Subhiksha is a retailer located in India who has positioned themselves as a low cost leader who offers a broad range of goods from groceries to telecom. The company’s order winner of low prices is achieved through operational efficiency. As competition continues to increase from competitors including Reliance, Birla and Tata, Subhiksha they are further challenged with customer retention through low prices. In order to maintain or further leverage their competitive advantage, back-end operations will need to maintain consistency in terms of supply chain management, inventory decisions, and staff management to ensure minimal stockouts and a timely checkout processes. Since variance exists in Subhiksha’s customer demand stretching their capacity during peak periods, management must figure out a way to shift demand times or rearrange process scheduling structure to better service their customers. Additionally, management must better control employee turnover since attrition has been an issue at Subhiksha. In terms of inventory management, Subhiksha is faced with trying to maintain a simple static MBQ system, or expanding their dynamic MBQ systems in an attempt to reduce inventory levels and increase efficiencies. A dynamic MBQ system would incorporate aspects of an EOQ model taking into consideration the fluctuations in demand.
Subhiksha attempts to conduct a very lean operation in terms of inventory management. The fact that some of the suppliers of FMCG operate at 70-85% drastically increase Subhiksha’s chances of stockouts of goods in this department. Management must figure out a way to minimize the negative effects of these stockouts by either increasing safety stock of some items or strategically planning their stockouts.
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