EXECUTIVE SUMMARY Indian retail sector is witnessing one of the most hectic Marketing activities of all times.

The companies are fighting to win the hearts of customer who is God said by the business tycoons. There is always a first mover advantage in an upcoming sector. In India, that advantage goes to BIG BAZAAR. It has brought about many changes in the buying habits of people. It has created formats, which provide all items under one roof at low rates, or so it claims. In this project, we will study its Inventory management system and vendor relationship. The research titled A Study on Inventory management system of BIGBAZAAR at BIGBAZAAR, Banashankari, Bangalore helps us to understand the present inventory management system which is responsible for fulfilling the demand of customer at BIGBAZAAR.This study will helpful to top level management to improve the present inventory management system at BIGBAZAAR.

The research was carried out as per the steps of Marketing Research. The well supportive objectives were set for the study. To meet the objectives primary research was undertaken. The data collection approach adopted was experimental research & survey research. The instrument used for the data collection was observation, interview & analyzing previous year balance sheets and p&l a/c. The target respondents were the Logistic manager, Inventory manger, Merchandiser category person etc of BIG BAZAAR, with the sample size of 50 for the study of Inventory management and relationship with vendors of the company. Tables & charts were used to translate responses into meaningful information to get the most out of the collected data Based on those the inferences have been drawn with peer supportive data.

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PART-A

CHAPTER-I

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INTRODUCTION 1.1 Industry Profile: Retailing consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power.

1.1.1.GLOBAL RETAIL SECTOR Retailing involves all activities accompanying to selling to ultimate consumer for their personnel family and household use, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser. Retailing is the interface between the producer and the individual consumer buying for personal consumption. Hence the success of retailing is highly dependent on an efficient supply chain management.

1.1.2.Growth in the Global Retail Market The confluence of market forces has created an extremely complex climate for the global retail industry. In mature markets, retail sector is challenged by its inability to grow and maintain profit margins as a result of a constrained operating environment, market maturity & situation, slow population growth and more demanding consumers as well as highly volatile consumer behavior. According to the research conducted by MVI (Management Ventures Inc) in 2007 found that modernizing retailers need capabilities in six core areas to win in the changing environment

Today retailing is a primary driver of the global economy and has become an essential part of our lives. Of the worlds 10 largest retail companies, six are from the US and four are from
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Europe. These top ten had combined sales of $978.5 billion in 2007, according to international consulting group, Deloitte.

1.1.3. Most Preferred International Retail Markets The following table gives the top 15 countries which has the highest presence of international players in their retail market. India ranks 44 in the list. This is because of the FDI restrictions prevailing in the country. The situation is expected to change because of the liberalization in the FDI for retail sector.

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Table.no-1.1 Most preferred International Retail Market Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Country UK Spain Germany Italy Switzerland Austria United Arab Emirates China Russia USA Netherland Singapore Belgium Italy Ireland Percent of international retailers present 55 51 49 47 45 42 42 41 40 39 39 38 38 37 35

It is also found that luxury goods dominated international retail scene, with almost 90 per cent respondents in the segment having a presence in more than 10 markets. This was markedly more than grocery, food and drinks, with just 60 per cent present in 10 or more markets. In clothing, footwear and accessories segments, 54 per cent retailers had operations in more than10 markets. Many luxury retailers are well-known particularly for their clothing range, such as Hugo Boss or Versace, reflecting the historical tendency for high fashion brands to be offered internationally. Least division was the department stores with only 5 per cent being represented in 10 or more markets.

1.1.4. Present State of Global Retail Industry In 2009 in the retail industry Cutbacks, layoffs, closings and bankruptcy are the hottest retail trends in 2008. History will point to 2008 as the official beginning of a massive global retail recession. There were record-breaking declines in sales, inventories, and consumer confidence that caused revenue losses. As it was predicted in the Deloitte report, 2008 Industry Outlook: A look around the corner, U.S. retailing is challenging due to fears about the housing market, tightening credit, not to mention high gas prices and cost of living increases. The big retailers have been compensated top
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U.S. CEOs in fiscal year 2008 which ranged from a high of $30.6 million to a low of $1.00, according to Salary.com. Robert Iger, Walt Disney Co. received $30.6 million and Steve Jobs, Apple received $ 1.00 (source: About.com Overview of retail sector) As a result the retailers need to struggle to enhance sales by being creative and competitive but it's not enough to just show up. History shows that the retailers who survive economic setbacks are the ones who get inventive, get resourceful, and get noticed. One of the most exciting things to watch in the global retail landscape is the growth and influence of the BRIC emerging markets (Brazil, Russia, India and China). China is already a strong global performer and represented in the top 10 most international markets in our study. Within the primary cities, such as Beijing, Shanghai and Guangzhou in China, there is a significant concentration of wealth and it is around these cities that much of the international retail activity is well centered, Mr. Davies underscored. `Deloitte in its report, Global retail trends for 2009 has mentioned that successful retailers will find a way to enhance their customer experience, improving risk management, cutting cost, human resource management, multi-channel approach, thinking globally and branding.

1.1.5. OVERVIEW OF INDIAN RETAIL SECTOR India is one of the largest and highly fragmented Retail markets globally with the highest retail outlets in the world crossing over 12 million with unorganized players accounting for around 5% of market share. Among this unorganized player more than 80 percent of these run as small family businesses in small towns and cities in the form of kirana stores, push cart vendors, melas and mandis. In terms of employment the retail outlet in the unorganized sector feeds a household of six to seven members. The big retail players are beginning to realize the significance of this untapped market by entering these markets and are being accepted by these rural consumers. The rural retail revenues are estimated to increase by 60 per cent by 2012, with larger share of increase in demand for consumer and household products. 1.1.6. Structure of Indian Retail Sector The Indian retail industry can therefore be broadly divided into organized and unorganized retailing. Unorganized sector constitutes of the local kiranas, hand cart, the vendors on the pavement etc. Unorganized retailing is still the backbone of the Indian retail industry contributing to over 95 per cent of total retail revenues. The organized sector on the other is hand trading undertaken by the licensed retailers who have registered themselves to sales as well as
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income tax. They constitute of corporate backed hypermarkets and retail chains. This modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof. 1.1.7. Growth prospects in Indian Retail Sector The Indian retail industry today is the 5th largest retail destination and the second most attractive market for investment in the globe after Veitnam as reported by AT Kearney's seventh annual Global Retail Development Index (GRDI), in 2008.The growing popularity of the Indian retail sector has resulted in a growing awareness about brands and quality products. As a whole Indian retail sector has made life convenient, easy, quick and affordable. Indian retail sector, especially organized retail is growing rapidly, with the customer spending growing in an unpredicted manner. It is undergoing a metamorphosis. The diagram clearly demonstrates the evolution of the retail industry. Till 1980 the retail industry continued in the form of kiranas that is unorganized retailing. Later in 1990s Branded retail outlets like Food world, Nilgris and local retail outlets like Trinetra super market, Apna Bazaar, came into existence. Now big players like Reliance, Bharti, Tatas, ITC and other reputed companies are entering into organized retail businesses The big multinational retailers are slowly entering India in the form of direct entrance eg: - Nike, Reebok, Metro etc or Joint Ventures e.g.: - Bharti with Wal-Mart and Tatas with Tesco. 2008 onwards the retail sector realized the significance of technology and understanding the opportunities the retail sector had to offer efforts have been made to leverage traditional formats. It is estimated that 2011 will see a remarkable growth in retail sector in terms of investments to optimally benefit from the unexplored retail market .

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Graph.no-1.1 Total Share of Retail Sector in India

Recent trends Retailing in India is witnessing a huge revamping exercise as can be seen in the graph India is rated the fifth most attractive emerging retail market: a potential goldmine. Estimated to be US$ 200 billion, of which organized retailing (i.e. modern trade) makes up 3 percent or US$ 6.4 billion As per a report by KPMG the annual growth of department stores is estimated at 24% Graph.no-1.2

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India rank first in terms of emerging market potential in retail sector. Current retail market is US $ 215 billion. Growth rate of retail sector in India is 8-10% per annum. Near about 12 million retail outlets are spread across India. FDI in retail sector increases from US $ 3.1 billion in 2003 to over US $7.6 billion in 2009. 1.1.8.Key challenges impeding the growth of Organized Retail in India The key challenges facing Organized Retail in India are acceptance of Organized Retail by the Traditional retailers (which is leading to tougher regulatory measures by the government), supply chain inefficiencies, high real estate costs, increasing personnel costs, High cost of real estate,High stamp duties , Multiple & complex taxation system , high execution risks in terms of store rollouts and high shrinkage that hits Retailers' Bottom-lines. We believe that these challenges would result in Margin contraction for most players. However, increasing economies of scale and scope would result in savings for the Retailers and mitigate Margin contraction to a large extent.

1.1.9. Major players of Retail sector in India: SHOPPERS STOP ADITYA BIRLA GROUP SUBHIKSHA PROVOGUE (INDIA) LTD TRENT LI MITED VISHAL RETAIL LIMITED PANTALOON RETAIL (INDIA) LIMITED FUTURE RETAIL VALUE (INDIA) LIMITED RELIANCE TREND 1.1.10. CONTRIBUTION TO GDP Retail sector in India is predominantly unorganised, having one of the highest density of retail outlets per capita in the world and lowest per capita retail space. Only 2% of the Indian retail sector is organised while this has been 20%, 80% and 70% in case of China, United States of America (USA) and United Kingdom (UK) respectively. The contribution of the Indian retail
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sector to the total employment has been 7% as compared to 6%, 11.7% and 11% in case of china, USA and UK respectively. As per the existing policy of the government, foreign direct investment (FDI) is not allowed in retail trade in any form whereas this has been allowed in many other countries with or without restrictions. This was stated by Shri Kamal Nath, Union Minister of Commerce & Industry, in reply to a question in the Rajya Sabha

As per study commissioned to Indian Council for Research on International Relations (ICRIER) by the Department of Consumer Affairs, the size of Indian retail market has been estimated as Rs.7,40,000 crore in 2002. a. Retailing is one of the biggest private industries in the world and total sales exceeded US $ 8 trillion in 2002. b. It accounts more than 10% of GDP in western countries and India and 8% in China. c. High incidence of female employment and part time employment. d. Food and grocery constitute the largest segment of retailing e. Rapid urbanization, income growth, increased participation of women in labor force and improvements in infrastructure in 1980s and 1990s led to organized retailing. f. Most countries liberalized policies for opening of FDI in retailing. g. FDI allowed in China (1992), Brazil, Mexico, Argentina (1994), South Korea (1996), Thailand (1997) and Indonesia (1998). h. Total procurement by global retail chains from India is estimated to be below US $ 3 billion out of which 1 billion by Wal-Mart alone.

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1.2 Company Profile Pantaloon Retail (India) Limited, is Indias leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai (Bombay), the company operates over 12 million square feet of retail space, has over 1000 stores across 71 cities in India and employs over 30,000 people.

1.2.1 Background and inception of the company

Future Value Retail Limited is a wholly owned subsidiary of Pantaloon Retail (India) Limited. This entity has been created keeping in mind the growth and the current size of the companys value retail business, led by its format divisions, Big Bazaar and Food Bazaar. Big Bazaar is a chain of department stores in India currently with 120 outlets. It is owned by Pantaloon Retail India Ltd, Future Group. It works on the same economy model as WalMart and has been successful in many Indian cities and small towns. The idea was pioneered by

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entrepreneur Mr.Kishore Biyani, the CEO of Future Group. Currently Big Bazaar stores are located only in India. It is the fastest growing chain of department stores and aims at having 350 stores by 2010.Big Bazaar is the destination where you get products available at prices lower than the MRP, seeing a new level of standard in price, convenience and quality. Big Bazaar is not just another hypermarket. It caters to every need of your family. Where Big Bazaar scores over other stores is its value for money propos iron for the Indian customers. At Big Bazaar, you will definitely get the best products at the best prices thats what we guarantee. With the ever increasing array of private labels, it has opened the doors into the world of fashion and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods and much more at prices that will surprise you. And this is just the beginning. Big Bazaar plans to add much more to complete your shopping experience.

About Big Bazaar

Hypermarket Chain of Departmental Stores 120 outlets in India Located in 70 Cities Pantaloon Retail Group (PRIL) Subsidary of Future Group Kishore Biyani

Outlet

Parent group

Owner

Founded

2001

Headquarter

Jogeshwari, Mumbai

Industry

Retail is se sasta aur achha kahin

Tag Line

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Man Behind Big Bazaar Kishore Biyani is the Managing Director of Pantaloon Retail (India)Limited and Group Chief Executive Officer of Future Group. He was born in August 1961. Kishore founded Pantaloons in 1997 onsiders Indianness as the core value driving the group Mr. Kishore has won following awards and honors: 2006 Ernst & Young Entrepreneur of the Year award. 2006 Lakshmipat Singhania IIM Lucknow YoungBusiness Leader 1.2.2 Nature of the business carried: Re-tailing Food Fashion Home Solutions IT General Leisure & Entertainment Wellness & Beauty Books & MusicStore Locator

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(Different lines of business carried at BIGBAZAAR)

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1.2.3. Vision, Mission and Quality Policy Vision: To Deliver Everything, Everywhere, Every time, to Every Indian Customer in the most profitable manner. One of the core values at Future Group is, Indianess and its corporate credo isRewrite rules, Retain values Mission: We share the vision and belief that our customers and stakeholders shall be served only by creaRng and execuRng future scenarios in the consumption space leading to economic development. We will be the trendsetters in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments. Core Values: Indianness : confidence in ourselves. Openness: to be open and receptive to new ideas, knowledge and information. term relationships. Posi6vity: Simplicity and Positivity in our thought, business and work. ividual and be humble in our conduct.

1.2.4. Products/service profile Big Bazaar offers a wide range of products which range from apparels, food, farm products, furniture, child care, toys, etc. Products of all the major brands are available at Big Bazaar. Also, there are many in house brands promoted by Big Bazaar. Big Bazaar sold over 300,000 pairs of jeans, 50,000 DVD-players and 25,000 microwave-ovens. In all, the fashion, electronics and travel segments made up about 70% of sales. Last year, these categories made up only about 60%.
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APPARELS

FOOD

Formal wear Casual wear Night wear Tshirt Jeans Sarees Dressmaterials Ethnic wears Party wears

Ready to eat Ready tocook Spices Staples Internationafoods Tea & Cofee

HOME AND PERSONAL CARE

Shampoo Detergent Soap Liquid Wash Creams Deodrant Home cleaners Utensils Crokery Bundles

CHILL STATION

ELECTRONIC BZAR

Soft drink Packagedjuice Milk Items Frozen foods Ice creams

Television sets

FASHION & JEWELLERY

WashingMachines Refrigerator Personal Care m Bazaar Microwaves Small Appliances Laptops Computer Accessories Kitchen Appliances

Footwear Bazaar Beauty Care Navaratana Star Parivar Meena Bindre

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FURNITURE BAZAAR

Living Room Bed Room Kitchen Dinning Rooms Kids Room Been Bags PainRngs DecoraRve Items

OTHERS SERVICES

Mr. right Bakery Loot Mart Tulsi

FUTURE MONEY

Future Money Future Generali

1.2.5 Area of operation: Big Bazaar is a chain of shopping malls in India currently with1 29 outlets, owned by the Pantaloon Group. It works on it the economy model as Wal-Mart and has had considerable success in many Indian cities and small towns. The idea was pioneered by entrepreneur Kishore Biyani, the head of Pantaloon Retail India Ltd. Big Bazaar stores in Metros have a gaming area and kids play area for entertainment..BIG BAZAAR stores are located all over the India.

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 Agra Ahmedabad Allahabad Ambala Asansol Bangalore Bhubaneswar Cuttack Chennai Coimbatore Palakkad Kolkata Delhi Durgapur Ghaziabad Gurgaon Hyderabad Indore Lucknow Kanpur Mangalore Mumbai Nagpur Nasik Panipat Pune Rajkot Surat Thane Thiruvananthapuram Vishakhapatnam
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1.2.6. Ownership pattern: BOARD OF DIRECTORS Mr. Kishore Biyani, Managing Director Kishore Biyani is the Managing Director of Pantaloon Retail (India) Limited and the Group Chief Executive Officer of Future Group. Mr. Gopikishan Biyani, Wholetime Director Gopikishan Biyani, is a commerce graduate and has more than twenty years of experience in the textile business Mr. Rakesh Biyani, Wholetime Director Rakesh Biyani, is a commerce graduate and has been actively involved in category management; retail stores operations, IT and exports. He has been instrumental in the implementation of the various new retail formats.

Mr. Vijay Biyani, Wholetime Director Vijay Biyani has more than twenty years of experience in manufacturing, textiles and retail industry and has been actively involved in the financial, audit and corporate governance related issues within the company. Mr. Vijay Kumar Chopra, Independent Director V.K.Chopra is a fellow member of The Institute of Chartered Accountants of India (ICAI) by profession and is a Certified Associate of Indian Institute of Bankers (CAIIB). His banking career spans over 31 years and he has served senior management positions in Central Bank of India,Oriental Bank of Commerce,SIDBI, Corporation Bank and SEBI Mr. Shailesh Haribhakti, Independent Director Shri Shailesh Haribhakti, is a Chartered Accountant, Cost Accountant, and a Certified Internal Auditor. He is the Deputy Managing Partner of Haribhakti & Co., Chartered Accountants and past president of Indian merchant Chambers. He is on the Board of several Public Limited Companies, including Indian Petrochemicals Corporation Ltd., Ambuja Cement Eastern Ltd. etc. He is on the
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Board of Company since June 1, 1999.

Mr. S Doreswamy, Independent Director S. Doreswamy, is a former Chairman and Managing Director of Central Bank of India and serves on the board of DSP Merrill Lynch Trustee Co and Ceat Limited among others. Dr. D O Koshy, Independent Director D. O. Koshy, holds a doctorate from IIT, Delhi and is the Director of National Institute of Design (NID), Ahmedabad. He has over 24 years of rich experience in the textiles and garment industry and was instrumental in the setting up of NIFT centres in Delhi, Chennai and Bangalore. He is a renowned consultant specializing in international marketing and apparel retail management. Ms. Bala Deshpande, Independent Director Bala Deshpande, is Independent Director, Pantaloon Retail (India) Ltd. and also serves on the boards of Deccan Aviation, Nagarjuna Construction, Welspun India and Indus League Clothing Ltd, among others

Mr. Anil Harish, Independent Director Anil Harish, is the partner of DM Harish & Co. Associates & Solicitors and an LLM from University of Miami. He also serves on the board of Mahindra Gesco, Unitech, IndusInd Bank and Hinduja TMT, among others. Competitors information: The Big Bazaar operates in a competitive environment. For each line of business, they face competition from established national and regional companies. 1.2.7. Major Competitors Shoppers Stop. Trent (Star India Bazaar). Lifestyle. RPG (Spencer). Subhiksha.

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Vishal Mart. Shah Bazaar.

1.2.8. Achievement / Award: Most Admired Retailer of the year: Hypermarket BigBazaar 2009 Indian Retail Forum Awards 2008 The INDIASTAR Award 2008 Retail Asia Pacific 500 Top Awards 2008 Coca-Cola Golden Spoon Awards 2008 The Reid & Taylor Awards For Retail Excellence 2008 Platinum Trusted Brand Award Images Retail Award 2005,06 CNBC Awaaz Consumer Awards 2009 Images Fashion Forum 2009 National Retail Federation Awards 2007 World Retail Congress Awards 2007 Hewitt Best Employers 2007 PC World Indian Website Awards 2007 Readers Digest Trusted Brands Platinum Awards

1.2.9. Work flow model (At BIGBAZAAR): Generally the workflow model at BIGBAZAAR starts with customer and ends with customer . depending upon the customers demand BIGBAZAAR predict the sale for particular period and order to suppliers. Suppliers get all the goods/product from manufacturer and send to the ware house of BIGBAZAAR, again from ware house it comes to particular store. Ultimately the goods

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reach to the customer at last.

1.2.10. Future growth and prospects: Aggressive growth Food bazaar Company planned to grow to over 400 FB stores by 2010 and annual revenues Of $1250 million To rent properties from shop owners in exchange of profits generated from store Purchase food grains directly from manufactures To develop private label brands and devote 60 % shelf space to it. 1.3. FUNCTIONAL ANALYSIS: Administration Department Store administration comes under Store Manager its functions are store maintenance, House Keeping, Security etc. Store manager has to control all the activities within the store. He has to communicate all the departmental managers and assistance departmental managers regarding any new offers, regarding their targets etc. Sore manager has to see the operation at the store is being performed in coordination and cooperation he has to communicate with the corporate office regarding any changes being applied at the store. Information Technology This department is responsible for the maintenance of the systems of the stores. All billing
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machines their functioning networking with the master machine etc. If there is any problem with the machine then this department comes into function. Cashing Dept: This department is responsible for the collection of sales amount i.e. cash sales, Credit sales, etc under this department all billing machines of the stores comes. The sales amount collected throughout the day by the cashiers has to be submitted to the department. Marketing This dept is responsible for the marketing of the store in different media like Television, Newspaper, and Holdings etc. the authorized person has to visit different companies and has to look after for tie-ups etc. The executives arranges rallys. Visual Merchandise: This department is responsible for the product arrangement at the store with respect to their nature. The basic function of this dept is it divides the store into several departments based on the nature of the product and within the department it decides how the products should be arranged by keeping in mind the customer should not suffer. Human Resource Human Resource basically works for the welfare of the employees. It acts to organize the manpower and work to increase productivity of the employees. Basically Human Resource performs the functions of Recruitment, Hiring, Induction, Training and development, Performance appraisal of the employees. Human Resource studies and involves in inter life cycle of the employee from his joining the organization to till his end from the organization. CSD (Customer Service Desk): This is the separate unit, which is mainly focuses on customer service like if the customer find difficulty in finding any product, Customer complaints any replacement, Customer assistance etc. Supply chain management: Companys supply chain was split into the broad categories of fashion, food and general merchandise, leading to a more focused approach to businesses, improved service levels, better customization of logistic and supply chain related needs, and finally deliverables. Further, with new concepts and lines of business being included during the year, as well as strategic alliances with other companies, the process of gradually integrating them have either been completed or close to completion.
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The existing supply chain design consists of a Master Distribution Centre (MDC) and city warehouses upgraded to Regional Distribution Centers (RDCs) and additional Distribution Centers (DCs). The company had one MDC and 16 RDCs and DCs The company has also appointed leading international and domestic players in the warehouse infrastructure and technology front. The company also introduced the concept of reverse logistics that looks at setting up a process to transfer finished goods from the consumption point to the point of origin. This reduces wastage and can lead to significant cost savings. On the technology front, all the existing MDCs,RDCs and DCs are live on SAP, thereby facilitating standardization, real time data management and reporting, as well as optimum operational efficiencies.

Finance Department: Prepares the budget for expenditure at all levels. Decides and gives the sales targets for all the departments periodically. Maintains the books of accounts Collects & deposits the cash received daily through sales in the Companys bank account

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CHAPTER-II

The McKinsey 7S model

The McKinsey 7S model was named after a consulting company, McKinsey and Company, which has conducted applied research in business and industry. The McKinsey 7S Framework was created as a recognizable and easily remembered model in business. The seven variables, which the authors term "levers", all begin with the letter "S": These seven variables include structure, strategy, systems, skills, style, staff and shared values. Structure is defined as the skeleton of the organization or the organizational chart. The authors describe strategy as the plan or course of action in allocating resources to achieve identified goals over time. The systems are the routine processes and procedures followed within the organization. Staff are described in terms of personnel categories within the organization (e.g. engineers), whereas the skills variable refers to the capabilities of the staff within the organization as a whole. The way in which key managers behave in achieving organizational goals is considered to be the style variable; this variable is thought to encompass the cultural style of the organization. The shared values variable, originally termed super ordinate goals, refers to the significant meanings or guiding concepts that organizational members share.

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From above 7, three are called Hard S these are such as Strategy Structure System And other four are called Soft S, namely Skills Staff Shared value Style

McKinseys 7s at BIGBAZAAR: STRATEGY: Strategy is the plan of action an organization prepares in response to, or anticipation of, changes in its external environment. Strategy is differentiated by tactics or operational actions by its nature of being premeditated, well thought through and often practically rehearsed. In store: Food Fill rate strategy APPS MPM/VM &Impulse strategy HSRIL Display & Derive strategy (for furniture) Electronics - Demonstration strategy Value for money Service Profitability (Returns, productivity) Service to society (Exchange policy, Old to new offer, demonstration) SYSTEM: They are wing, many type of procedure for different-different department. Every department carries Asst manager, dept manager, team leader and team member etc. to look after the particular department. Its very easy to handle work and they work in a systematic way. The coordination between the staff member is very good which make the big bazaar system perfect .
E.g.-Inventory control system at Logistic department, order execution system by Vendor Help Desk etc. 26 | P a g e

Structure:

SOUTH ZONE HEAD

BUSINESS MANAGER

UNIT HEAD SUPER CENTER

BUSINESS MANAGER

ASST STORE MANAGER

DEPARTMENT MANAGER

ASST DEPT. MANAGER

MANAGEMENT TRAINEE

TEAM LEADER

TEAM MEMBER

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Skills: They have to be able to understand the customer and proper communicating people and taking corrective action and solving problems like accountability. 1. Core Competence of Big Bazaar Festival type creation Fight competition (price) Keeping customer busy Creating desire

2. Job description and Strength Staff: Organizations are made up of humans and it's the people who make the real difference to the success of the organization in the increasingly knowledge-based society. The importance of human resources has thus got the central position in the strategy of the organization, away from the traditional model of capital and land. All leading organizations. There are totally 335 employees or staffs. They have out of this, 210 on roll of employees and 35 securities, 35 housekeeping and 55 promoters. The coordination between the staff member is good which make the corporate perfect. This also helps the store to work in a better way. Every staff knows there work nicely and they do all the work on time and systematically according to the order of head of department. Style: KRA of Managements staff Top down / Bottom up. Both Authoritarian / Participative. Participative Any one decision making parameter should be studied pertaining to day-to-day operation, to conclude the style of functioning. Style of functioning- MBO (Management by Objective) - a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization
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Shared value: Vision: To Deliver Everything, Everywhere, Every time, to Every Indian Customer in the most profitable manner. One of the core values at Future Group is, India ness and its corporate credo is Mission: We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development. We will be the trendseaers in evolving delivery formats, creating retail realty, making consumption affordable for all customer segments We follow Management by Objectives, where in the organization goals are formulated with the companys mission & vision. These Org. goals are further broken into departmental goals, from which the KRAs (Key Result Areas) are arrived for each individual based on the role he/ she performs. Rewrite rules, Retain values.

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CHAPTER-III SWOT analysis: It is an acronym for the internal strength and weakness of affirm and the environmental opportunities and threats facing that firm. It is a technique through which a manager creates a quick overview of a companys strategic situation. So SWOT analysis of BIGBAZAAR is fllows.

Strengths Bearer understanding of customers helping the company to serve them bearer. Vast range of products under one roof helping in aerating customer and their family to shop together and enjoy the experience. Benefit of early entry into the retail industry. Diversified business operating all over India in various retail formats. Ability to get products from customers at discounted price due to the scale of business.

Weaknesses High cost of operation due to large fixed costs. Very thin margin. High attrition rate of employee. Specific items are not consistently available Low incentives are provided to the sales executives

Opportunities: Lot of potential in the rural market. Can enter into production of various products due to its in depth understanding of customers tastes and preferences. Can expand the business in smaller cities as there is a lot of opportunity .

Threats: High business risk involved. Lot of competitors coming up to tap the market potential. Margin of business reducing all the time. High taxes in India suppress consumption

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CHAPTER-IV (Financial Highlights) Profit & Loss Summary..

So from above profit and loss account it is shown that the sales of BIGBAZAAR is increased compared to previous year. But interestingly the PBIT is increased where as PAT is decreased compare to its previous year which shows company had pay more interest on loans as there is no Significant increase in Tax. Again the cash profit is increased compare to its previous year which shows company having more liquidity. The company can use that money for expanding business. This shows companys competitiveness from other company.

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Balance Sheet Summary

Cash Flow Summary .......

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CHAPTER-V My Learning Experience in the company I am very happy to express my practical experience at Big Bazaar. Before going to share my practical feelings regarding project work. I would like to say heartily thanks to CMR Institute of Technology and Visvesvaraya Technological University. Who have given one of the good opportunity to learn a knowledge in practical environment and along with that I would like to say heartily thanks to company guide Mr.Mukund Logistic manager, of BIG BAZAAR.

I had under gone a glorious 70 days project at Big Bazaar And along with that I had learn a lot of practical things from the corporate world. From this project I came to know that Inventory Management system and taste, Procurement system, Vendor relationship and competition level in the sector and along with that I had learn how management is responsible for increasing sales and revenue of the company And also I learned the functional department like HR,

Finance and Marketing.

From this project now I came to know that how to carried out

business

process

in

systematic manner in the competition level This practical knowledge of project made me to perfect in future to stand in a any corporate world. And Finally I thanks to My Internal guide Mr Sravana Krishnan and Company guide Mr.Mukund.

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CHAPTER-VI

INTRODUCTION

Project title: Study on Inventory Management System of BIGBAZAR . 6.1. PROBLEM STATEMENT: Although BIGBAZAR having special software system called SARATHI made by SAP to manage the whole Inventory Management system still they have Number of issues with supplier Continuous loss due to inadequate Inventory management system No special ordering system

6.2. Objective

You are in trouble if you have to keep telling customers, "I'm sorry we're out of that size. May we order it for you?" Even though the shirts are selling briskly, you will lose customers if you don't have an item in stock. When the customer spends, you have got to be ready with the goods. This is what inventory management is all about. In many retail and wholesale operations, the single largest asset is inventory. Control of this investment is vital. It will eliminate a number of the problems associated with capital shortages and will also provide capita lto permit expansion of operations for increased sales and profit. The objectives are To study the current practise of inventory management in Retail industry. To study the inventory control techniques. To analyze the current performance of inventory management at BIGBAZAAR To analyze the growth of inventory level at BIGBAZAAR To study the inventory turn over ratio To analyze the cost of inventory at BIGBAZAAR To suggest measures to better inventory management system
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6.3. Scope of study: Merchandise stocks in a retail store contribute to profits only when their sale puts money into the cash register. In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profits. In fact, many small businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled, they are unreliable, inefficient and costly.

Inventory management is primarily about specifying the size and placement of stocked goods. Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of Sales against the random disturbance of running out of materials or goods. The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting

Such an analysis would lead to newer and better strategies to increase satisfaction of Suppliers and decrease the loss due to Internal Stock management. Focus on such Issues can lead BIGBAZAR more strategic and more profitable compare to its competitor.

6.4. Research methodology:

6.4.1. Type of research:

Explorative Research Design

Explorative Research Design: Research typically conducted early in a research program. Designed to uncover basic viewpoints, perceptions, behaviours, attitudes and so forth in a market place. Exploratory research provides insights into and comprehension of an issue or situation. It should draw definitive conclusions only with extreme caution. Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research helps determine the best research
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design, data collection method and selection of subjects. Given its fundamental nature, exploratory research often concludes that a perceived problem does not actually exist.

6.4.2. Sources of data collection: In BIGBAZAAR for analyzing whole project I collected data from both the source i.e. Secondary data Sources for secondary data: Collecting financial reports Surfing the websites, comments on the blogs Reading articles from books, newspaper and magazines Five year Balance sheets. Five year Profit & loss a/c. 6.4.3.Graphs Used to Interpret the data: Bar Column Line Pie Cone 6.4.4. Ratios used to analyze the data Inventory turn over ratio Current asset to level of inventory ratio Inventory holding period Level of inventory

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7. Limitation of the Study

Analysis of present inventory management system.(2008 -09) Different present methods to reduce the loss of internal stock management Analysis of present Stock or Inventory This Study is only limited to Big Bazar, Banashankari This study is only applicable to Retail industry only. All ratios are calculated on the basis of five years balance sheets.

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CHAPTER-VII Inventory Management What is inventory: Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. It is also used for a list of the contents of a household and for a list for testamentary purposes of the possessions of someone who has died. In accounting inventory is considered an asset. Inventory refers to any kind of resource having economic value and is maintained to fulfill the recent and future needs of organization. Fred Hansman, defined inventory as: An idle resource of any kind provided such a resource has economic value. Such resources may be classified into three categories Physical resources such as raw materials, semi-finished goods, finished goods, spare parts, lubricants etc. Human resources such as unused labor (manpower). Financial resources such as working capital, etc. Inventory management in BIGBAZAAR can be briefly described as: Acquiring an adequate supply and assortment of merchandise from which customers can buy. Providing safety stocks to meet unexpected demand or delays in inventory replenishment. Maintaining clear, correct, and current records. Purchasing the proper assortment of goods in quantities that will maintain inventory levels consistent with business requirements, while providing adequate safety stocks. Reducing excessive inventories promptly, so that the dollars realized from clearing overstocks can be invested in merchandise with a greater market potential.

There are three basic reasons for keeping an inventory in BIG BAZAAR: 1. Time - The time lags present in the supply chain, from supplier to user at every stage, requires that you maintain certain amount of inventory to use in this "lead time" 2. Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply and movements of goods.
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3. Economies of scale - Ideal condition of "one unit at a time at a place where user needs it, when he needs it" principle tends to incur lots of costs in terms of logistics. So bulk buying, movement and storing brings in economies of scale, thus inventory. Buffer stock is held in individual workstations against the possibility that the upstream workstation may be a little delayed in long setup or change-over time. This stock is then used while that change-over is happening.

Inventory Expectations of BIGBAZAAR from various Departments: Top Management Higher inventory turn-over, Lower operating cost, Excellent customer service Marketing Department Quick delivery, No stock out, Varieties & volumes, Frequent & small deliveries Logistic Department Less damages, Economic batch qty, Quick off-take, No rejection & Cancellations Finance Department Lower inventory levels, Low operation cost, Higher inventory turn-over, Lower cost of delivery. Inventory of resources is held to provide desirable service to customers and to achieve sales turnover target. Investment in large inventories adversely affects the organizations cash flow and working capital as investment in inventory represent substantial portion of total capital investment in business. It is therefore necessary to balance the advantage of having inventory of resources and the cost of maintaining it so as to determine an optimal level of inventory of each resources so that total inventory cost is minimum.

Inventory costs of BIGBAZAAR: Inventory costs money. The cost factor must be considered while taking any decision regarding inventories. Inventory costs includes Ordering cost: This type cost are caused due to placing an order with vendor . Every organization has to purchase materials. Thus ordering cost refer to cost associated with preparation of purchase requisition by the user department, transportation of the material ordered, inspection and handling. It also includes the cost for not lifting the material in time. If the concern has capacity to produce the required components internally, then
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ordering cost refer to cost associated with preparation of requisition forms by the user department, transportation, inspection, handling cost. Above all ordering cost remain more or less constant irrespective of size of order although transportation and inspection cost may vary depending upon the size of the order. Carrying cost: These types of costs are directly related to the inventory. It includes obsolescence cost, Deterioration cost. These are the expenses of storing the goods. Once the goods have been accepted, they becomes the part of firms inventories. These cost include insurance, rent of the warehouse, salaries of the storekeeper and security personnel financing cost of money locked-up in inventories. It is generally considered as the percentage of value of inventory held in the warehouse. Approximately carrying cost are considered to be 25% of value of inventory held in store Capital cost: It includes the money invested in inventory, Tax money, Insurance money. Storage spaces costs: It includes rent on ware house, cost of maintainance,utility charges, salary to security personnel. Out of stock cost: it includes the cost arise due to back ordering, lost sales.

Inventory Management and Control at BIGBAZAR: After interviewing the store manager I got to know that the store manager decides the level of inventory, the store manager inspects the stocks time to time and also the demands of customers. Manager maintains the Stock in & Stock out, so that he can decide the level of inventory. He, also has seen the trends in the requirement of inventories, as for e.g. he told that apparels are ordered approximately after 45 days. For every sample of clothes they have a back up of 10 pieces. However in case, if more number of pieces are required, they first ask other BIGBAZAAR which is closer to that. but if, even then they fail to meet the demands of customers, they go for Transfer of Interest. In this they prefer sending the customers to pantaloons, as it is also of Future Group, instead of losing them.

And recently BIGBAZAAR has undergone tremendous technological advancement, as its supply chain has become completely computerized. Once the product is sold, automatically, the computer sends the request for back up.
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Decision flow for Inventory Management at BIGBAZAAR: Generally the decision for inventory management is taken by taking concern of all the people from all the hierarchy that is from Top management peoples to Department manager. Below diagram shows how the decision flows in BIGBAZAAR for Inventory management. PLANNING BY MERCHANDISER AT ZONAL LEVEL

ORDERING TO SPPLIERS ACCORDING TO DEMAND BY CATEGORY PEOPLE

PURCHASING

GOODS/PRODUCT COMES TO WARE HOUSES

FIRST LEVEL DITRIBUTION OF GOODS TO EACH CENTER

SECOND LEVEL DISTRIBUTION TO EACH DEPARTMENTON A PARTICULAR CENTER

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Planning: Generally this decision is taken by all the peoples from top management at zonal level called Merchandiser. They consider demand of the customer for a particular product, seasonal demand, the amount of stock in the ware house and in each store etc for taking this decision. This decision is very important for inventory management as it determines the amount of goods /product to be ordered.

Ordering: These types of decision are taken by the Category people at BIGBAZAAR. Generally they discuss with merchandisers about the demand for a particular product and they give order to respected suppliers.

Purchasing: In this phase purchasing of particular goods happens. There are certain requirements for suppliers that they have to disclose at the time of purchase, these are such as Purchase order Invoice copy GI First level distribution to each store: This phase starts from the ware house after good received from respective suppliers. According to demand at different store goods are distributed to all the stores. There some certain requirements at the time of arrival of goods to particular store ,these are such as Invoice copy STN ( Stock Transfer Notice ) Purchase order Second level distribution to each department of a particular store: After good received from warehouse goods are distributed to each Department. The respective department manager comes with an Inter stock transfer note to take the goods. This phase is fully controlled by the logistic department at BIGBAZAAR. This concludes the whole decision flow for inventory management at BIGBAZAAR.
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Factors affecting the Level of Inventory at BIGBAZAAR: Generally there are number of factors which affect the level of inventory at BIGBAZAAR, these are such as Nature of the product Demand for the product Seasonal variation Reorder points for each product Supply chain of perishable and imperishable goods

Nature of the product: Big Bazaar generally deals in national level brands like Lee, Levis etc, Other than this it also deals in some Private label brands DJ&C in apparel, KORIA in electronics etc. apart from that there are different product categories , that are FMCG FOOD NON- FOOD junction Staple items fruits and vegetables fashion & apparels chill section Home decorator footwear book zone, CDs etc So depending upon different product the level of inventory varies.

Demand for the product: Uncertain demands are met by either by getting it through other outlets of big bazaar or through transfer of interest, to other outlets of future group, like Pantaloons which again affects the level of inventory.

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Seasonal variation: Depending upon seasonal demand due to festival, Republic day, Dusherra, Diwali the level of inventory is increased due to boom in demand .

Reorder points for each product: The manager in charge told me that there is no such reorder points. Orders are placed as and when required. However he told that there are no such measures, except in a few items. Previously apparels were ordered once there stock fell below 4 per item piece. For general merchandise, which includes, food and non-food items, it was 7 days. However they always keep In mind the transit time of 2 days. Vegetables are taken on a daily basis, form local vendors and hence for above items again the level of Inventory is affected.

Supply chain of perishable and imperishable goods: Again this aspect of particular goods and product affects the level of inventory a lot.

Various Inventory Management practices followed by BIGBAZAAR are as following:

There are some selective Inventory control methods to have an effective control on the inventory.Inventory Management Techniques are ABC Analysis VED Analysis FSN Analysis HML Analysis SDE analysis SOS Analysis XYZ Analysis

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ABC Analysis: ABC analysis is a business term used to define an inventory categorization technique often used in materials management. It is also known as Selective Inventory Control. ABC analysis provides a mechanism for identifying items which will have a significant impact on overall inventory cost whilst also providing a mechanism for identifying different categories of stock that will require different management and controls When carrying out an ABC analysis, inventory items are valued (item cost multiplied by quantity issued/consumed in period) with the results then ranked. The results are then grouped typically into three bands. These bands are called ABC codes.

Is based on the cost (or value) of items consumed Very high value items are A class items and may require tighter control Medium value items are categorized as B class and the low value items as C class

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ADVANDAGES: Preference for keeping inventory can be placed properly after ABC analysis. Store personnel are placed better with this analysis i.e their time can be utilized better. Storing, handling and delivery of materials to production department become better.

VED Analysis: ( Vital, Essential and Desirable ) Is done to determine the criticality of an item and its effect on production and other services It is specially used for classification of spare parts If a part is vital it is given V classification If it is essential it is given E classification and if it is desirable the part is given D classification For V items a large stock of inventory is generally maintained, while for D items minimum stock is enough.

FSN Analysis: FSN stands for fast moving, slow moving and non-moving Classification is based on the pattern of issues from stores and is useful in controlling obsolescence To carry out FSN analysis, the date of receipt or the last date of issue, whichever is later , is taken to determine the number of months , which have lapsed since the last transaction The items are usually grouped in periods of 121 months FSN analysis is useful in identifying active items which need to be reviewed regularly and surplus items which have to be examined further Non moving items may be examined further and their disposal can be considered.

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HML Analysis: This analysis is done for classifying the products based on their prices. H-High price products M-Medium price products L- low value products Procurement department is more concerned with prices of products so this analysis helps them to take them the decisions such as, who will procure what based on the hierarchy and price of material . When it is desired to evolve purchasing policies then also HML analysis is carried out i.e. whether to purchase in exact quantities as required or to purchase in EOQ or purchase only when absolutely necessary When the objective is to keep control over consumption at the department level then authorization to draw materials from the stores will be given to senior staff for H item, next lower level in seniority for M class item and junior level staff for L class items. Cycle counting can also be planned based on HML analysis. H class items shall be counted very frequently, M class shall be counted at lesser frequency and L class shall be counted at least frequency as compared to H & M class. SDE analysis: The SDE analysis is based upon the availability of items and is very useful in the context of scarcity of supply. S-Scarce Material i.e. hardly available D-Difficult material i.e. difficult in sourcing E-Easy materials i.e. materials available easily SDE analysis is done based on purchasing problems associated with items on day-to-day basis. Some of the purchasing problems are as under: Long Lead Times. Scarcity and hardly available Sourcing the same material from many geographically scattered sources Uncertain and unreliable sources of supply
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Purchasing department classifies these materials and formulates the strategy and policy of procurement of these items accordingly. So classification of materials is done based on level of difficulty in sourcing S Class Materials: These materials are always in shortage and difficult in procurement. These materials sometimes require government approvals, procurement through government agencies. Normally one has to make the payment in advance for sourcing these materials. Purchase policies are very liberal for such materials D Class Materials: These materials though not easy to procure but are available at a longer lead times and source of supply may be very far from the consumption. Procurement of these materials requires planning and scheduling in advance. Particular OEM spares of the machinery may fall under this category as that OEM may be very far from the ordering or consumption location. E Class Materials: These materials are normally standard items and easily available in the market and can be purchased anytime. SOS Analysis: S- For seasonal Materials OS - For non-seasonal Materials Purchase planning has to be done if the material is seasonal as material shall be available for a particular time period of the year. Purchase planning has to be done if the material is seasonal as material shall be available for a particular time period of the year. Leechee is seasonal fruit which is available only for one month in year. If any Juice and pulp company wants to buy this fruit then the procurement department shall have to plan in advance the requirement and procurement job becomes concentrated only for one month. Other than this issue, shelf life and storage is also a big problem as the plan is consume is throughout the year while the buying time available is only one month.

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 Some materials are seasonal but are available throughout the year such as grains, and other non perishable items. These items are bought during season and these items are cheaply available during season. The company can take the advantage of economies of scale in buying these materials in bulk. But at the same time the inventory carrying cost should not go beyond the profit margins while holding the large inventory Non-seasonal materials are available throughout the year without any significant price variation. Non seasonal items can be Plastics, Metals etc. The prices of these materials are independent of the season.

XYZ Analysis : XYZ analysis is calculated by dividing an item's current stock value by the total stock value of the stores. The items are first sorted on descending order of their current stock value. The values are then accumulated till values reach say 60% of the total stock value. These items are grouped as 'X'. Similarly, other items are grouped as 'Y' and 'Z' items based on their accumulated value reaching another 30% & 10% respectively. The XYZ analysis gives, you an immediate view of which items are expensive to hold. Through this analysis, you can reduce your money locked up by keeping as little as possible of these expensive items. Inventory Turnover Ratio of BIGBAZAAR: Inventory Turnover Ratio: Inventory turnover means how many times the inventory is cycled through in a given time period. In most instances the time period that is used is the previous twelve months. It is often calculated at the end of the year. Inventory Turn and Profitability The more times an inventory turns, the more it adds to the companys profitability. A faster turning inventory uses fewer dollars and increases the owners return on investment. If fewer dollars are on spent on inventory, those extra dollars can be used for other investments or other assets to generate more revenue.
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If a high percentage of the inventory remains idle for a long period of time, it can cause a slower turn in proportion to the rest of the inventory. The period of time for judging idle inventory can vary depending on the industry and type of merchandise. Items that have a short shelf like, like perishable food items for example, must have a very fast turn rate. Idle inventory is a major cause of slow inventory turn. The inventory-turnover ratio gives a general view on the inventories of a company. In order to calculate it you should divide the annual sales of the company by its inventory. Inventory Turnover = Sales / Inventory The result represents the turnover or inventory or how many times inventory was used and then again replaced. This number is representative for a one year time period. If the value of the inventory-turnover ratio is low, then it indicates that the management team doesn't do its job properly in managing inventories. Inventory Turnover ratio in BIGBAZAAR is decreasing continuously from five years. It is easily understood from the below table and graph.

Tab NoThis table shows how the Inventory Turnover ratio is decreasing year by year. YEAR Jun-2005 Jun-2006 Jun-2007 Jun-2008 Jun-2009 INVENTORY TURN OVER 94 98 99 102 101

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INVENTORY TURN OVER

Analysis : A higher Inventory Turnover Ratio is indicates that the performance of BIGBAZAAR is better compare to its previous year. Since Inventory Turnover Ratio indicates that the firm's inventories are being sold more quickly as it is increasing.. However, if the ratio is too high then the firm may be losing sales to competitors due to inventory shortages. When comparing one firm's Inventory Turnover ratio with that of another firm it is important to consider the inventory valuation method used by the firms. Some firms use a FIFO (first-in-first-out) method, others use a LIFO (last-in-first-out) method, while still others use a weighted average method.

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Procurement procedure/Ordering system of BIGBAZAAR: Procurement is the acquisition of goods and/or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source for the direct benefit or use of corporations, individuals, or even governments, generally via a contract, or it can be the same way selection for human resource. Simple procurement may involve nothing more than repeat purchasing. Complex procurement could involve finding long term partners or even 'co-destiny' suppliers that might fundamentally commit one organization to another. Procurement can refer to buying, outsourcing, etc of any resources. Below chart shows how ordering system is working throughout the BIGBZAAR.

Need identification

Vendor selection

Order placement

Order reciept

order acceptance

Payment and vendor rating

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Need identification: Procurement process get initiated when users of the Merchandiser express a demand to category people. In the case of regular sailing items , inventory control policies that are in vogue (trend)will trigger a procurement process

Vendor selection: Once the exact requirements are identified, the procurement process focuses on identifying an appropriate source of supply Begins with search for potential vendors Existing set of vendors are considered initially Additional sources could be identified through professional contacts, trade directories, and B2B portals The sources are contacted and are subjected to a request for proposal (RFP)and request for quotation(RFQ) Order placement: Order placed with selected vendor It Includes Fixing all terms of contract such as price, payment and delivery terms and other engineering specifications Obtaining required authorization for spending For orders with high monetary value the decision making is done at highest level in the organization Purchase order is generated Payment and vendor rating: In this phase supplier are paid their payment Again in this phase vendor rating takes place.

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Vendor rating: Selecting a right vendor is difficult but an important part of purchasing and supply management process in an organization Is a systematic method to evaluate suppliers performance using data from delivery of items in response to the purchase orders placed Reorder points of inventories: The manager in charge told us that there is no such reorder points. Orders are placed as and when required. However he told that there are no such measures, except in a few items. Previously apparels were ordered once there stock fell below 4 per item piece. For general merchandise, which includes, food and non-food items, it was 7 days. However they always keep in mind the transit time of 2 days. Vegetables are taken on a daily basis from local vendors. Recently big bazaar has undergone tremendous technological advancement, as its supply chain has become completely computerized. Once the product is sold, automatically, the computer sends the request for back up. Before six month BIGBAZAAR started using a new inventory management system software called SARATHI made by SAP which helps a lot to all the management throuhiut the organization.

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VENDOR/ SUPPLIER SELECTION AT BIG BAZAR : What truly separates successful competitors from the "also rans" in today's global competitive race is suppliers. Many companies that the years have thrown "everything" into the battle for competitive advantage are only now coming to admit that their best and strongest resources are their suppliers. These are the silent partners hat every day back them with the ideas, quality, and dependability that make them competitors. Nowhere is this recognition of the relationship between supplier excellence and competitive success better realized than in the purchasing offices of corporate America. In fact, it is becoming a generally accepted principle that the companies with the best competitive records are usually the ones with the best and brightest suppliers. Pre-requisites/must for Suppliers of BIGBAZAAR: Vendor Registration Dispatch from supply partners Quality checking Bar coding DONTS FOR SUPPLY PRTNERS: Not to follow non SAP commitments Should not dispatch goods without inbound number Should not ask for change in ASN once given Dispatch must not be done without any quality checking The dispatch should not be done without missing of any document like Po,Invoice,ASN etc

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BENEFITS TO SUPPLY PARTNERS: Single point delivery Easy tracking of goods Shorter delivery lead time Faster processing of bills Easy back office job like documentation and monitoring Less material handling Win win situation to both the parties

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Data analysis and Interpretation

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Table. No-7.1 VALUE OF STOCK IN EACH DEPARTMENT IN RELATION TO TOTAL INVENTORY: Generally the value of stock in each department plays an important role in determining the level of inventory in convince store like BIGBAZAAR . Below table shows the value of stock at each department with relation to total inventory for the year 2008-2009. Name of the Dept. Value of the stock (In lakhs) Apparels Food Bazaar Electronics Furniture Bazaar Jewellery 15455.2 13225.6 50624.2 45524.4 180024.6 Total Inventory (In lakhs) 304854.00 304854.00 304854.00 304854.00 304854.00 5.069 4.338 17.00 15.00 59.05 Percentage

AnalysisThis table shows the measure stock is held in jewellery department compare to other which carries 59.05 percentage of Total Inventory . Electronics bazaar follows Jewellery department Which carries 17 percentages of total inventory. Other department like apparels , food bazaar ,furniture bazaar carries 5 ,4.5,17 percentage respectably.

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Graph .no-7.1

350000 300000 250000 200000 150000 100000 50000 0 Value of the stock Total Inventory Percentage

InterpretationThis shows there is more stock in jewellery department which shows these are the slow moving product and it incurs more cost to handel and manage inventory compare to other product because the cost incured in managing inventory is directly related to the amount of product in case of precious metal like Gold and Diamond. Other department having average inventory in relation to customer demand.

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Tab.no-7.2 GROWTH OF INVENTORY LEVEL IN LAST FIVE YEAR AT BIGABAZAAR : In inventory management the level of inventory plays an vital role . It determines the Iinventroy control technique , Inventory cost and many more things. Below table shows how the level of inventory is increasing year by year. Year Level of Inventory (In cores) April 2004 April 2005 April 2006 April 2007 April 2008 157.60 275.93 507.02 885.96 1,429.84 100 175.08 321.71 562.15 907.25 Growth in Percentage

By calculating level of inventory we can use the formula , which is given below

Ex: the level of inventory for the year 2005 becomes

100*507.02/157.60=175.08
AnalysisSo from above table it shows that how fast the level of inventory is increasing year by year in big bazaar. Generally the trend shows it is increasing rate which is un predictable. In the year 2008 it is increased to closely 9 times more if you take April 2004 as base year. And in other years like in 2005 it is 175 percentage, in 2006.2007the level of inventory becomes 321 and 562 percentage respectably.
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Graph. no-7.2

Level of Inventory

Apr-04 Apr-05 Apr-06 Apr-07 Apr-08

InterpretationSo from above graph it is shown that the level of inventory is increasing year by year which act as a competitive edge over other competitors because it can enhance the responsiveness which increase the profit and same time increase in level of inventory increases inventory cost . So it is important to note that BIGBAZAAR should have a strategy which can increase the level of inventory and as well as the profit or surplus.

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Table. No-7.3 Value of total inventory to total current asset at BIGBAZAAR from five year The ratio between the current asset and inventory plays an important role in inventory management traditionally. It tails how much should the company carry the inventory in order to make balance between the current asset and liabilities. The underline table shows how the level of inventory varies current asset in BIGBAZAAR. Particulars Level of inventory (In cores) April -2004 April -2005 April -2006 April -2007 April -2008 157.60 275.93 507.02 885.96 1,429.84 Current Asset (In cores) 229.98 403.87 844.48 1,749.45 2,628.58 68.52 68.32 60.03 50.04 54.39 Percentage

AnalysisThe above table shows that the ratio of level of inventory to current asset is decreasing year by year in BIGBAZAAR. In between both the year 2004 and 2005 there is no significant change but suddenly in the year 2006 it is decreased to 60 percent which is 68 percent in previous year. And that followed in the year 2007 which is 50 percent but dramatically again the level of Inventory is increased with respect to Current asset.

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Graph no-7.3

3000 2500 2000 Level of inventory 1500 1000 500 0 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Current Asset Percentage

InterpretationThe above graph shows how the level of inventroy is increased with the level of Current asset. As we know inventory the real blood of any type of retail chain store, so it is increasing as sales increase . but in the case of bigbazaar the level of inventory fall down at a rate of 10 percent in 2006 compare to its previous year 2005 which is 60 percent of total current asset. The cause behind this is due to increase in other current asset factor like loan advances, cash and bank balance and debtor . but it is again increased in the year of 2008 due to increase in inventory compare to other factor in current asset.

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Table.no-7.4 Inventory Turnover ratio at BIGBAZAAR for last five years Inventory Turnover Ratio indicates that the firm's inventories are being sold more quickly as it is increasing.. However, if the ratio is too high then the firm may be losing sales to competitors due to inventory shortages. So the company should maintain a particular inventory turnover ratio which neither loose the sales nor decrease profit due to high inventory. Years Sales (In cores) April -2004 April -2005 April -2006 April -2007 April -2008 658.31 1,052.80 1,868.97 3,236.74 5,048.91 Avg.Inventory (In cores) 2481.28 3948.8 7307.67 12655.5 1,999.84 3.77 3.75 3.91 3.91 3.96 Inventory turnover ratio

We can calculate inventory turn over ratio by using this formula which is given below

AnalysisSo the above table shows how the inventory turn over ratio is varying compare to its previous year for last five years . it is shown that it is increasing year by year which creates an sense of competitive edge over the other competitor. In the year 2004 it is 3.77 percent. It is followed by 2005, 2006, 2007 and 2008 and the respective inventory turnover ratioare3.75, 3.91, 3.91and 396 which shows an increase in the turn over ratio.

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Graph no-7.4

4 3.5 3 2.5 2 1.5 1 0.5 0 Years Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Series1 Series2

InterpretationThe above graph shows the the product of BIGBAZAAR are sale at a faster rate as it is determined by the inventory turnover ratio. It creates a competitive edge over other competitor. It also determines that what type of product is sailing more or which is a slow moving, fast moving product etc.

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Table. No-7.5 Inventory holding days at BIGBAZAAR for last five years Even the holding period of inventory plays an important role in inventory management system at any company. It identifies the nature of product, it determines current asset, profitability. Helps in prediction for future demand. The below table shows how the inventory holding period varies with respect to last five years. Particular Sales (In cores) April -2004 April -2005 April -2006 April -2007 April -2008 AnalysisThis above table shows the till how many days BIGBAZAAR held product as inventory is called inventory holding period. Generally the Table tell us that the no of holding days are increasing year by year. It can be calculated as by using the formula 658.31 1,052.80 1,868.97 3,236.74 5,048.91 Inventory (In cores) 157.60 275.93 507.02 885.96 1,429.84 86 95 99 99.90 103 No.of inventory holding days(in days)

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Graph.no-7.5

No.of inventory holding days(in days)

InterpretationThe above graph shows the no of inventory holding days which is increasing year by year.it enhances the responsiveness time for the customer, it add slight advantage that not to loose any customer but still it incurs inventory cost.so company should find out a strategies which can make the inventroy holding days low at ahiher responsive time to customer.

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Table.no-7.6 Total inventory cost at BIGBAZAAR for last five year The major part of the inventory management is inventory cost. It determines what should be the optimal Inventory management system. The change in Inventory cost fluctuation affects the surplus or profit alot. According to this the whole Inventory management system is designed. The table shows how the Inventory cost varies in different year with reference to Total cost. Year Total Inventory cost (In cores) April -2004 April -2005 April -2006 April -2007 April -2008 AnalysisThis table shows the inventory cost at different year at BIGBAZAAR ,which is 53.32 percent of total inventory in the year 2004. In the year 2005 t is about to 59 percent of total cost. and in the year 2006 the trend of growing inventory cost is decreased which is 71.68.both 2007,2008 follow 2006 and shown there is a huge decrease in inventory cost. the year 320.59 567.38 1234.67 1943.41 2098.53 Total cost (In cores) 602.50 961.94 1,722.34 3,021.14 4,588.39 53.32 58.98 71.68 64.32 45.73 Percentage

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Graph. no-7.6

Percentage of Inventory cost to Total cost

Percentage

Graph.No-7.7

Total Inventory cost

Apr-04 Apr-05 Apr-06 Apr-07 Apr-08

From both the graph we got to know that the the inventory cost is incrasing year by year but not in the same rate as some of the cost which determines inventory cost like labor charge ,transportation coct are volatile in nature. But from 2007 onwards the cost of inventory is
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decreasing compare toits previous year as the company adopts new information system, SARATHI by SAP and other certain devlopment software which fetch the Inventory cost a liitle down.

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CHAPTER-VIII Findings: There has been tremendous increase in the level of inventories year by year. There is a increase in inventory turnover ratio from previous year. There is no special inventory management technique. SARATHI a software now take care about all the Ordering, Maintaining and Logistic decision. There are no specialized people to take care about the inventory. There is no reverse logistic process which causes a significant part of loss in inventory for damaged goods. No special reordering system The various items and products are stored at different warehouse according to the suitability of their use near to respective Stores. But same are controlled from central location i.e. from zonal center. As and when product received in the store, the same is given product as well as SAP code. These codes are decided in company itself. Still there number of issue with suppliers Generally BIGBAZAAR not shares its strategic information with its suppliers. There are no proper specialized people to handle problem caused in a product at the time of the sale. There is no product care center for BIGBAZAAR There is no special inventory costing method There is a significant decrease in transportation cost.

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 There is a in Reduced material obsolescence The satisfaction level of suppliers is increased from previous year Number of suppliers also increased compare to previous year Ordering system is quite flexible compare to other buyer. Many of the suppliers are not satisfied with vendor help desk of BIGBAZAR Companys inventory holding period is increasing year by year. The cost of inventory increasing continuously from last 5 years. Increase in inventory turnover ratio.

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Suggestion: The company should make realistic prediction about the sales and there should not be frequent changes in the same. Suppliers should be given schedule for the supply products and other supplies in time. Still better co-ordination should be there among various departments. A large part of companys investments are tied up with the loan, the company should try to pool its capital investments. It should start its own subsidiaries for producing all the product. It should start making partnership with its suppliers. It should change its current system for damaged goods. It should have a look on vendor help desk Standardized tools should in inventory management There should be more standardization in procurement decision

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Recommendation: There should be a proper department for inventory The company should employ the qualified people for inventory management as well as supply chain management The warehouse of the BIGBAZAAR should be modernized with new storage technique like JIT. The software system should be modernized in order to increase the clarity of communication among various departments There should be a specialized team to take decision like procurement.logistic.and supply chain management The vendor help desk should be supplier friendly There should be an adequate MIS to fulfill the customer order. The company should have a modernized ERP system.

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Conclusion: Indian retail sector is witnessing one of the most hectic Marketing activities of all times. The companies are fighting to win the hearts of customer who is God said by the business tycoons. There is always a first mover advantage in an upcoming sector. In India, that advantage goes to BIG BAZAAR. It has brought about many changes in the buying habits of people and changing a number of aspects in Store Management, Inventory Management and Product Delivery . It has created formats, which provide all items less than one roof at low rates.

The consumers preferences are changing & they are moving from Traditional Kirana stores to Modern Retail outlet. Its the main challenge to the Modern retail outlets to attract the customers towards them from that of competitors. To attract more customers companies have more Inventory or stock at the store in order to satisfy the customers demand. Again it is important the inventory should be managed in proper manner as it act as life blood for hyper market like BIGBAZAAR. BIG BAZAAR has maintained that uniqueness & has succeeded in attracting customers.

What truly separates successful competitors from the "also rans" in today's global competitive race is suppliers. Many companies that the years have thrown "everything" into the battle for competitive advantage are only now coming to admit that their best and strongest resources are their suppliers. So Now a-days it is important to have a good relationship with suppliers to be successful.

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