Supply Chain Management

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YEAR LONG PROJECT

PRE- MIDTERM REPORT

TEAM 19:
Rajkumar VR -29095
Manojkumar B -290
Kalpana Gaur -290

Importance of Supply Chain in Retail

With this growth in retail, not only front end but the entire network of activities leading to a culmination of a successful retail transaction has undergone a significant development. Supply Chain is no different. In the course of this retail evolution in India, the supply chain has also seen significant activity. After all, Supply chain forms a major part of the sustenance of any retail venture. For the retail venture to flourish successfully, it should have an efficient and well established supply chain. In the modern format, when all the other aspects of retailing have been discarded as being a differentiating factor, the role of supply chain has become even more important. Importance of an efficient supply chain for a retail chain may be assesses from the gamut of areas in which it helps the chain such as sourcing of material for Private Label, supplying of SKUs to the distant tier II and III cities, more and more retailers entering into Food & Grocery segment resulting in need for transportation of perishable items requiring cold supply chain, etc. hence it is deemed that from being just a part of the operations of a network, supply chain is soon going to become the source of competitive advantage for some firms.

If we look at the global scenario, we already have the example of retail mammoth, Wal-Mart. Wal-Mart is said to have the best supply chain which enables it to pursue the EDLP (Every Day Low Pricing) strategy. The Indian retail is yet to reach that stage and it will be an amalgamation of huge investments, government policies, third party intermediation, and fast changing consumer preferences which will characterize this back end revolution.

The key opportunities for investment in a retail supply chain lie in the areas of sourcing, distribution centres (warehouse, cold storage), transportation networks, inventory (both store level and warehouse), supply chain information systems such as warehouse management systems, planning, forecasting, inventory management, etc. different retailers have chosen a different combination of activities that they perform themselves while some activities are being outsourced to 3PLs (Third Party Logistics). On one hand a retail chain like Subhiksha has outsourced most of its back end work; on the other hand some like Reliance are investing heavily in the supply chain network to go for backward integration of their businesses. Some like Vishal Megamart and Pantaloons are excessively into selling of their in-house brands in their stores and have, hence, included manufacturing in their supply chain as well.

Organized Retail SCM in India

With respect to supply chain, the various factors which organized retail impact can be summarised as:

Outlook towards Retail SCM:
While the organized retail is expected to boom, the supply chain will take more time to develop at the same rate because of a general lack of SCM professionals in the country with even fewer having any experience in the retail sector. Even amongst them, the level of process expertise and best practice skills are low. These factors may prove to be a “comma” but not a “full-stop”. However, with the growth of organized retail and with the increasing number of professional courses offered towards supply chain management and retail; numbers of SCM professionals are gradually focusing more towards a scientific methodology in dealing with the back end supply chain.

Infrastructure woes:
The infrastructure in India is not as well developed as in other countries. Many parts of India still do not have roads and need to be delivered through bullock carts. Hence, any SC strategy for rural retail and tier II and III retail would need to take all these indigenous Indian factors into account.

Use of Third Party...
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