SUMMER TRAINING PROJECT REPORT

ON

INVENTORY MANAGEMENT AND STOCK REPLNISHMENT

SUBMITTED FOR PARTIAL FULFILLMENT OF REQUIREMENT FOR THE

AWARD OF DEGREE
OF
MASTERS OF BUSINESS ADMINISTRATION
Affiliated to AKTU University, Lucknow
[Batch: 2018-2020]

Submitted To: Submitted by:

Dr. Shashi Gupta Chahat Dhariwal
Roll No.: 1814370012
MBA-3rd Sem.

IMS Engineering College Ghaziabad Uttar Pradesh-201009,

Affiliated to Dr. A. P. J. Abdul Kalam Technical University Lucknow
 IMS Engineering College Ghaziabad Uttar Pradesh-201009,
Affiliated to Dr. A. P. J. Abdul Kalam Technical University Lucknow
CERTIFICATE

This is to certify that “Chahat Dhariwal” a student of Master of Business Administration, Batch (2018-

2020) of IMS Engineering College Ghaziabad , Roll No. 1814370012 has undertaken the summer

internship project under my guidance for the Project Title ”Inventory Management & Stock

Replenishment.”. This Project Report is prepared in partial fulfillment for the Degree of Master of Business

Administration by APJ Abdul Kalam Technical University, Lucknow.

To the best of my knowledge, this research work is original and no part of this report has been submitted by

the student earlier to any other institution/university.

Dr. Shashi Gupta Dr. Monika Verma

Faculty HOD (Management)

 DECLARATION

I Chahat Dhariwal student of MBA hereby declare that the study entitled “INVENTORY
MANAGEMENT & STOCK REPLENISHMENT" in context of Pantaloons is submitted by me in the
partial fulfillment of requirement for the internship report.

(Chahat Dhariwal)
 PREFACE

Management training has gained rapid importance only recently. Management was previously considered as

an inborn art or talent. But in today’s fast developing word this view has been abandoned.

To develop managerial capabilities and to supplement their theoretical knowledge with practical experience,

the management students are required to go training in business organization.

This study would not only help me as a management student to gain a deep insight of how an organization

works but also practical usage of all management techniques that I have learnt during the course of my study.

This project would also help me analyze the difference between the organizational realities and the theories

that have been taught in my academic session and also gave me a real experience of the corporate world let

me better understand how it function. It also taught me how to take every experience in the right and learn

from each one. Finally the analysis feasible to be put to test in real life situations. I shall consider all my hard

work worthwhile if this endeavor of mine is able to satisfy all those concerned and proves useful to anyone or

for any further study in the future.

ACKNOWEDGEMENT

Behind every study there stands a myriad of people whose help and contribution make it successful. Since
such a list will be a prohibitively long, I may be excused for important omissions.
 First of all, I would like to thank the PANTALOONS for providing me the great opportunity to undergo my
summer training in this esteem organization.

I sincerely thank Mr. Piyush Kumar (Warehouse Executive) for the project given to me by him. It was a
very interesting one; the support he gave me throughout my study was immense.

The guidance, help and co-operation of my supervisor Mr.Brij Nandan( Store Manager) , is gratefully
acknowledged with profound gratitude.

I would like to thank my colleagues especially my group members who are working with me on the same
topic who helped me a lot in discussing all the related aspect of the topic.

Contents
Page No.

 History of pantaloon

 Introduction of Inventory management

 Introduction of Indian Retail Industry

 Inventory management
 Types of inventory

 Inventory cost

 Carrying cost

 Stock out cost

 Inventory control system

 Objectives of inventory management

 Inwarding of Merchandise

 Process flow chart of inventory

 Problem in managing stock

 Action plan

 Finding & Recommendations

 Recommendation / Suggestion

 Bibliography
 Compan

y profile

1.1 Introduction

THE INDIA RETAIL INDUSTRY IS THE LARGEST AMONG ALL THE INDUSTRIES, ACCOUNTING
FOR OVER 10 PER CENT OF THE COUNTRY’S GDP AND AROUND 8 PER CENT OF THE
EMPLOYMENT. THE RETAIL INDUSTRY IN INDIA HAS COME FORTH AS ONE OF THE MOST
DYNAMIC AND FAST PACED INDUSTRIES WITH SEVERAL PLAYERS ENTERING THE MARKET.
BUT ALL OF THEM HAVE NOT YET TASTED SUCCESS BECAUSE OF THE HEAVY INITIAL
INVESTMENTS THAT ARE REQUIRED TO BREAK EVEN WITH OTHER COMPANIES AND
COMPETE WITH THEM.THE INDIA RETAIL INDUSTRY IS GRADUALLY INCHING ITS WAY
TOWARDS BECOMING THE NEXT BOOM INDUSTRY.

ADITYA BIRLA GROUP

A US $40 BILLION CORPORATION, THE ADITYA BIRLA GROUP IS IN THE LEAGUE OF

FORTUNE 500. IT IS ANCHORED BY AN EXTRAORDINARY FORCE OF OVER 136,000
EMPLOYEES BELONGING TO 42 DIFFERENT NATIONALITIES. THE GROUP HAS BEEN
RANKED NUMBER 4 IN THE GLOBAL 'TOP COMPANIES FOR LEADERS' SURVEY AND
RANKED NUMBER 1 IN ASIA PACIFIC FOR 2011. 'TOP COMPANIES FOR LEADERS' IS THE
MOST COMPREHENSIVE STUDY OF ORGANISATIONAL LEADERSHIP IN THE WORLD
CONDUCTED BY AON HEWITT, FORTUNE MAGAZINE, AND RBL (A STRATEGIC HR AND
LEADERSHIP ADVISORY FIRM). THE GROUP HAS TOPPED THE NIELSEN'S CORPORATE
IMAGE MONITOR 2012-13 AND EMERGED AS THE NUMBER 1 CORPORATE, THE 'BEST IN
CLASS'

50 PER CENT OF THE ADITYA BIRLA GROUP'S REVENUES FLOW FROM ITS OVERSEAS
OPERATIONS. THE GROUP OPERATES IN 36 COUNTRIES – AUSTRALIA, AUSTRIA,
BANGLADESH, BRAZIL, CANADA, CHINA, EGYPT, FRANCE, GERMANY, HUNGARY, INDIA,
INDONESIA, ITALY, IVORY COAST, JAPAN, KOREA, LAOS, LUXEMBOURG, MALAYSIA,
MYANMAR, PHILIPPINES, POLAND, RUSSIA, SINGAPORE, SOUTH AFRICA, SPAIN, SRI
LANKA, SWEDEN, SWITZERLAND, TANZANIA, THAILAND, TURKEY, UAE, UK, USA, AND
VIETNAM.
THE ADITYA BIRLA GROUP IS AN INDIAN MULTINATIONAL CONGLOMERATE NAMED
AFTER ADITYA VIKRAM BIRLA, HEADQUARTERED IN THE ADITYA BIRLA CENTRE IN
WORLI, MUMBAI, INDIA.

THE ADITYA BIRLA GROUP IS THE WORLD'S LARGEST PRODUCER OF VISCOSE STAPLE
FIBER INDUSTRY. IT OPERATES FROM INDIA, LAOS, THAILAND, MALAYSIA AND CHINA.
IT OWNS THE BIRLA CELLULOSE BRAND. APART FROM VISCOSE STAPLE FIBER, THE
GROUP ALSO OWNS ACRYLIC FIBER BUSINESSES IN EGYPT AND THAILAND, VISCOSE
FILAMENT YARN BUSINESSES AND SPINNING MILLS IN INDIA AND SOUTH EAST ASIA.
THE GROUP HAS PULP AND PLANTATION INTERESTS IN CANADA AND LAOS. IT'S TWO
COMPANIES I.E. ADITYA BIRLA NUVO LTD. AND GRASIM BHIWANI TEXTILES LTD.
WHICH IS A SUBSIDIARY OF GRASIM INDUSTRIES ARE IN TEXTILE BUSINESS.
Our Vision

TO BE A PREMIUM GLOBAL CONGLOMERATE, WITH A CLEAR FOCUS ON EACH OF THE BUSINESSES.

Our Mission

TO DELIVER SUPERIOR VALUE TO OUR CUSTOMERS, SHAREHOLDERS, EMPLOYEES AND SOCIETY

AT LARGE.

Values:

Integrity:

We believe in growth of the organization with the growth of our people.People are our
investors, partners (Vendors), employees, customers and stakeholders of the companies.

Aditya Birla is a name known for higher value and good quality. We do what we commit to
Commitment:
our people.

Our excellence in every field of business and promise to provide the best shows the passion
Passion: of the organization.

Seamlessness: We work beyond limits; we go one step ahead of others to serve and to benefit.

Speed: Growth is important but timely growth is the key to success. We believe to act early.
 Hindalco

Grasim

Aditya Birla

Nuvo

Ultratech

Idea

Aditya Birla nuvo Ltd. Novelis

ADITYA BIRLA NUVO LTD. (ABNL) IS A US$ 4 BILLION PREMIUM CONGLOMERATE. IT

IS PART OF THE ADITYA BIRLA GROUP, A US$ 40 BILLION INDIAN MULTINATIONAL
OPERATING IN 36 COUNTRIES IN SIX CONTINENTS.

Vision

TO BE A PREMIUM CONGLOMERATE BUILDING LEADERSHIP IN BUSINESSES AND

CREATING VALUE FOR ALL THE STAKEHOLDERS.

Mission

INVESTING IN PROMISING

SECTORS BUILDING

LEADERSHIP IN BUSINESSES

A PLATFORM TO DRIVE SYNERGY OF

RESOURCES DELIVERING BEST VALUE

 TO ALL THE STAKEHOLDERS TO BE A

RESPONSIBLE CORPORATE CITIZEN

OVER THE YEARS, ADITYA BIRLA NUVO HAS TRANSFORMED ITSELF FROM A
MANUFACTURING COMPANY TO A DIVERSIFIED CONGLOMERATE.
THE RAZOR-SHARP FOCUS ON EACH BUSINESS HAS MADE IT A LEADING PLAYER IN MOST
SEGMENTS, INCLUDING VISCOSE FILAMENT YARN, BRANDED GARMENTS, AGRIBUSINESS,
TEXTILES AND INSULATORS. OVER THE PAST FEW YEARS, ADITYA BIRLA NUVO,
THROUGH ITS SUBSIDIARIES AND JOINT VENTURES, HAS MADE SUCCESSFUL FORAYS
INTO LIFE INSURANCE, ASSET MANAGEMENT AND OTHER FINANCIAL SERVICES, TELECOM,
BUSINESS PROCESS OUTSOURCING (BPO) AND IT SERVICES.
 Financial Fashion and
Services Telecom IT-ITeS Manufacturin
Lifestyle g
Asset
Management Madura
Agri
Pantaloons
Life Insurance Rayon

NBFC Textiles Insulator

Private Equity,
Broking, Wealth
Management,
General
Insurance
Advisory

WITH AN OPTIMUM MIX OF REVENUE AND PROFIT STREAMS, THE COMPANY IS IN A

STRONG POSITION TO MAXIMISE LONG-TERM SHAREHOLDER GAINS.

Market Position:

FINANCIAL SERVICES: ABNL IS AMONG TOP 5 FUND MANAGERS (EXCL. LIC)

FASHION & LIFESTYLE: LARGEST PREMIUM BRANDED APPAREL PLAYER,

LARGEST MANUFACTURER OF LINEN TELECOM: AMONG TOP 3 CELLULAR

OPERATORS BY REVENUE MARKET SHARE

IT-ITES : AMONG THE TOP 10 BPO COMPANIES BY

REVENUE SIZE AGRI BUSINESS: SECOND-BEST ENERGY

EFFICIENT UREA PLANT

RAYON: SECOND LARGEST MANUFACTURER OF VFY

INSULATORS: LARGEST MANUFACTURER OF INSULATORS.

AMONG ADITYA BIRLA NUVO’S JOINT VENTURES AND SUBSIDIARY COMPANIES ARE:

 Idea Cellular Limited, which is among the top three cellular operators in India, in terms
of revenue market share.

 Birla Sun Life Insurance Co. Ltd., which is among the top five private sector life insurance
companies in India, in terms of new business premium.

 Birla Sun Life Asset Management Co. Ltd., which is the fourth largest asset management
company in India, in terms of assets under management.

 Aditya Birla Minacs Worldwide Limited, which is the sixth largest Indian BPO company by
revenue size.

1.2. PANTALOONS FASHION AND RETAIL LTD.

Pantaloons Fashion & Retail Limited is an Indian premium clothing retail chain. The first
Pantaloons store was launched in Gariahat, Kolkata in 1997. As of November 2013, there are
76 Pantaloons stores in 44 cities. Pantaloons was previously controlled by the Future Group,
but has now been taken over by Aditya Birla Nuvo Limited (ABNL).

Spotlighting today's buoyant youth, Pantaloons Fashion Retail Ltd., India's premium lifestyle
apparel company offers chic and trendy fashion to meet their ever-changing needs. With
innovative designs, concepts and products, the company brings the latest trends in fashion
and clothing styles to the apparel market. Pantaloons reflect the ideology of always keeping
alive the 'newness factor' through fashion apparel and accessories that are visually appealing
and fashionably upbeat.

The first Pantaloons store was launched amidst much fanfare in Gariahat, Kolkata in 1997.
Over the years, the brand has undergone several transitions and re-invented itself to bring
forth compelling trends and styles catering to the evolving fashion hub.

Since its inception, Pantaloons progressed from retailing just a mix of brands to its very own
popular private labels as well, designed by the in-house Design Studio. With a sharp focus on
bringing the latest in fashion, the Design Studio combines its prowess in design and
aesthetics to present styles that keep the consumer fashionably dressed each season.

Initially positioned as a store catering to the fashion needs of the entire family, Pantaloons
has now transitioned to a fashion and lifestyle brand with an emphasis on youth and a focus
on designs that are inherently in sync with current fashion trends. This compelling
combination has helped Pantaloons retain its place on the style radar of every consumer's
wardrobe.

Pantaloons stores have an abundance of choices across categories that range from western to
Indian wear, formal to party wear and active wear for men, women and kids. To further add
to the customer's innumerable choices that reflect style, attitude, and comfort, Pantaloons has
extended its horizons to fashion accessories like fragrances, footwear, handbags, watches,
sunglasses and much more.

With a chain of 81 fashion stores across 40 cities and towns, Pantaloons is constantly
extending its foot-prints into the rest of modern India.

Pantaloons which was previously controlled by the Future Group has now been taken over by
Aditya Birla Nuvo Limited ['ABNL']. ABNL is a part of the prestigious Aditya Birla Group,
a $40 billion Indian multinational, operating in 36 countries across the globe with over
136,000 employees.

The company offers an incredible and complete one-stop shopping experience to its buyers
through its vast collection of more than 100 prestigious brands for the discerning fashionista.

The 81 aesthetically designed stores spread across the country display a range of classy and
trendy merchandise that truly lives up to Pantaloons’ maxim of ‘fresh fashion’.

A typical Pantaloons store is spread across a sprawling retail space of about 28,000 sq. ft.,
comprising a brand portfolio that runs across a wide gamut of styles that spell class. The
collection includes ready-to-wear western and ethnic apparel for men, women and kids,
complemented by an exhaustive range of accessories.

The women’s section houses the private labels — Bare Denim, Bare Leisure, Rig, Annabelle,
Honey, and Ajile — in western wear, as well as the choicest ethnic wear from RangManch,
Trishaa and Akkriti. Popular brands like Lee Cooper, Biba and W are also available.

The private labels for men in western wear include Lombard, Rig, Bare Denim, Bare Leisure
and JM Sport apart from trendy brands like Urbana, Scullers, John Miller, and Indigo Nation.
Akkriti provides a wide selection of ethnic wear.
Kids can choose from private labels like Bare Denim, Bare Leisure, Rig, or indulge in
exclusive brands like Lee Cooper Juniors, Chalk exclusive, Chirpy Pie & Bare in addition to
international brands like Barbie and Disney. For the ethnic look, they can opt for traditional
wear from Akkriti.

Pantaloons offer much more than just apparel. Customers can shop from an assortment of
watches from renowned international brands like Tommy Hilfiger, Esprit, Kenneth Cole,
Citizen, Timex, and Titan, among other brands.

Trendy sunglasses from Polaroid, Guess, Police, Scott, I Dee and Allen Solly are also
available. The accessories and beauty segments display an attractive collection of lady’s

handbags from Lavie, Caprese, Fiorelli and Fastrack. Also available are products from colour
cosmetic brands such as Bourjois, Chambor, Deborah, Faces, Revlon, Maybelline, and
Lakmé, as well as a wide collection of exotic fragrances.

With its overwhelming repertoire of lifestyle apparel brands, Pantaloons is focused on growth
while continuing to create fresh fashion. Pantaloons isrecognized by its warm personalized
service that completes the core proposition of this trendy chain.

The Aditya Birla Group ranks high in the League of Fortune 500 Corporations of the world
with a strong mix of talented and capable personnel comprising of 42 different nationalities,
who are credited with anchoring the organization and scripting one brilliant success story
after another.

Backed by the giant conglomerates, ABNL and Future Group, both the entities will work in
tandem to derive operational synergies for back-end, supply chain and other crucial value
drivers of the business.

With its overwhelming repertoire of lifestyle apparel brands, Pantaloons is focused on growth
while continuing to create fresh fashion. Pantaloons are recognized by its warm personalized
service that completes the core proposition of this trendy chain.
1.3. Company Hierarchy
1.4. Under the apparels section, PFRL is currently operating with Private labels in
different categories:-

Women’s wear

Casual Wear : Honey

Ethnic Wear : Rang manch
Akriti

Trishaa
 HISTORY OF PANTALOON

Pantaloon Retail (India) Limited is India's leading retailer that operates multiple retail formats in both the
value and lifestyle segment. Pantaloon has ushered a retail revolution in India and its founder Kishore Biyani
is known as India's "King of Retail". Pantaloon's headquarter is in Mumbai. The company currently operates
over 5 million square feet of retail space and has plans to increase it to 30 million sq. ft by 2011. Pantaloon
has plans to open over 3000 new stores by 2010.

Pantaloon's origin can be traced to 1987 when the company was incorporated as Men's Wear Private Limited.
The company launched Pantaloons trouser, India's first formal trouser brand. In 1992, Pantaloon launched its
IPO. In 1994, The Pantaloon Shoppe - exclusive menswear store in franchisee format was launched across the
country. Pantaloon started distribution of distribution of branded garments through multi-brand retail outlets
across the nation. In 2001, Big Bazaar, India's first hypermarket chain was launched. In 2002, Food Bazaar,
the supermarket chain was launched. In 2006, Future Capital Holdings, the company's financial arm launched
real estate funds, "Kshitij" and "Horizon" and private equity fund "In division". The company is also planning
forays into insurance and consumer credit.
Pantaloon Retail is the flagship company of Future Group. The lines of business of Future Group are:

 E-commerce: Pantaloon's website Futurebazaar.com has revolutionized the e-commerce business in

India. It offers a wide range of products at affordable prices. It has been named as Best Indian Website
2007 in the Shopping category by PC World.

Food: In food business, the group offers a host of options. Food Bazaar - a chain of large
supermarkets; Brew Bar - a beer bar; café Bollywood - a national chain of eateries; Chamosa - a pan-
Indian chain of snack counters, and Sports Bar - a bistro focused on the world of sports.

Fashion: The group offers a variety of options in fashion. Its brands include aLL, Blue Sky, Central,
Etam, Fashion Station, Gini & Jony, Navaras, Pantaloons, and Top 10.

Home & Electronics: Options include: Collection i - a lifestyle furniture store; Electronics Bazaar -
offers branded electronic goods and appliances; e-zone - trendiest electronics items; Furniture Bazaar -
entire range of Home Furniture; Home Town - one stop destination for all the home needs.

Leisure & Entertainment: Options are: Bowling Co. - state-of-the-art premium family entertainment
centre, offering multiple, novel and unique leisure and entertainment options; F 123 - offers a wide
range of gaming options ranging from bowling and pool to redemption and interactive video games to
bumper cars.

Wellness & Beauty: Options are: Health Village - a state-of-the art spa and yoga centre; Star & Sitara:
Beauty salon for men and women; Tulsi - provides access to the best allopathic, ayurvedic and
homeopathic medicinal products; Turmeric - offers beauty products like colour cosmetics, fragrances,
herbal and specialty skin items, hair products and bath accessories.
 Major Achievements of Pantaloon Retail

 Chosen as International Retailer for the Year 2007

 Chosen as Emerging Market Retailer of the Year 2007

 Best Employers in India (Rank 14th) in the Hewitt Best Employers 2007 survey.

 Best Managed Company in India (Mid-cap) for the year 2006.

 Won Images Retail Awards 2006 for Best Value Retail Store, Best Retail Destination, and Best Food &
Grocery Store.

 The new Pantaloons Fresh Fashion store, the fourth to be opened in Delhi, will showcase
the following brands: Ladies wear — Rig, UMM, Bare Denim, Bare Leisure, PEPE, John Miller,
Indigo Nation, Scullers, JM Sports Ajile, Urban Yoga, Akkriti, F Factor and Monte Carlo; Men’s wear
— Rig, UMM, Bare, Jean Paul, Pepe, Annabele, Honey, Jealous, Ajile, Mix n match, SKD, DMS,
Akkriti and Monte Carlo; Kids wear — Chalk Boys, Chalk Girls, Bare7214, Giny & Jony, Barbie and
Bob the Builder.

INTRODUCTION OF INVENTORY MANAGEMENT

INVENTORY MANAGEMENT – A Theoretical basis

Inventory is very important current assets. The term inventory refers to the stockpile of the products a firm is
offering for sale and the components that makes up the product. In other words, inventory is composed of
assets that will be sold in future in the normal course of business operations. The assets which firms stores as
inventory in anticipation of need are

1 raw material
2 work-in-progresses (semi finished goods)

3 finished goods

The raw material inventory contains items that are purchased by the firm from others and are converted into
finished goods through the manufacturing (production) process. They are an important input of the final
product.

The work in process inventory consists of items currently being used in the production process. They are
normally semi-finished goods that are various stages of production in a multi-stage production process.
Finished goods represent final or completed products which are available for sale. The inventory of such
goods consists of items that have been produced but are yet to be sold.

Inventory represents the second largest asset category for manufacturing companies, next only to plant and
equipment. The proportion of inventory to total assets generally varies between 15 and 30 percent.

Decisions relating to inventories are taken primarily by executives in production, purchasing and marketing
departments. Usually raw material policies are shaped by purchasing and production executives, work-in-
process inventory is influenced by the decisions production executives and finished goods inventory policy
evolved but production and marketing executives. Yet as inventory management has important financial
implications, the financial manager has the responsibility to ensure that inventories are properly monitored
and controlled. He has to emphasize the financial point of view and imitate programmes with the participation
and inventory, as a current asset, differ from other current assets because only financial managers are not
involved. Rather all the functional areas finance, marketing, production, and purchasing are involved.

Business inventory the reason for keeping stock

All these stock reason can apply to any owner or product stage

Buffer Stock is held in individual workstations against the possibility that the upstream workstation may be
little delayed in providing the next item for processing. Whilst some processes carry very large buffer stock.
Toyota moved to one (or a few items) and has now moved to eliminate this stock type.

Safety Stock is held against process or machine failure in the hope/belief that the failure can be repaired
before the stock runs out. This type of stock can be eliminated by programmes like Total Productive
Maintenance.

Overproduction is held because the forecast and the actual sales did not match. Making to order and JIT
eliminates this stock type.

Lot Delay Stock is held because a part of the process is designed to work on a batch basis whilst only
processing items individually. Therefore each item of the lot must wait for the whole lot to be processed
before moving to the next workstation. This can be eliminated by single piece working or a lot size of one.

Demand Fluctuation Stock is held where production capacity is unable to flex with demand Therefore a stock
is built in times of lower utilization to be supplied to customer when demand exceeds production capacity.
This can be eliminated by increasing the flexibility and capacity of a production line or reduced by moving to
item level load balancing.

Line Balance Stock is held because different sub – processes in a line work at different rates therefore stock
will accumulate after a fast sub-process or before a large lot size sub process line balancing will eliminate this
stock type.

Special terms used in dealing with inventory

Stock keeping unit (SKU) is unique combination of all the components that are assembled into the
purchasable item. Therefore any change in the packaging or product is a new SKU. This level of detailed
specification assists in managing inventory

Stock Out means running out of the inventory of an SKU

“New Old Stock” is a term used in business to refer to merchandise being offered for sale which was
manufactured long ago but that has never been used. Such merchandise may not be produced any more, and
the new old stock may represent the only market source of a particular item at the present time.

Inventory Accounting

The way in which a company accounts for its inventory can have a dramatic affect on its financial statements.
Inventory is a current asset on the balance sheet. Therefore, the valuation of Inventory directly affects the
inventory, total current asset and total asset balances. Companies intend to sell their inventory and when they
do, it increase the cost of goods sold , which is its often a significant expense on the income statement.
Therefore, how a company values its inventory will determine the cost of goods sold amount, which in turn
affects gross profit (margin), net income before taxes, taxes owed and untimely net income. It is clear then
that a company’s inventory valuation is relatively simple. For a retailer, inventory should be valued for what it
cost to acquire that inventory. When an inventory item is sold, the inventory account should be reduced
(credit) and cost of goods sold should be increased (debited) for the amount paid for each inventory item. This
work if a company is operating under the specific identification method. That is, a company knows the cost of
every individual item that is sold. This method works well when the amount of inventory a company has is
limited and each inventory item is unique. Examples would include car dealerships, jewelers and art galleries.

The specific identification Method, however, is cumbersome in situations where a company owns a
great deal of inventory and each other. As a result, other inventory and each specific inventory item is
relatively indistinguishable from each other, As a result, other inventory valuation methods have been
developed. The best known of these are the FIFO (first-in, first out) and LIFO (last-in, Last-out) methods.

What is ABC Analysis in inventory Management ?

Some people confuse this with activity based costing, which is also called ABC. However, in the inventory
management area, ABC analysis refers to categorizing the stock according to their cost and quantity.
 Not all stocks is equally valuable and therefore doesn’t require the same management focus. The
results of the ABC analysis provide information that helps evaluate how each inventory part should be
monitored and controlled.

ABC category for an inventory item is derived based on its cost and quantity. You cannot say that an
item is always a class A item or a class B item. The category of an inventory item can change over time. An
inventory management system should be able to based on the information available and periodically update
the ABC assignment.

Just –in- Time

(JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-
process inventory and its associated carrying costs. In order to achieve JIT the process must have signals of
what is going on elsewhere within the process. This means that the process is often driven by a series of
signals, which can be Kanban, that tell production processes when to make the next part. Kanban are usually
‘tickets’ but can be simple visual signals, such as the presence or absence of a part on a shelf. When
implemented correctly, JIT can lead to dramatic improvements in a manufacturing organization’s return on
investment quality and efficiency. Some have suggested that “Just on Time” would be a more appreciate name
since it emphasizes that production should create items that arrive when needed and neither earlier nor later.

Quick communication of the consumption of ols stock which triggers new stock to be ordered is key to
JIT and inventory reduction. This saves warehouse space and costs. However since stock levels are
determined by historical demand any sudden demand rises above the historical average demand the firm will
deplete inventory faster than usual and cause customer service issues. Some have suggested that recycling
Kanban faster can also fix the system by as much as 10-30% in recent years manufacturers have touted a
trailing 13 week average as better predictor for JIT planning than most forecasters could provide.

JUST-IN-TIME INVENTORY CONTROL

“Just-in-time production is a simple idea that may be difficult to implement,” wrote Gershon and Weiss. The
basic concept is that finished goods should be produced just time for delivery, and raw materials should be
delivered just in time for production. When this occurs, materials or goods never sit idle, which means that a
minimum amount of money is tied up in raw materials, semi finished goods, and finished goods …. The just-
in-time approach calls for slashing production and purchase lot sizes and also buffer stocks-but incrementally,
a little at a time, month after month, year after year. The result is sustained productivity and quality
improvement with greater flexibility and delivery responsiveness.” This production concept, which originated
in Japan and became immensely popular in America industries in the early and mid-1990s, continues to be
hailed by proponents as a viable alternative for businesses looking for a competitive edge.
 Effects

Some of the initial results at Toyota were horrible, but in contrast to that a huge amount of cash appeared,
apparently from nowhere, as in-process inventory was built out and sold. This by itself generated tremendous
enthusiasm in upper management.

Another surprising effect was that the response time of the factory fell to about a day. This improved
customer satisfaction by providing vehicles usually within a day or two of the minimum economic shipping
delay.

INTRODUCTION OF RETAIL INDUSTRY

Retailing in India

Retail Marketing

Retailing is the interface between the producer and the individual consumer buying for personal consumption.
This excludes direct interface between the manufacturer and institutional buyers such as the government and
other bulk customers. a retailer is one who stocks the producer’s goods and is involved in the act of selling it
to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual
consumer with the manufacturing and distribution chain.

The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading
activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These
include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail
businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for
example, the local kirana shops, owner manned general stores, pan/beedi shops, convenience stores, hand cart
and pavement vendors, etc.

The Indian Scenario:

Trade or retailing is the single largest component of the services sector in terms of contribution to GDP. Its
massive share of 14% is double the figure of the next largest broad economic activity in the sector. India is the
‘second most attractive retail destination’ globally from among thirty emergent markets. It has made India the
cause of a good deal of excitement and the cynosure of many foreign eyes. With a contribution of 14% to the
national GDP and employing 7% of the total workforce (only agriculture employs more) in the country, the
retail industry is definitely one of the pillars of the Indian economy1.

Growing in tandem with the economy is the Indian retail sector. The sector is on a high growth trajectory and
is expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one of India’s largest
industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the
nation’s workforce. Indian retail business promises to be one of the core sectors of the Indian economy, with
organized retail sector estimated to grow by 400 per cent of its current size by 2007-08.

Income, technology and life styles of consumers are changing, even from whom they buy are changing. The
location or the place where they buy is changing; the shops are opened closed according to the convenience of
the buyers. The buying process has changed due to Internet buying, which brings new and better deals and
also saves time. Population growth rate, increasing literacy rate and increasing family income has an effect on
consumer spending.

Changing social attitudes towards work, home and leisure affect the retail strategies. Political decisions
relating to the environment, shopping locations and fair trade affect, where and how retailers can trade.
Changes in technology bring new attitudes to buying products and services and to better organization of the
supply chain.
India has the highest shop density in the world and the present retail market in India. We are ranked second in
the global retail development index out of 30 by AT Kearney. This figure shows the comparative penetration
of organized retail in India.

Evolution of Retail Market in India.

In the beginning there were only kirana stores called Mom and Pop Stores, the friendly Neighborhood stores
selling every day needs. In the 1980s manufacturer’s retail chains like DCM, Gwalior Suiting’s, Bombay
Dying, Calico, Titan etc started making its appearance in Metros and small towns. Multi brand retailers came
into the picture in the 1990s. In the food and FMCG sectors retailers like Food world, Subhiksha, Nilgris are
some of the examples. In music Segment Planet M, Music world and in books Crossword and Fountainhead
are some others. Shopping Centers began to be established from 1995 onwards. A unique example was the
Establishment of margin free markets in Kerala. The millennium year saw the emeregence of super markets
and hypermarkets. Now big players like Reliance, Bharti, Tatas, HLL, ITC are entering into the organized
retail segment. The big international retail bigwigs are waiting in the wings, as the present FDI guidelines do
not allow them to own retail outlets in the country. Walmart is testing the waters by agreeing to provide back
end and logistic support to Bharti for establishment of retail chains with a view to study the market for future
entry when the FDI guidelines change and to establish a backbone supply chain. Table 1 shows the different
phases in the growth of organized retailing in India.

Table: 1. Journey of Organized Retail in India

Year Growth Function

2000 First Phase Entry, Growth, Expansion, Top line focus

2005 Second Phase Range, Portfolio, Former options

2008 Third Phase End to end supply chain management, Backend operation, Technology, Process

2011 Fourth Phase M&A, Shakeout, Consolidation, High investment

Source:
Ernst & Young

GLOBAL SCENARIO

Retail stores constitute 20% of US GDP & are the 3 rd largest employer segment in USA. China on the other
hand has attracted several global retailers in recent times. Retail sector employs 7% of the population in
China. Major retailers like Wal-Mart & Carrefour have already entered the Chinese market. In the year 2003,
Wal-Mart & Carrefour had sales of US $ 70.4 Crore & US $ 160 Crore respectively. The global retail industry
has traveled a long way from a small beginning to an industry where the world wide retail sales is valued at $
7 x 10” Crore. The top 200 retailers alone accounts for 30 % of the worldwide demand. Retail turnover in the
EU is approximately Euros 2,00,000 Crore and the sector average growth is showing an upward pattern. The
Asian economies (excluding Japan) are expected to grow at 6% consistently till 2005-06.On the global Retail
stage, little has remained same over the last decade. One of the few similarities with today is that Wal-Mart
was ranked the top retailer in the world then & it still holds that distinction. Other than Wal-Mart's dominance,
there's a little about today's environment that looks like the mid-1990s. The global economy has changed,
consumer demand has shifted & retailers' operating systems today are infused with far more technology than
was the case six years ago.

The Top Five

Company Investment

Wal-Mart - Bharti Yet to announce

Reliance $ 5.5 billion

Aditya Birla Group$ 3.3 billion

Pantaloon $ 1 billion

Tatas $ 89 million

Source: The Economic Times

PRESENT INDIAN SCENARIO

India’s retail market that is seen as the GOLDMINE by global players has grabbed attention of the most
developed nations. This is no wonder to the one who knows that the total Indian retail market is US $350bn.
(16, 00,000 crore INR approx.) of which organized retailing is only around 3 percent i.e. US $8bn (36,000
crore INR approx).
Modern retail has entered India as seen in sprawling shopping centers, multi-storeyed malls and huge
complexes offer shopping, entertainment and food all under one roof. The future of Indian retailing may even
witness the concept of 24 hour retailing.

The urban retail market has been embracing various new formats and the malls turned out to be the
trendsetters by promising the concept of shoppertainment. The trends in the rural market also have been
changing from the old Haats and Melas to the rural malls like ‘Chaupal Sagar’ launched by ITC, DCM
Shriram Groups one-stop shopping destination called ‘Hariyali Bazaar’, Godrej groups agri store ‘Adhar’ etc.

Organized retailing is spreading and making its presence felt in different parts of the country. The trend in
grocery retailing, however, has been slightly different with a growth concentration in the South. Though there
were traditional family owned retail chains in South India such as Nilgiri’s as early as 1904, the retail
revolution happened with various major business houses foraying into the starting of chains of food retail
outlets in South India with focus on Chennai, Hyderabad and Bangalore markets, preliminarily. In the Indian
context, a countrywide chain in food retailing is yet to be established as lots of Supply Chain issues need to be
answered due to the vast expanse of the country and also diverse cultures that are present.

 Unorganized market: Rs. 583,000 crores*

 Organized market: Rs.5, 000 crores* 5X growth in organized retailing between 2000-2005 * Over
4,000 new modern Outlets in the last 3 years* Over 5,000,000 sq. ft. of mall space under development

Major players
- Food and grocery-
- Food world-
- Shoppers' Stop-
- Subhiksha- Working at certain places
- Westside –
- Planet M-
- Nilgris –
- Lifestyle-
- Music World-
- Nirma-Radhey
- Globus-
- Reliance Fresh
 - RPG’s Spencers

Indian consumers are rapidly evolving and accepting modern formats overwhelmingly. Retail Space is no
more a constraint for growth.

Few of India's top retailers are:

1. Big Bazaar-Pantaloons:
Big Bazaar, a division of Pantaloon Retail (India) Ltd is already India's biggest retailer. In the year 2003-04, it
had revenue of Rs 658.31 crores & by 2010; it is targeting revenue of Rs 8,800 Crore.

2. Food World:
Food World in India is an alliance between the RPG group in India with Dairy Farm International of the
Jardine Matheson Group.

3. Trinethra:
It is a supermarket chain that has predominant presence in the southern state of Andhra Pradesh. Their
turnover was Rs 78.8 Crore for the year 2002-03.

4. Apna Bazaar:
It is a Rs 140-crore consumer co-operative society with a customer base of over 12 lakh, plans to cater to an
upwardly mobile urban population.

5. Margin Free:

It is a Kerala based discount store, which is uniformly spread across 240 Margin Free franchisees in Kerala,
Tamil Nadu and Karnataka. Wholesale trading is another area, which has potential for rapid growth. German
giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting
up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format
cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain
relationships with multiple suppliers for all their needs.
What is retailing?

The word 'retail' is derived from the French word 'retailer' meaning 'to cut a piece off' or 'to break bulk'. In
simple terms it involves activities whereby product or services are sold to final consumers in small quantities.
Although retailing in its various formats has been around our country for many decades, it has been confined
for along time to family owned corner shops. Englishmen are great soccer enthusiasts, and they strongly think
that one should never give Indians a corner. It stems from the belief that, if you give an Indian a corner he
would end up setting a shop. That is how great Indians retail management skill is considered.

This emergence of organized retailing has been due to the demographic and psychographics changes taking
place in the life of urban consumers. Growing number of nuclear families, working women, greater work
pressure, changing values and Lifestyles, increased commuting time, influence of western way of life etc.
have meant that the needs and wants of consumers have shifted from just being Cost and Relationship drive to
Brand and Experience driven, while the Value element still dominating the buying decisions.

A retail revolution is happening at newer markets, India presents exciting opportunities on account of its vast
middle-class and a virtually untapped retail industry.

• The network of retailers reaches every nook and corner of the country. So any product produced anywhere in
the country can be easily accessed by the buyers from any location. Thus the spatial convenience of Indian
retailers is varying high. According to ORG-MARG2 the total number of all kinds of retail outlets in India
was 51,30,000 during 1996-97. This means one retail outlet exists against an average of almost 190 persons.

• Secondly, in India the retailing industry is an unorganized lot consisting of, in most of the cases, small
entrepreneurs. And the virtual omnipresence of the Indian retailer can be attributed to these small
entrepreneurs only.
The second attribute gives rise to the following characteristics –

• The manufacturers cannot directly reach all retailers in a particular geographical area. Therefore, the
manufacturers cannot maintain the desired relationship with the retailers, which in turn, makes management of
the channel complicated. This also makes the possibility of a direct feedback loop from the retailers almost
remote.

• Therefore, the member operating between the manufacturers and retailers become more powerful as they can
block the channel of communication between the two. So the dependence of retailers on other channel
members increases to a high extent. Thus the participation of retailers in the flows of marketing mix becomes
lower than desired.

• The financial strength of the Indian retailers, in general, is very low and hence the investment capabilities.
This makes the retailers more dependent on the other channel members. However, these characteristics are
peculiar to the small retail outlets and may not be present at every kind of retail level. According to the ORG-
MARG study referred to above, the number of smaller retailers (having turnover less than Rs. 20,000 pa) is
estimated to be 27,71,200 and the number of retail outlets with turnover more than Rs. 1,20,000 per annum is
only 3,59,100. In recent times, however, more and more big retail outlets are coming up in the metros and
cities of the country. Many business houses now are thinking of opening up a retail chain of their own.
Spencer and Co. Limited (retailing arm of the RPG group), Vitan Industries Limited, Pantaloon, Shoppers
Stop, to name a few, have already in the business with a big bang. All of them have got very ambitious plans
to get into the new millennium. Pantaloon, for example, has got 40 strong chain of franchisee and 12 stores
owned directly by them. RPG Group plans to increase their outlets to 50 Food World, 18 Health & Glow, 8
Music World from present 27 Food World and 2 Music World outlets by the end of the year 1999. Likewise,
Archie has got a good presence in the market through a very successful and efficient franchisee network.

In India, the logistics market is mainly thought to mean transportation. But the major elements of logistics
cost for industries include transportation, warehousing, inventory management, courier and other valued-
added services such as packaging.

The logistics costs account for 13 per cent of GDP. The industry is currently on an upswing and is poised for a
growth of 20 per cent in the coming years.

With the expansion of retail, supply chain will take on an increasingly important role. With the end consumer
becoming more demanding and time conscious, the need for just-in-time services is increasing. In retail,
where competition is intense and stakes are high, customer satisfactions is paramount.

Retailers realize that knowing what is selling and what is not can improve the inventory processes. Inventory
is the biggest cost factor, and if not managed well, it can also be the biggest drain. That's why retailers and
their trading partners today set store by the inventory process and its impact. Effective SCM enables:

Averting problems: Stores easily identify potential stock-outs and request replenishment before the inventory
drops to zero. Deciding to de-list or replace a product is easier.
Facilitating resource planning and allocation: Product forecasts and supply schedules are easily converted to
perform space planning, establish staffing needs and organise inbound/outbound shipments. Financial experts
can plan cash flow and analyse margins into the future.

The key players in the logistics industry are gearing up to meet the challenges by initiating both organic and
inorganic growth to leverage the retail opportunity. Logistics firms have also started focusing on related
services such as Customs clearing and forwarding, inbound warehousing, labeling and packaging, fleet
management, order picking and inventory management.

Physical distribution and materials management have been replaced by logistics management and a
subsequent concern for the whole supply chain (Figure 1.1). This logistics transformation derives from cost
and service requirements as well as consumer and retailer change (see Fernie, 1990; Fernie and Sparks, 1998).
Elements of logistics are remarkably expensive, if not controlled effectively. Holding stock or inventory in
warehouses just in case it is needed is a highly costly activity. The stock itself is expensive and might not sell
or could become obsolete. Warehouses and distribution centres generally are expensive to build, operate and
maintain. Vehicles to transport goods between warehouses and shops are expensive, in terms of both capital
and running costs.

Materials Management Physical distribution management

C
O

Raw Materials Inventory N

Parts Storage Facilities S

Packaging Finished Product Utilization U

Materials Transportation M

Communication E

R
S

Logistics management
There is thus a cost imperative to of both capital and running costs. There is thus a cost imperative to making
sure that logistics is carried out effectively and efficiently, through the most appropriate allocation of
resources along the supply chain. At the same time, there can be service benefits. By appropriate integration of
demand and supply, mainly through the widespread use of information technology and systems, retailers can
provide a better service to consumers by, for example, having fresher, higher quality produce arriving to meet
consumer demand for such products. With the appropriate logistics, products should be of a better
presentational quality, could possibly be cheaper, have a longer shelf life and there should be far fewer
instances of stock outs. Reaction time to spurts in demand can be radically improved through the use of
information transmission and dissemination technologies. If operating properly, a good logistics system can
therefore both reduce costs and improve service, providing a competitive advantage for the retailer.

Retailing and logistics are concerned with product availability. Many have described this as ‘getting the right
products to the right place at the right time’. Unfortunately however that description does not do justice to the
amount of effort that has to go into a logistics supply system and the multitude of ways that supply systems
can go wrong. The very simplicity of the statement suggests logistics is an easy process. As the boxed
example shows, problems and mistakes can be all too apparent. The real management ‘trick’ is in making
logistics looks easy, day in and day out, whilst reacting to quite volatile consumer demand

For example, if the temperature rises and the sun comes out in an atypical Scottish summer, then demand for
ice cream, soft drinks and even salad items rises dramatically. How does a retailer make sure they remain in
stock and satisfy this transient demand? Or we might think about Valentine’s Day, when demand for certain
products in the days before increases exponentially. If a retailer stocks Valentine’s cards and demand does not
materialize, then the retailer has stock that will not sell. There is little demand for Valentine’s cards on 15
February. While over-stocks in this case will not perish, the cost of their storage and handling for the
intervening year can be considerable.

The examples above demonstrate that retailers must be concerned with the flows of product and information
both within the business and in the wider supply chain. In order to make products available retailers have to
manage their logistics in terms of product movement and demand management. They need to know what is
selling in the stores and both anticipate and react quickly to changes in this demand. At the same time they
need to be able to move less demand-volatile products in an efficient and cost-effective manner. The logistics
management task is therefore initially concerned with managing the components of the ‘logistics mix’. We can
identify five components:

• Storage facilities: these might be warehouses or distribution centres or simply the stock rooms of retail
stores. Retailers manage these facilities to enable them to keep stock in anticipation of or to react to, demand
for products.
• Inventory: all retailers hold stock to some extent. The question for retailers is the amount of stock or
inventory (finished products and/or component parts) that has to be held for each product, and the location of
this stock to meet demand changes.

• Transportation: most products have to be transported in some way at some stage of their journey from
production to consumption. Retailers therefore have to manage a transport operation that might involve
different forms of transport, different sizes of containers and vehicles and the scheduling and availability of
drivers and vehicles.

• Unitization and packaging: consumers generally buy products in small quantities. They sometimes make
purchase decisions based on product presentation and packaging. Retailers are concerned to develop products
that are easy to handle in logistics terms, do not cost too much to package or handle, yet retain their selling
ability on the shelves.

• Communications: to get products to where retailers need them, it is necessary to have information, not only
about demand and supply, but also about volumes, stock, prices and movements. Retailers have thus become
increasingly concerned with being able to capture data at appropriate points in the system and to use that
information to have a more efficient and effective logistics operation. It should be clear that all of these
elements are interlinked. In the past they were often managed as functional areas or ‘silos’, and while
potentially optimal within each function, the business as a whole was sub-optimal in logistics terms. More
recently the management approach has been to integrate these logistics tasks and reduce the functional
barriers. So, if a retailer gets good sales data from the checkout system, this can be used in scheduling
transport and deciding levels and locations of stock holding. If the level of inventory can be reduced, perhaps
fewer warehouses are needed. If communications and transport can be linked effectively, a retailer can move
from keeping stock in a warehouse to running a distribution centre which sorts products for immediate store
delivery: that is, approaching a ‘Just-In-Time’ system. Internal integration has therefore been a major concern.

It should also be clear, however, that retailers are but one part of the supply system. Retailers are involved in
the selling of goods and services to the consumer. For this they draw upon manufacturers to provide the
necessary products. They may outsource certain functions such as transport and warehousing to specialist
logistics services providers.

Retailers therefore have a direct interest in the logistics systems of their suppliers and other intermediaries. If
a retailer is effective, but its suppliers are not, errors and delays in supply from the manufacturer or logistics
services provider will impact the retailer and the retailer ’s consumers, in terms of either higher prices or
stock-outs (no products available on the store shelves).
If a retailer can integrate effectively its logistics system with that of its suppliers, such problems may be
minimized. Much more importantly, however, the entire supply chain can then be optimized and managed as a
single entity. This brings potential advantages of cost reduction and service enhancement, not only for the
retailer, but also for the supplier. It should also mean that products reach the stores more rapidly, thus better
meeting sometimes-transient customer demand. In some instances it may mean the production of products in
merchandisable ready units, which flow through the distribution systems from production to the shop floor
without the need for assembly or disassembly. Such developments clearly require supply chain co-operation
and coordination.

We may be describing highly complex and advanced operations here. Retail suppliers are increasingly spread
across the world. A retailer may have thousands of stores in a number of countries, with tens of thousands of
individual product lines. They may make millions of individual sales per day. Utilizing data to ensure effective
operation amongst retailers, manufacturers, suppliers, logistics services providers, head office, shops and
distribution centers is not straightforward. There is thus always a tension between overall complexity and the
desire for the simplest possible process. Summarizing the discussion above, the logistics task therefore can be
described as:

The process of strategically managing the procurement, movement and storage of materials, parts and finished
inventory (and the related information flows) through the organization and its marketing channels in such a
way that current and future profitability are maximized through the cost effective fulfillment of orders.
(Christopher, 1998: 4)

Managing the logistics mix in an integrated retail supply chain, while aiming to balance cost and service
requirements, is the essential element of logistics management. As retailers have begun to embrace this
logistics approach and examine their wider supply chains, many have realized that to carry out logistics
properly, there has to be a transformation of approach and operations (Sparks, 1998).

Inventory Management
What is Inventory?

 Stock of items kept to meet future demand for

◦ internal customers

◦ external customers

◦ Any idle material resource of an enterprise awaiting future sales, use or transformation.

 Purpose of inventory management

◦ how many units to order

◦ when to order

How Much?

Too much inventory – leads to undue

Carrying and holding charges

Involvement of working capital

Too Little inventory – leads to

Too frequent ordering

Loss of quantity discounts

Higher transportation charges

Likely shortage in future

Inventory includes:-

 Raw materials

 Work-in-process (partially completed) products (WIP)

 Finished goods
  Tools and equipment

 Spare

Rationale of Inventory Management

 Seasonal or cyclical demand

 Inventory provides independence from vendors

 Take advantage of price discounts

 Inventory provides independence between stages and avoids work stop-pages

 Geographical specialization

 Periodic variations

 Balancing demand & supply

Types of Inventory

On the basis of Nature of Material

 MRO Inventories (Lubricants, old clothes)

 In process Inventories (Partially finished)

 Finished goods (Available for sale)

On the basis of Uses of Material

  Transaction Inventory

 Speculative Inventory (to get more prices of goods in future)

 Precautionary Inventory

On the basis of Utility

 Working Stock

 Safety Stock

(To meet short range variation in demand or replenishment)

 Anticipation stock (Seasonal )

 Pipeline Stock

 Decoupling Stock

(Inventory accumulated between the various points – manufacturer, wholesaler, and retailer)

 Psychic Stock

(Window display of inventory – works as a silent salesperson, stimulates buying tendency)

Inventory Costs

 Ordering cost ( Procurement Cost )

◦ cost of replenishing inventory

 Carrying cost

◦ cost of holding an item in inventory

 Shortage cost ( Stock Out Cost )

◦ temporary or permanent loss of sales when demand cannot be met

Ordering cost (Procurement Cost / replenishment cost)

Cost of Order Processing

Cost of stationary used, staff & executive’s time spend on order processing

Cost of Transmission of an order

 (From purchase department to the supplier)

Cost of postage, follow up cost over the telephone, fax, internet etc.

Cost of Transportation

Freight, Octroi, transit insurance, protective packaging

Cost of Invoice Pricing

Checking, approval, book entries

Cost of Goods Receiving

Handling, inspecting and entry in the stock register/ computer

Cost of final feeding of data in the logistics information system

Carrying Cost

Space rent for the storage of goods

Cost of working capital locked in inventory

Cost of insurance of the goods

Cost of spoilage (quality, breakages)

Cost of deterioration due to passes of time

Cost of obsolescence

Cost of depreciation
 TYPES OF INVENTORY MANAGEMENT

TRANSIT INVENTORY

Transit inventories result from the need to transport items or material from one location to another, and from
the fact that there is some transportation time involved in getting from one location to another. Sometimes this
is referred to as pipeline inventory. Merchandise shipped by truck or rail can sometimes take days or even
weeks to go from a regional warehouse to a retail facility. Some large firms, such as automobile
manufacturers, employ freight consolidators to pool their transit inventories coming from various locations
into one shipping source in order to take advantage of economies of scale. Of course, this can greatly increase
the transit time for these inventories, hence an increase in the size of the inventory in transit.

BUFFER INVENTORY

As previously stated, inventory is sometimes used to protect against the uncertainties of supply and demand,
as well as unpredictable events such as poor delivery reliability or poor quality of a supplier's products. These
inventory cushions are often referred to as safety stock. Safety stock or buffer inventory is any amount held on
hand that is over and above that currently needed to meet demand. Generally, the higher the level of buffer
inventory, the better the firm's customer service. This occurs because the firm suffers fewer "stock-outs"
(when a customer's order cannot be immediately filled from existing inventory) and has less need to backorder
the item, make the customer wait until the next order cycle, or even worse, cause the customer to leave empty-
handed to find another supplier. Obviously, the better the customer service the greater the likelihood of
customer satisfaction.

ANTICIPATION INVENTORY

Oftentimes, firms will purchase and hold inventory that is in excess of their current need in anticipation of a
possible future event. Such events may include a price increase, a seasonal increase in demand, or even an
impending labor strike. This tactic is commonly used by retailers, who routinely build up inventory months
before the demand for their products will be unusually high (i.e., at Halloween, Christmas, or the back-to-
school season). For manufacturers, anticipation inventory allows them to build up inventory when demand is
low (also keeping workers busy during slack times) so that when demand picks up the increased inventory
will be slowly depleted and the firm does not have to react by increasing production time (along with the
subsequent increase in hiring, training, and other associated labor costs). Therefore, the firm has avoided both
excessive overtime due to increased demand and hiring costs due to increased demand. It also has avoided
layoff costs associated with production cut-backs, or worse, the idling or shutting down of facilities. This
process is sometimes called "smoothing" because it smoothes the peaks and valleys in demand, allowing the
firm to maintain a constant level of output and a stable workforce.

DECOUPLING INVENTORY

Very rarely, if ever, will one see a production facility where every machine in the process produces at exactly
the same rate. In fact, one machine may process parts several times faster than the machines in front of or
behind it. Yet, if one walks through the plant it may seem that all machines are running smoothly at the same
time. It also could be possible that while passing through the plant, one notices several machines are under
repair or are undergoing some form of preventive maintenance. Even so, this does not seem to interrupt the
flow of work-in-process through the system. The reason for this is the existence of an inventory of parts
between machines, a decoupling inventory that serves as a shock absorber, cushioning the system against
production irregularities. As such it "decouples" or disengages the plant's dependence upon the sequential
requirements of the system (i.e., one machine feeds parts to the next machine).

The more inventory a firm carries as a decoupling inventory between the various stages in its manufacturing
system (or even distribution system), the less coordination is needed to keep the system running smoothly.
Naturally, logic would dictate that an infinite amount of decoupling inventory would not keep the system
running in peak form. A balance can be reached that will allow the plant to run relatively smoothly without
maintaining an absurd level of inventory. The cost of efficiency must be weighed against the cost of carrying
excess inventory so that there is an optimum balance between inventory level and coordination within the
system.

CYCLE INVENTORY

Those who are familiar with the concept of economic order quantity (EOQ) know that the EOQ is an attempt
to balance inventory holding or carrying costs with the costs incurred from ordering or setting up machinery.
When large quantities are ordered or produced, inventory holding costs are increased, but ordering/setup costs
decrease. Conversely, when lot sizes decrease, inventory holding/carrying costs decrease, but the cost of
ordering/setup increases since more orders/setups are required to meet demand. When the two costs are equal
(holding/carrying costs and ordering/setup costs) the total cost (the sum of the two costs) is minimized. Cycle
inventories, sometimes called lot-size inventories, result from this process. Usually, excess material is ordered
and, consequently, held in inventory in an effort to reach this minimization point. Hence, cycle inventory
results from ordering in batches or lot sizes rather than ordering material strictly as needed.

MRO GOODS INVENTORY

Maintenance, repair, and operating supplies, or MRO goods, are items that are used to support and maintain
the production process and its infrastructure. These goods are usually consumed as a result of the production
process but are not directly a part of the finished product. Examples of MRO goods include oils, lubricants,
coolants, janitorial supplies, uniforms, gloves, packing material, tools, nuts, bolts, screws, shim stock, and key
stock. Even office supplies such as staples, pens and pencils, copier paper, and toner are considered part of
MRO goods inventory.

Stock-out Cost

Stock-out cost is the economic consequence of either an external or an internal shortage.

Results when the stock of the item gets depleted before the receipt of fresh supply.

External shortage occurs when a customer order is not filled and results in back order cost, present profit lost
due to loss of potential sales, profit loss due to loss of corporate image

Internal shortage occurs when an order of a department within the organization is not filled results in stoppage
of production

Causes of stock out cost

 Unusual higher demand rate during the procurement lead time

 Delay in delivery

 Transportation delays

 Rejection in the incoming consignment

 Inventory Management

Order Quantity (EOQ)

How much to order

Order Point (Re-order Point)

When to order

Inventory Control Systems

Continuous system (fixed-order-quantity)

Constant amount ordered when inventory declines to predetermined level

Periodic system (fixed-time-period)

 Order placed for variable amount after fixed passage of time.

Item Description Annual Consumption Price/ unit Annual Use

A 4000 10 40000
B 600 10 6000
C 2000 16 32000
D 3500 1 3500
E 50 8 400
F 6000 6 36000
G 2400 5 12000
H 4200 1 4200
I 50 10 500
J 100 7 700
K 80 40 3200
L 50 8 400
M 20 10 200
N 2000 0.15 300
O 30 6 180
P 80 0.25 20
Q 200 0.5 100
R 750 4 3000
S 350 6 2100
T 20 10 200
Objective of inventory management
 To ensure smooth movement of stock and merchandise from warehouse, vendors and any other
location to shop floor, updating the inventory and subsequently be available for sale.

 To meet unforeseen future demand due to variations in forecast figures and actual figures.

 To smoothen the production process.

 To gain economy of production or purchase in lots.

 To facilitate intermittent production of several products on the same facility.

 To meet the customer requirement timely, effectively, efficiently, smoothly and satisfactorily.

 To maintain a minimum investment in inventories to maximize the profitability.

WHEN THE STOCK BEEN RECEIVED FROM VENDOR

1 Security person to check the supporting documents (LR Copygirl) and hand over the same to the
warehouse person for inwarding.
2 After that SCM inform to Scanning person and after scanning inwarding the product and Inform to the
Ops Exe.

3 Ops Exe inform to concern Department manager .Department manager inform to concern person about
the merchandise, so that floor space for the same can be created.

In warding of the Merchandise

 The unloaded cartons to be brought to the store warehouse.

 Each carton’s H.U. no. is displayed by the system. On selecting particular H.U. nos. the contents of the
carton are displayed by the system.
 Basic
Problem
in
managing
stock

 500 -
700

carton available in stock room (approx.)

 1 system (computer) been provided for scanning.

 No category of merchandise been divided accordingly.

 Inward and outward stock been kept simultaneously.

 No security person been allocated.

 Hard and soft tags been lying carelessly.

 Proper ventilation not available inside the stock room.

 Drinking water facility not available inside stock room

 Proper segregation of cartons is not been done according to brand.

 Daily counting of stock available in stock room is not done.

 Cleanliness of stock is not been checked.

Solution

Managing Stocks on the Floor

 Managing stocks on the floor refers to effective and cautious way of moving the merchandise from
Store Warehouse to the respective section where the merchandise has to be displayed and sold to the
customers.

 Merchandise received from the warehouse or vendors are taken to the floor after completing the
inwarding process. The excess or additional merchandise is stored at the warehouse till the time the
merchandise displayed on the floor gets sold out.
 Managing Stocks in the Warehouse

 Secure the warehouse by sealing off/securing all unnecessary outlets (e.g. open drains, vents, and
damaged walls) to prevent accessibility by rodents.

 Adequate racking capacity to be made. Most effective is having slotted angle steel racks which allow
one to adjust the height depending on type of merchandise being stored.

 Goods to be placed on top of each other only to the extent that the items do not get damaged in any
way.

 The goods to be stored in a manner that ensures retrieval of the merchandise as per First in First Out
method of stocking.

 Heavy merchandise to be stored in the lower racks. This hence reduces the load when the merchandise
is being put in or removed.

Indian Logistics Industry

This section gives an overview of the size of the Indian logistics industry, its competitive dynamics and future
prospects.

Size of the Indian logistics industry

The annual logistics cost in India is estimated to be 14% of the GDP, which translates into USD 140 billion
assuming the GDP of India to be slightly over USD 1 trillion. Out of this USD 140 billion logistics cost,
almost 99% is accounted for by the unorganized sector (such as owners of less than 5 trucks, affiliated to a
broker or a transport company, small warehouse operators, customs brokers, freight forwarders, etc.), and
slightly more than 1%, i.e. approximately USD 1.5 billion, is contributed by the organized sector. So, one can
see that the logistics industry in India is in a nascent stage. However, the industry is growing at a fast pace and
if India can bring down its logistics cost from 14% to 9% of the GDP (level in the US), savings to the tune of
USD 50 billion will be realized at the current GDP level, making Indian goods more competitive in the global
market. Moreover, growth in the logistics sector would imply improved service delivery and customer
satisfaction leading to growth of export of Indian goods and potential for creation of job opportunities.

Competitive dynamics and other issues

The following problems existing in the Indian logistics industry make it unattractive for investments and also
create entry barriers.

· Logistics is a high-cost, low-margin business. The problem of organized players is compounded by unfair
competition with unorganized players, who can get away without paying taxes and following operating norms
stipulated in the Motor Vehicles Act such as quality of drivers and vehicles, volume and weight restrictions,
etc.

· Economies of scale are absent in the Indian logistics industry. Even the organized sector that contributes
slightly more than 1% of the logistics cost, is highly fragmented. Existence of the differential sales tax
structure also brought in diseconomies of scale. Though VAT (Value Added Tax) has been implemented since
April 1, 2005, failure in implementation of a uniform VAT structure across different states has let the problem
persist even today.

· Apart from the non-uniform tax structure, Indian LSPs have to pay numerous other taxes, octrois, and face
multiple check posts and police harassment. High costs of operation and delays involved in compliance with
varying documentation requirements of different states make the business unattractive. On an average, a
vehicle on Indian roads loses 24-48 hours in complying with paperwork and formalities at different check
posts en route to a destination. Fuel worth USD 2.5 billion is spent on waiting at check posts annually. A
vehicle that costs USD 30,000 pays USD

7,500 per annum in the form of various taxes, which include the excise duty on fuel. This is why freight cost
is a major component of the cost of a product in India.

· There is lack of trust and awareness among Indian shippers with regard to outsourcing logistics. The volume
of outsourcing by Indian shippers is presently very low (~ 10%) compared to the same for the developed
countries (> 50%, sometimes as high as 80%). The unwillingness to outsource logistics on part of Indian
shippers may be attributed to skepticism about the possible benefits, perceived risk, and losing control, of
sensitive organizational information, and vested interests in keeping logistics activities in-house.
· Indian shippers expect LSPs to own quality assets, provide more value-added services and act as an
integrated service provider, and institute world-class information systems for more visibility and real-time
tracking of shipments. However, they are unwilling to match the same with increased billings; even pay little
attention to timely payments that leave LSPs short of adequate working capital.

· Indian freight forwarders face stiff competition from multi-national freight forwarders for international
freight movement. MNCs, because of their size and operations in many countries, are able to offer low
freight rates and extend credit for long periods. Indian freight forwarders, on the other hand, because of their
smaller size and lack of access to cheap capital, are not able to match the same. Moreover, clients of MNCs
often want to deal with a single service provider and especially for FOB (Free on Board) shipments specify
the freight forwarders, which most of the time happen to be the multi-national freight forwarders. This is sort
of a non-tariff barrier imposed on Indian freight forwarders.

· Poor physical and communications infrastructure is another deterrent to attracting investments in the
logistics sector. Road transportation accounts for more than 60% of inland transportation of goods, and
highways that constitute 1.4% of the total road network, carry 40% of the freight movement by roadways.
Slow movement of cargo due to bad road conditions, multiple check posts and documentation requirements,
congestion at seaports due to inadequate infrastructure, bureaucracy, red-tapeism and delay in government
clearances, coupled with unreliable power supply and slow banking transactions, make it difficult for
exporters to meet the deadlines for their international customers. To expedite shipments, they have to book as
airfreight, rather than seafreight, which adds to the costs of shipments making them uncompetitive in
international markets. Moreover, many large shipping liners avoid Indian ports for long turnaround times due
to delays in loading/unloading and hence Indian exporters have to resort to transshipments at ports such as
Singapore, Dubai and Colombo, which adds to the costs of shipments and also delays delivery.

· Low penetration of IT and lack of proper communications infrastructure also result in delays, and lack of
visibility and real-time tracking ability. Unavailability and absence of a seamless flow of information among
the constituents of LSPs creates a lot of uncertainty, unnecessary paperwork and delays, and lack of
transparency in terms of cost structures and service delivery. For example, a shipper has to pay a higher
freight rate if it cannot ensure return load. At present, there is no realtime process by which a shipper may
know about the availability of trucks and going rates at the destination market. Therefore, it has to pay more.
Had the market information been available to both the shipper and the service provider, the service provider’s
cost structure would have been transparent to the shipper and it would have ended paying the actual market
rate. Another example would be that LTL (Less than Truckload) shipments cost more than FTL (Full
Truckload) shipments. Now, when a shipper books a LTL shipment, it has no idea about the status of its
shipment after it leaves the warehouse at the origin and before it reaches the warehouse at the destination. The
service provider may still convert this LTL shipment into a FTL shipment at it own warehouse before
delivering at the destination. So, the shipper ends up paying LTL rates for a FTL shipment. Had there been
visibility during delivery, this problem would not have occurred.
· Since most of the LSPs are of relatively small size, they cannot provide the entire range of services.
However, shippers would like service providers to offer more value-added services and a single-stop solution
to all their logistical problems. The inability of service providers to go beyond basic services and provide
value-added services such as small repair work, kitting/dekitting, packaging/labeling, order processing,
distribution, customer support, etc. has not been able to motivate shippers to go for outsourcing in a big way.

· Service tax levied on logistics service fees (currently 12.36% with educational cess) may make outsourcing
costly and outweigh the possible benefits.

· There is lack of skilled and knowledgeable manpower in the logistics sector. Management

graduates do not consider logistics as a prime job. To improve the status of the industry, service

providers have to move beyond the level of brokers and truckers to attract and retain talent.

Future prospects:-

Despite problems, The Indian logistics industry is growing at 20% vis-à-vis the average world logistics
industry growth of 10%. Since the organized sector accounts for merely 1% of the annual logistics cost, there
is immense potential for growth of the sector. The major opportunities are highlighted below.

· Many large Indian corporates such as Tata and Reliance Industries have been attracted by the potential of
this sector and have established logistics divisions. They started providing in-house logistics services, and
soon sensing the growth of the market, have started providing services to other corporates as well.

· Large express cargo and courier companies such as Transport Corporation of India (TCI) and Blue Dart have
also started logistics operations. These companies enjoy the advantage of already having a large asset base and
an all-India distribution network. Some large distributors have also forayed into the logistics business for their
clients.

· Since logistics service can be provided without assets, there is growing interest among entrepreneurs to
venture into this business.

· Indian shippers are gradually becoming more aware of the benefits of logistics outsourcing. They are now
realizing that customer service and delivery performance are equally important as cost to remain competitive
in this global economy.
· The Indian economy is growing at over 9% for the last couple of years (compared to the world GDP growth
rate of 3%), which implies more outputs and more demand for specialized logistics services.

· The Indian government has focused on infrastructure development. Examples include the golden
quadrilateral project, east-west and north-south corridors (connecting four major metros), Free Trade and
Warehousing Zones (FTWZ) in line with Special Economic Zones (SEZ) with 100% Foreign Direct
Investment (FDI) limit and public-private partnerships (PPP) in infrastructure development. It is expected that
infrastructure development would boost investments in the logistics sector.

· In India, 100% FDI is allowed in logistics whereas in China, until recently, foreign investment was not
allowed in domestic logistics. Almost all large global logistics companies have their presence in India, mainly
involved in freight forwarding. For domestic transportation and warehousing, they have tie-ups with Indian
companies. As the Indian logistics scenario looks promising, these MNCs are expected to play a bigger role,
probably forming wholly-owned subsidiaries or taking the acquisition route. The latter may be the preferred
route of investment since the target company is readily acquired with its asset base and distribution network,
and the need for building everything from scratch can thus be avoided. The benefits for the acquired company
include the patronage of an MNC and access to the MNC’s global network. As an example, DHL Danzas, the
biggest logistics company in the world, has taken over Blue Dart.

Action Plan

 Step 1: cartons should be kept in a segregated manner

 Step 2: Department or Brand wise area should be decided for all the cartons coming.
 Step 3: whose carton has come should be checked by the DM and should make sure that the carton is
kept at the decided place.

 Step 4: Required days should be decided for scanning /tagging and replenishing the same stock for
each sales executive on rotational basis(to avoid and sort of discrepancy).

 Step 5: Now to stop or reduce shrinkage a security person should be available there every time.

 Step 6: Proper ventilation and water facility should be looked ahead.

 Step 7: Assuming to taken in concern - If possible company should hire/appoint 2 executives who are
at least commerce graduate and good at calculations.

 Step 8: These executives should only be dedicated for the scanning / tagging and keeping the cartons at
their required place while receiving and do the same after completing the required work.

 Step 9: At times they should also check the invoices also for correct inwarding.

 Step 10: And it will be their responsibility to keep stock room in a decent way with the entire carton
and other important material like (banners, signage) in appropriate place.

 Note:-According to my suggestion if this kind of management flow is been followed we can look for
betterment of the store and the sales executives can dedicate their most of the time in sale which might
help in the business growth of the company. And this can be followed across all the required stores
those who are facing such kind of problem of managing stockroom.
DATA ANALYSIS
 DATA ANALYSIS

AS AN ASSORTMENT PLANNER, YOU USE OPTIONS TO HELP YOU PLAN THE

OPTIMAL ASSORTMENT BREADTH (THE NUMBER OF DIFFERENT PRODUCTS

CARRIED BY THE RETAILER) AND PRODUCT DEPTH (THE NUMBER OF

VARIATIONS (OPTIONS) OF EACH PRODUCT SOLD). BASED ON THE SELECTED

OPTION-RELEVANT PRODUCT ATTRIBUTES FOR EACH CATEGORY, YOU

DETERMINE THE NUMBER OF OPTIONS REQUIRED FOR THE DIFFERENT

LOCATION CLUSTERS.

YOU TYPICALLY CARRY OUT THE OPTION PLANNING PROCESS WELL IN ADVANCE
OF DETERMINING THE FINAL PRODUCT MIX, USING HISTORICAL SALES DATA TO

HELP YOU DECIDE WHAT TO SELL IN THE UPCOMING ASSORTMENT SEASON. THE

PROCESS IS SUBJECT TO CONSTRAINTS SUCH AS APPROVED PURCHASE BUDGETS.

CATEGORY PLANNING

IN A MULTI-CHANNEL WORLD, RETAILERS SHOULD THINK ABOUT HAVING A

SINGLE, JOINED-UP CATEGORY PLAN IRRESPECTIVE OF THE NUMBER OF

CHANNELS IN ORDER TO TIE BACK TO THE SINGLE TRADING STRATEGY TO ALIGN

CHANNELS TOWARDS A COMMON OBJECTIVE. CATEGORY ROLES (E.G. FRESH

FRUITS AND VEGETABLES AS A DESTINATION / IMPULSE CATEGORY AND

NEWSPAPERS AND MAGAZINES AS A CONVENIENCE / IMPULSE CATEGORY) SHOULD

BE APPLIED CONSISTENTLY ACROSS CHANNELS SO THAT THEY ARE ALIGNED TO

CONSUMER DEMANDS.

TYPES OF OPTION
PLAN 1>
20 CRORE BUDGET

Value Avgas MRP Qty ( value/Avgas

MRP)
50% denim 10 cr. 1200 80000
30% T-shirt 6 cr. 500 120000
20% Shirts 4 cr. 1000 40000

10*3 10*3*10 300

20*2 20*2*10 400
70*1 70*1*10 700
Prepack 1400
Eaches 600

TOTAL ORDER 100

70% PREPACK TOTAL 1400

30% EACHES ORDER 600
TOTAL 2000

NO. OF OPTIONS = 40000/2000

= 20 OPTION
2> CAPACITY WISE

B
A stores
Area 480 stores
No of Wall Profiles (2ft 8
Standard) 8
2
Hanging Options Per Fixture 2
4
Stacking Options Per Fixture 6
48
Wall Total Options 64

No of "I" Browser

Hanging Options
0
Total Options 0
4
No of Two Way Browsers 8
4
Hanging Options 4
16
Browser Total Options 32
2
No of Table 2
24
Stacking Options 28
48
Table Total Options 56
112
Total Display Options 152

3.1 Optimum Development of Option Plan

Objectives :

 To reduce the excess sampling - While Range presentation where designers

showcases their collection of a particular season ( AW 15 ) in which they
developed certain number of option ( shirts, bottoms etc.) for each brand to show
so at the end of the Presentation if you can check actual number of option then it
Is lesser then it was. Buyers select lesser number of option then it was developed
due to Fabric problem, color outcomes , print outcomes etc. which incurred
wasting of time money and manpower also. so this should be avoided or
minimized.

XXXI
X
  To bring the transparency between all the departments roles and their inter
department communication

 To take new point of all concerned department. & roll out the conclusion on
how to implement the same on the option plan

OPTION PLAN

FOR

LOMBARD AW'14
Optn Optn volume PC- Intake Avg Avg
SHIRTS Remarks Mrp
MCC count mix Volume mix MRP margin Mrp PC
Lombard Shirts 1099
Lombard Shirts 1199 1 2% 2000 3% 28.36% 71.6% 1199 340
Lombard Shirts 1299 19 30% 19183 29% 31.56% 68.4% 1299 410
Lombard Shirts 1399 27 42% 29021 44% 31.24% 68.8% 1399 437
Lombard Shirts 1499 13 20% 12044 18% 28.49% 71.5% 1499 427
Lombard Shirts 1599 4 6% 4014 6% 29.33% 70.7% 1599 469
LMSH Total 64 100% 66262 86% 30.77% 69.23% 1394 429

AW15

OPT OPT VOLUME Avg Avg

MCC Remarks Mrp PLAN MIX MIX VOL MRP CP Margin
Lombard Shirts 1099
Lombard Shirts 1199 23 35% 32% 23000 1199 350 70.8%
Lombard Shirts 1299 26 40% 40% 28600 1299 410 68.4%
Lombard Shirts 1399 16 25% 27% 19200 1399 445 68.2%
Lombard Shirts 1499
Lombard Shirts 1599
LMSH Total 65 100% 100% 70800 1294 400 69.08%

XL
 30

25

20

15 AW 14

AW 15
10

0
1099 1199 1299 1399 1499 1599

F-FACTOR

SHIRTS

F factorAW14
shirts 699
F factor shirts 799
F factor shirts 899 6 10% 14108 25% 31.48% 68.52% 899 283
F factor shirts 999 8 13% 7465 13% 29.83% 70.17% 999 298
F factor shirts 1099
F factor shirts 1199 21 34% 18460 33% 30.44% 69.56% 1199 365
F factor shirts 1299 14 23% 9375 17% 30.18% 69.82% 1299 392
F factor shirts 1399 10 16% 5769 10% 30.24% 69.76% 1399 423
F factor shirts 1499 3 5% 1050 2% 31.82% 68.18% 1499 477
F SH-Total 62 100% 56227 73% 30.54% 69.46% 1140 348.2

AW15

OPT PLAN OPT MIX VOLUME MIX VOL Avg MRP Avg CP Margin
F factor shirts 699
F factor shirts 799
F factor shirts 899 6 15% 25% 13125 899 283 68.5%
F factor shirts 999
F factor shirts 1099
F factor shirts 1199 5 12% 11% 5500 1199 365 69.6%
F factor shirts 1299 10 24% 21% 11000 1299 392 69.8%
F factor shirts 1399 12 29% 26% 13200 1399 423 69.8%
F factor shirts 1499 8 20% 17% 8800 1499 477 68.2%

XLI
F SH-Total 41 100% 100% 51625 1246 384 69.20%

25

20

15

AW 14
10 AW 15

0
699 799 899 999 1099 1199 1299 1399 1499

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I
 BYFORD SHIRTS

AW14

AW'14
Optn Optn volume PC- Intake Avg Avg
MCC Remarks Mrp count mix Volume mix MRP margin Mrp PC

Byford Shirts 1199

Byford Shirts 1299 1 2% 1014 2% 29.64% 70.36% 1299 385
Byford Shirts 1399 4 8% 4339 7% 32.24% 67.76% 1399 451
Byford Shirts 1499 19 40% 27706 46% 30.89% 69.11% 1499 463
Byford Shirts 1599 24 50% 27829 46% 24.14% 75.86% 1599 386
BYSH Total 48 100% 60888 100% 30.83% 69.17% 1534 473

AW15

OPT OPT VOLUME Avg Avg

MCC Remarks Mrp PLAN MIX MIX VOL MRP CP Margin

Byford Shirts 1199 10 21% 21% 12000 1199 380 68.3%

Byford Shirts 1299 14 29% 29% 16800 1299 385 70.4%
Byford Shirts 1399 14 29% 29% 16800 1399 430 69.3%
Byford Shirts 1499 10 21% 21% 12000 1499 440 70.6%
Byford Shirts 1599
BYSH Total 48 100% 100% 57600 1349 409 69.7%

XLI
II
30

25

20

15 AW 14

AW 15
10

0
1199 1299 1399 1499 1599

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V
INTERACTION BETWEEN THE

DEPARTMENTS 1> SOURCING

DEPARTMENT

FABRIC SOURCING

FOLLOWING ARE THE REASONS WHICH I FOUND WHILE INTERACTING WITH THE FABRIC
SOURCING TEAM
 Incorrect Fabric being Inhoused
 Colour outcome , Print outcome or delayed delivery dates

GARMENT SOURCING

2> PLANNING DEPARTMENT

PLANNING TEAM GIVE THE OPTION PLAN THEY CAN SUGGEST THAT PARTICULAR
STYLE CAN BE REPEATED THROUGH SALES (SSPD) OF STYLE BUT BASICALLY
THEY GIVE OPTION PLAN ON THE BASIS OF STORE (DISPLAY) AREA. REPEATING
PREVIOUS BEST SELLERS TO AVOID NEW DEVELOPMENT SO THAT ALLOCATION
BECOME SMOOTH.

3> DESIGN DEPARTMENT & CATEGORY DEPARTMENT

WHILE INTRODUCING THE NEW SEASON THEME BASED COLLECTION CAD

DESIGNER MAKE 130% OPTIONS WHICH THEY HAVE TO SHOW TO THE DESIGNERS
FOR THAT THEY HAVE TO MAKE 140% SO OUT OF THAT DESIGNERS DEVELOPED
120% OPTIONS OUT OF WHICH FINALLY 100% OPTION IS BEING FINALIZED.

CATEGORY PERSON MUST HAVE VISION OF A FINAL PRODUCT WHICH COMES OUT
AFTER DEVELOPMENT WHICH IS LACKING APART FROM HAVING THE KNOWLEDGE
OF SALES ANALYSIS, SALE THROUGH, BUYING

XL
V
SKILLS , NUMBERS BUYER MUST HAVE KNOWLEDGE ABOUT THE
PRODUCT WHICH IS A CORE THING FOR A DESIGNER. FOR BUYER
IT IS ALSO NEEDED.

XL
 Findings

 Use of different software like excel(macros)

 Use of other analyzing software like SAP, SPSS

 Style of the garment is the most important parameter in the consumers mind while
purchasing clothes followed by brand, fit, color and price. As the fashion trends are
changing fast, need to focus more on style and patterns of the garments

 The sales staff is knowledgeable, courteous and helpful.

 The customers in Pantaloon retail stores consider Staff service, ambience and
merchandise display of products as the most important factor while buying the clothes
and choosing a store rather than product quality.

XL
 Recommendations

Communication with the employees

Atmosphere and the smell

Use of location signs

Action Plan been provided for better Recommendations

XL
 BIBLIOGRAPHY

 http://www.valuenotes.com/one-time/IndianRetailSector_11oct06.asp?
ArtCd=86179&Cat=I&Id=117

 http://www.123eng.com/forum/viewtopic.php?t=14447

 http://www.indianmba.com/Faculty_Column/FC742/fc742.html

 http://www.fibre2fashion.com/news/company-news/reliance-industries/newsdetails.aspx?
news_id=41476

 http://www. pantaloon .com

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