunglasses Watches & Clocks

Category
Basic Fashion Basic Boys Girls Mens Womens Birthday City Crockery Glassware & Wireware Gift

Class
Casualwear Casualwear Analog Clocks Shoes B, Sports- B Shoes - G Shoes M, Slipons-M, Sports-M Bin W, Slipons-W,Sports-w Birthday City Crockery & Glassware Wireware & Chrome Accessories Gifting Makeup Accessories Perfumes & Deos

Footwear

Footwear

Gifts & Living Improvements

Gifts Crockery and Crafts

Grooming & Beauty Living Impovements Bags And Baggage

Cosmetics Fragrances Lamps and Lighting

Luggage

Plastics Toys & Stationery

Household Plasticware

Sports Goods

Stationery

Toys

Lamps College Bags, Office Bags Bags,Overnight Bag, School Bags Ladies Handbag Basic, Fashion Travel Accessories Pouches Trolleys & Suitcases Suitcases, Trolly Cleaning & Bathroom Accessories,Cleaning Bathroom Items Articles Kitchen & Home Accessories,Melamineware, Household Items Storage & serving,Thermoware Boxing, games,skating, Indoor swimming, table tennis Badminton, Basketball, Cricket, Outdoor Hockey, tennis Colouring Material, Office Non Paper consumables, Writing Instruments Paper Related Products Paper And Pads Activity, CD ROM, Non-Soft Toys Dolls,Games,Puzzles,Vehicles Prams/Rides Infant Carriers Stuffed Animals,articles, Soft Toys characters Terry Towels Blankets, covers, Quilts, sheets Utility Covers

Bed Linen Home Accessories

36

Department

Sub Department
Made-Ups

Category
Bath Linen Kitchen Linen Living Accessories Stuffed Article Table Linen

Class
Handloom Towels Cleaning Aides, cooking Furniture & Floor Coverings, curtains Fillers Dining Accessories, table Lenin covers

Home Goods
Home Linen

Stock Status report for Big Bazaar warehouse of few selected item categoriesFootwear, Gift, Home, Kids, Ladies, Ladies Acc, Luggage, Mens, Mens Acc, Plastics, Stationary, Toys and Utensils is shown in Table no.1, 2,3,4 and 5, below for the month May 2006 to Sept 2006 respectively. Stock status report shows opening stock, closing stock and total inwarded and outwarded stock for the respective month.

37

Table no.1

MAY
CATEGORY FOOTWEAR GIFT HOME KIDS LADIES LADIES ACC LUGGAGE MENS MENS ACC PLASTIC STATIONARY TOYS UTENSILS TOTAL

Stock Status Report May 2006

OPENING STOCK Quantity Boxes Amount 800 4216 1635 11568 1811 2654 965 18156 24856 152 5000 95 900 72808 30 25 98 238 149 187 42 278 248 50 27 48 55 1475 24563 42187 14854 245988 155486 169845 4586 278569 157000 18452 8449 6897 158998 1285874

INWARD (RECEIPT) OUTWARD (DESPATCH Quantity Boxes Amount Quantity Boxes Amo 593 9674 6234 29510 16838 4062 2917 24034 13420 7349 2663 7281 8800 133375 27 107 129 375 212 59 104 1023 97 183 15 189 233 2753 217998.3 156756 256842 422586 707894 345690 531261 503539 259045 2712540 53620 60124 5246531 905 9455 4633 20104 11847 3154 3100 30150 21545 7501 5545 4597 8800 32 71 118 112 170 186 134 752 140 233 14 98 233 2293

1985 1004 2055 5004 6805 3118 5357 3764 3195 2730 551 345 5246

11474426 131336

11296

Table no. 2

JUN
CATEGORY FOOTWEAR GIFT HOME KIDS LADIES LADIES ACC LUGGAGE MENS

Stock Status Report June 2006

OPENING STOCK Quantity Boxes Amount 488 4435 3236 20974 6802 3562 782 12040 25 61 109 501 191 60 12 549 44037.3 98465 66135 168149 182803 203642 62 405642

INWARD (RECEIPT) OUTWARD (DESPATCH Quantity Boxes Amount Quantity Boxes Amo 352 20921 4521 9080 43222 2829 1878 15528 20 105 174 72 177 38 74 450 202545 189549 136688.3 386782 1527527 112811.2 254111 500694.6 810 19523 5284 15845 37486 3454 956 8216 42 90 170 78 120 44 32 348

1894 1652 1104 4757 9957 1901 924 2984

38

MENS ACC PLASTIC STATIONARY TOYS UTENSILS TOTAL

16731 0 2118 2779 900 74847

205 0 28 139 55 1935

96482 0 6957 32494 158998 1463866

21809 7276 15118 17737 5434 165505

168 91 106 707 53 2235

575481.2 1645278 150786 1367002 2564574 9613829

11552 7276 11574 18511 5450 145937

89 91 80 30 48 1262

2015 1645 984 1310 2515

8289

Table no.3

JULY
CATEGORY FOOTWEAR GIFT HOME KIDS LADIES LADIES ACC LUGGAGE MENS MENS ACC PLASTIC STATIONARY TOYS UTENSILS TOTAL

Stock Status Report July 2006

OPENING STOCK Quantity Boxes Amount 30 5833 2473 14209 12538 2937 1704 19352 26988 0 5662 2005 884 94615 3 76 113 495 248 54 54 651 284 0 54 816 60 2908 57124.3 122728 92400.33 79211 714547.1 126301.2 161715 607911.6 470395.2 0 59278 88942 207786.3 2788340

INWARD (RECEIPT) OUTWARD (DESPATCH Quantity Boxes Amount Quantity Boxes Amo 1818 8845 21407 6753 56901 3766 1189 19817 8189 1852 500 1896 1353 134286 40 88 490 67 183 25 29 752 68 38 10 38 154 1982 215458 90456.96 2050648 513919.4 720635.5 208819.6 8056789 2553162 407926.8 211584 11596 19754.82 100243.8 15160994 1840 4541 13440 12399 15415 5832 1099 20663 6897 1720 5456 3368 1404 94074 18 12 70 42 46 10 7 820 17 28 51 10 23 1154

2208 4568 9869 3786 6965 2124 6352 7983 2281 1845 702 5949 4286

4559

39

Table no.4

AUG
CATEGORY FOOTWEAR GIFT HOME KIDS LADIES LADIES ACC LUGGAGE MENS MENS ACC PLASTIC STATIONARY TOYS UTENSILS TOTAL

Stock Status Report August 2006

OPENING STOCK Quantity Boxes Amount 8 10137 10440 8563 54024 871 1794 18506 28280 132 706 533 833 134827 25 152 533 520 385 69 76 583 335 10 13 844 191 3736 51737.3 167495.8 1156077 214496.4 738660.6 122710.9 7583281 2362733 650184 27006 624 49202.87 265160.5 13709369

INWARD (RECEIPT) OUTWARD (DESPATCH Quantity Boxes Amount Quantity Boxes Amo 1600 19548 19266 21476 13606 3532 2915 25539 13156 4189 2954 11497 12375 151653 25 242 264 649 50 28 163 456 14 72 21 91 165 2240 142062 472292.7 1758674 2732565 1946940 941004 361060 2703545 767915.1 108794.7 23548 334740.3 1371659 945 7992 11555 27794 5888 1848 2423 14581 10926 3789 2500 3055 12867 17 27 49 510 30 5 17 55 16 24 15 14 20 799

1624 2226 1101 5284 1027 9083 2453 2290 4422 2858 184 8916 1588

13664799 106163

7836

Table no.5

SEPT
CATEGORY

Stock Status Report September 2006

OPENING STOCK Quantity Boxes Amount

INWARD (RECEIPT) OUTWARD (DESPATCH Quantity Boxes Amount Quantity Boxes Amo

40

FOOTWEAR GIFT HOME KIDS LADIES LADIES ACC LUGGAGE MENS MENS ACC PLASTIC STATIONARY TOYS UTENSILS TOTAL

663 21693 18151 2245 61742 2555 2286 29464 30510 532 1160 8975 341 180317

33 367 748 659 405 92 222 984 333 58 19 921 336 5177

31328.61 417132.2 1813295 2418571 1658300 972883.2 7698961 2775427 975842.6 107213.9 5714 294780.4 48354.6 19217804

4000 8585 18932 23446 22270 3819 946 32225 10199 13562 468 17468 6458 162378

60 119 266 274 408 43 56 990 107 150 12 247 220 2952

483321.4 1492506 1276452 1104676 5968542 73288.54 312682 3303762 552007.3 90693.95 15789 511719.3 185568

3272 6181 6418 13750 38217 3675 1321 48041 2792 7847 1250 24549 5811

76 83 196 96 125 8 74 1026 21 119 8 116 142 2090

3487 1881 5488 1056 4380 5515 1552 3520 1100 1269 105 5937 4753

15371008 163124

11639

41

Chapter 5

Analysis of Data

42

ABC Analysis for item categories on the basis of monthly consumption. ABC analysis for stock is done to identify different categories of stock at Big Bazaar warehouse, with the help of this analysis product categories differentiated as per their value of consumption. Dispatched quantity of finished goods to retail stores is taken as consumption quantity and consumption value for each item category is taken as shown in table B. Item categories are arranged in descending order of total value of consumption. Cumulative value of consumption is calculated. Percentage value of this cumulative value to the total monthly value of consumption quantity is calculated for all items as also cumulative percentage.

ABC ANALYSIS FOR ITEM CATEGORIES ON THE BASIS OF MONTHLY CONSUMPTION Average Quantity Usage per Item Consumed month in Cumulative Cumulative cumulative Category per month Rs. Ranking Usage Usage % item % Class 6866 1888236 1888236 22 A Utensils 1 7 21771 1556103 3444339 39 A Ladies 2 15 24330 1457000 4901339 56 A Mens 3 23 5627 943274 5844613 67 A Plastics 4 31 8266 590657 6435270 74 B Home 5 39 17978 588047 7023317 81 B Kids 6 46 10816 417498 7440815 85 B Toys 7 54 1780 332823 7773638 89 B Luggage 8 62 3593 271371 8045008 92 B Ladies Acc 9 70 10742 260315 8305324 95 C Mens Acc 10 78 1554 224019 8529342 98 C Footwear 11 85 9538 144451 8673793 99 C Gift 12 93 5265 50562 8724355 100 C Stationary 13 100

Table B

Chapter 5 Data from table B has been plotted to produce a cumulative frequency curve to create this graphical representation.

43

100 90 80 70 60 50 40 30 20 10
C O N S U M P T I O N

23

10

20

L A T I V E

30

40

50

60

70

80

90

100

CUMULATIVE ITEM %

From the above Cumulative frequency curve, it is seen that, 31 percent items in the product item categories account for 67 percent of the total consumption value, the items that make up this 31 percent are referred as A category items includes Utensils, Ladies and Mens Item categories, these item categories has high consumption value than other items at Big Bazaar warehouse Item categories Plastics, home, kids, luggage and Ladies Accessories are B category items, accounts for approximately 39 percent of the total items in the product categories, and accounts for additional 20 percent of total consumption value. Finally the C category items are represented by the remaining 30 percent of the item categories, which account only for approximately 8 percent of total consumption value, Mens accessories, footwear, gift and stationary are C category items. Chapter 5

Determination of Excess and Nonmoving Stock.

44

The stock status of each item category is studied from the monthly stock status report of five months as shown in table no.1 to 5. From this data total quantity of each item category inwarded and total quantity of each item category outwarded (consumed) in five months is taken, from this data, average monthly consumption of each category is calculated as shown in Table C, Closing Stock of each item category, at the end of Sept 2006, is taken for analysis (b), it is assumed that average consumption of finished goods done in the five months may 2006 to Sept. 2006 will be continuing further.

ITEM CATEGORY
Footwear Gift Home Kids Ladies Ladies Acc Luggage Mens Mens Acc Plastics Stationary Toys Utensils

e Surplus Stock Over 1 months Cumulative quantity Average Quantity consump Closing stock at warehouse consumed at retail store in 5 Consumed per tion & at the end of 5 th month months month above. Quantity Amount Quantity Amount Quantity 1391 165853 7772 1120094 1554 -163 24097 1721494 47692 722253 9538 14559 30665 2540873 41330 2953285 8266 22399 11941 2466279 89892 2940237 17978 -6037 45795 3246510 108853 7780514 21771 24024 2699 494605 17963 1356853 3593 -894 1911 7856374 8899 1664115 1780 131 13648 2558273 121651 7284999 24330 -10682 37917 1417799 53712 1301577 10742 27175 6247 70975 28133 4716368 5627 620 378 10979 26325 252809 5265 -4887 1894 212749 54080 2087489 10816 -8922 988 186392 34332 9441182 6866 -5878

Table C The average stock quantity d consumed at retail store for each item category, in past 5 months is taken. It is assumed that d is the quantity of items, required for next months consumption. This quantity is compared with the total stock available at warehouse at the end of September 2006.

Chapter 5

45

Category Footwear
Gift Home Kids Ladies Ladies Acc Luggage Mens Mens Acc Plastics Stationary Toys Utensils

Inventory Stock at the end Value (in of 5th month Rs.) 1391 165853.42 24097 1721494.47 30665 2540873.39 11941 2466279.03 45795 3246510.11 2699 494605.4 1911 7856374.46 13648 2558272.53 37917 1417798.667 6247 70974.8 378 10979 1894 212748.58 988 186391.8

Average Short Excess Quantity Quantity Quantity after considering 1 Consumed 1 months months per month consumption consumption 1554 163 9538 14559 8266 22399 17978 6037 21771 24024 3593 894 1780 131 24330 10682 10742 27175 5627 620 5265 4887 10816 8922 6866 5878 -

From this comparison it is seen that, for some categories much stock is lying at warehouse, after deducting one months stock from the actual stock, in some categories few stock is need to be ordered. Too much stock is lying at warehouse as excess or surplus stock, this data from table C is taken and bar chart is prepared as shown in diagram no.2 From this diagram it is seen that after 1 months consumption Gift, Home, Ladies, Luggage, Mens Accessories and Plastics category items have excess stock at warehouse, out of this categories percentage of excess stock in item categories Gift, Home, Ladies and Mens Accessories is highest, out of this four categories Mens and Ladies items are in A category and are high value items, Value of total Excess stock lying at warehouse is 61,61,719 and due to this stock of storage cost and inventory value is increasing.

Chapter 5

46

Analysis on Replenishment Quantity

30000 Quantity of Items 25000 20000 15000 10000 5000 0
ea r G if H t om e Ki d L s La ad di ies es Lu Acc gg ag e M M en en s s A Pl c c a St s ti at c s io na ry To U ys te ns ils Fo ot w

Required Quantity Excess Quantity

Category Items

Diagram no.2. Inference: In A category items (Utensils, Ladies & Mens) Stock for Utensils and Mens category items is not sufficient for next month, stock of these categories should be managed properly by observing their lead time, because their consumption value is high, if there is stock out in this categories, there will be loss in sale. Stock for Ladies items is very high, this stock is lying in double quantity than it is required for consumption, for ladies items consumption value is more. This nonmoving stock should be liquidated faster as this stock increases inventory value of the Big Bazaar Warehouse. Out of B category items, stock of home category items is more than the consumption quantity or the requirement, it is lying as non moving /dead stock and it should be sold quickly to reduce accumulation of stock on warehouse space. In case of Kids and Toys items stock need to be ordered to avoid stock outs. In C category items stationary items should be ordered urgently, as it is showing near about stock out condition for next month. In Mens and Gift items, there are few nonmoving and dead items, which should be liquidated quickly, as it is occupying space at warehouse unnecessarily.

Chapter 5

47

Warehouse efficiency:
Warehouse efficiency is how you regulate inward Quantity as per the demands of Outward quantity and achieving lowest possible closing stock, this means Outward Quantity Warehouse efficiency = Inward Quantity + Closing Stock. From Monthly Stock Status Report following data is taken and bar chart is drawn (Diagram.3) from this data warehouse efficiency is calculated asWarehouse efficiency =Outward /(Inward+Closing stock) 0.63 0.61 0.41 0.37 0.48

Month May June July August September

Opening Stock 72808 74847 94615 134827 180317

Inward (Receipt) 133375 165505 134286 151653 162378

Outward (Despatch) 131336 145937 94074 106163 163124

Closing stock 74847 94615 134827 180317 179571

Warehouse Transactions
200000 Stock Quantity 150000 100000 50000 0 May June July Month August September

Opening Stock Inw ard (Receipt) Outw ard closing stock

Chapter 5

48

It is seen that closing stock is going up and up thus inward is increasing, this is due to lack of understanding of customer demand in sales team and category management. In month of May Inward and Outward is balanced but there is no movement of goods from Opening stock, in June, July and August inward is more than outward thus closing stock gets increased, In September inward and outward is balanced, but Opening stock does not moved. From the study of five months warehouse stock it is seen that stock is not reducing from warehouse closing stock is increasing in most cases, therefore it is obvious; more quantity is inwarded than required for outwarding. The demand pattern of each month must be regulated so as to achieve much lower closing stock. It is obvious that there are nonmoving stocks in each category, which we need to identify and dispose them or find a way for disposal.

Study for Warehouse Efficiency

0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00
M

0.63

0.61 0.41 0.48 0.37 Warehouse efficiency

Wh effi.

ay

Ju ne

Ju ly

Au gu s

M onth

this diagram shows that warehouse efficiency is going down, this means inventory at warehouse is increasing this leads to blocking of lot of money.

Chapter 6

49

Se pt em

be r

Recommendations
1. Stock Control and minimization of excess stock: 1. Warehouse must have enough inventories to satisfy the demands from retail site for finished goods but should not have too much inventory on hand because of the cost of carrying inventory, but at Big Bazaar Warehouse it is seen that few items has too much stock quantity and for few items there is not sufficient stock for doing replenishment at retail site. 2. For the item categories like Ladies, Mens Accessories and Home, ordering of stock should be stopped from category or Central warehouse, as these categories already has lot of excess stock at warehouse, and after liquidation of this stock, authorization to order stock should be given to Warehouse manager, he will order further stocks before lead time by forecasting past consumption requirement from retail store. A category items should ordered weekly as per their consumption, B items in 15 days and C items in 1 month, 3. For dead and damaged goods register should be maintained and updated, to liquidate this nonmoving, dead or damage stock, approval should be taken from Category immediately for sending the stocks to Central warehouse or to reverse logistics. 4. Before giving allotment to Central warehouse for dispatches, Category management should check Stocks lying at City warehouses and retail stores, to manage the supply of category items stock properly. 5. Application of DRP system in Big Bazaar: DRP is widely used and potentially powerful technique for outbound logistics systems to help determine the appropriate level of inventory. This will helpful in to improve customer service (decrease stock out condition) and to Reduce overall level of finished goods inventories, reduce transportation cost and improve distribution center operations. With DRP system replenishment requirements will be developed by - Forecasting of demand for each SKU - From current inventory level of the SKU (balance on hand) - Considering Lead time for replenishment

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2. Order picking: When any consignment is inwarded at warehouse in ERP system, a Handling Unit number is generated in system; from this number details of scanned finished goods can be viewed, after inwarding of a consignment completed, GRN number is created, Handling Unit number and GRN Number should be pasted on the box these boxes are then placed on pallets in a respective category.

A B C D

SCANNING AREA

C O N S U M A B L ES

Layout of Big Bazaar Storage area In storage area at Big Bazaar warehouse the pallet lines should be numbered alphabetically as Line A, Line B, Line C, Line D Suppose Line A has 10 pallets, each pallet is numbered as A1, A2, A3A10.

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A sheet should be prepared and updated on daily basis, as shown below

Category Line Line A Item Pallet Number A1 A2 A3 B1 B2 B3 Handling Number 1000042823 1000040283 1000028534 Unit GRN Number 6200457863

Line B

Sheet No.1. This sheet will be updated daily in Excel, from this sheet, box with a particular handling Unit can be easily tracked Second excel sheet of article codes is to be prepared, as shown
GRN Number 6200457862 Handling Unit Number Product Details Article No. Description 1000021483 302145856 xxxxxxxxxx 309000510 xxxxxxxxxx 309000511 xxxxxxxxxx Quantity 1 2 2

Sheet No.2. Details from Handling Unit Numbers like article code, Description and Quantity of finished goods can be taken out from SAP system, this details are filled in the format above, so that product with particular description and article code can be found easily, with the help of this sheet, Handling Unit number can be tracked and from Handling Unit number pallet number and pallet line is tracked easily from sheet no.1. As the finished goods are moved from pallets to the scanning area; for outward, details from Sheet 1 and Sheet 2 should be updated daily.

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3. Optimum utilization of Storage Space: 1. At big bazaar warehouse the buildings height as much as possible should be utilized. In Big Bazaar warehouse much space is wasted by not storing goods as high as possible to use warehouses vertical space. Horizontal warehouse space is usually the most obvious and easiest to fill. but a vertical dimension is also a cost factor, and a warehouse operation must utilize this space effectively in order to be efficient.

Upper Space at warehouse Remains Vacant, It should be utilized.

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At Big Bazaar warehouse material is stored only in horizontally on the warehouse floor, the vertical space remains unused, if this space were used storage capacity of warehouse would be doubled. In the upper portion of the warehouse, a floor can be created that will store lightweight items. 2. Implementation of Material handling system. Racks are frame works designed to store loads in upright columns diagonally braced for strength, racking to store pallets may created so that material can be lifted with pallets with the help of trolley, few racks with shelves for storage of goods like apparel, delicate goods, gift and crockery items should be prepared in the upper space of warehouse. For storage of lightweight items vertical carousels can be used, this equipment has a moving belt with number of shelves in it. This equipment will be helpful in quick retrieval and order picking of finished goods. Hydraulically operated scissor jack platform trucks can be used for removing pallets from racks. 3. While palletizing goods received, packages should be laid out so that they interlock and build up to a self-supporting unit load, Same SKUs should be stored on a pallet, as it is easier to stack, the stack is self-supporting as same units fit perfectly, it is easy to locate and pick later on 4. To Reduce double handling, the prepared pallets should be sent directly to the designated location without any intermediate storage point to avoid double handling, Pallets to be kept at level above 3(from ground) should be handled by forklifts only to avoid double handling. 6. Cross docking of finished goods should be done. In this method of storage, on arrival of goods at the warehouse the product is transferred to a staging area or to the delivery vehicle. In this system, the product is not allocated any storage area, because it has been pre-allocated to the individual retail stores. The merchandise arrives at the distribution facility as pre-labeled or non labeled Merchandise. The non-labeled product requires a laborer to print and place the retail store delivery address label on each carton Hence in this case the GRN and STN will be raised simultaneously, against each invoice unlike the normal process followed in receiving and dispatch. Cross docking is an efficient and cost effective method of retail distribution. It helps to reduce the inventory holding cost and enables more efficient space utilization Chapter 6

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8. Warehouse must reduce handling of material, if a warehouse is to operate efficiently. Therefore the design of any material handling system and its associated activities should minimize movements to flow through the warehouse rapidly and efficiently. The aisle space in the warehouse should not be narrow enough to impede movement in the warehouse facility. 9. Storage according to the moving class the areas should be arranged according to the pick frequencies and the picking attributes of the article. Overall walking distance should be minimized by storing fast movers in the best locations nearest to the receiving and dispatch area, Fast moving products should be stored as close to the main aisle as possible routes

Low Usage Medium usage Bulk Storage High usage

Goods In

Goods Out

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Conclusion.
On time customer delivery, in right quantity, with right cost, at right time, in undamaged condition is the basic objective of warehousing in any organization, keeping this objective in mind, this study at Pantaloon Retail India Limited warehouse was carried out to understand the warehouse management processes, During this study in Big Bazaar Warehouse It was found that few warehousing processes like Order picking, Material handling & storage and control on Inwards (receipts) needed to be improved. From the data analysis, and study of processes at Big Bazaar Warehouse, I have concluded that by classifying inventory according to ABC Analysis, and carrying out the replenishment of inventory by studying their monthly consumption and lead times the inventory at warehouse can be reduced and controlled efficiently. This will reduce inventory value and ultimately capital cost of the organization. If the proper storage systems as pallet racks and shelve racks are used First In First Out can be implemented more efficiently, double handling as well as manpower at warehouse can be reduced. In above recommendations, after implementing we should aim to have inventory not more than one weeks requirement in due course of time after implementation of recommendation given in this report. If we want to be world class the focus for future should be on daily basis instead of weekly stock approach and finally establish a JIT (Just In Time) way of working this will make the company most competitive.

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References
Books :
1. Author - Brian Merchant. Title - Distribution. 2. Author - Geoff Lancaster. Title - Physical Distribution Management. 3. Author - Paul Freathy. Title - The Retailing Book. Principles and Applications. 4. Author - Donald J. Bowersox and David J.Closs. Title - Logistical Management. 5. Author - John L. Gattorna. Title - Handbook of Logistics and Distribution Management. 6. Author - Kent N. Gourdin. Title - Global Logistics Management.

Website: www.pantaloons.com
www.inventoryoups.com

Manual: Operating Manual of Pantaloon Retail (I) Limited.

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