Operations Management at SPAR

1. Electronics Department
Damage & Shrinkage Control
At Spar Hyper Market
Submitted By
AshishSarolia
IMT Ghaziabad

2. Last 3 months Analysis
Month Net Sales Shrinkage Value Shrinkage %
Feb 4277170 16389.9 0.383
March 7948348 16406.8 0.206
April 7429813 6433.29 0.086
Net Sales
9000000
8000000
7000000
6000000
5000000
4000000 Net Sales
3000000
2000000
1000000
0
Feb March April
Shrinkage %
0.45
0.4
0.35
0.3
0.25
0.2 Shrinkage %
0.15
0.1
0.05
0
Feb March April

3. Note – Shrinkage Percentage=Shrinkage Value/Net sales *100
Note – Net sales doesn’t have a definite pattern but shrinkage percentage has decreased from
.38% in February to .08 percent in April.
Note – Presently we are having a damage stock of 212474 rupees that is lying into CDIT back room.
Total Number of damaged products is 380.
Types of Damages and Losses
1. Manufacturing Damages – This kind of damages happens due to technical problems in the
product and procurement of faulty products from vendors. This is completely outside the
purview of the company and little can be done about this other than having a good replacement
policy in place.
2. Transportation Damages – This kind of damages happens due to movement of stock from
one place from other or from Distribution center to Store. These are the main cause of damages
and can only reduce by proper handling of the stock.
3. Customer caused Damages – This kind of damages happens due to movements and improper
handling of the products by the customers. This happens because of customer unawareness and
poor display management of the products.
4. Shrinkage – This is not actually damage but caused due to customer theft and difference
between physical stock and system stock. This is a big loss to company as neither can we get a
replacement nor we can get a price for that product so this should be minimized.
5. Mishandling By the sales staff – This kind of damages happens due to callousness and poor
handling of the products by the sales persons.

4. Major Issues
1
Situation Description
Current Situation Display pieces is put up by company(Spar) itself
Problems in current Situation Whole cost of damage and responsibility of safeguarding lies with
the company(Spar)
Possible Solution Display Pieces should be sponsored by respective vendor
2
Situation Description
Current Situation Ageing stock is moved to the inventory till their sell off to the scrap
dealer
Problems in current Situation 1. Overburdening to the inventory room and inventory team
2. Less resell value due to no such policy of Mark Down
Possible Solution There should be a 90 days scrap Mark down policy on ageing stock
3
Situation Description
Current Situation Some Personal EntertainmentProducts don’t have security tag and
there is no security lock in the shelves containing these products
Problems in current Situation Vulnerable to customer theft
Possible Solution 1. There should be security tags on all small appliances like
headphones pen-drives CD’s etc.
2. There should be security lock on shelves like the shelves
sponsored by promoters
3. There should be a security personnel at the bay containing
small appliances so that customer theft can be minimized
4
Situation Description
Current Situation Damaged products are lying in the CDIT Back room for more than 6
months
Problems in current Situation 1. Company is losing precious inventory space
2. Company is also losing money on these damaged products
as it is not able to get replacement products
Possible Solution 1. There should be a good return back and replacement policy

5. with vendor
2. Non-compliance on the part of the vendor should be dealt
strictly e.g. Money should be debited from his account
3. Buyers should be make more accountable for non-
compliance of the vendor
4. Follow a Mark down policy
5
Situation Description
Current Situation Cluttered Shelves containing Mixers
Problems in current Situation More prone to damages while displaying and customer inspection
Possible Solution Utilize the free space in same department and Use optimal display
patterns
6
Situation Description
Current Situation Product wires hanging out from the shelves
Problems in current Situation More prone to damages while customer movements
Possible Solution Respective Sales persons should be more vigilant
7
Situation Description
Current Situation Blenders are kept erect without any support
Problems in current Situation More prone to damages while customer movements and placing
back on shelves
Possible Solution There should be blender stand or jar for holding them
8
Situation Description
Current Situation Water purifiers are kept on the stack of boxes
Problems in current Situation More prone to damages while customer movements
Possible Solution Purifier should have stands sponsored by company

6. Suggestions
There should be more power sockets for display products.
Mix up of GM products with Electronics Products should be do away with.
Sales persons should be encouraged to visit competitor’s Store to observe best things in the
industry and implement that in our store for the better growth prospect.
Why should we use a mark down policy?
Time Period 60-90 90-120 120-180 180-270 270-365 >365
(In days )
No.of 1520 532 727 939 336 839
products
Total value of 2468927 563940 465570 626870 405094 468578
the products
Total
8% 9% 60-90
90-120
50% 120-180
13%
180-270
9% 270-365
11% >365

7. Sub Category Wise Ageing Stock (Value in rs.)
sub category 60-90(Days) 90-120 120-180 180-270 270-365 >365
Personal Care 60369 1883 31674 29365 8743 10060
Personal Entertainment 210779 87860 46558 15644 19486 48599
IT 32211 5111 45873 30072 11842 92310
Home Entertainment 1840678 339658 153060 157019 72252 91491
Large Appliance 131458 56873 24329 76826 11307 27214
Small Appliances 193432 72555 164075 317944 281462 198903
Note – The data mentioned here are the ageing stocks till Jan 2012.
60-90
2%
8% 9% 1%
5%
Personal Care
Personal Entertainment
IT
Home Entertainment
Large Appliance
Small Appliances
75%
*Home Entertainment here includes LCD, LED, and Plasma TV etc.

8. 90-120 120-180
0%
7%
13% 16% 1% 10%
35%
10%
10%
60% 33%
5%
180-270 270-365
5% 2% 2% 5%
3%
5%
18%
25%
51%
69% 3%
12%
>365
2%
10%
42%
20%
20%
6%

9. Item Wise Break Up of Ageing Stock
sub category 60-90(Days) 90-120 120-180 180-270 270-365 >365
Personal Care 20 3 39 21 5 9
Personal 1177 375 192 166 106 185
Entertainment
IT 80 43 226 341 20 265
Home Entertainment 88 42 46 105 60 184
Large Appliance 8 6 1 6 1 4
Small Appliances 147 63 223 300 144 192
Total 1520 532 727 939 336 839
Total
17% 60-90
31% 90-120
7% 120-180
180-270
19% 270-365
11%
>365
15%
60-90
1% 1%
6% 10% Personal Care
5% Personal Entertainment
IT
Home Entertainment
Large Appliance
77%
Small Appliances

10. 90-120 120-180
1%
1% 12% 5%
8% 31%
27%
8%
70% 0% 6%
31%
180-270 270-365
2% 1%
18%
32% 32%
43%
1% 36% 6%
11%
18%
0%
>365
1%
23% 22%
0%
22%
32%

11. Conclusions:
We have 50% of our ageing items in 60-90 days period. That’s why we should have a 90
days markup policy on these products so that we can sell them on lower margin instead
of let them aged more.
Value wise share is always greater for Home Entertainment but no. of item wise its
always personal entertainment which is more because of having products with low
price.
Although we have 75% of items from Home entertainment category in 60-90 days
bracket but as the bracket size increases, items from small appliances category occupies
more space.
More Items are in 60-90 Days aged category so they need to be mark down so as to get a
reasonable value from them.
Personal Entertainment and Small Appliances are the major products in each aged category.
Brand Wise Ageing Stocks
Brand Name Total products with more Total Value (In Rs.)
than 120 day's ageing stock
Symphony 50 191164
LG 9 126697
Hama 847 111861
Maharaja 89 94415
Sony 7 86713
Kodak 19 84432
Panasonic 50 73818
Kenstar 20 65895
Nova 39 57538
Inalsa 48 55251
Morphy Richards 35 50165
Khaitan 44 48252
Whirlpool 6 48046
Philips 40 45269
Lenco 12 44053
Vega 44 37302
Prestige 21 34607
Usha 23 32048
Baltra 183 28606

12. Gryphon 28 25805
Pagaria 26 24689
Volcco 21 20317
Kenwood 7 20230
Skullcandy 14 17790
EzeeMix 22 16044
Kailash 10 15555
Suraksha 11 8044
Italia 16 8024
Logitech 8 7912
Lords 23 6739
Pigeon 20 6000
Radical 47 4810
Conclusions
Apart from big vendors, there is more number of small vendors whose products are
lying for more than 120 days so there is a strong need of a mark down policy plus strong
return back policy.
Some of vendors are not getting requisite sales and they are moved from shelves to
back room but still they are not taken back by vendor so such vendors should be called
quickly so as to vacate back room.
CD ROM’s and DVD Rom’s are ageing but they don’t have some ageing characteristics
like small appliances so their mark down policy should be different.
Security Tags Costing
There are 2 types of security tags
1. Soft security Tag
2. Hard Security Tag
Type Cost(In Rs) Probable use Reusability
Soft Security Tag 3 On CD’s and DVD’s Non-Reusable
Hard Security Tag 10 Headphones, Pen Reusable
Drives, Mouse’s

13. Security Tag usage
Product Name Current Stock Type Of Tag Past 3 Months Total cost Total Avg
to be put Sales(Volume) of putting Shrinkage of Shrinkage/Month
tags Past 3
Months
CD’s And DVD’s 2886 Soft 4686 8658 7126 2375
Headphones & 368 Hard 3680 6796 2265
Earphones
Pen Drives And - Hard - - -
Memory Cards
Conclusions:
Security Tags cost varies between 3-10 Rs but on comparing their cost with total
shrinkage of past 3 months then putting tags are still a viable option.
Also reusable security Tags will serve for long thus over a long time hard security tags
cost will reduce to less than 1 Rs.
Although Soft security tags cost 3 Rs but their cost will be compensate by less shrinkage
which is in the tune of 2375 each month.
Vendors who can be persuaded for putting Display pieces
Sub Category Vendor Name Major Products Total Total
Name pieces Sales
Sold
Large Appliances L G ELECTRONICS Refrigerators, Washing Machines, TV’s 742 11781944
INDIA PVT LTD
Large Appliances SAMSUNG INDIA LCD,LED 594 10837732
ELECTRONICS
PVT. LTD.
Large/Small VIDEOCON Coolers,Irons,Cookers(Kenstar),Refrigerators 1531 6130048
Appliances INDUSTRIES
LIMITED
Small Appliances FAIRDEAL Mixer, Irons,Kettles (Morphy Richards) 2547 5114472

14. CONSUMER
DURABLES PVT
LTD
Small Appliances PHILIPS Dryers,shavers 2575 3738348
ELECTRONICS
INDIA LTD
SMALL APPLIANCE USHA Ceiling Fan, Cookers,irons 2394 2877526
INTERNATIONAL
LTD
Small Appliances SREENIVASA Emergency Lights, rice cookers (Pigeon 2293 2840044
DISTRIBUTORS Brand)
Small Appliances BAJAJ Steam Irons 3142 2249967
ELECTRICALS LTD
Gaming Software VISION CD,DVD 15294 1646747
INTERACTIVE
SYSTEMS (CON)
Small Appliances UNIVERSAL Shavers,trimmers 472 1575864
CORPORATION
LTD
(ELECTRONICS)
Large Appliances MADHUKAR Pure it Water Purifier,steam Irons etc. 1092 1229720
DOMESTIC
APPLIANCES (P)
LTD
Small Appliances MAHARAJA Mixers 1148 967537
WHITELINE
INDUSTRIES LTD
Small Appliances MILLION LIGHTS Hair Dryers 1612 798775
Gaming Software QUIXOT CD,DVD 3031 474729
MULTIMEDIA PVT
LTD
Small Appliances ARYAH TRADING Wipro Emergency Lights 401 418314
CORPORATION
(WIPRO GM)
COMP.ACCESSORIES INTEX Headphones,Pen Drives,Speakers,Web cams 3422 388196

15. TECHNOLOGIES
INDIA LTD
SMALL APPLIANCE ASTHA Ascent Steam Iron
ENTERPRISES
Top Contributors
Vendor Name % Contribution
L G ELECTRONICS INDIA PVT LTD 14.45
SAMSUNG INDIA ELECTRONICS PVT. LTD. 13.29
VIDEOCON INDUSTRIES LIMITED 7.52
SAPNA DISTRIBUTORS 7.4
FAIRDEAL CONSUMER DURABLES PVT LTD 6.1
PHILIPS ELECTRONICS INDIA LTD 4.59
USHA INTERNATIONAL LTD 3.53
SREENIVASA DISTRIBUTORS 3.48
BAJAJ ELECTRICALS LTD 2.76
MIRC ELECTRONICS LTD 2.72
TANSIHA MARKETING 2.45
VISION INTERACTIVE SYSTEMS (CON) 2.02
Total 70.31
Conclusions:
Top 12 vendors are contributing for overall 70% sales of electronics department.
Large appliances vendors like Samsung and LG got total sales of above 1 crore from the
store so we can persuade them to put their display pieces thus we can reduce our
damage responsibility.
Small Appliances vendors are also getting good sales from store so they can be asked to
give free display piece whose damage and replacement responsibility will rest on
vendor. Thus we will significantly reduce our damages.
As we are giving good sales to each vendor thus they all need to be more responsible
about replacement otherwise their lateness should be dealt strictly.