1. A
SUMMER PROJECT REPORT
ON
A STUDY OF SUPPLIER RELATED PAYMENTS SYSTEM AND PROCESS
INVOVLED IN SUPPLY CHAIN AT RELIANCE RETAIL, AHMEDABAD
Project study carried out in partial fulfillment for requirement for MBA Degree
Programme
(2006-2008 BATCH)
Submitted To:
Ahmedabad Education Society Post Graduate Institute of Business Management
Ahmedabad
Submitteed By:
Jigisha P Aagja
Roll No: 01
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2. ACKNOWLEDGEMENT
I would like to thank Mr. Subir Sinha, AVP & Head (Human Resource), Mr.
Rahul Devi VP (Commercial), Mr. Prakash Somany, In-charge , Distribution
Centre, Mr. Sushil Shinde (CPC Manager) and all employees at Reliance Retail,
Ahmedabad for all that I learned from them about processes involved in
Payments system and supply chain management.
I thank Dr A H Kalro, Director Ahmedabad Education Society Post graduate
Institute of Business Management, for giving me opportunity to work for summer
project. I also thank Ms. Jinal Parikh, Faculty Member (Summer Project In-charge)
for supporting me throughout my summer project. I thank Dr. Mayank
Joshipura for tirelessly anaswering my querries relating to concepts involved in
my project.
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3. EXECUTIVE SUMMARY
Organised food retailing is a relatively new phenomenon in India, with small Western-style
supermarkets only starting to appear since the 1990s. Most food is still sold through
local ‘wet’ market vendors, roadside pushcart sellers or tiny kirana (grocery) stores.
Although less than one per cent of food is estimated to be sold through supermarkets, this
share is growing rapidly. In this light, Reliance Retail has rolled out stores in different
parts of India. A study is undertaken to understand the supplier related payment system
and process invovled in supply chain at Reliance Retail, Ahmedabad. A mix of analysis
of internal records at Reliance Retail, Ahmedabad, unstructured informal interviews and
observation methods was employed for undertaking the study. There is strong internal
control system existing at Reliance Retail, Ahmedabad. Reliance Retail, Ahmedabad has
finely customised SAP to suit its business processes.
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4. TABLE OF CONTENTS
Certificate i
Acknowledgement ii
Executive summary iii
Table of contents iv
Retailing trends in the world 1
Retailing in India 12
Food Retailing in India 13
Reliance Retail 16
My study 28
Observations/Findings 29
----- Distribution center for Reliance Retail Stores 29
------ Supply Chain Process for fruits & Vegetables 31
------ Procurement Planning / Sourcing 42
------- Problems faced at different levels 65
------- Activities undertaken by commercial Team At CPC 66
------- Warehouse Management System 71
------- Document Management System 77
------- Significance of SAP Enabled Invoice Verification & DMS 83
-------- SAP Enabled Payment System and Internal Control 86
-------- Invoice Verification For SKUs At DRY DC 94
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6. Retailing includes all the activities involved in selling goods or services directly to final
consumers for personal, nonbusiness use. A retailer or retail store is any business
enterprise whose sales volume comes primarily from retailing.
As retailers shift from mass marketing to targeting specific groups of consumers, they're
becoming increasingly innovative. Leveraging demographic segmentation has become
quite common, so retailers are taking it a step further and identifying ever-more specific
markets to better position their strategies.
The growing trend in retailing is to move away from a centralized organizational
structure that manages all marketing, assortment, and distribution channels to a
decentralized approach. Thanks to distribution channels like the Web, consumers are now
accustomed to retailers that market directly to them. Retailers are responding to consumer
expectations with what's been called "mass customization."
Amazon.com has set the standard for customized retailing. Once you purchase a product
from Amazon's Web site, the site not only recognizes you as a customer when you return,
but it also recommends products based on your sales history. Essentially, Amazon's
"store" tailors itself to meet your personal needs.
Consumers are now demanding the same level of service from other retailers, including
brick-and-mortar stores.
The essential premise of localized retailing is about creating "my kind of store" – an
environment where customers can feel completely at home, relate with ease to the
shopping experience, and see themselves reflected in the marketing. Appealing directly
and individually to customers, though, requires a strong awareness of the local customer
base and a firm grasp of what will catch customers' attention.
A good example of this principle in action is the "Urban Theater" that Home Depot
created in its recently opened store in Manhattan. In this "virtual apartment" setting,
Home Depot showcases its most urban-relevant products while actors complete home
projects in a mock loft apartment – a setting that many of the borough's residents can
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7. relate to. "The [retail] chains that are always successful in the city are the chains that
come in and change for the city and react to New York," said Jeffrey Roseman, a real
estate broker in the city, in Women's Wear Daily.
Localised retailing has also spawned "pop-up" events in which marketers or retailers set
up shop briefly to target a specific market segment. These retailers may have traditional
brick-and-mortar locations, but they use this type of marketing event to identify and
communicate with a particular audience. Some retailers say that these local events can
add more value to their marketing campaigns than traditional advertising or marketing.
Target Corporation has enjoyed success with pop-up retailing events such as its "Target
Bullseye Inn." Target took over the Bull's Head Inn in Bridgehampton, New York, for
five weeks, creating what the company called "a one-stop resource for all things
summer." This special event featured exclusive items – from tableware to bed linens to
outdoor decorating items – from Target designers. The goal of the event was to "surprise
and delight our guests by bringing everything they need for summer fun directly to them
at a favorite summer spot, the Hamptons," said John Remington, vice president, events
marketing and communications for Target. Target has also created special marketing
events in Manhattan, launching designer Isaac Mizrahi's apparel during a fashion show in
2004 and promoting holiday sales with a pop-up event on a boat in 2002.
Customer-centricity
Retailers are continuing to focus on local customers by making their marketing or
products more customer-centric: They're creating modified versions of their brand by
targeting smaller and more specific market segments.
Best Buy has been a pioneer in this approach. The retail chain has launched very specific
store concepts that speak directly to a soccer mom, a tech guru, or that urban guy who
wants his entire home entertainment system built and installed for him. While the product
assortment may be similar, its presentation varies in these customer-centric locations.
Stores designed to appeal to soccer moms may offer a kids' play area, educational toys,
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8. and products like appliances in addition to Best Buy's traditional consumer electronics
mix. Other stores may feature home theater displays as well as high-end and cutting-edge
electronics to attract that urban guy.
These stores first determine the demographics of their local market and choose two
customer profiles. Then, they stock merchandise accordingly. The approach seems to be
succeeding. Brad Anderson, Best Buy's chairman and CEO, recently said that "customer
centricity lab stores collectively outperform other U.S. Best Buy stores in terms of comp
store sales gains and gross profit."
These small variations offer great rewards. This type of focused positioning creates a
unique message for customers; they truly feel that this is "my kind of store." While it also
offers challenges – it creates extra processes and structure in the corporate office, for
example – its potential to evolve and expand brand offerings seems limitless.
Another way to target specific segments is through in-store media, which has evolved as
a main vehicle to individualise a retailer's message. Eddie Bauer was an early pioneer in
testing in-store video media. By placing flat-screen televisions in store windows,
individual stores were able to change their advertising messages at any point in the day.
This gave Eddie Bauer the ability to appeal to morning shoppers who might be motivated
by a different marketing message than people shopping in the evening.
Changing climates
A customised approach can also help retailers adjust their product offerings to the local
climate. Though retailers understand the need to carry shorts in markets where it's hot
year-round, their systems have not always allowed them to do so. In the past, shoppers
may have found only a small selection of shorts for sale in Miami in the winter, during
that city's peak tourism time. Now, retailers have fine-tuned their marketing tactics and
carry shorts year-round in warm climates. They're also creating exclusive product lines
that are climate-sensitive: A retailer may carry a long-sleeved shirt in cooler markets, for
example, but offer a short-sleeved version in warmer markets.
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9. As consumers learn that they can purchase products through more channels, retailers are
reacting; their goal is to get the customer what they want when they want it. If a retailer
fails to stock items that are in demand in a particular climate-driven market, the customer
can easily find it elsewhere, whether that's online or down the street. As customised
retailing expands and consumer expectations rise, retailers must exploit every opportunity
to create unique product offerings that speak directly to their local customers.
Pricing is another key aspect of localisation. Many retailers now localise pricing to adjust
to local market conditions; they can grow their profit margins or cater to a local
marketplace's pricing tolerance. Essentially, they can charge what a particular market will
bear.
"Retailers whose stores/outlets span locations that have different customer segments in
terms of buying power and interests need to be able to price appropriately for each of
these customer segments to maximise profit for each segment," says Sanjay Chopra, co-founder
of Calance, a global professional services firm. "Retailers need to be able to plot
the demand curve of each segment, then price and promote appropriately to maximise
profit, clear inventory, or meet revenue targets."
Customised retailing has evolved beyond breaking a retailer's store base into a few store
types. As distribution channels continue to diversify, retailers must find ways to appeal to
specific market segments. Their product mix must be relevant to the local climate and
culture, and their pricing must reflect what the marketplace will bear. While mass
marketing may be on the decline, mass customisation is evolving -- and as it evolves, so
do the demands that each market places on retailers
Store of the Future
Today, customer-centric retailers worldwide are increasingly banking on technology, not
people, to gain an advantage in the marketplace, and with many companies in various
fields in retail introducing Radio Frequency Identification technology (RFID), the chase
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10. is on to make it happen.
In a relentlessly competitive retail environment, particularly in the US and Europe, the
goal is to identify key customers, what these customers want, and to have what they want
in stock and on store shelves as soon as it is made. Cutting the down time between the
product selling from the shelves and the time taken to replenish it and also to get a new
product on to the shelves as soon as possible, is heavily dependent on technology today.
For some, the implementation is on now, but for others, it may be decades away. But
Indian chains will have to adapt quickly as prototype technologies reshape retail in the
next five to ten years. Though there are a few people in India who have already started
implementing the technologies that are new. A case in point is the Adora jewellery brand
– one of the fastest growing diamond jewellery brands in India. They already have 160
outlets and are projected to grow to over 300 in the next 18 months. Not only have they
successfully implemented a very extensive ERP technology covering manufacturing,
supply chain management, but also to a great extent have been successful in installing
customer-friendly touch screen terminals with wireless internet at many of their shop-in-shops.
Prabir Chatterjee Managing Director, Adora Jwellery is of the view that the
technology is being used for the first time by a jewellery brand in the retail industry and
will cut down the time between selection of a product by a customer and delivery to him
from the current three weeks to 72 hours.
The customer can access from any of the 5,000-odd designs available in ready stock at
any of the outlets in India. Upon confirmation of the order, the piece will be shipped to
the ordering outlet within 24 hours, thereby making over 5,000 products available to the
customer at the touch of a button even though the stocking at each outlet may not be
more than 300 pieces.
The concept is based upon the use of RFID along the entire retail supply chain. "An
intelligent tag" that utilises a miniature computer chip and antenna is attached to the
product and transport package. It is similar to more conventional barcodes. In fact, it is
expected that it will eventually replace barcodes. Right now, it is expensive for some
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11. applications, but it provides the manufacturer and retailer with important product
information.
For retailers, the technology optimises tracking of merchandise, minimising losses and
maximising product management. For consumers, it means fewer out-of-stock situations
on shelves and quicker checks of a product's expiry date.
In the Store of the Future, RFID wireless technology is being tested mainly for supply
chain management. It can track the movement of goods to the warehouse, to the store,
and replenishment of goods on "intelligent shelves" in the store. RFID technology is also
the key to other applications in the Store of the Future.
For the moment, only individual, stand-alone applications of innovative technologies
have been implemented at retail. In the future, the plan is to link a variety of these
technologies to provide a more sophisticated package.
There are several basic interactive areas in the Store of the Future. For instance, when the
customer checks in using a card that is issued to regular customers, a user-friendly
computer on the shopping cart greets the customer by name and becomes the shopper's
Personal Shopping Assistant (PSA).
The computer displays information and prices when customers scan the product barcode
over the built-in reading device. It also provides information about special promotions,
directs customers to products they usually buy, keeps a running total of the shopping bill,
and facilitates checkout (since customers have already scanned purchases). The card,
which is also a loyalty card, automatically enters customers into the store's bonus system.
Information terminals are also set up for various merchandise groups to offer details
about the products. In food stores, it might offer recipes. An "intelligent scale" not only
identifies the product, but also weighs it and emits a price slip. Electronic advertising
displays are placed near the merchandise to which they apply. And "smart shelves"
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12. stocked with RFID-tagged products communicate with store personnel so that they are
rarely empty.
Virtual sales could enable customers to feel the silk of a new dress or smell the aroma of
freshly ground coffee when they are sitting in front of their TVs or computers at home,
areas where retailers see sales increasingly being made.
Check Out
Every retail experience ends with some version of checkout. The Store of the Future
checkout requires no unloading of the cart (because everything in the cart has already
been scanned). Customers check themselves out (passing a RFID security check and a
RFID deactivator to ease exit).
Behind the technology, inventory management is the basic building block from the
retailer's perspective. A mobile assistant/personal digital assistant helps employees help
customers. An inventory count is available by just pushing a button. And smart shelves
prevent out-of-stock situations or misplaced items. There is also the promise of future
supply chains that interact, that can track shipments from the producer to stores equipped
with this new technology. Once in the store, it can track the flow of merchandise from
stockroom to store shelf to customer checkout.
Not so far into the future, it may be possible to customise products that are, today, mass
produced, and to have those products delivered when and where customers need them.
The exponential growth of the Internet makes this vision more realistic than it was a few
years ago. About 71 million people born between 1979 and 2002 are coming of shopping
age and are very comfortable with technology, in many cases more so than members of
immediately preceding generations.
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13. According to John Davies, vice president of Intel's solutions’ market development group
there will be great efficiency and visibility across the retail supply chain and also
enhanced customer experience.
Cart-level and pilot-level applications will be visible in five years; significant use of
wireless tagging will take seven years or more, according to David Hogan, CIO, National
Retail Federation. If the price of the RFID technology comes down there will be
widespread adoption by retailers of RFID technology.
Tags now cost about Rs.12 to Rs.15 each but time and widespread use should bring the
cost down to a few paisa.
Technology has been used extensively in retail banking, servicing the needs of the
consumers across the nation. Imagine not having the online banking system – you could
only withdraw money from your branch via a cheque instead of the smart ATM card that
enables you to do multiple transactions at any point in the world even though your
account may be in a small branch in New Delhi!
This has also changed the face of the stock trading, retail trading in stocks and shares and
the financial and equity markets by making so much available. Can the retailers afford
therefore to stay away from technology in retail?
It is after all the point where the customer actually touches and feels the heart of the final
usage of technology and makes life so much simpler.
Future IT Trends and Benefits for Retailers
The hardware and software tools that have now become almost essential for retailing can
be classified into three broad categories.
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14. 1) Systems that affect the customer directly
• Bar coding and scanners
Point of sale systems use scanners and bar coding to identify an item, use pre-stored data
to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new
concept where the consumer pushes the full shopping cart through an electronic gate to
the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and
scanned. All that the consumer has to do is to pay for the goods.
• Payment
Payment through credit cards has become quite widespread and this enables a fast and
easy payment process. Electronic cheque conversion, a recent development in this area,
processes a cheque electronically by transmitting transaction information to the retailer
and consumer's bank. Rather than manually process a cheque, the retailer voids it and
hands it back to the consumer along with a receipt, having digitally captured and stored
and image of the cheque, which makes the process very fast.
• Internet
Internet is also rapidly evolving as a customer interface, removing the need of a
consumer physically visiting the store.
2) Retail Operation Control Systems
• Retail exchanges
Various retail exchanges have been set up in the US and in Europe. One of them is the
World Wide Retail Exchange, which enables retailers to interact with vendors and with
other retailers for B2B transactions. Such exchanges help in reducing transaction costs.
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15. They need to be set up in India, too.
• ERP Systems
Various ERP vendors have developed retail-specific systems which help in integrating all
the functions from warehousing to distribution, front and back office store systems and
merchandising. An integrated supply chain helps the retailer in maintaining his stocks,
getting his supplies on time, preventing stock-outs and thus reducing his costs, while
servicing the customer better.
3) Retail ERP packages
In the future there would be a need to evaluate if retail ERP packages like JDA, SAP, and
Retek are suitable for Indian retailers. These products have an integrated solution for
demand forecasting, merchandising, replenishments, supply chain, etc. Most of these
packages have built-in CRM, OLAP tools, collaborative planning and supply chain
systems that are tightly integrated with the merchandising and forecasting functionality.
Though the flip side is that these packages are costly, the return on investment takes
longer and expertise to implement the systems is gradually being developed in India.
Hence, it would be a good idea to evaluate these packages, determine the cost-benefit
analysis, and wherever possible, source the software from one vendor organisation that
would provide all the functional requirements of the retailer from an information
technology perspective.
The Indian experience in implementing Retail ERPs has been difficult due to the lack of
trained ERP package implementers in India. Hence, the cost of implementation has gone
up, as package experts have to be brought in from abroad. But this is true for all ERP
implementation in India, whether in the retail sector or in the manufacturing sector. In the
past, manufacturing industries also faced difficulties in implementing ERP packages
specifically meant for the industry, but over time, with expertise in the packages and in
their implementation building up within India, the success rates of such implementations
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16. have increased. Hence, over the next two to three years, Retail ERP expertise will grow
and will be able to support the needs of Indian retailers, who in that timeframe would
have progressed up the learning curve on the benefits of information technology.
But one has to learn where to draw the line and cannot go on with adapting new
technologies which sometimes may not be cost effective solutions.
At the same time, growth is rapidly evolving and change is the only thing that is constant.
If we in Indian retail business don't adapt ourselves with the changing times we will be
left way behind in another day and age.
Introduction to Retailing in India:
Organised food retailing is a relatively new phenomenon in India, with small Western-style
supermarkets only starting to appear since the 1990s.
16
17. Most food is still sold through local ‘wet’ market vendors, roadside pushcart sellers or
tiny kirana (grocery) stores. Although less than one per cent of food is estimated to be
sold through supermarkets, this share is growing rapidly.
Most supermarkets resemble the small independent operations that existed in Australian
cities and towns about 20 years ago, typically occupying from 275-750 square metres and
carrying about 6000 stock-keeping units.
Most of the supermarket development has occurred in the south of the country in the
major cities of Bangalore, Chennai and Hyderabad, as well as New Delhi and Mumbai in
the north.
According to the Images-KSA Technopak India Retail Report 2005 an estimated 500
shopping malls are expected to be built by 2010 from a near-zero base in 2000, in a trend
that can benefit Australian producers by providing greater visibility and shelf space.
Convenience stores are also taking off in major cities, usually in the form of Shell shops
or Food Stops attached to petrol station outlets.
The format and product range is surprisingly similar to those in Australia, and they often
include chilled and refrigerated sections. Market analysts estimate the organised retail
sector has been growing by nearly 30 per cent a year since 2000 with similar growth
likely in the short-to-medium term.
The sector is expected to undergo further change with prospective new domestic and
global foreign entrants, and the takeover or exit of some existing participants. Global
players such as Wal-Mart (US) and Carrefour (France) have indicated their plans to enter
India once Indian foreign investment regulations permit.
Food retailing in India
Traditional local markets and small-scale retailing continue to dominate India’s food
retail sector. There are an estimated 12 million retail outlets, of which almost seven
million sell food and grocery products. The vast majority of these are small kiosks (17
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18. per cent), general provision stores (14 per cent) and grocery stores (called kirana; 56 per
cent of all rural retail outlets) run by a single trader and his family With more than 71 per
cent of the population living in small villages and engaged in agriculture, most of India
still does its food shopping at small-scale vendors in the local village, or at larger-scale
weekly markets often serving several villages in one area, where small individual vendors
trade.
In the towns and cities, most consumers do their food shopping at the local
neighbourhood independent small retailers, kiosks and street hawkers. Servants in high
income households usually undertake this task. Most cities and towns also have one (or
more) large central fresh produce market where wholesalers and retailers (plus some
consumers) procure their supplies for the day from individual traders. The Food
Corporation of India (FCI) has an extensive nationwide network of about 478,000 fair
price shops and sells subsidised food grains and certain other staples, but since the
retargeting of the Public Distribution System (PDS) in 1997 to focus on the poor, these
are only available for those below the poverty line set by the government.
There are also a few other chains of government-operated provisions stores, such as the
Kendriya Bhandar (about 120 stores nationwide) run by the Ministry of Personnel,
Grievances and Pensions, and the canteen stores (about 34 plus 3400 canteens) run by the
Ministry of Defence, which are exclusively for Defence personnel. Thus the majority of
food and beverage retailing in India is categorised as belonging to the unorganised sector.
There is no firm data for the total value of India’s annual food and beverage expenditure,
however there are various calculations and estimates, such as about US$90 billion by
2000 based on the Indian government’s estimates of average urban and rural household
expenditure on food and beverages3, and about US$135 billion by 2004 and growing at
4-5 per cent a year, based on industry estimates cited by the USDA.
However it is commonly believed that less than one per cent of food and beverage retail
sales take place through the organised retail sector, though this share is estimated to be
growing rapidly. An early form of ‘supermarket’ has been around in India for some time:
the single-unit, smarter familyowned grocery and provisions store, now calling itself a
supermarket (while others may call it a ‘super-kirana’), of which there are at least five to
20 in each city.
18
19. Another form is a specific food and grocery section contained in some department stores,
such as the Sahkari Bhandar department store chain, which has about 16 stores in
Mumbai. But it is only in the past decade or so that a form of supermarket akin to a
Western-style supermarket, albeit on a smaller scale, has started to appear in India,
mainly in certain cities of southern India plus in New Delhi and Mumbai.
One of the pioneer supermarket chains was created in 1995 through a technical
agreement (and from 1999 by a 51/49 joint venture) between India’s Calcutta-based RPG
Group and the UK’s Jardine Matheson Group’s Hong Kong-based subsidiary Dairy Farm
International. The joint venture converted the loss-making old Spencer department store
chain owned by the RPG Group into the Foodworld supermarket chain, with about 94
stores in several southern cities, including Chennai, Bangalore, Hyderabad and Pune, by
2005. While Dairy Farm aims to continue expanding the Foodworld chain, the RPG
Group decided in 2005 to sell its 51 per cent share in the Foodworld joint venture, though
possibly retaining half the supermarkets rebranded as Spencer’s. RPG Group plans to
focus on developing its other retail businesses including the Spencer hypermarket chain,
which had three stores opened by 2005 (in Hyderabad, Visakhapatnam and Mumbai), and
a plan for 20 stores across India by 2007 in existing cities plus others such as Chennai,
Bangalore, Delhi, Calcutta, Ahmedabad, and Chandigarh. Several other Indian-owned
companies have developed chains of supermarkets, hypermarkets or convenience stores,
mostly in major cities in the southern states plus in Mumbai and Hyderabad.
Another pioneer, the Nilgiri supermarket chain, opened its first supermarket in Bangalore
in 1971 and by 2005 had built a network of 30 stores, both company-owned and
franchised, in the states of Tamil Nadu, Andhra Pradesh,Maharashtra and Karnataka.
The Hyderabad-based Trinethra Group opened its first supermarket in 1986, expanded to
68 stores by 2004, then acquired the 12-store Fabmall chain in Bangalore, in partnership
with a new 50 per cent equity investor, Bangalore-based GW Capital, to enable further
expansion into more states. Fabmall now has a total of 28 stores in Bangalore and
Chennai. Other significant chains include the Subhiksha discount supermarket chain, with
72 stores in Tamil Nadu, and Pantaloon Group’s 42 Food Bazaar supermarkets and Big
Bazaar hypermarkets in major metropolitan centres.
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20. The Indian government has taken a cautious approach to allowing foreign direct
investment (FDI) in food retailing (and retailing generally), with majority foreign
ownership in food retail chains not allowed, and approvals generally given on a case-by-case
basis. (In February 2006 the government made a small concession on FDI in
retailing, by announcing that up to 51 per cent in retailing of “single brand” products
would be allowed.) Since the joint venture of the RPG Group and Dairy Farm
International was approved in 1999, only Germany’s Metro Group (with two Metro Cash
& Carry wholesale stores opened in Bangalore so far since 2002), and the South African-owned
Shoprite Group in partnership with a local investor (with one Shoprite
hypermarket opened in Mumbai in late 2004) have been permitted to set up operations.
Local foodservice group Radhakrishna has also gained a licence for food wholesaling in
partnership with France’s Intermarché Group, whereby independent food retailers can
sign up for use of the Spar store brand. Several major multinational corporations, in
particular Wal-Mart, have been lobbying the Indian government to allow majority foreign
ownership in retailing. Wal-Mart has indicated that it would significantly increase its
sourcing from Indian suppliers from its current level of US$1.5 billion a year
(so far mainly non-food products, but likely to soon include some food products, such as
basmati rice, tea, spices, seafood), if it were allowed to set up retailing operations.
Major Indian retail groups, such as the RPG Group and the Pantaloon Group, have
expressed their strong opposition to allowing more foreign direct investment into Indian
retailing, especially majority foreign ownership. They argue that the sector is still at a
very early stage of development and multinationals such as Wal-Mart would swamp local
players, especially the kirana-wallahs. However the Indian government appears to be
considering some degree of liberalisation, in the interests of improving efficiency in
retailing and supply chains and so strengthening the integration of the Indian agrifood
market, plus opening possible new avenues for Indian exports via multinational
retailers.
RELIANCE RETAIL
A targeted sales turnover of Rs. 90,000 crore by 2010 of Rs. 30,000 crore over the next
five years – that's the retail vision of Mukesh Ambani and his RIL retail team. RIL's retail
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21. venture seems all set to achieve the status of being the flag-bearer of India Retail Inc, and
that too in record time!
Culling information from all possible sources, Images F&R Research attempts to put the
Reliance Retail jigsaw in order and see how the concept and strategy differentiates from
the existing competition, how it impacts the intermediaries and consumers, and more
interestingly, how will it stand up to the real competition from global retail powerhouses
like Wal-Mart, Carrefour, Target, Metro, Sears and Tesco that are eager to enter the
Indian retail arena once the FDI barrier is lifted. Read on for the full story…
It's been in the news for quite some time now. Earlier, about a year ago, it was only
whispered in close industry circles. Slowly the whispers become louder, and the word
gained ground that India's largest private sector company, Reliance Industries Limited
(RIL), is entering the Indian retail sector in a real big way.
But with virtually nothing coming from anyone in the know inside RIL about their retail
plans, this has to be one of the most closely guarded secrets of India's corporate story.
Blueprint for 800-odd Towns/Cities: Initial Investment Rs 3,350 Crore
Amidst all sorts of speculations in the media circles about RIL's intended retail foray, the
word finally came out on January 23, 2006, when the Mukesh Ambani-controlled
Reliance Industries Limited presented the mega retail initiative plans to its board of
directors who subsequently gave their consent to pursue the retail business through a
wholly-owned subsidiary of the company – likely to be christened Reliance Retail
Limited.
The Reliance Retail blueprint envisages nation-wide chains of hypermarkets,
supermarkets, discount stores, department stores, convenience stores and specialty stores,
in about 800-odd cities and towns across the length and breadth of India. The RIL board
of directors approved the initial phase of the retail foray at an estimated cost of Rs 3,350
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22. crore (US$ 750 million).
That was big news for both the national and international media, which went all agog
again with intense speculation. Giving full respect to the importance of this
announcement, more than one leading international daily – chiefly, The Financial Times
– gave this news a front-page treatment, speculating (like many others) that this
investment could just be an initial tranche of a much larger commitment from Reliance
Industries towards the retail project.
Just how big and grand this investment is for the Indian retail sector can be gauged by the
simple fact that the entire Indian retail sector is estimated to be at Rs 1050,000 crore
(US$ 233 billion) – growing at five per cent annually – and the estimated share of
organised retail is only Rs 36,000 crore (US$ 8 billion), at present, albeit growing at over
30 per cent every year.
That makes Reliance Retail's proposed investments equivalent to about 10 per cent of
India's organised retail market – such a level of investment in the Indian retail arena has
been unprecedented in the country's most promising sunrise industry – retail.
So much so, projections by the Images-KSA India Retail Report 2005 of an organised
retail market of Rs 100,000 crore (US$ 22 billion) by 2010 now appears conservative,
likely to be achieved much earlier than 2010.
If Indian retail was lacking a whole-hearted and full-blooded thrust from a big and large
corporate house (apart from the lukewarm investments made by the Tatas and ITC), it is
now all set to change. Mukesh Ambani, who has been nourishing retail ambitions for
quite some time now, has clearly positioned himself in to the role of redefining the entire
landscape of Indian retail.
RIL Set To Become World's Largest Real Estate Property Owner
22
23. What is even more interesting is that Reliance Industries Limited will far out-surpass the
Catholic Church in becoming the world's largest owner of real-estate property by virtue
of its mega Retail and Satellite Township plans, in the next two to three years!
Now what exactly does this mega retail plan portend for the Indian retail sector? In fact,
what exactly are RIL's plans, in terms of retail strategy? How will RIL differentiate its
stores and concept from existing players who have already moved into the retail space
earlier, and have already established a good foothold? How will this impact the existing
retail majors – the likes of Pantaloon Retail, Trent India, Shoppers' Stop, RPG, etc? How
will the consumer benefit from RIL's venture and how will intermediaries like traders,
suppliers and farmers all along the supply chain network benefit? What will be the USP
of Reliance Retail?
And, more significantly, how will this impact the major international retailers who plan
to enter the Indian retail market? Reliance Retail is in fact giving India for the first time a
real feel of the scale at which these global retail powerhouses actually operate, it is
preparing India to stand up to the ensuing competition and in the process, allow
consumers the full benefits of modern retail.
Retail Will Become Core Business of RIL
Reliance Industries Limited is the largest and one of the fastest growing private sector
companies in India, with business activities encompassing almost all major growth
sectors of the Indian economy. The company manufactures and markets a wide range of
products with market leadership in almost all its businesses.
All of Reliance Group production and services ventures have one common feature –
global scale operations employing state-of-the-art technology in all fields. The company
is truly emerging as a well diversified conglomerate with global competence in
technology, management and financial capabilities to meet the needs of a rapidly growing
Indian market.
23
24. With domestic market shares ranging from 40-80 per cent, RIL is also ranked among the
top 10 producers globally, for all its major product segments. It is one of India's largest
business conglomerates with total revenues of Rs 1,00,650 crore (US$ 22.6 billion).
It is being speculated within the industry that the ROIs made by RIL in the retail space
will far out-shadow its existing core flagship businesses – and very soon retail will
become the core business for the Mukesh Ambani-controlled Reliance empire.
Factors contributing to Interest in Retail sector For Reliance:
For a long time, organised retail in India remained the attraction of only a few
enterprising Indian entrepreneurs, who took the plunge into the deep sea of a hitherto
uncharted territory.
It is only in the last 10-15 years that the retail sector's inherent attractiveness started
catching the attention of large corporate houses in India, like the Raheja Group, RPG
Enterprises, the Piramal Group etc. But with due respect to all of them, their vision has
remained conservative and they have been modest in scaling up their retail business
models to take it to the next level of operations with a pan-India presence.
What clearly lacked was the level of investments; the slow pace of consolidation and
indecisiveness in experimenting and migrating between multiple formats, categories and
channels. This has prevented them from reaping the true benefits of modern retailing.
The compelling drivers of new retail thrust in India with a large corporate house like
Reliance Industries announcing big, not to mention international retail giants who are
getting impatient to enter India are as follows:
• The first driver is a self-sustaining buoyant Indian economy that is growing at eight per
24
25. cent a year.
• The second is that as the economy grows and expands, the consumption habits and
patterns of people also change – and it is changing real fast in India.
• The third important driver of organised retail is the country's demography – India is
home to the largest and the youngest population in the world.
India's 300 million-odd middle-class, the real consumers, is catching the attention of the
world.
Going by its past track record of business acumen and foresight, Reliance Industries
could not afford to miss out on this great potential that organised retail offers. The
opportunity has all along been there for all Indian businesses to grab, and indeed some
have made a serious attempt. But, it is RIL's announcement of entering the retail sector in
this big and grand manner that has really provided the needed thrust for take-off, it has
shaken up not only the entire Indian retail fraternity and key stakeholders therein, but has
also evinced the interest of other business groups to look up to retail and consider
sizeable greenfield investments in retail ventures as also in building up the supply chain
from farm/manufacturer to retail stores.
It was at the India Retail Forum 2005, organised by the IMAGES Group, when Hital
Meswani, Executive Director, Reliance Industries Limited, highlighted the changing
dynamics of retailing in key areas such as demand, supply, technology, supply chain
management and on how the industry expects government to foster and facilitate a more
proactive retail trade policy.
Hital Meswani remarked, at the IRF '05, that change in demand patterns have provided a
huge opportunity to organised retail, as it realigns itself with global trends in value-oriented
shopping experiences. He opined that change in supply trends provides the
greatest challenge to retailers as price points grow competitive and new formats emerge
25
26. on a large scale, and to provide all of that to the ever-demanding customer without
compromising on assured supply and highest quality. These remarks were an indication
of the seriousness with which RIL was working towards its retail venture – and the
leaflets of the blueprint started unfurling thereafter, albeit cautiously.
RETAIL PLANS & STRATEGIES
Manoj Modi and Hital Meswani, flanked by a core team of trusted lieutenants and
business aides, constitute the top hierarchy in Reliance Retail. They have access to close
supervision from Mukesh Ambani himself. The retail plans are humungous and Reliance
insiders claim that the objective is to 'do a Wal-Mart' in India.
Targets 90,000 Crore Turnover by 2010
RIL has set a revenue target of Rs 90,000 crore (US$ 20 billion) from its retail operations
by year 2010, almost 10 per cent the size of the current organised retail business in the
country. It dwarfs India's current numero uno in organised retail chain, Pantaloon Retail,
which currently has an annual turnover of US$ 240 million from its 84 outlets spread
over 30 cities and has projected revenues of US$ 2 billion by 2009.
RIL's plans include a pan-India footprint of its stores, across multiple formats and
categories, in more than 800 cities and towns, and in record time.
Multiple Formats with Investment of Rs 30,000 Crore
The brains behind the mega retail venture have been able to ideate and develop a low cost
pan-India supply-chain model that will involve massive economies of scale.
The strategy is to set up a chain of hypermarkets, supermarkets, discount stores,
speciality stores, and convenience store formats in 800-odd cities and towns across the
length and breadth of the country at an investment of around Rs 30,000 crore (US$ 8
26
27. billion).
The retail foray will have almost all the leading Indian and international brands, and
possibly a sizeable presence of private labels as well, and would clearly try and build a
loyal customer base with tens of millions of consumers from across the country.
While the sheer scale of operations will ensure Reliance's retail business a 20 per cent
return on investment over a span of five years, its rural low cost-high return investment
will ensure sufficient competitive edge vis-à-vis purely urban retail operators.
The first phase was expected to see around 1,575 retail outlets coming up in just three
months – between December 2006 and March 2007. The first of these outlets were
expected to open up around September this year, either in Mumbai or Ahmedabad.*
Reliable sources say that the retail business would start with 20 destination points in A-class
cities in India, and soon expand to over 100 destinations in a very short span of
time. On an average, each of these retail centres could be spread over 100 acres of land
that would house leisure and entertainment facilities, small hospital complex, eateries and
a big mall. RIL insiders are, of course, tight-lipped about everything.
Further, it has been reported in the media circles that initially the company has targeted
the five states of Maharashtra, Gujarat, Punjab, West Bengal and Andhra Pradesh for the
first phase of retail rollout.
Gradually, in the next two to three years, Reliance Retail plans to establish a pan-India
presence of all its formats, targeting not only the major metros and cities, but also the
second-tier towns and semi-urban and even rural centres. Quite clearly then, the number
– 800 towns and cities – has been very strategically and meticulously worked upon.
F&B to Generate 40% Sales Revenue, Direct Employment to Over 5 Lakh
It is internally estimated that the food and beverages category will account for as much as
40 per cent of the total revenue generated from the Reliance Retail venture and that the
27
28. company plans to give direct employment to more than five lakh people. About 23 CEOs
across multiple functions and categories will oversee the retail operations.
The popular format in towns and rural settings will be hypermarkets, which will be
warehouse-style stores spread over 150,000 sq.ft and will be selling products ranging
from consumer electronics and groceries to fresh food and clothes. There will also be
smaller 75,000 sq.ft supermarkets.
RIL has roped in leading retail consulting firm, Technopak Advisors, and management
consulting firm AT Kearney to provide specific and specialised strategic inputs, and
advise the top management of Reliance Retail during the entire planning, design and
implementation, and execution stages of the massive retail foray, reports say.
Evaluation of Category Mix & Formats
Reliance Retail has studied the potential of all possible categories of products and
services retailing. In fact, it is keen on capturing market leadership in every possible retail
category, once it has rolled out and consolidated its retail operations.
The market insights and intelligence derived from this effort has helped Reliance to
evaluate each category on its market-size, growth rate and potential as being one of the
main determinants for its retail rollout operations. This can clearly be taken as a precursor
to Reliance's understanding of the retail market in India, in terms of clear understanding
of:
• The primary sources of procurement of products
• Average inventory (retail and warehouse) that is normally maintained at retail stores
across various categories
• Seasonal sales variation in categories across different regions in the country
• Shrinkage and wastage of products and percentage of returns thereon
• The number of SKUs across brands and categories
• The credit details (in terms of the number of days and cash) that retailers normally get
28
29. from their supplier across various product categories; and
• The average gross margin (percentage of MRP) that the retailer generally gets on its
products.
Apart from food and grocery, which will contribute 40 percent to total sales, the company
is strongly looking at apparel, lifestyle, consumer durables, and leisure and entertainment
operations as its major drivers of business. It is considering the establishment of both
multi-brand as well as exclusive brand outlets for certain categories of operations.
While most of outlets will be company-owned, the convenience-store format could
possibly be the only exception to be operated through a franchisee route in collaboration
with mom-and-pop kirana shop-owners, which in itself is a novel concept that could work
very well in the Indian context.
RELIANCE RETAIL LIMITED & ROLL OUT OF ITS STORES IN INDIA
RESEARCH
29
30. Before plunging into the retail sector, reliance had undertaken an extensive market
research.It had undertaken a comprehensive study of the retail market.It took more than
two long years of hard research work, which gave it a base for taking a sound decision of
whether or not to plunge into the retail industry.The hard research work also helped it to
have a better approach of entering the market.
It had undertook different types of research.It had used questionnaires,surveys.
Where Questionnaires were not sufficient, other methods had to be used This was
required as questionnaires do no always provide the right answers. They do not always
reveal the truth.
Actually research team members had to make obserations, the consumption patterns
and buying behaviors were monitored and analysed.This involved a huge cost.Hiring the
best and the talented is a costly exercise, but also an intelligent one.
STORE LAUNCH IN INDIA
Reliance retail limited has rolled out a chain of its ‘Reliance Fresh’ stores in India.
It gave birth to it’s first ever‘Reliance Fresh’ retail store at Hyderabad, in Andhara
pradesh.
It began with the it’s first ever ‘Reliance Fresh store’ at ‘Hyderabad’in Andhara Pradesh.
Not confining itself to the state of origin of it’s store, it walked further and set up it’s
store at Tamil nadu.Thereafter, it gave the people of ‘Rajasthan’ the taste of it’s new
concept of retailing,through it’s stores,where the fruits and vegetables are arranged on the
shelves of the store along with other food products.
It made a flight from Rajasthan to ‘Delhi’.And tempted the time driven consumers
there by giving them the an option of relishing the experience of ‘convienence
shopping’.It did this by offering varieties of fruits and vegetables beautifully arranged on
the store shelves along with the other FMCG (Fast Moving Consumer Goods), all under
the same roof.
30
31. Then it came to the native state of it’s founder and set up ‘Reliance Fresh’ stores at
Ahmedabad.It rolled out nine stores in the first phase of it’s store launch at ahmedabad.
In gujarat..It has been adding up more of it’s ‘Reliance Fresh’ stores at different regions
of ahmedabad.
‘Reliance Fresh Stores’ in the first phase of launch, at Ahmedabad are :
NAME OF STORE STORE LOCATION
R K VILLE ISANPUR
SUKUN ARCADE MITHAKALI
HARVY GURUKUL
SHALVIK NARANPURA
ORNET VASTRAPUR
RAJSHREE AMBAVADI
KALADARSHAN JODHPUR TEKRA
GANGA RACHANA RTO CIRCLE
ADITYA PLAZA SATELLITE
After the roll out of the above nine stores in the first phase of its store launch in
ahmedabad, it has launched some more of the ‘Reliance fresh’ stores.
They are
31
32. Reliance retail is planning to have in all sixty such stores in ahmedabad alone.It has plans
to launch its stores in different cities like baroda,surat,rajkot of gujarat.
At present, in total for all the states together it has twohundred ‘Reliance Fresh’ stores.
It has plans to come out with some existing as well as new types of shopping source.
Reliance Retail limited has it’s head office at bombay,Maharashtra.The gujarat state
Office is located at ‘Asha Arcade’, opposite gandhigram railway station,ahmedabad.
RELIANCE RETAIL AND CUSTOMISATION OF SAP
Today, technology is the driving force for business organisations.RelianceRetail limited
is well aware of this and hence it has cusomised SAP to provide real time solutions to its
business problems.
The entire company is system driven.It chiefly relies on SAP.It also makes use of retailix
especially for its chain of stores.
MY STUDY
Objective:
32
33. 1) To understand the supplier related payments system at Reliance Retail,
Ahmedabad
2) To study the processes involved in the supply chain at Reliance Retail,
Ahmedabad
Research Method: Data was collected by three methods. They are
1) Examination of internal records at Reliance Retail, Ahmedabad
2) Semi-structured Informal Interviews of Key Executives involved in process of
supply chain at Reliance Retail, Ahmedabad
3) Observation of employees at work at Reliance Retail, Ahmedabad
OBSERVATIONS/ FINDINGS
33
34. DISTRIBUTION CENTRE FOR RELIANCE RETAIL STORES
Reliance Retail limited offers more than 4600 SKUs at its “Reliance Fresh Stores”.
These SKUs can be divided chiefly into :
1) Food Category
2) Non-food Category
1)The ‘Food category’ includes the following :
· Fruits and Vegetables
· Staples
· Dairy Products
· Bakery Products
· Processed Food
2)The ‘Non-food Category’ includes :
· Articles of daily usage (ADU)
· Other Non-food (items)
Reliance Retail limited has its distribution center at 103 /106 GIDC, Naroda.The
‘reliance retail distribution center’ is divided into two parts. They are:
· Dry Distribution Centre (Dry DC)
· Wet Distribution Centre (Wet DC)
The dry DC is meant for the SKUs belonging to the FMCG section and falling under the
following categories:
· Staples
· Processed Food
· Articles of daily Usage (ADU)
· Other Non-food items
The Wet DC is meant for distribution of the SKUs belonging to the following categories :
· Fruits and Vegetables (F&V)
· Dairy Products as Milk, Paneer, butter
34
35. THE SUPPLY CHAIN PROCESS
The supply chain process for all the above sub-categories is not the same. On basis of the
supply chain process, the above sub-categories are divided as below for the purpose of
Study of the supply chain :
· Fruits and vegetable (F&V)
· Bakery Products and Ice creams
· All the other FMCG (Fast moving consumer goods)
35
36. SUPPLY CHAIN PROCESS FOR FRUITS AND VEGETABLES
Introduction :
The fruits and vegetable section is classified as CPC and wetDC.
City processing Centre (CPC)
The City Processing Centre (CPC) is also located at 103/106 GIDC, naroda.But, its chief
purpose is not that of a distribution centre. It is ideally meant for carrying out certain
processes on the fruits and vegetables. And so it is termed as the ‘City processing
centre’(CPC).At the same time it partly serves the purpose of providing storage area for
the fruits and vegetables which are procured for the purpose of processing them and than
handing over to the wet DC. This processes are as follows:
· Sorting and grading through different methods.
· Crates Washing
· Ripening
· Cold Storage processing
Wet Distribution Centre(DC)
It is meant for storage and distribution of milk, paneer and ditribution of the fruits and
vegetables to the stores.
THE PROCESS – F & V (FRUITS & VEGETABLES) CATEGORY
STEP 1
STO ( STOCK TRANSFER ORDER ) / INDENT BY ‘RELIANCE FRESH’ CHAIN
OF STORES
Daily, at each of the stores, the ‘store franchisee’ / ‘store FDM’ (franchisee development
manager) will raise a STO (stock transfer order) / an indent. An indent / a STO is an
estimate of the store’s requirement of sku’s( here of F & V section ), based on the sku
wise sales.An indent / a STO is divided into morning STO / indent and evening STO /
indent. The morning STO / indent is an estimate of the store’s morning requirement of F
36
37. & V sku’s and the evening indent / STO is an estimate of the store’s evening requirement
of F & V sku’s.The morning indent /STO is based on the morning sales trend and the
evening STO is based on the evening sales trend.
In the initial phase when the first nine ‘Reliance Fresh’ stores where launched,
the STOs were prepared by ‘F&V – category’.But now the franchisees being trained anf
the FDM’s being famaliarised, now STO preparation has been assigned to them.
At present, a STO is raised by the franchisee / FDM by 11:00 AM.This STO
is meant for a delivery to be made after two days.This two day / 48 hours time-gap is
provided for the following operations :
1) Procurement Planning - Ascertaining the requirement
- Communicating & Conforming
2) Procurement - Target Allocation
- Price Band
- Harvesting
- Bringing to the CC
3) Sorting and Grading
4) Packing (in some of the cases)
5)Weighing and Barcoding
6) Outbound Operations - Allocation to stores
- Transportation Planing
7) Store Setting
STEP 2
F & V ( FRUITS AND VEGETABLES) CATEGORY RAISING P.O.
The F&V category in simple terms means purchase department for fruits and
vegetables. Each store’s F& V STO is accessible by the F & V category through
SAP. And through it, the F& V category will consolidate the morning STOs of all the
Reliance Fresh Stores, which will give the morning P.O. And similarly by consolidation
37
38. of the STOs of all the Reliance Fresh stores an evening P.O. will be generated. Such
consolidation will be SKU wise.
For example, If there are fourteen stores, then from the STO of these stores the total
demand for french beans will be determined. Similarly, for each SKU belonging to the F
& V section the total demand will be determined.
This will be done by Two P.M. every day.
The morning P.O. and evening P.O. each will have a SAP generated unique number, for
its identification.
Modifications in the storewise morning and evening P.O.:
The F & V category will make the necessary modifications in the morning and evening
STO prepared by the franchisees / FDM at the store level.Such modifications will be
based upon the following :
1) Opening stock of the Fruits and Vegetables at each store.
2) Sales trend of each SKU
3) City Area of store location
4) Day – Weekday / weekend
STEP 3
R-GRN (ROUGH GOODS RECEIVED NOTE)
The ‘city processing center’ (CPC) incharge will prepare a rough goods received note,
termed as ‘R-GRN’as given in appendix table 1..
‘R-GRN’ is an estimate against the PO, of the quantity ( kgs / eaches ) of the SKUs
which the CPC will be able hand over to the outbound team after sorting, grading and
weighing and barcoding it, within the CPC cutoff time.
Cutoff Time is the maximum time limit for completion of a / more task/s.
The morning R-GRN is an estimate of the quantity of the SKUs which will be handed
over for the morning PO and the evening R-GRN is an estimate of the quantity of the
SKUs to be handed over for the evening PO.
R-GRN is prepared on basis of :
1) Stock of F & V on hand with the CPC
38
39. 2) Estimate of the quantity of the PO which can be procured to bridge the gap between
the PO and the stock on hand.
If on basis above study if the results suggest that the entire PO quantity will not be
procured well in time, than the R-GRN will be for the SKUwise quantity which the CPC
incharge is cent percent sure.If the CPC incharge feels that only 70 % of the morning PO
can be delivered to the outbound team by the CPC cut off time than R-GRN will be
prepared only for the 70 % of the PO.And it will be handed over to the outbound team. If
the rest 30 % is procured than again R-GRN will be prepared by the CPC incharge and
given to the outbound team for‘ Planning allocation to stores’.
Significance of R-GRN
Both the morning and the evening R-GRN has a unique number, which are given to the
outbound team.On basis of this R-GRN numbers, copies of R-GRN will be generated,
which will have SKUwise list of the quantity in kgs which will be delivered by the CPC
to the wet DC.
It will help the outbound team and the transport department for planning out their
operations as per the SKU wise quantity to be delivered.
R-GRN is important as it helps in planning out the following activities:
1) Sorting and Grading :It enables simultaneuos planning for sorting and grading of the
material on hand and in the PO so as to hand over the sorted, graded , weighed and
barcoded material within the CPCcut off time.
2) Outbound Team : Morning and Evening R-GRN numbers are used for planning out
allocation of the fruits and vegetables to the stores.
3) Transportation Department : R-GRN will provide an estimate about the number of
crates that will have to be dispatched to each store, based on storewise allocation of the
fruits and vegetables.
39
40. CUTOFF TIMINGS TABLE
Cut off for
RGRN
Day 1
Cutoff for
CPC
Day 2
Cut off for
Outbound
Day 2
Morning
Ambient
Vehicle
5 :00 PM 2:30 AM 5:00 AM
Morning
Reference
Vehicle
5 :00 PM 4:30 AM 6:30 AM
Evening
Ambient
Vehicle
8:00 PM 11:00AM 4:00 PM
Evening
Ambient
Vehicle
8:00 PM 12:00AM _
40
41. Cut off time : It is the time within which a task assigned,has to completed
Cut off Timings for giving R-GRN :
Morning R-GRN cutoff time is 5:00 PM for partial R-GRN.The morning R-GRN is
meant for the nextday’s morning PO for which the CPC cutoff time is 2:30 AM and
outbound cutoff time is 5:00AM for ambient vehicle and 6:30 for refer vehicle.This R-GRN
is given by the CPC incharge daily by 5:00 PM.for 70% of the morning PO and
rest 30%, by 8:00 PM, if at all to be given.
Evening R-GRN has to be prepared in total,latest by 8:00PM.It is meant for the next
day’s evening PO for which the CPC cutoff time is 11:00 AM and the outbound cutoff
time is 4:00 PM for ambient vehicle.There is no refer delivery for evening PO.
STEP 4
PROCUREMENT PLANNING TEAM At City Processing Centre (CPC) :
The consolidated morning and evening PO numbers will be mailed by the F & V
Category to the procurement planning team at CPC, Naroda, Ahmedabad. On the basis of
these PO numbers the procurement planning team will have an access to the morning &
evening PO on the excel sheet.
STEP 4 (A) Physical Stock Determination for RR (Reliance Retail) material
41
42. SKU code SKU
Descrip. RR RR RR
RR RR RR RR RR RR
RR – Fruits / Vegetables which are fresh and of good quality, and approved by the
quality department. They are meant for Reliance retail and hence termed as RR
NRR – Fruits / Vegetables which have some defects / cuts etc. Generally these are sold
back to the mandis.If the RR grade fruits / vegetables are converted to NRR state after
reaching the store, then such F & V are sold at mark down prices at the store.
Dump - The fruits or vegetables which are totally damaged / deteriorated,
have poor quality, and have serious defects as cuts, rotten state.Such material is disposed
off daily, twice as waste.
Method adopted for stock taking
Two types of crates are kept at CPC, naroda, Ahmedabad.They are ‘Black crates’ and
‘Grey crates’.The black crate is for RR material and it weighs 1.7 kgs and the grey crate
is for the NRR material and it weighs 2.2 kgs.Each crate has a standard weight carrying
capacity determined on basis of the F / V SKU it carries. This weight is arrived at on
basis of trial and error.
Physically weighing each SKU would be a tedious task and time consuming task if to be
carried daily.So, for each SKU the number of filled crates are counted.This is done for
Outside area, cold storages and the ripening chambers.
NRR DUMP
Outside
area
Cold
storage
Repening
chamber
Total
crates
Kgs
per
crate
Out
Side
Ripen-ing
Chamber
Cold
Strg
Tota
kgs
59000009
2
Tomato
Economy 280 - - 280 10 280 - - 280
0
-` -
42
43. Cold Storages :
There are five cold storages in all.Of these currently three are in use.
Two are for CPC (for F & V) and one under the wet DC(for dairy products as milk,
paneer)
Cold storageNo.1 has 3 degree centrigade temparature.And it is used for
imported fruits like lichis, dates fresh and vegetables as green peas.
Cold storageNo.2 has 11 degree centegrade temparature.And it is used
for leafy vegetables, french beans, bottle gourd, bitter gourd, pointed gourd.
Ripening chamber : It is a chamber meant for ripening some of the fruits.It is use for
banana, chiku, papaya and mango.The fruits are kept under ethelene gas for 24 hours at
18 degrees and then the chamber is ventilated for 2 hours.Then the fruits are kept for 3
days at 20 degees temparature.there are six such ripening chambers, of which currently
three are in use.
Outside area : The area at CPC other than the cold storages and the ripening chambers is
termed as the outside area where the fruits and vegetables received are sorted and graded.
This area is divided into following parts :
1) Material Receiving Area
2) Sorting and Grading area- Belt
- Vegetable trimming Line
- Table
3) RR stacking area
4) NRR stacking area
5) Dump Material stacking area.
6) Packing area
43
44. 7) Weighing and Barcoding Area
8) Crates washing area
9) Palette storage area
The number of crates of each SKU is multiplied by the set skuwise standard weight for a
crate.as in appendix table 9. This gives the quantity of physical stock on hand in kgs lying
in each storage area – outside area, cold storages and ripening chambers. The skuwise
figure in the total column givesRR component of the sku’s in kgs, on basis of previous
day’s physical stock taking carried on taday by 12:00 A.M.
This total kgs of RR fruits and vegetables are entered in today’s opening stock in
‘Arrivals and Stock report’ to find the procurement quantity for today.
STEP 4(B) DETERMINING THE QUANTITY TO BE PROCURED
Arrival & Stock Table:
SKU code
(1)
SKU
desc
ription
(2)
No. of
Crates
(3)
Qty
(kg)
(4)
Opening
Bal
(5)
Arrivals
(6)
Tentative
arrival
(7)
Morning
PO
(8)
+
/-v/s
Mg
PO
(9)
UOM
(kg)
(10)
Eve
PO
(11)
+/-
v/s
Eve
PO
(12)
UOM
(kg)
(13)
59000009
2
Tomato
Economy 280 10 2800 200 1000 5000
-100
0
Kg 500
-150
0
kgs
44
45. SKU Code: The code assigned to fruits or vegetables
SKU Description: A brief description about the fruit or vegetable stock keeping unit.
No. Of crates: The number of crates filled with Tomoto economy.
Quantity : Quantity of tomoto economy occupied in each crate is ten kg. It is the standard
weight of tomoto economy which can be carried by a black crate (Meant for Reliance
Retail (RR) graded fruit or vegetable) of 1.7 kg.
Opening stock: The previous day closing stock of tomoto economy.It is the stock of
tomoto economy available on hand with the CPC.
Arrivals: They are the incoming fruits or vegetables to CPC from CC/ Mandi, direct
supply or national centres. Daily physical stock taking is carried out by the procurement
planning team by 12.00 A.M. The arrivals are the fruits & vegetables arriving at CPC
from any of the above-mentioned sources after previous day’s stock is completed and
recorded till 2.00 PM today.
Tentative Arrivals: They are the F/V which are going to be delivered at CPC but at
present this F/V have not yet reached the CPC. The suppliers /CC in charge or national
centres or mandi in charge officers have communicatwd about the quantity of F/V which
will be despatched to the CPC but has not yet arrived. The tentative arrivals are
confirmed on phone whether they will arrive or not.
Morning Po: It shows SKU wise total demand of the stores for F/V to be despatched early
morning.
+/- v/s Morning PO: It shows addition of opening stock, arrivals , tentative arrivals and
from the resultant figure thew morning PO is deducted for each SKU. If the resultant
figure is negative, it means that the sku is in shortfall by that quantity (kg) and hence that
much kgs of that particular sku needs top be procured for fulfilling the morning PO.
Example:
Opening stock of tomato Economy – 2800 kgs
+ Arrivals - 200 kgs
+ Tentative arrivals - 1000 kgs
45
46. ______________
Total 4000 kgs
(-) Morning P.O. 5000 kgs
_______________
+ / - versus Morning P.O. – 1000 kgs
UOM : It is means the ‘ Unit of Measurement’. It shows measurement in kilograms or
eaches.An each means a single fruit or vegetable. It is used to measure fruit like coconuts.
Evening P.O. : It is the SKU wise consolidated demand of all the stores together.
+ / - versus Evening P.O. : It is the difference between the ninth and the eleventh
column.It shows the SKU wise shortfall / excess quantity (kgs) in order to meet the
requirements of the evening P.O.It is calculated by deducting SKU wise, the figures of
the evening P.O. (in kgs ) from the figure of the excess / shortfall shown in the ninth
column.This gives the excess / shortfall quantity( in kgs) for each SKU.it enables the
procurement planning team to undertake the procurement planning for the figures arrived
at in this column, as it gives the final shortage / surplus of the evening P.O.It is calculated
by deducting SKU wise, the figures of the evening P.O. (in kgs ) from the figure of the
excess / shortfall shown in the ninth column.This gives the excess / shortfall quantity( in
kgs) for each SKU.it enables the procurement planning team to undertake the
procurement planning for the figures arrived at in this column, as it gives the final
shortage / surplus.
Having determined the quantity to be procured, the next step is to find the right source
from which to procure each F & V SKU and accordingly plan its procurement.
STEP 4 (C ) :
Pivot table for procurement planning :
46
47. Sr
No.
SKU
Code
SKU
description
Opening
Stock
PO
Total
Uom
(kgs)
Procure
Ment
Uom
(kgs)
On basis of the above table,against the stock at CPC the PO quantity will be compared
and for the shortfall the the procurement centres will be used.The system will generate a
pivots which will show the different centers from where and in what amount (kgs) a
particular vegetable / fruit can be procured.This will facilitate the procurement planning
work. And accordingly, the procurement planning team will carry out its work by
Communicating and conforming with the concrened procurement center.
PROCUREMENT PLANNING / SOURCING
Sources for procurement :
1) COLLECTION CENTRES (CCs)
In all there are four collection centres in gujarat. They are located at the following places:
· Prantij
· Padra
· Chaklasi
· Chiloda
A Collection centre is set up to procure vegetables from the farmers.
Source
CPC
CC
National
centers
Regular
vendors
Mandis
47
48. As per the legal framework, each CC is either already registered or has applied for
registration at the APMC, so as to buy vegetables from the farmers.A Collection centre is
set up to procure vegetables from the farmers.
CC Officer
At each CC, a reliance employee is appointed as CC officer.He has the responsibility of
procuring the vegetables from the farmers
These farmers face two routine problems :
1) To travel all the way from their villages and come to the mandi to sell their vegetables.
Daily, the farmers come at the local mandis of prantij, padra, chiloda and chaklasi.
2) The concern about selling their entire lot of vegetables.
3) In order to sell at the mandis, the farmers are required to pay commission to the agents
at the mandis.
Reliance needs vegetables in a large amount. So, it procures the entire lot of the
vegetables from the farmers and at times even goes to their doorstep if needed.
At each CC, sorting and grading is done by workers on payroll of third party logistics.
Receipt Cum Weighment Slip :
When vegetables are purchased from the farmers at the CC, a ‘Receipt cum weighment
Slip’ is issued to them by the CC officer as given in appendix table 2.
In it the fruit / vegetable unique code is written under the skucodecolumn, the fruit /
Vegetable name is mentioned under the sku description column,the grading is mentioned
under RR/NRR column,and then the per kg rate and toal amount in rupees is mentioned.
It is signed by the ccofficer and has the name of the seller and the date of sale on it.
Stock Transfer note (STN) :
When the vegetables procured from the farmers are send to CPC, a stock transfer note
(STN) is prepared for it as in appendix table 3.It has detailed description of the vegetables
being sent from CC to CPC.It is signed by the CC officer.It means that the vegetables
purchased by reliance retail at CC are transferred to CPC, and STN authorises such
48
49. transfer.STN is meant for internl transfer of goods.It does not involve reduction in
monetary resouces, as in case of a purchase.
Daily Procurement Slip :
At end of the day, at each CC, the CC officer will prepare a ‘Daily Procurement
Slip’ and sent it with the last lot of vegetables. It will have columns for sku code,
sku description, its quantity (in kgs), rate per kg, amount ( in Rs ), computed as
the product of rate and quantity.The total of the amount column will give the
actual total amount ( in Rs.) for all the vegetables purchased from the farmers
during a day.
At the bottom of the‘Daily Procurement Slip’, there are columns for opening
balance, deposits, payments and closing balance.The CC officer will fill in the
columns of opening balance, payments made during the day to the farmers against
the vegetables purchased and the balance amount will be the amount left after
payment to the farmers.The ‘deposits ’ column is meant for the amount which is
deposited daily from Reliance Retail’s bank account to the CC officer’s bank
account at the CC bank.This column is not filled in by the CC officer as he
himself is not informed about the exact amount deposited.This practise is meant
for control purposes.
2) Direct vendors : Fruit and Vegetable wholesalers who provide qulaity products at
wholesale prices have become regular suppliers for Reliance.Large farmers within
gujarat also sell their vegetables to Reliance Retail.They have entered into
agreement with Reliance Retail, as per which the vendors will supply the fruits /
vegetables in vehicles arranged by them at their expense.
3) National procurement centres : There are certain fruits and vegetables which are
not grown and hence not readily available in large quantities within gujarat state.
Such fruits and vegetables are procured from those different states of India,
where they are available in the best quality.This is especially a practise for fruits
49
50. like leechis and oranges(procured from pune in maharashtra), apples (procured
from himachal pradesh),pear,grapes and vegetables like onions.Reliance fresh
stores offer certain exotic fruits and vegetables, all of which are not readily
available within gujarat.So it also depends on the following sources :
( a ) Reliance based National procurement centers –
In certain states of India like Andhara pradesh, Rajasthan and Tamil Nadu
where Reliance retail ltd. is already in opertion. In such states there are Reliance
retail’scollection centres.
These centres also supply certain items which are a speciality of that particular
region. to the other states.
( b ) Vendor based National procurement centers :
The procurement demand for the fruits and vegetables not available within gujarat
and which cannot be fulfilled from the national procurement centers of Reliance
Retail, are purchased directly from the the vendors in states other than gujarat.
( c ) Imported Fruits and vegetables
Such fruits and vegetables are purchased either directly from the vendors,
who import such items.Or these items are procured via collection centres in other states
besides gujarat.Examples of such skus are imported oranges, grapes,etc
4 ) Local Mandis : These are the fruits and vegetable markets of Ahmedabad.They are
the ‘Jamalpur vegetable Mandi’ , ‘Vasna Vegetable Mandi’ and the ‘Naroda fruit Mandi’.
When the quantity of the fruit and vegetable procured from the procurement centers as
the CCs, regular vendorsas well as from all available supply sources is not sufficient to
meet the PO quantities then for the shortfall, procurement is made from the local mandis
mentioned above.
50
51. At each of the local mandis a reliance employee called ‘mandi officer’ has been
appointed. This person is responsible for all the mandi related procurement work.
The mandi officer has to take a morning round at the mandi under his responsibility.
And find out the prevailing mandi rates for each vegetable / fruit. The mandi officer is
resposible for finding this rate every hour and reporting it to the CC head at the state
office, asha arcade, ahmedabad.He also informs the procurement team at the CPC, about
the daily mandi rates, by 2:00 PM.
STN (Stock Transfer Note) :
When fruits / vegetables purchased from the local mandis are sent to the CPC,a STN is
prepared as this merley involves a transfer of goods from one to another place.The
Mandi officer prepares the STN whenever F & V material is send from mandis to CPC.
STEP 4 ( D) :
Daily price table
Skucode
Sku
description
Local mrkt
price
Rangefor
20 kgs
Local mrkt
max traded
price
Range for 20
kgs
Price
per kg
Name of
Sources all
over india
59000116
0
Potato
160.00
170.00
157.80
164.60
8.00
8.00
8.50
7.89
8.23
The third column shows the local market rates. These are the rates prevailing at the
ahmedabad mandis like the ‘Jamalpur mandi’, ‘vasana Mandi’ and ‘Naroda fruit Market’.
Daily monitoring of the mandi prices is carried on to find daily price ranges and to
determine most traded price(Price at which maximum sales took place).The last column
gives the options for sourcing the material.
This table helps in knowing the price ranges and the source for each of the sku’s.
51
52. Price Band :
On basis of the monitored mandi prices the daily price bands are fixed.The mandi prices
are conveyed to the procurement team for fruits and vegetables.The daily skuwise
variation in prices that takes place is tracked through the following table.And accordingly
prices are forcasted for each sku.
Earlier during the first few days of the Reliance Freshstore launch,the prices of the
competitors asOrganised retail as Big bazaar, sstar bazaar, subhiksha, and unorganised
retail like the kirana shops were monitored to work backwards and determine the price at
which vegetables and fruits can be procured from farmers.And accordingly pay to the
farmers against the vegetables procured.
Once having determined the price bands and the procurement quantity target,the
procurement planning team will undertake the following steps :
1) Communiction & coordination : Determine the stock that can be procured from
the four CCs, by conforming through phonecalls by 3:00 PM daily..If the RR
quality material is available from CC, same will be procured from there within the
given price band.
Accordingly the CC Officers will convey the message to the farmers about the
quantity of the vegetables to be harvested, collected and brought to the CC.This
message will be given to them by 4 :30 to 5:00 PM evening daily
2) For the material in the P.O., but not available through the CCs, arrangements have
to be made for it .through direct vendors or other national level centres.
On basis of pros and cons, the material is to be procured from either the vendor
national centers or locally.
3) For tentative arrivals a thorough follow up is needed.
The procurement team cannot rest untill all the indented material is received.
Having determined from which source the good quality RR grade fruits /
vegetables can be sourced and preparing the procurement plan, the same is sent to
the F &V procurement team.
The procurement planning team will determine the quantity that can be procured
from each of the sources and accordingly, mail the same to the F & Vcategory,
52
53. CC head, F & V procurement incharge.
3) Transport Requisition : It is the requsition to be made by the to the transport
Department, for arranging a vehicle to the CCs and Mandis. In case of thedirect
vendors such a practise is not required as they supply the material in there own /
arranged vehicals .
Accordingly,as per the described quanity, the right vehicals will be arranged
And sent to the specific location .
Push POs – store’s viewpoint & CPC viewpoint
At time of emergency situations, when suddenly the stock of certain SKUs falls down
a push PO is generated by the stores.
It is also generated, sometimes via the Procurement planning team.
Daily reports sent to Gurgoan, Delhi (Agriculture Head office)
Price forecasting table :
Sku
Code
SKU
Description
Supply
Location
Previou
s
Day
Price/kg
Today’s
Price/kg
%
Changein
price
59000009
2
Tomato
Economy
X Y Z 30 33 10
On basis of such reports, the agriculture team at HO is able to monitor the price
movements and make price forecasts to support the procurement planning.
STEP 5 PROCUREMENT
Collection Centers :
The CC head will give the procurement targets to each CC, on basis of the procurement
planning undertaken.
53
54. Moving Average Prices (MAV) : Procurement Price
The prices of the vegetables procured from the CC are generally within the priceband.The
weighted average price is calculated for each vegetable procured.
The sysem has such a mechanism that it automatically picks up the last few prices, so as
to reflect the most current scenario.Hence this resultant Price is termed as ‘Moving
average price’.The procurement price is determined in this way.
Price band determination :
The price bands are determined on the basis of the prevailing prices.Daily reports are sent
to the agriculture department’s head office gurgaon, delhi.The price bands for F & V skus
are determined by the F & V procurement team.
There the top level executives ascertain the price bands to be assigned for the national
level procurement centers.
The procurement teams will work to attain the given targets, both in terms of
Quantity and price as well as quality.
The CC and Mandi Officer and the Imprest amounts :
The CC and the mandi officers are given a sum of money as an advance amount
Given and deposited in the banks. When,the payment are to be made early morning, the
sum of money which is required for it iswithdrawn from the bank.This helps in doing
away with the management of excess funds not neeeded at the moment and at the same
time it enaables to make timely payments.
F &V CATEGORY AND TRANSFER PRICE FOR STORES :
The transfer price :
It is the price which will be charged for a sku.at Reliance fresh stores. It is calculated by
the F & V category.It is obtained by summing the following :
Procured cost (MAV) *
+ mandi tax *
+ mandi commission *
54
55. + transport cost *
+ Sorting & grading *
+ Weighing charges *
+ Loading & unloading *
+ wastages *
________
Total Price ***
+ Margin **
Profit **
At the CCs and mandis the vegetables will be purchased within the price bands as far as
possible.The last lot will arrive latset by late night, for the morning PO for which the
cutoff time is 2:30 AM (next day).
Sorting & grading : It is done by the workers at the CCs / mandis.
Weighing : The vegetables will be weighed and aReceipt cum weighment slip(RWS)
will be prepared.This RW will give the procured quantity, and rate per kg for each day.
At the CCs /mandis the STNs will be prepared for the material to be sent to the stores
Set of documents to be handed over to the CPC commerce department.
1) Invioce /delivery challan ( direct vendors and mandi purchase)
2) STN
3) Receipt Cum weighment slip
STEP 6
1) ARRIVAL AT CPC
The fruits and vegetable loaded vehicle will arrive at the CPC.
Gate :The driver informs the security guard at the reliance DC (distribution Center)
About the delivery lot and the source.
Gate Inward register :
On asis of these information, the security men will record the details of the delivered lot.
55
56. And will assign an unique gate pass entry number.On basis of this number the details of
the lot can be traced.
CPC
The CPC is the processing center for fruits and vegetables.,for ahmedabad.
The F & V section is divided into two main parts :
1)CPC – It is divided into inbound and processing.
2)Wet DC – It is divided into outbound and transportation.
Doors
The CPC has 4 doors at inbound. The door 1 is for receving the empty crates.
Door 2 iand door 3 are for reeiving the fruit amd vegetables.
Door 4 is for dump material to be discaded.
On arrival of a lot, the documents will be handed to the inbound supervisor.
The documents are for mandi purhase are as follows :
1) Invoice
2) STN ( two copies )
3) weighment slips
For CC, the documents are:
1) weighment slips
2) Two copies of STN
In case of direct vendors the document are as follows :
1) Invoice
2) Octroi fees receipt
3) Form 403 (if outside gujarat)
The inbound supervisor will check the documents and get the vehicle arranged at the
receiving door 2 /3 and get it unloaded with the help of workers.
On arrival there is a quality check undertaken by the quality department.On spot sorting
and grading will take place.
Electronic Weighing Machines and daily slip :
The fruits / vegetables will be taken in grey crates, these crates will be loaded on a
pallette and then the fruit / vegetable weight will be ascertained as follows :
Weight of a pallette – 17.6 kgs
56
57. Weight of a grey crate meant for Non Reliance material – 2.2 kgs
Weight of a black crate meant for Reliance retail material – 1.7 kgs
When a pallette floaded with grey crates is weighed, the screen of the electronic machine
will show the following :
weights of the pallette + weight of the grey crate + weight of the fruit / vegetable
From this sum the weight of the pallette and crates is deducted to arrive at the weight of
the f ruit / vegetable.
For example,
A pallette loaded with 30 grey crates of tomatoe economy is 2280 kgs then the weight of
tomatoe economy will be,
Total weight as shown by the machine 2363.6 kgs
(-) weight of the pallette 17.6 kgs
(-) weight of 30 grey crates 66 .0 kgs
(30 X 2.2) _____________
Net weight of tomatoes 2280 kgs
After weighing the material a day wise slip is placed on the pallett, showing the weight
( in kgs )of the sku, its description, it’s lot no.which helps in distinguishing that particular
lot.
Inward Register Entry :
In actual paper register
The weighed material is entered in the stock register as in appendix table 4.
The difference between the invoiced quantity and the actual received on shows shortage /
surplus, as shown in the table of the inbound register.
The entry is also made on the excel sheet, by the data entry operator.This sheet is send by
the inbound DEO to the commercial team andalso the procurement planning team.The
commercial team uses the excel sheet for GRN preparation.
The inbound team at the CPC hands over the documents to the commercial team.
Activities performed by commercial team
These are discussed under the I/ V.
57
58. STEP 7
SORTING AND GRADING
Sorting : It is the process of separating the fresh and quality material from the total
material arrived.
Grading : It means assigning a grade to the sorted material depending on the quality
and condition.
Three Grades of Material :
As a result of sorting and grading, three grades of material are obtained. They are as
follows:
1) Reliance Retail (RR) Material :
RR material means, the material that is meant for ‘Reliance retail’.
At the CPC the fruits and vegetables received are sorted and graded.Of the received
material, the material which is fresh and of good quality is sorted and graded as ‘RR’
Material.
2) Dump :
From the remaining material, the material which has become out of use either due to
being rotten, or driedup ( corriander,spinach etc) or due to large cuts formation will be
sorted and graded as ‘dump’.
3) Non Reliance Retail ( NRR) Material :
NRR material is the material that is no meant for Reliance retail.
And the rest which as either minor cuts or is not fresh as RR material will be sorted and
termed as ‘NRR’(Not for Reliance Retail).
R-GRG means that much quantity of the SKUs will have to be handed over to the
outbound team. Every day on basis of the R-GRN, the sorting and grading work will
be planned out.A little more than the R-GRN quantity, will allow to provide for the
‘NRR’ or ‘Dump’ material.So, it serves to guide the sorting and grading department
of the CPC,which chiefly consist of the supervisors and workers and is meant to plan
out the sorting snd grading activities within the time limit.
58
59. The sorting and grading supervisors are given a copy of theR-GRN. On basis
of this copy they get the required material sorted and graded by the workers.
The R-GRN given by the CPC incharge today is meant for the next day’s PO.
The morning R-GRN is meant for the morning PO to be delivered by 2:30 AM,
And atleast 70% of the morning R-GRN is given by 5:00PM daily, for the next day
morning PO. So, the workers responsible for the sorting and grading the fruits and
vegetables have time between 5:00 PM to 1:30 AM( excluding one hour,considering
the time that will be needed for weighing and barcoding)Similarly daily the evening
R-GRN isgiven latest, by 8:00PM for the evening PO of the next day.And this
provides the time needed by the workers for sorting, grading, weighing and
barcoding..
Daily first priority is given to the material which is in stock and is also enlisted in the
PO.The material which is there in the PO, but has not reached the CPC can be sorted
only when once it reaches the CPC.So procurement at the right time is of utmost
importance for the performance of the CPC.Sorting & grading continues as a cycle.
As the lots are received at the inbound area of the CPC,those SKUs enlisted in the
R- GRN are picked up first and are sorted and graded.
Fruits / vegetables which are yet to arrive, should reach the CPC latest by late
night for the morning PO. The morning cutoff time for CPC is 2:30.
Equipments used for sorting & grading :
1) Vegetable trimming Line
It is electrically operated rolling sorting and grading device.There are two such
lines.
They are used for vegetables as tomatoes,leafy and green vegtables as cabbage,
cauliflower, capsicum.To operate they need 8 to 9 workers per line.It is more
advisable to be used when sorting and grading is to be done for large quantity.
59
60. When sorting & grading of different SKUs is to be done then the workers need to be
distributed. So, in such cases,sorting-grading is better done on tables.
2) Vegetable Belt:
It is electrically operated rolling sorting and grading device.CPC has one such belt for
sorting and grading.It requires 9 workers.It is
Meant for sorting and grading of vegetables like,green chillies, capsicum,mint
leaves,corrainder.
Drawbacks of using vegetable line and vegetable belt :
* Not practical when manpower is less than seven or eight workers.
* More time cosuming, if workers are less. Because when workers are less, the speed of
the belt will be kept low. So time consumed will rise.It invoves electric cosumption, so
the costs will rise.
3 ) Table :
It needs 4 workers. It is used for the remaining types of the vegetables as beans,cow peas,
Green peas,cluster beans,etc.
Sorting & Grading report:
On the basis of suh sorting and grading , a sorting and grading report is prepared as
given in appendix tables 5 to8. The SKU will be described under the and against it in
He code column, the sku code will be mentioned. Under sorting particulars, the weight in
kgs of RR, NRR and dump is specified.This report is transferred from the paper to excel
sheet by the data entry operator, which is used for management information systems
STEP 8
PACKING
Some of the fruits and vegetables like apples, onions,( netted )and vegetables like
tomatoes (transparent plastic) are packed.
STEP 9
60
61. WEIGHING & BARCODING
The SKU wise standard crate weight is used for weighing as given in appendix table 9.
The fruits and vegetables graded as RR are kept in black crates.This list of the skuwise
standard weight is given to the weight takers and bar coders.
There are in all 12 rolling conveyors,attached to the electronic weighing machines and
the bar-coders. The electronic weighing machines have screen which displays the weight.
And the bar-coding devices have printers, which generate printed ‘bar coded
labels’.When a black filled crate is placed on one side of the conveyor, it rolls down to
the center where the weighing machine and bar coding device is attached.The standard
weight for the SKU on the black crate is entered in the weighing machine with negative
sign, and the eaches of the Sku are added or removed to bring down the weight to zero
kg.With the weight of the SKU being ascertained, the attached barcoding device
generates a barcoded label as given in appendix table 10.
This label describes the SKU - mango kesar, has its code on it,just below the bar
code the no. 590000724 is the sku code,G2C is the CPC code,0031037258 are the
number of crates that has passed on the conveyor,and 15 kgs is the weight of the
SKU.This procedure is followed for all the SKU’s to be dispatched to the stores.
All the crates carrying the SKU’s to be dispatched are handed over by the CPC to the
outbound team by 2:30AM for the morning PO and 11:00AM for the evening PO,
for ambient vehicles.
STEP 10
OUTBOUND
STEP 10(a) ALLOCATION TO STORES :
On basis of R-GRN no., the outbound assitant manager will generates a copy of the
R-GRN. The receiving supervisors of the outbound department take a copy of these
R-GRN and on its basis, tally the RR graded black filled crates being delivered by the
CPC after sorting, grading,weighing and barcoding them.All the SKUs received are cross
checked with the R-GRN to ensure that no SKU is left out to be received or no SKU is
received in part as compared to the R-GRN amount.All these crates are stacked in the
‘receiving reserve area’ of outbound.In emergencies or when there is less time gap
61
62. between the receiveng of material and their dispatch as in case of the evening PO, the
crates are directly placed at the dispatch locations, by tallying them with the R-GRN..
The R-GRN is a useful tool for allocating the bulk of the fruits and vegetables to the
stores. It provides the SKU wise list showing the kgs of each SKU that will be handed
over, as against the PO, by the CPC to the outbound team so that same is dispatched to
the stores.The outbound team needs time to allocate these fruits and vegetables amongst
the stores, specially when the entire PO quantity cannot be fulfilled.In case of Reliance
retail,the SAP enabled system will allocate each SKU in the R-GRN to the stores.
Such allocation will be based on sales trends of each of the SKUin the past three to five
days.Such an allocation is termed as ‘soft allocation’ and is possible due to SAP.
So, though the store might have indented a particular quantity of a SKU, but on the basis
of the total availability SAP will allocate on basis of each store’s individual sales
performance for each SKU. If ‘x’ store is selling more french beans than ‘y’ store,than
out of the total quantity between the two, ‘x’ store will be allocated more quantity of
french beans than ‘y’ store, even if the indented quantity of ‘y’ store is more than that of
‘x’ store.This work of soft allocation is not visible.
On basis of the SAP system enabled allocation to the stores,a number is generated by
the system.This number is called ‘Allocation Number’.On entering the allocation no.,
delivery date and giving a command the system generates two lists.They are ‘Article
Wise Pick List’ and ‘STO wise Pick list’.
Article Wise Pick list :
It is as shown in the appendix table 11.As shown in the table, it enlists the different stores
to which, different quantities of an article are allocated.On basis of the ‘Article wise pick
list’which is for an article ( here SKU ) for example , ‘Grapes thoms SDLS’, the total
quantity of which is179 kgs.On basis of this list, the entire pallette loaded with black
barcoded, scanned crates filled with ‘grapes thoms’will be carried to the physical store
shipping area. The DEO ( Data entry operator)and the loading supervisor will take this
pick list and see the crates to be allocated to the first store. And accordingly they will
count the crates and allocate them to each store specified in the list.
The DEO will repeat this for all the stores listed in the pick list.
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63. STO wise Pick List :
This list given in appendix table 12 has a STO no., a store wise bar code and shipping
point bar code.The Store Wise bar code is scanned and the store’s shipping point is
scanned,and then the barcoded labels( generated and placed while weighing the crates) on
each crate are scanned. As these labels are scanned,the crates on which they are placed
will be assigned to the store whose barcode and shipping point were scanned. If these
scanning is done for ‘shalvik store’, than all the crates scanned after scanning shalvik’s
bar code and.shipping point will be assigned to ‘shalvik store’. So all the crates to be
dispatched to a particular store, here ‘shalvik’, will be assigned to shalvik’s shipping
point in SAP.
As soon as the crate scanning takes place, the Sap enabled system generates auto GRN
and an auto Article wise STN (stock transfer note).And thus the stock is received by, and
transferred from wet DC ( distribution center), to shalvik’s shipping point.As the crates
are scanned, an articlewise GRN is generated automatically. And simultenously, the stock
is transferred from the wet DC ‘s site to the store’s site in the SAP system.Thus, in SAP,
through scanning,first GRN and then STN preparation takes place for each article.
For each store the procedure for scanning barcoded labels on the crates to assign them to
the store, and autoGRN preparation and STN generation is same as explained above.
Print out of STN
By putting in the relevant details as the DC code,means of transport,transport Id
will give the four STN copies.
STEP 10(B)
TRANSPORTATION & VEHICLE PLANNING :
Types of Delivery Vans as given in appendix table 13.
(a) On basis of temparature in the van, the transport department chiefly has two types of
delivery vans.
They are :
1) Ambient Vehicles
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