04-02-2013, 03:40 PM
Report on Big Bazaar
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Introduction to logistics
Logistics is a part of supply chain management which deals with the inbound shipments, outbound shipments of goods as well as non saleable items and communication between suppliers. Logistics management involves the integration of information flow, material handling, production, packaging, inventory, transportation, warehousing and often security overseeing the key links in the supply chain, such as shipping decisions, inventory control choices and packing requirements. The importance can be understood by the
fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% - 5% of the total retail price. Therefore, the margins in the retail sector can be improved by 3% - 5% by just improving the supply chain and logistics management.Efficient logistics management not only prevents needless
movement of goods, vehicles transferring products back and forth;
but also frees up storage space for more productive use.
Peculiarities of the Indian Logistics
The Indian logistics sector has typically been driven by the objective of reducing transportation costs that were (and often continue to be) inordinately high due to regional concentration of manufacturing and geographically diversified distribution activities as well as inefficiencies in infrastructure and accompanying technology. Freight movement has slowly been shifting from rail to road with implications on quality of transfer, timeliness of delivery and consequently costs except for commodities which over long distances, predominantly, move through the extensive rail network. More on the infrastructure issues later. The transportation industry is fragmented and largely unorganized – a large number of independent players with regional or national permits that carry freight, often with small fleet size of one or two single-axle trucks. This segment carries a large percent of the national load and almost the entire regional load. This fragmented segment comprises owners and employees with inadequate skills, perspectives or abilities to organize or manage their operations effectively. Low cost has been traditionally achieved by employing low level of technology, low wages (due to lower education levels), poor maintenance of equipment, overloading of the truck beyond capacity, and price competition amongst a large number of service providers in the industry. Often, one finds transportation cartels that regulate supply of trucks and transport costs. However, the long run average cost of transport operations across the entire supply chain may not turn out to be low.
Background –
Big Bazaar was launched in September 2001 and within span of 11 years it is a chain of hypermarket in India. As on 2nd June 2012 there are 214 stores across 90 cities and towns in India covering around 16 million sq.ft. of retail space where it offers a wide range of merchandise including fashion and apparels, food products, general merchandise, furniture, electronic books, fast food and leisure and entertainment sections. It was started by was pioneered by entrepreneur Kishore Biyani, the CEO of future group and managing director of Pantaloon Retail India, born in middle class Marwari family, began career with selling stonewash fabric to small shops in Mumbai .
OBSERVATIONS :-
There were various observations made from the time we entered the store.
• Trolleys are not easily available, especially on other than ground floor.
• Little attention to cleanliness. Dust on shelves as well as some product items.
• In-house packaging not efficiently done.
• Crowded store interiors. Items are arranged in a cluttered way. Tried to stock maximum number in limited area.
• Sign boards are not prominent. Lack of direction creates confusion.
• Family crowd is evident. Youth comprises of only around 10% of the crowd.
• Food Bazaar very efficiently managed. It is a bit overstaffed
but layout is very good. Shelf space is used very well to stock products with clear distinction.
Challenges AT BIG Bazaar LOGISTICS :-
Significant losses/damages during shipping:-
The next problem in setting up organized retail operations
is that of supply chain logistics. India lacks a strong supply
chain when compared to Europe or the USA. The existing
supply chain has too many intermediaries: Typical supply
chain looks like:- Manufacturer - National distributor -
Regional distributor - Local wholesaler - Retailer -
Consumer. This implies that global retail chains will have
to build a supply chain network from scratch. This might
run foul with the existing supply chain operators. In
addition to fragmented supply chain, the trucking and
transportation system is antiquated. The concept of
container trucks, automated warehousing is yet to take
root in India
Inadequate infrastructure
The lack of proper infrastructure and distribution channels
in the country results in inefficient processes. This is a
major hindrance for retailers as a non-efficient distribution
channel is very difficult to handle and can result in huge
losses. Infrastructure does not have a strong base in India.
Urbanization and globalization are compelling companies
to develop infrastructure facilities.
The storage infrastructure, too, is severely restricted. In
2006, India had a total warehousing capacity of 81 million
tonne. Like the rest of the infrastructure sector,
warehousing is highly fragmented and unorganised
Transportation, including railway systems, has to be more
efficient. Highways have to meet global standards. Airport
capacities and power supply have to be enhanced.
Warehouse facilities and timely distribution are other areas
of challenge. To fully utilize India's potential in retail
sector, these major obstacles have to be removed
Almost 78% of total freight is transported by road.
Almost 78% of total freight is transported by road . But,
according to the FICCI-E&Y retail report, roads connect
less than half of the half a million Indian villages. The
normal distance covered by trucks and trailers in India are
250-300 km a day, whereas the international norm is 600-
800 km a day. Most roads in India are designed to carry a
maximum gross weight of 16.2 tonnes, which allows for a
maximum loading of about 9 tonnes. This severely
restricts the ability to transport goods on larger vehicles.