PROJECT REPORT

“LOGISTICS MANAGEMENT IN RETAILINDUSTRY: A

CASE STUDY V-MART RETAIL LIMITED”

MASTER OFBUSINESS ADMINISTRATION (MBA)

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INDIRA GANDHI NATIONAL OPEN UNIVERSITY,

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 CERTIFICATE OF ORIGINALITY

This is to certify that the project titled “LOGISTICS MANAGEMENT IN RETAIL

INDUSTRY: A CASE STUDY V-MART RETAIL LIMITED” is an original work of

the student and is being submitted in partial fulfillment for the award of the “MASTER‟S

DEGREE IN BUSINESS ADMINISTRATION” of Indira Gandhi National Open

University. This report has not been submitted earlier either to this University or to any

other University/Institution for the fulfillment of the requirement of a course of study.

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 ACKNOWLEDGEMENT
I feel indebted to my guide ………………………….for the completion

of the dissertation entitled “LOGISTICS MANAGEMENT IN RETAIL

INDUSTRY: A CASE STUDY V-MART RETAIL LIMITED” The present work

could be completed only because of the able guidance and affectionate attitude of my

guide ………………………………….

I am thankful to all respondents and all those who assisted me by

supplying the requisite information towards the completion of the questionnaire there by

enable me to collect the relevant data.

NAME: ………………………….

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SUBJECT CODE: MBA (OR)

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 TABLE OF CONTENT

CHAPTER TOPIC PAGE

NO.

1 INTRODUCTION

2 RETAILING AND LOGISTICS

3 RESEARCH METHODOLOGY

4 ANALYSIS OF THE SAMPLE

SURVEY OF EMPLOYEES

5 SUMMARY AND CONCLUSIONS

REFERENCES

QUESTIONNAIRE

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 CHAPTER 1

INTRODUCTION

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INTRODUCTION

Supply chain management addresses the management of materials and information

across the entire chain from suppliers to producers, distributors, retailers, and

customers. Traditionally, each company performs purchasing, production and

marketing activities independently, so that it is difficult to make an optimal plan for the

whole chain. In recent years, it has been realized that actions taken by one member

of the chain can influence all others in the chain. More and more companies have

gradually recognized that each of them serves as part of a supply chain against other

supply chains in terms of competition, rather than as a single firm against other individual

firms. Since 1990, as the information technology has continuously developed, it is

possible to coordinate all organizations and all functions involved in the whole chain.

Consequently, supply chain management has been increasingly receiving attention

from both academic researchers and practitioners.

A supply chain is a network of suppliers, manufacturing plants, warehouses, and

distribution channels organized to acquire raw materials, convert these raw materials to

finished products, and distribute these products to customers. The efficient design and

operation of supply chains is one of the important components of planning activities in a

manufacturing firm. The strategic level supply chain planning involves deciding the

configuration of the network, i.e., the number, location, capacity, and technology of the

facilities. The tactical level planning of supply chain operations involves deciding the

aggregate quantities and material flows for purchasing, processing, and distribution of

products. The strategic configuration of the supply chain is a key factor influencing

efficient tactical operations, and therefore has a long lasting impact on the firm.

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Furthermore, the fact that the supply chain configuration involves the commitment of

substantial capital resources over long periods of time makes the supply chain network

design problem an extremely important one. (Tjendera, et al., 2005)

SCM is a network of the logistics systems and related activities of all of the individual

companies/organizations that are a part of a particular supply chain. It can be traced to the

1980s and it was not until the 1990s that this term captured the attention of senior level

management in organizations. A supply chain has been recognized as an important

approach to make organizations more globally competitive and help to increase their

market share with consequent improvements in shareholder value. (Coyle, 2003) It

benefits from a variety of concepts that were developed in several different disciplines,

such as marketing, information systems, economics, system dynamics, logistics,

operations management, and operations research. There are many concepts and strategies

applied in designing and managing supply chains . The expanding importance of supply

chain integration presents a challenge to research to focus more attention on supply chain

modeling (Tayur, et al., 1999). Based on the emerging distinction between SCM and

logistics, in October 1998 the Council of Logistics Management announced a modified

definition of logistics. The modified definition declares the Council‟s position that

logistics management is only a part of SCM. (Lambert and Cooper, 2000)

Ayers (2001) shows that there is much cost saving in logistic processes and one of the

potential moves is to consider logistics as part of the Supply Chain. The next definition

can be easily learned: logistics is that part of the supply chain process that plans,

implements, and controls the efficient, effective flow and storage of goods, services, and

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related information from the point of origin to the point of consumption in order to meet

customers‟ requirements.

Logistics means the integration of two or more activities for the purpose of planning,

implementing and controlling the efficient flow of materials and products from the point

of origin to the point of consumption. Logistics involves the integration of information,

transportation, inventory, warehouse, material handling, and packaging. Depending upon

its origins, logistics is often seen as begin synonymous with distribution activities, either

the physical distribution of product, SCM, pipeline management, or supply and transport.

Whichever description is used, the basic definition of logistics is the same; namely,

getting the right goods to the correct place at the time and in the condition required by the

customers (Attwood, Peter and Nigel Attwood, 1992). Generally speaking, the most

common form of logistics has traditionally been based on moving large shipments of

items in bulks to select strategic customers in a few geographic locations. Shipments have

also traditionally been tracked by container, pallet, or other unit of bulk measurement, not

by individual item or parcel. (Bayles, 2001)

Logistics performance may be conceptually viewed as a subset of the larger notion of

IRM or organizational performance. Essentially, logistics performance is composed of

three key components: the first, logistics productivity, that is used to create the

meaningful productivity standards to measure the ability of track and managing logistics

costs; the second, logistics service performance, is concerned with tracking metrics

associated with the ability of logistics functions to meet customer service goals; the final

component, logistics performance measurement systems, focus on what and how

performance is to be tracked (Ross, 2003). Managers today increasingly face the

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challenge of improving logistical performance within their organizations. When a firm

confronts this challenge and undertakes the risk of improvement, its managers must grasp

leadership of the change process. The logistics excellence provides managers and others

the motivation for and means of becoming thoroughly committed agents of logistical

change. Logistics Excellence is about change management, the focus is on how to go

about changing an organization‟s commitment and culture to support revitalization of its

logistics process. (Bowersox, et al., 1992).

In today‟s challenging competition in the consumer goods, the manufacturers strive for

their products to reach final customers before they turn their heads to the rival‟s ones.

This challenge is influenced by for example globalization, deregulation, new business

comers and convergence of the industries.

Retailing is a significant part of economic activities of both developed and developing

countries‟ economies, with wholesaling and retailing value-added. The major goal of the

retail industry or retail merchandising system is to influence possible consumers to

purchase a particular products assortment at a particular retail store . Retail activities turn

out to be one of the significant themes playing the role in supply chain management and

logistics.

Convenience store is also one part of the store format in retailing business and the word

convenience means the least amount level of the financial, physical, and mental

expenditure required to conquer the friction of time, space and pecuniary loss inherent in

any retail transaction. The product assortment consists mainly of goods for daily use and

it is offered to customer on a relatively small sale area. Convenience stores need a

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flexible system with the ability to deliver products rapidly with small volume to diverse

locations in an efficient manner .

In the late 1990s with the boom in the economy and at that India became the fastest-

growing economy in the world as well the next major developments in Indian retailing

with the arrival of both convenience stores and discount superstores . Nevertheless, the

mixture of more investment, economic growth, greater lifestyle of Westernization and

most remarkably the timely arrival of V-Mart has made 24-hour convenience stores

ubiquitous near bus stops, in service stations and on many street corners.

The researcher has used a case study of chain convenience store, the company, namely V-

Mart, Delhi s it resembles a good example of establishing logistical activities to conquer

the hindrances for the success of the business as mentioned before. Compared to other

convenience store brands, Family Mart and Vishal mega mart, V-Mart in India has

ranked number one in convenience store industry where India has a relatively inferior

infrastructure and supply chain coordination.

STATEMENT OF THE PROBLEM

This study focuses on only retailing industry and retailing convenience stores‟

perspective in India. The subject will be` studied by using of V-Mart as a reference.

Retailing and distribution are concerned with product availability and retailers must be

concerned with the flows of product and information into and through their companies in

order to make products available to consumers. According to Fernie and Sparks (1998), it

had been revolutionary in the 1980s in the history of logistics support to retail stores. The

first step changed in managing the logistics function; retailers moved from direct store

deliveries (DSD) to centralization of stock at regional distribution centers (RDCs) .

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Fernie and Spark (1998) state that technologies and IT were developed to facilitate

logistical efficiencies in the distribution network and those technologies were either

material handling (composite distribution, unitization) or of and IT nature which can

improve the flow of information through the supply chain.. Therefore technology and IT

are important.

The concern in retail and distribution are with the structure and management

logistics channels . The management task is concerned with the element of distribution

mix (for example storage facilities and communication, etc), which have to be integrated

for successful retail distribution (Sparks, 1998). The researcher will study and focus on

the mentioned information which surely affects retail business (in this research which is

retail convenience business) in one way or another.

RATIONALE BEHIND THE STUDY

India has a relatively inferior infrastructure and supply chain coordination in the retail

business. Retailing and distribution are concerned with product availability and retailers

must be concerned with the flows of product and information into and through their

companies in order to make products available to consumers. Logistics support to retail

stores was the first step that changed t h e m a n a g e m e n t of the logistics function;

retailers moved from direct store deliveries (DSD) to centralization of stock at

regional distribution centers .

Latest technologies and IT have developed and facilitated logistical efficiencies in the

distribution network. IT improved the flow of information through the supply chain.

The concern in retail and distribution are with the structure and management

logistics channels. The management task is concerned with the element of distribution

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mix (for example storage facilities and communication, etc), which have to be integrated

for successful retail distribution. Thus to analyze various processes in the supply chain

management in the light of latest technological developments and IT revolution in the

country makes a good sense.

This study focused on only retailing industry and retailing convenience stores‟

perspective in India. The subject was studied by using V-Mart in Delhi as a reference.

The purpose of this research is to, from retailing industry and retailing convenience

store‟s perspective, identifies and describe how V-Mart manages and operates its retail

convenience business focusing on several aspects; strategic fits, distribution and IT,

which support the logistics activities. It explored the competitive advantage that

originates from those actions.

OBJECTIVES OF THE STUDY

Following objectives are formulated for the proposed study:

 To identify and describe how V-Mart manage and operate its retail convenience

business in Delhi.

 To analyze the strategies, distribution and IT support in V-Mart stores in Delhi.

 To explore the competitive advantage of V-Mart products in the market.

 To find out how supply chain management is done at V-Mart stores in Delhi.

 From retailing industry and retailing convenience store‟s perspective analyze the

operations of V-Mart store in Delhi

 To examine how logistics activities are handled and in what essence have they

been regarded to in V-Mart.

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V-MART RETAIL OVERVIEW

V-Mart Retail is an Indian retail brand that runs chains of consumer retail department

stores. The brand is wholly owned by V- Mart Retail Limited and is operated by its

subsidiary, V-Mart Retail, which is headquartered in India. V-Mart is a complete family

fashion store that provides its customers true value for their money. V-Mart offers

fashion garments at down-to-earth prices and over a period of time has emerged as the

destination of choice for bargain hunters and the fashionable alike. First incorporated as

Varin Commercial Private Limited under the Companies Act in 2002 in West Bengal.

Then in 2003, we opened our maiden store in Ahmedabad (Gujarat). In the Year 2004

we have opened our first store in capital city, Delhi.

Further in 2006 we have crossed 1 lac sq.ft. retail space and subsequently renamed to V-

Mart Retail Private Limited. In the year of 2008, we hit the base by registering V-Mart

Retail as a public limited entity and also crossed the turnover of 1,000 million Rs. As the

time passes by we took the shape of a renowned family brand that caters the needs of

whole family by offering high quality retail products. Along with growing customers, we

achieved a turnover of over Rs 2,000 million in 2011-12 In the Year 2012 we have

crossed the retail space of 5 lac Sq. Ft.

2013 -V-Mart Retail Ltd has opened a new store located at F.D.R.A Plaza, Opp. Sanjay

Cinema, Malipur Road, Shahzadpur, Akbarpur, Uttar Pradesh. -V Mart Retail has opened

86th Store at Jhansi, Uttar Pradesh. -V Mart Retail has opened 65th Store at Varansi,

Uttar Pradesh. -V Mart Retail Opening its 84th Store at Fatehpur, Uttar Pradesh. 2014 -V

Mart Retail has Opened 92nd Store at Patna City, Bihar. -V Mart Retail has Opened 97th

Store at Ranchi, Jharkhand.

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BACKGROUND OF RETAIL INDUSTRY IN INDIA

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of

its GDP. The Indian retail market is estimated to be US$ 500 billion and one of the top

five retail markets in the world by economic value. India is one of the fastest growing

retail markets in the world, with 1.2 billion people.

As of 2013, India's retailing industry was essentially owner manned small shops. In 2010,

larger format convenience stores and supermarkets accounted for about 4 percent of the

industry, and these were present only in large urban centers. India's retail and logistics

industry employs about 40 million Indians (3.3% of Indian population).

Until 2011, Indian central government denied foreign direct investment (FDI) in multi-

brand retail, forbidding foreign groups from any ownership in supermarkets, convenience

stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a

bureaucratic process.

In November 2011, India's central government announced retail reforms for both multi-

brand stores and single-brand stores. These market reforms paved the way for retail

innovation and competition with multi-brand retailers such as Walmart, Carrefour and

Tesco, as well single brand majors such as IKEA, Nike, and Apple. The announcement

sparked intense activism, both in opposition and in support of the reforms. In December

2011, under pressure from the opposition, Indian government placed the retail reforms on

hold till it reaches a consensus.

In January 2012, India approved reforms for single-brand stores welcoming anyone in the

world to innovate in Indian retail market with 100% ownership, but imposed the

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requirement that the single brand retailer source 30 percent of its goods from India.

Indian government continues the hold on retail reforms for multi-brand stores.

In June 2012, IKEA announced it had applied for permission to invest $1.9 billion in

India and set up 25 retail stores.[9] An analyst fromFitch Group stated that the 30 percent

requirement was likely to significantly delay if not prevent most single brand majors

from Europe, USA and Japan from opening stores and creating associated jobs in India.

On 14 September 2012, the government of India announced the opening of FDI in multi-

brand retail, subject to approvals by individual states. This decision was welcomed by

economists and the markets, but caused protests and an upheaval in India's central

government's political coalition structure. On 20 September 2012, the Government of

India formally notified the FDI reforms for single and multi brand retail, thereby making

it effective under Indian law.

On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-brand

retail in India. The government managed to get the approval of multi-brand retail in the

parliament despite heavy uproar from the opposition (the NDA and leftist parties). Some

states will allow foreign supermarkets like Walmart, Tesco and Carrefour to open while

other states will not.

MAJOR PLAYERS IN THE INDUSTRY

The booming Indian retail industry had transformed greatly from 1996 to 2013,

particularly with the emergence of organised retailers from previously small, unorganised

family-owned retail formats. From real estate companies to venture capitalists, many

businesses were investing in retail infrastructure. As a consequence, the Indian retail

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sector was undergoing a huge revamping exercise. It was estimated that an annual US$3

billion in capital expenditure would finance the growth of organised retail. Traditional

markets were increasingly being replaced by new formats (specialty stores, supermarkets,

hypermarkets and departmental stores). This resulted in the development of a mall culture

and the rapid emergence of malls that offered food, entertainment and shopping in one

place. With 325 departmental stores, 1,500 supermarkets and 300 malls under

construction, the sector was going through a phase of spectacular growth. By the end of

2008, it was expected that approximately 9.29 million square metres of quality shopping

centres would have been built.

Major local retailers planned massive Pantaloon planned to have 30 million square

feet by 2015; Reliance planned to invest US$5.8 billion on multiple retail formats by

2015; and Lifestyle intended to invest more than US$87.6 million over a five-year period

to further develop its Home & Lifestyle Centers and Max Hypermarkets. Other important

players that announced aggressive plans in retailing were RPG Group, Aditya Birla

Group and Tata Group. Most of these domestic companies‟ operations were quite

different from those of Wal-Mart.

Spencer‟s Retail, owned and operated by R.P. Goenka (chairman of RPG Group), was

one of the oldest multi-brand retail players in the country. In 2007, Spencer‟s Retail

invested about US$194 million in its flagship retail venture. RPG Group announced

further investments of over US$58.3 million to expand its smaller retail chains operating

under the brand names RPG Cellucom, Book and Beyond, and Music World. Spencer‟s

Retail was one of the country‟s fastest-growing retailers dealing in books, lifestyle

products, electronics, fashion, apparel and food. Under four formats (Spencer‟s Express,

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Spencer‟s Daily, Spencer‟s Super and Spencer‟s Hyper), the company operated 290

stores in 32 cities across the country and occupied a retail space of over 55,740 square

metres. Women were the main target customers for Spencer‟s Retail. The new small-

format businesses offered Indian and international food in pre-cooked, semi-cooked and

ready-to-eat styles.

Another important Indian retailer that had big plans for the country was Reliance

Industries Limited (“RIL”). It intended to have a pan-India presence with different

formats, including discount stores, malls, supermarkets, hypermarkets and speciality

stores. The company wanted to open stores in more than 700 large cities by 2011,

stocking products ranging from food and groceries to consumer durables, and also

providing financial and travel-related services. One of its focuses was on selling luxury

brands to the growing number of rich Indians. In addition, the company was building a

robust supply chain infrastructure spanning the entire country. Out of the total capital

expenditure of US$4.86 billion set aside for the venture, RIL planned to spend US$1.94

billion on its supply chain, indicating the growing importance of a stable back end for

retail operations. To support this, the company had its own fleet of both trucks and cargo

planes. Reliance Retail Limited (“RRL”), a subsidiary of RIL, was targeting a sales

turnover of US$17.5 billion by 2010. The company already had 30,000 people on its

payroll, of which some had previously worked at Wal-Mart, Carrefour or Tesco. Senior

executives from Electrolux Kelvinator, Unilever, Spencer‟s, Coca-Cola, Pantaloon Retail,

Indus League and McDonald‟s were said to have also joined RRL. Intensifying

competition, rising salaries and poaching of key executives were likely to inflate costs at

Pantaloon Retail, Shoppers Stop and other organized retailers.

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Meanwhile, Tesco and Carrefour were waiting patiently while proactively targeting local

companies to become partners. It was believed that Carrefour planned to invest US$100

million initially and that it wanted to start operations in Delhi. Some others, such as

South Africa‟s Shop Rite and Metro AG from Germany, had already arrived in India to

set up cash-and-carry businesses that supplied caterers, restaurants, retailers and other

businesses.

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LIMITATIONS OF THE STUDY

 The selected case study is a convenience store chain, V-Mart in Delhi; therefore

it may mainly reflect norms and practices considerably within the firm‟s

environment.

 The convenience store management policies on certain areas normally differ at

each location since they are tightly tied to local customer needs. It could then

give a deviated data from the retail convenience store in other firms or in other

states. Hence, the results cannot be generalized.

 The time frame of the study is limited.

 The data collected may have the biased opinion of the respondents.

 The V-Mart management may not reveal the whole information due to secrecy

considerations.

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 CHAPTER 2

RETAILING AND

LOGISTICS

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RETAILING AND LOGISTICS

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 look 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 Jammu

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

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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.

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• 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,

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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 centres 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
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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

(Figure 1). 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).

RETAIL LOGISTICS AND SUPPLY CHAIN TRANSFORMATION

Retailers were once effectively the passive recipients of products, allocated to stores

by manufacturers in anticipation of demand. Today, retailers are the active designers

and controllers of product supply in reaction to known customer demand. They control,

organize and manage the supply chain from production to consumption. This is the

essence of the retail logistics and supply chain transformation that has taken place.

Times have changed and retail logistics has changed also. Retailers are the channel

captains and set the pace in logistics. Having extended their channel control and focused

on efficiency and effectiveness, retailers are now attempting to engender a more co-

operative and collaborative stance in many aspects of logistics. They are recognizing that

there are still gains to be made on standards and efficiency, but that these are probably

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 Figure 1: The Management Task in Logistics

Only obtained as channel gains (that is, in association with manufacturers and logistics

services providers) rather than at the single firm level.

In 1996 Alan McKinnon reviewed and summarized the key components of this retail

logistics transformation. He identified six closely related and mutually reinforcing

trends:

1 INCREASED CONTROL OVER SECONDARY DISTRIBUTION

Retailers have increased their control over secondary distribution (ware- house to shop)

by channeling an increasing proportion of their supplies through distribution centres

(DCs). In some sectors such as food this process is now virtually complete. British

retailers exert much tighter control over the supply chain than their counterparts in

most other countries. Their logistical operations are heavily dependent on

information technology (IT), particularly the large integrated stock replenishment

systems that control the movement and storage of an enormous number of separate

products.

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2 RESTRUCTURED LOGISTICAL SYSTEMS

Retailers have reduced inventory and generally improved efficiency through for

example the development of „composite distribution‟ (the distribution of mixed

temperature items through the same distribution centre and on the same vehicle)

and centralization in specialist ware- houses of slower moving stock. In the case of

mixed retail businesses common stock rooms have been developed, where stock is

shared across a number of stores, with demand deciding to which store it is allocated.

3 ADOPTION OF „QUICK RESPONSE‟ (QR)

The aim has been to cut inventory levels and improve the speed of product flow.

This has involved reducing order lead-time and moving to a more frequent delivery of

smaller consignments both internally (between DC and shop) and externally (between

supplier and DC). This has greatly increased both the rate of stock-turn and the

amount of product being „cross-docked‟, rather than stored at DCs.

QR (Lowson, King and Hunter, 1999) was made possible by the development of EDI

(Electronic Data Interchange) and EPOS (Electronic Point of Sale), the latter driving the

„Sales Based Ordering‟ (SBO) systems that most of the larger retailers have installed. In

other words as an item is sold and scanned in a shop, this data is used to inform

replenishment and reordering systems and thus react quickly to demand. Sharing such

data with key suppliers further integrates production with the supply function.

Major British retailers have been faster to adopt these technologies than their

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counterparts in other European countries, although they still have to diffuse to many

small retail businesses.

4 RATIONALIZATION OF PRIMARY DISTRIBUTION (FACTORY TO

WAREHOUSE)

Partly as a result of QR pressures and partly as a result of intensifying competition,

retailers have extended their control upstream of the DC (that is, from the DC to the

manufacturer). In an effort to improve the utilization of their logistical assets, many

have integrated their secondary and primary distribution operations and run them as a

single „network system‟. This reduces waste and improves efficiency.

5 INCREASED RETURN FLOW OF PACKAGED MATERIAL AND

HANDLING EQUIPMENT FOR RECYCLING/REUSE

Retailers have become much more heavily involved in this „reverse logistics‟

operation. This trend has been reinforced by the introduction of the EU packaging

directive. Although the United Kingdom currently lags behind other European countries,

particularly Germany, in this field, there remain opportunities to develop new forms of

reusable container and new reverse logistics systems to manage their circulation.

6 INTRODUCTION OF SUPPLY CHAIN MANAGEMENT (SCM) AND

EFFICIENT CONSUMER RESPONSE (ECR)

Having improved the efficiency of their own logistics operations, many retailers have

begun to collaborate closely with suppliers to maximize the efficiency of the retail

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supply chain as a whole. SCM (and within this, ECR) provides a management

framework within which retailers and suppliers can more effectively coordinate their

activities. The under- pinning technologies for SCM and ECR have been well

established in the United Kingdom, so conditions have been ripe for such developments.

It is clear that many of these trends identified in McKinnon (1996) have been the focus

for retailers in the intervening years. Issues such as primary distribution and factory

gate pricing, consolidation centres and stockless depots and Collaborative Planning

Forecasting and Replenishment (CPFR) have occupied much attention. The overall

focus in retail logistics has been altered from an emphasis on the functional aspects

of moving products to an integrative approach that attempts to develop end-to-end

supply chains. This outcome is normally referred to as supply chain management.

SUPPLY CHAIN MANAGEMENT

The roots of supply chain management are often attributed to Peter Drucker and his

seminal 1962 article. At this time he was discussing distribution as one of the key areas

of business where major efficiency gains could be achieved and costs saved. Then,

and through the next two decades, the supply chain was still viewed as a series of

disparate functions. Once the functions began to be integrated and considered as a

supply chain rather than separately, several key themes emerged:

• A shift from a push to a pull: that is, a demand-driven supply chain;

• Customers gaining more power in the marketing channel;

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• An enhanced role of information systems to gain better control of the supply chain;

• The elimination of unnecessary inventory in the supply chain;

• A focus upon core capabilities and increased outsourcing of non-core activities to

specialists.

To achieve maximum effectiveness of supply chains, it became clear that integration, or

„the linking together of previously separated activities within a single system‟ (Slack et

al, 1998: 303) was required. Companies have had therefore to review their internal

organization to eliminate duplication and ensure that total costs can be reduced, rather

than allow separate functions to control their costs in a sub-optimal manner.

Similarly, supply chain integration can be achieved by establishing ongoing

relationships with trading partners throughout the supply chain.

In industrial markets supply chain integration focused upon the changes promulgated by

the processes involved in improving efficiencies in manufacturing. Total quality

management, business process re-engineering and continuous improvement brought

Japanese business thinking to western manufacturing operations. The implementation of

these practices was popularized by Womack, Jones and Roos‟s (1990) book The Machine

that Changed the World, which focused on supply systems and buyer–seller

relationships in car manufacturing. In a retail context it is claimed that food retailers

such as Tesco are increasingly embracing such lean principles for parts of their business

(see Jones, 2002).

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During the 1990s this focus on so-called „lean production„ was challenged in the

United States and the UK, because of an over-reliance on efficiency measures („lean„)

rather than innovative („agile„) responses. Table 1.1 shows how lean and agile supply

chains differ. Agility as a concept was developed in the United States in response to the

Japanese success in lean production. Agility plays to US strengths of entrepreneurship

and information systems technology. An agile supply chain (Figure 2 ) is highly

responsive to market demand. Harrison et al (1999) argue that the improvements in

the use of information technology to capture „real time‟ data mean less reliance on

forecasts and create a virtual supply chain between trading partners. When

information is shared, process integration takes place between partners who focus on

their core competencies. The final link in the agile supply chain is the network where

a confederation of partners structure, coordinate and manage relationships to meet

customer needs (Aldridge and Harrison, 2000).

Both approaches of course have their proponents. There is however no reason why

supply systems may not be a combination of both lean and agile approaches, with each

used when most appropriate (the so-called „leagile‟ approach: Naylor, Naim and

Berry, 2002; Mason-Jones, Naylor and Towill, 2000). In either case, emphasis is placed

on the demands of supply chain management.

It can be suggested that the key concepts within Supply Chain Management (SCM)

include the value chain, resource-based theory (RBT) of the firm, transaction cost

economics and network theory. The thrust of all these concepts is the obtaining of

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competitive advantage through managing the supply chain (within and beyond the single

firm) more effectively.

Table 1.1 Alternative Supply Chain Processes

Efficient/function (lean) Innovative/responsive (agile)

Respond quickly to unpredictable

demand in order to minimize
Supply predictable demand stockouts, forced mark-downs, and
Primary purpose efficiently at lowest cost obsolete inventory

Manufacturing focus Maintain high average utilization rate Deploy excess buffer capacity

Generate high turns and minimize Deploy significant buffer stock of

Inventory strategy inventory parts

Shorten lead time as long as it Invest aggressively in ways to reduce

Lead time focus doesn‟t increase cost lead time

Approach to supplier Select primarily for speed, flexibility

selection Select primarily for cost and quality and quality

Source: adapted from Harrison, Christopher and Van Hoek, 1999

Table 1.1: Alternative Supply Chain Processes

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 Figure 2 The Agile Supply Chain

They all explore possible benefits of a pan-firm orientation. Figure 2 is a supply chain

model showing how value may be added to the product through manufacturing,

branding, packaging, display at the store and so on. At the same time, at each stage cost

is added in terms of production costs, branding costs and overall logistics costs. The aim

for retailers (and their supply partners) is to manage this chain to create value for the

customer at an acceptable cost. The managing of this so-called „pipeline‟ has been a

key challenge for logistics professionals, especially with the realization that the reduction

of time not only reduced costs, but also gave competitive advantage.

According to Christopher (1997) there are three dimensions to time-based competition

that must be managed effectively if an organi- zation is going to be responsive to

market changes. These are:

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• Time to market: the speed at bringing a business opportunity to market;

• Time to serve: the speed at meeting a customer ‟s order;

• Time to react: the speed at adjusting output to volatile responses in demand.

Christopher (1997) uses these principles to develop strategies for strategic lead-time

management. If the lead times of the integrated web of suppliers necessary to

manufacture a product are understood, he argues that a „pipeline map‟ can be drawn to

represent each stage in the supply chain process from raw materials to customer.

In these maps it is useful to differentiate between „horizontal‟ and „vertical‟ time.

Horizontal time is time spent on processes such as manu- facture, assembly, in-transit

or order processing. Vertical time is the time when nothing is happening, no value is

added but only cost and products/materials are standing as inventory.

It was in fashion markets that the notion of „time-based competition‟ had most

significance, in view of the short time window for changing styles. In addition, the

prominent trend in the last 20 years has been to source products globally, often in low-

cost Pacific Rim nations, which lengthened the physical supply chain pipeline. These

factors combined to illustrate the trade-offs that have to be made in supply

chain management, and suggested an imperative to develop closer working relationships

with supply chain partners.

This consideration of the changes and challenges in retail logistics allows us to

summarize the key issues in retail logistics and supply chains.

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First, it should be clear by now that the modern logistics and supply systems are

heavily dependent on the use of information technology. Logistics now is as much

about information movement as it is about product movement. Anyone who believes

that retail logistics is all about boxes and lorries needs to rethink. Of course it remains

true that products have to be distributed. Vehicles and boxes are still involved. But

increasingly it is the control of data and information that remains the key to a

successful logistics system.

Second, the discussion above should have indicated that modern retail logistics is no

longer a separate or functionally based activity. Within a company, warehousing and

transport can not exist as separate operations. Instead logistics is all about integration,

not only within a company, but also increasingly outside the business with suppliers,

logistics service providers and customers. Partnership is a strong component of modern

retail logistics, and an ability to work with other individuals and other companies is

fundamental to success.

Third, it should have become apparent that the „reach‟ of retail logistics has expanded

enormously. Companies used to manage local suppliers and products to and from local

warehouses. Nowadays, retailers are much more global in their outlook. Products are

sourced from around the world and so the interactions and movements involved in

logistics are now equally international.

Finally however, we must not forget that logistics is about the movement of

product, and much work is undertaken on improving the mechanics of this task. For

example, a modern supermarket contains good examples of packaging and

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standardization, the best of which make handling easier. Vehicle fleets may be

equipped with GPS (Global Positioning Satellite) systems and advanced tachograph

and communications equipment, allowing real-time driver and vehicle performance

monitoring. Such detailed analysis remains a key component of supply chain integration.

With the pressure on to enhance service and reduce costs in supply chains, together

with their enhanced complexity, there can be little doubt that retailers will be subjected

to considerable logistical challenges in the years to come.

The current study has attempted to assess the logistics management of V-Mart in Delhi

city of Delhi state, using the above information as a base although the infrastructure in

the state is still not well developed and the retailing is still in its infancy state as most of

the market share is controlled by the local kirana shops and there is a long way for the

retail sector to go.

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 CHAPTER 3

RESEARCH

METHODOLOGY

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METHODOLOGY OF THE STUDY

Research methodology is a way to systematically investigate the research problem. It

gives various steps in conducting the research in a systematic and a logical way. It is

essential to define the problem, state objectives and hypothesis clearly. The research

design provides the details regarding what, where, when, how much and by what means

enquiry is initiated. Every piece of research must be planned and designed carefully so

that the researcher precedes a head without getting confused at the subsequent steps of

research. The researcher must have an objective understanding of what is to be done,

what data is needed, what data collecting tools are to be employed and how the data is to

be statistically analyzed and interpreted. There are a number of approaches to the design

of studies and research projects all of which may be equally valid. Research is a

systematic attempt to obtain answers to meaningful questions about phenomenon or

events through the application of scientific procedures. It an objective, impartial,

empirical and logical analysis and recording of controlled observation that may led to

the development of generalizations, principles or theories, resulting to some extent in

prediction and control of events that may be consequences or causes of specific

phenomenon. Research is a systematic and refined technique of thinking, employing

specialized tools, instruments and procedures in order to obtain a more adequate solution

of a problem than would be possible under ordinary mean. Thus, research always starts

from question. There are three objectives of research factual, practical and theoretical,

which gives rise to three types of research: historical, experimental and descriptive.

Research design has been defined by different social scientists in a number of ways. All

these definitions emphasize systematic methodology in collecting accurate information

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for interpretation. Selltize et al. (1962) expressed their views as, “Research designs are

closely linked to investigator‟s objectives. They specify that research designs are either

descriptive or experimental in nature.” Research design tells us how to plan various

phases and procedures related to the formulation of research effort (Ackoff Russell,

1961). Miller (1989) has defined research design, “as the planned sequence of the entire

process involved in conducting a research study.”

Kothari (1990) observes, “Research design stands for advance planning of the method to

be adapted for collecting the relevant data and the techniques to be used in their research

and availability of staff, time and money.” In this way, selecting a particular design is

based on the purpose of the piece of the research to be conducted. The design deals with

selection of subjects, selection of data gathering devices, the procedure of making

observations and the type of statistical analysis to be employed in interpreting data

relationship”.

The study is a qualitative research aimed at identifying how V-Mart manages and

operate its retail convenience business focusing on several aspects; strategic fits,

distribution and IT, which support its logistics activities. It leads to the exploration of the

competitive advantage that originates from those perspectives.

POPULATION OF THE STUDY

The population of the study comprised of all the staff members in the management

involved in managing the supply chain. Furthermore, the managers of distribution centers

and transport providers also formed the part of the population of the study.

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SAMPLE OF THE STUDY

20 interviews were conducted with the respondents from various V-Mart stores

functional in the Delhi city

RESEARCH PURPOSE

Enquiries can be classified in terms of their purpose as well as by the research strategy

used (Robson, 2002). There are three different classifications, exploratory, descriptive

and explanatory. In the same way as you may employ more than one strategy in your

research project, so you may have more than one purpose. Indeed as Robson (2002)

points out, the purpose of your enquiry may change over time.

Exploratory Study is a study investigating an entirely new area of research. Unlike

replications and exploratory study does not follow directly from an existing study .

Robson defined that exploratory studies are a valuable means of finding out „what is

happening‟ to seek new insight; to ask questions and to assess phenomena in a new light

(Robson, 2002).

There are three principal ways of conducting exploratory research:

• A search of the literature;

• Talking to experts in the subject;

• Conducting focus group interviews.

Exploratory research can be likened to the activities of the traveler or explorer (Adam and

Schvaneveldt, 1991). Its great advantage is that it is flexible and adaptable to change. If

39 | P a g e
you are conducting exploratory research you must be willing to change your direction as

a result of new data that appears and new insights that occur to you (Saunders and et al.,

2003).

Adams and Schvaneveldt (1991) reinforce this point by arguing that the flexibility

inherent in exploratory research does not mean absence of direction to the enquiry. What

is does mean is that the focus is initially broad and becomes progressively narrower as

the research progresses.

The object of descriptive research is to portray an accurate profile of persons, events or

situations (Robson, 2002). This may be an extension of, or a forerunner to, a piece of

exploratory research. It is necessary to have a clear picture of the phenomena on which

you wish to collect data prior to the collection of the data (Saunders and et al., 2003). The

authors also claim that in a research work, you need to go further and draw conclusion

from your data. You should develop the skills of evaluating data and synthesizing ideas.

These are higher-order skills than those of accurate description. Description in

management and business research has a very clear place. However, it should be thought

of as a means to an end rather than an end in itself.

Studies that establish causal relationships between variables may be termed explanatory

studies. The emphasis here is on studying a situation or a problem in order to explain the

relationships between variables. You may find, for example, that a cursory analysis of

quantitative data on manufacturing scrap rates shows a relationship between scrap rates

and the age of the machine being operated. You could go ahead and subject the data to

40 | P a g e
statistical tests such as correlation in order to get a clearer view of the relationship

(Saunders and et al., 2003).

Based on our objectives, our research purpose is exploratory partly since we want to gain

a better understanding of how Supply Chain is managed in V-Mart. We conducted

exploratory studies by searching the literature in the library, database and the company‟s

internal documents and talking with the experts in this area. And we are descriptive since

we want to we portray the process, the system, the value and the influencing factors of

the e-Logistics system. We are also partly explanatory since we try to draw conclusions

by answering our research questions by our findings. Generally speaking, since our

research problem is to portray an accurate profile of e-Logistics system and the value

creation so our research purpose is primarily descriptive.

RESEARCH DESIGN

There are various methodologies for research and methodology refer to the choices

researcher make about cases to study, method of data gathering, and from of data

analysis etc (Sliverman ,2007). In this research the researcher used a qualitative study as

a methodology .The nature of qualitative research allows flexibility between gathering

data and interpreting them within framed theories. Qualitative researchers usually work

with small samples of people, nested in their context and studied in-depth, very different

from quantitative researchers, who aim for larger numbers of cases and seek statistical

significance (Miles & Huberman, 1994)..

In this study , researcher constructed a research strategy which is customized to study

purpose. Researcher used qualitative research method following with comparative

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research. A case study of V-Mart Delhi was chosen as a representative of an observation

in logistics and retailing business in this research. The multi-data collection methods

were employed from various sources of data to ensure the validity and reliability of the

research. The sources of data included the chosen firm‟s representatives, including the

staff in distribution center of Delhi. Additionally, research was conducted and the

interview with other supply chain members such as V-Mart‟s supplier and company that

provide transportation services to V-Mart. The interview with business analyst (financial

analyst) was conducted to gain more market environment and trend of the industry. The

researcher also included both primary and secondary data throughout the data collection

and analysis part.

QUALITATIVE RESEARCH

Qualitative research seeks out the „why‟ and the „how‟ of its topic through the analysis of

unstructured information (Yin, 1994) – things like interview transcripts and recordings,

emails, notes, feedback forms, photos and videos. The qualitative research does not only

rely on statistics or numbers, which are the domain of quantitative researchers. Yin

(1994) also depicts that the qualitative method is used to gain insight into attitudes,

behavior, motivation culture or lifestyles. Focus groups, in-depth interviews, content

analysis and semiotics are among the many formal approaches that are used.

The purpose of this study casts the main interests on how logistics activities are handled

and in what essence have them been regarded to. In this research, the researcher

employed naturalism and ethonomethodology which the researcher found to be the most

suitable method. The researcher corrected information through observation and

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interviews by using tools such as phone, audio record, email and internet. Furthermore

the researcher used interviews with several parties involved in the process of distribution

in the selected case study.

CASE STUDY

A case study is an extensive examination of a single instance of a phenomenon of

interest. It involves gathering detailed information about the unit of analysis with a view

to obtaining in- depth knowledge (Collis & Hussey, 2003). According to Yin (1994),

characteristics of a case study research tend to explore a certain phenomena and

offer the understandings in a particular context. The multiple methods can be used

in the collection of data which encourage the researcher to gain more opportunities in

searching up the data to provide a sound analysis. Researcher used a case study of V-

Mart in Delhi as it poses as number one in chain convenience store in the state of J&K.

The proposed study utilized a mixed methodology approach to collect the data from the

respondents .

The purpose of this project casts the main interests on how logistics activities are handled

and in what essence have they been regarded to.

The researcher collected information through observation and interviews by using tools

such as phone, audio record, email and internet. Furthermore the researcher used

interviews with several parties involved in the process of distribution in the selected case

study.

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A case study of V-Mart Delhi is chosen as a representative of an observation in logistics

and retailing business in this research.

The main interest of the study was to identify and describe how V-Mart manage and

operates its retail convenience business focusing on several aspects; strategic fits,

distribution and IT, which support V-Mart‟s activities. It leads to the exploration of the

competitive advantage that originates from those perspectives.

COLLECTION OF DATA

The researcher used two main data collection. First, the primary data is from the

interviews. The secondary data gives supporting data in to fulfill the gap from the

interviews in this research study. Both data collection methods are explained below.

PRIMARY DATA

The researcher used interviews as a primary source of data. Why interview? This

question may seem surprising, however the majority of published qualitative

research articles use interviews and moreover compared to other methods, interviews

are relatively economical in terms of time and resources (Sliverman, 2007).

Saunders, Lewis and Thornhill (2007), present the definitions of three types of

interview as;

Structured interview: Data collection technique in which an interviewer physically

meets the respondent, reads them the same set of questions in a predetermined order, and

records his or her response to each.

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Semi-structured interview: Wide-ranging category of interview in which the

interviewer commences with a set of interview themes but is prepared to vary the order

in which questions are asked and to ask new questions in the context of the research

situation.

Unstructured interview: Loosely structured and informally conducted interview that

may commence with one or more themes to explore with participants but without a

predetermined list of questions to work through.

The researcher applied a semi-structured interview and an in-depth interview in retrieving

primary data. The interviewees are involved V-Mart‟s personal, the financial analyst in

commerce industry, transportation firm, and supplier of V-Mart in Delhi.

The interviews with V-Mart‟s personal, transportation firm, and the suppliers are

intended to describing the functions at DCs and how each actors process these activities

accordingly to others chain members.

Due to the limitation of time, resources as well as the well-round data can flaw the

research quality; the researcher fulfill these slacks with secondary data described in a

next section.

SECONDARY DATA

The researcher used “Desk research” approach on secondary data. Desk research is the

term that is used loosely, and it generally refers to secondary data or that which can be

collected without fieldwork. (Hague et al., 2004) Desk research use the existing

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information from the website, company data and sources, directories, magazine or other

published sources (Yadin, 2002).

The researcher gathered data from company annual report, quarterly report and from its

website. The data can be trusted from these resources since the company selected in the

case study is a listed company in India which is obligated to provide financial and

operations performance, and future plans to investors.

Journals, magazines as well as the newspapers interviews with V-Mart was used as data

in this study. They provided the researcher with the reflections on firm‟s perspectives,

especially in the interviews with management level of the firm. The data was compared

and cross checked before including in the study.

According to Kent (2007), secondary data entails the proactive seeking of existing data in

both qualitative and quantitative research. It can also help to interpret the primary data.

DATA ANALYSIS

Researcher can increase the quality of the analysis by dividing data into three phases:

data deduction, data display and conclusion drawing, and verification from the presented

material (Miles & Huberman, 1994). In this study, our data evaluation followed these

three phases. According to Miles and Huberman (1994), the reduction of collected data in

first phase, data will be noted and recorded, shortened, simplified and compiled. The

researcher write down all interviews from the respondents in order to prevent the loss of

information. Moreover, they gave the researcher an opportunity to review the respondents

again. All interviews were transcribed into written text after finishing of the interviews.

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The data reduction was made before the collection starts, questions are selected in the

interview and they were given to the participants only relating to the research purpose

and objectives. Furthermore, in the second phase, the use of displays is not separate from

analysis, formats can be as various as the imagination of the analyst, and different

analytical activities can be used such as rows and columns of a matrix for qualitative data

and deciding which data, in which form, should be entered in the cells. In our analysis

part, related data was complied together to provide readers a complete picture of

respondents‟ opinions. Lastly, in the final part of analysis section, the modified material

was analyzed and then conclusions were drawn.

VALIDITY AND RELIABILITY

Validity addresses the problem of whether a measure measures what it is supposed

to measure .According to Thietart (2001), the main concerns with the validity are whether

the measured data is relevant and precise, and the second is the extent to which we can

generalize from those results. In this research, it brought up the question of whether the

interview has measured in the right way and also all the interviewed questions has been

proper and go well with the research‟s objective and purpose.

Reliability concerns the consistency and accuracy of the results obtained and it is

achieved if research results can be repeated (Collis & Hussey, 2003). Reliability means

dependability or consistency. Neuman (2006) suggests that the same result can be

achieved under the identical or very similar conditions. This researcher used many

sources of data and all were cross-checked before including in the study. The interviews

were made with several parties to gain insightful data. The interview data and data from

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secondary sources were compared to confirm the reliability of the data. To obtain higher

reliability, the researcher rechecked the transcripts from the interviews to the

interviewees to let them confirm their answer again. Therefore, this research is valid and

reliable.

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CHAPTER 4

ANALYSIS OF

THE SAMPLE

SURVEY OF

EMPLOYEES

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DATA ANALYSIS AND INTERPRETATIONS

V-Mart stores are wholly owned by Bharti Retail. The first B2B wholesale cash-and-

carry store in northern India. A typical cash-and-carry store stands between 50,000 and

100,000 square feet and sell a wide range of products from 6000 to 10000 and is

providing a one stop and shop experience.

The data was collected from the V-Mart‟s operational managers in Delhi. The analysis

and interpretation of the data is made as under:

Q1. WHAT HAS MADE V-MART LEADER IN SUPPLY CHAIN

MANAGEMENT?

V-Mart became a leader in supply chain management because they took a direct, regional

approach. They cut out the middleman, and became their own distributor. Also, a main

leading factor to their success was their implementation of the bar code system, which

was later adapted to have RFID microchips to eliminate physical inventory counting,

making it much more efficient. Not only could they tell what they were selling, how

much, now they could tell where it was in their regional distribution centers, making

them able to restock their inventory in 48 hours, much faster than any of their

competitors. These distribution centers were important because V-Mart retail stores were

strategically placed within a boundary of a delivery zone of their distribution centers to

cut transportation costs, and consumer costs. Another key factor into their success was

their intense competitor research weekly. This meant the V-Mart was able to beat

competitors by 4% to sometimes 10% by discounting 4 rolling key items for

approximately 75 days each. The increase in volume sales allowed for a price drop and

edge over their competitors, these promotions brought in revenue.

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Q 2. EXPLAIN V-MART‟S USE OF INNOVATIVE IT TOOLS AND IT-

ENABLED PROCESSES TO BENEFIT SUPPLY CHAIN

Information technologies such as the bar code, electronic data interchange (EDI), and

radio frequency identification (RFID) have allowed V-Mart to maintain its position as

leader in supply chain management. V-Mart first used the barcode paired with scanners

for inventory. This point of sale system was able to identify items sold, locate the price

for the item, create a receipt for the customer, and store the transaction for later sales and

inventory analysis. The barcode helped speedup the checkout process but on a larger

scale unlocked the door to information management. V-Mart was now able to control its

inventory and avoid overstocking its selves with merchandise that was not selling well.

This helped to make the supply chain become more efficient and cost effective. Soon

after, the universal product code (UPC) was introduced and became the standard for

identifying and labeling products in the retail industry. Electronic data interchange (EDI)

had become a valuable technological tool that helped to strengthen the relationship

between V-Mart and its suppliers. Through the company-developed application Retail

Link, suppliers are now able to access V-Mart database and view up-to-date, store-by-

store, sales and inventory information for their products. Suppliers could then coordinate

to forecast, plan, produce, and ship products as needed. With the use of its privately

owned satellite communication system, V-Mart is now able to coordinate its supply chain

activities between all store locations and distribution centers. V-Mart went to a whole

new level when it required its suppliers to equip its products with microchips that could

be used for radio-frequency identification (RFID). These microchips were an enhanced

form of the barcode, storing more information. Similar to what is used on the highway for

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toll collection, the technology requires the RFID tags to be in close proximity to the

RFID reader. Once scanned, the item or goods could be tracked throughout the whole

supply chain. In-store, managers could determine how many products it had and where

they could be located. V-Mart‟s use of innovative IT tools and processes has set the

standard for supply chain management. Its ability to exploit information and use it to

better the supply chain process has enabled it to keep inventories low, increase turnover,

and create cost savings, which in turn can be passed on to the consumers.

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Q3. ANALYZE THE RETAIL INDUSTRY THROUGH PORTER‟S FIVE

FORCES

Retail market (Organized and unorganized) is estimated by the India Retail Report to be

around Rs. 12,00,000 crore($270 billion) with annual growth rate is 5.7 percent.

Currently unorganized/traditional retailing is contributing 95% of the industry with over

15 million small and medium outlets (mom-and-pop corner stores also called „kirana‟

stores).Organized formats are only in the initial stages of adoption in the country.

However with the change of tastes and preferences of the consumers, the industry is

getting more popular these days and getting organized as well. With growing market

demand, the organized retail industry is expected to grow at a pace of 25-30% annually

(CII-AT Kearney Retail Study). Retailing is growing rapidly with consumer spending

increasing by unprecedented rates. Because of these factors global players like Wal-Mart,

Tesco, and Carrefour are interested in this sector.

1. New foreign trends

2. Low switching cost

More availability of options Considering these the threat to substitute in Indian retail

market varies from moderate to low as the organized retail market is very less and the

outcomes are currently favorable for the industry. The substitutes are mainly available in

the unorganized sector as they have the cheaper version of the products which attract the

customers from lower income group.

3. Bargaining power of supplier: (Low)

The price at which the product is available to the retailer is very important. If the

supplier has a high bargaining power then in theory it makes the industry less attractive.

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If we consider the retail market it is very attractive due to the low bargaining power of

the supplier as the number of buyers in existence as compared to the suppliers is very

few. However it varies from product to product and the availability of undefined highly

valued products can be seen as a threat as the bargaining power of the supplier would

increase in this case.

4. Bargaining power of buyer: (moderate to high)

The bargaining power of buyer in India is increasing fast as the customer is becoming

more and more informed and aware about the various brands, products and foreign

trends. This is also characterized due to the high number of alternatives available in the

market and the due to increase in the available disposable incomes as well as the price

range of the products.

5. Degree of Rivalry: (moderate)

The structure of industry cost, degree of differentiation and switching cost determine the

intensity of rivalry. The intensity of rivalry is not very high due to few levels in the

market and low differentiation. However this is changing due to the new entries in the

market.

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Q4. WHY IS IT LUCRATIVE FOR V-MART TO OFFER CASH-AND CARRY

SERVICES WITH ITS PARTNERS?

Entry into Emerging market:

Saturation in western markets has shifted the attention of investors to India‟s emerging

market. India has a growing middle class, an expanding economy and a growing brand-

conscious consumer. It has a $450 billion retail industry. However, there are high barriers

against foreign direct investment (FDI). India‟s strict regulations have made it difficult

for multi-brand foreign retailers, such as Wal-Mart, to sell directly to the public. Thus the

joint venture between V-Mart and Bharti has provided a means to enter the emerging

Indian market through this partnership.

First mover‟s advantage:

This partnership provides the first movers advantage to V-Mart as the other competitors

like Tesco have not established themselves yet into the country. This also provides an

opportunity to grab the market share due to lack of the organized retailing in the country.

This would also be an added advantage in future when the government would open FDI.

However, this may also pose a drawback since there will be a lot of investing needed to

improve the supply infrastructure. Those positioned as second-mover and third-mover

may be able to learn from the mistakes of the first.

Combination of the experience and expertise:

Bharti‟s knowledge and experience in Indian consumer markets matched with Wal-

Mart‟s logistics, supply chain management, and sourcing experience make them an

unstoppable force.

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Technical collaboration between Bharti Retail and Wal-Mart:

In this joint venture the two firms have also entered into an agreement according to which

V-Mart provides critical technical and back end support to Bharti Retail.

Supply Chain Management:

The joint venture works with the existing supply chain Infrastructure to help make it

more efficient which helps in the development of the Indian retail and increases the

efficiency.

Helping growth of Indian economy:

1.Support to farmers: The firm has removed the middle man and is directly dealing with

the farmer which helps them to improve the quality and production and also plays

important role in the development of the farmers as they also provide them with

educating programs to improve the efficiency of farmers.2.Creating job opportunities:

The firm makes use of 90% of local produce creating job opportunities for the locals.

This joint venture is looking forward to establish across the country which would create

job opportunities to the local people.

Low prices every day:

Their organized cash-and-carry strategy will benefit local retailers and merchants act as a

one-stop-shop, offering over 6,000 items at competitively low prices. A large array of

quality goods are readily accessible helping the small and mid-sized business to get the

products at a cheaper price.

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Q 5 HOW DO YOU DESCRIBE SUPPLY CHAIN MANAGEMENT AT V-MART?

Supply Chain Management at V-Mart

Supply chain management at V-Mart can be described in 3 sections.

Procurement and Distribution

V-Mart process of procurement involves reducing its purchasing costs as far as possible

so that it can offer best price to its customers. The company procures goods directly from

the manufacturers, bypassing all intermediaries.

V-Mart has distribution centers in different geographical places in Delhi , own

warehouses supplies about 80% of the inventory. Each distribution centre is divided in

different groups depending on the quantity of goods received. The inventory turnover rate

is very high, about once every week for most of the items.

The distribution centers ensures steady flow & consistent flow of products. Managing the

center is economical with the large-scale use of sophisticated technology such as Bar

code, hand held computer systems (Magic Wand) and now, RFID. Every employee has

access to the required information regarding the inventory levels of all the products in the

center. They make 2 scans- one for identifying the pallet, and other to identify the

location from where the stock had to be picked up. Bar codes & RFID are used to label

different products, shelves & bins in the center. The hand held computers guide employee

to the location of the specific product. The quantity of the product required from the

center is entered in the hand held computer, which updates the information on the main

central server. The computers also enabled the packaging department to get accurate

information such as storage, packaging & shipping, thus saving time in unnecessary

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paperwork. It also enables supervisors to monitor their employees closely in order to

guide them & give directions.

This enables V-Mart to satisfy customer needs quickly & improve level of efficiency of

distribution center management operations.

Logistics Management

This involves fast & responsive transportation system. More than 70 company owned

trucks services the distribution centers in Delhi. These dedicated truck fleets enables

shipping of goods from distribution centers to the stores within 2 days and replenish the

store shelves twice a week. The drivers hired are all very experienced & their activities

are tracked regularly through “Private Fleet Driver handbook”. For more efficiency, V-

Mart uses a logistics technique called “Cross Docking”. In this system, finished goods are

directly picked up from the manufacturing site of supplier, sorted out and directly

supplied to the customers. This system reduces handling & storage of finished goods,

virtually eliminating role of distribution centers & stores. Because of “cross-docking” the

system shifted from “supply chain” to “demand chain” which meant, instead of retailers

„pushing‟ the products into the system, the customers could „pull‟ the products, when &

where they required.

Inventory Management

Considering the rapid expansion of the stores, it was essential to have a very good

communication system. They have their own communication system. This allows the

management to monitor each and every activity going on in a particular store at any point

of the day and analyze the course of action taken depending on how the things went.

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V-Mart ensures that unproductive inventory is as less as possible, by allowing the stores

to manage their own stocks, thereby reducing pack sizes across many categories and

timely price markdowns. V-Mart makes full use of its IT infrastructure to make more

inventories available in case of items that customers wanted most, while reducing overall

inventory. By making use of Bar-coding & RFID technologies, different processes like

efficient picking, receiving & proper inventory control of the products along with easy

packing and counting of the inventories was ensured.

It has the most sophisticated computer system in private sector, which enables it to easily

track movement of goods & stock levels across all distribution centers and stores. For

emergency backup, it has an extensive contingency plan in place as well.

Employees use “Magic Wand”, which is linked to in-store terminals through a Radio

frequency network, to keep track of the inventory in stores, deliveries and backup

merchandise in stock at the distribution centers. The order management and store

replenishment of goods is entirely executed with the help of computers through Point of

Sale (POS) system. V-Mart also makes use of sophisticated algorithm to forecast the

quantities of each item to be delivered, based on inventories in the store. A Centralized

inventory database allows the personnel at the store to find out the level of inventories

and location of each product at a given time. It also shows the location of the product like

distribution center or transit on the truck. When the goods are unloaded at the store, the

inventory system is immediately updated.

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Q6 WHEN DID YOU INITIATE PLANS TO EMPLOY RFID TECHNOLOGY IN

THE SUPPLY CHAIN?

Easy had initiated its plan to employ RFID technology in its supply chain in June 2012 at

Delhi. The specification of the following RFID components was laid out in June 2012.

EPC (Electronic Product Code) specification

Type of Chip that would be installed

The Distribution centers that will accept RFID tagged products

After the defining phase, V-Martspecified the RFID requirements to its suppliers that

they should comply with:

EPC: 96-bit with a Global Trade Identification number

TAGS: Should operate in UHF spectrum (868 MHz to 956 MHz)

The TAG will carry the 96-bit serial number and will be field-programmable, that will

allow the suppliers to write serial numbers to the tags while being applied to the products.

EPC –compliant tags in UHF band consists of two main parts:

EPC data format on the chip

Class0 or Class1 communication protocol

Class0 is a factory programmable tag

Class1 provides the capability to the end users to write serial number on it

V-Mart planned to implement Class1 Version2, a globally accepted protocol that

incorporates both specification of Class0 and Class1

In addition, V-Mart is planning to enhance mobility to its existing RFID tag readers by

implementing RFID-enabled forklift. These readers will have the capability to read the

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tags on the pallets and transmit data through the RFID network, which would help the

users to be better informed about the supply-chain data.

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Q.7 HOW EFFICIENT IS SUPPLY CHAIN WITH RFID?

The various components of Supply Chain are: Procurement, Distribution, Logistics and

Inventory Management.

Since the core of V-Mart business is perpetual improvement in its Supply Chain

implementation, it believes in “no-compromise” on implementing an innovative IT

infrastructure and strong communication system as they are they the important links in

the chain for a smooth functioning of the complete system.

V-Mart tapped RFID technology with an aim to increase the efficiency of its supply

chain. This is because RFID implementation will enhance transparency of their supply

chain and hence will help them minimize cost and labor and will strengthen inventory

control. According to Venture Development Corporation, “With V-Mart selling over $45

billion worth of goods in fiscal year 2013, a 1% improvement in the out-of-stock issue

could generate nearly $2.5 billion in very profitable sales.”In addition, a study by Cohen

at Wharton chalks out the difference between the existing inventory management and the

RFID enabled supply chain.

“In current systems, you may know there are 10 items on the shelf, and that information

is compiled in an enterprise planning software system. With RFID, you know there are 10

items, their age, lot number, and expiration date and warehouse origin. "It's like knowing

there are 1,000 people in a city," says Cohen. "With RFID, you know their names."

From the above studies it indicates that employing RFID technology will help in

implementing a seamless supply chain and hence yield profits.

“V-Mart has been able to restock RFID-tagged items three times as fast as non-tagged

items.”

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In addition to improving the availability of in-stock merchandise, V-Mart aims to reduce

the practice of manually placing the order and has achieved 10% reduction in the case.

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Q 8 WHO ARE THE SUPPLIERS FOR THE V-MART?

Some of the major suppliers of V-Mart are:

Gillette, Hewlett-Packard, Johnson & Johnson, Nestle, Purina Pet Care Company, Procter

& Gamble and Hindustan Unilever etc.

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Q 9 WHAT ARE THE CHALLENGES FOR THE SUPPLY CHAIN

MANAGEMENT?

Supply Chain Management Challenges

V-Mart plans to bring its global supply chain capabilities and expertise to Delhi while

customizing them to the unique requirements of the market. Another area that it intends

to focus on is local sourcing of goods in addition to sourcing globally through its

international operations. V-Mart‟s fully owned logistics arm, would look after the V-Mart

retail venture. In order to build a supply chain adaptable to the local market, it closely

studies the various logistics providers. A solid supply chain is imperative to facilitating

the growth and success of retailers.

The fact that J&K‟s underdeveloped physical infrastructure put significant limitations on

the supply chain and is one of the key challenges of entering market. Overall, the quality

of roadway infrastructure, the quality of trucking and the adoption of modern technology

throughout the supply chain to the producer continues to pose significant challenges to

the development of supply chain capabilities in J&K. Furthermore, the prominence of

middlemen in the retail and wholesale industries had been a key characteristic of India‟s

retail sector. V-Mart‟s proposition is to cut out the middlemen and connect producers

directly with the retailer. It wants to work closely with suppliers to significantly enhance

productivity, packaging and quality management. Linking the producer with the retailer

is also expected to eliminate several stages in the supply chain, thereby reducing the

inefficiency of the industry‟s traditional supply chain. This will be aligned through the

partnership between V-Mart and local suppliers.

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 CHAPTER 5

SUMMARY AND

CONCLUSIONS

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SUMMARY AND CONCLUSIONS

At present, V-Mart is at a nascent state of implementing RFID. In addition to

strengthening the Supply Chain, the largest retailer is also looking into different

dimensions where RFID can be helpful. As a pilot test, V-Mart is working on the data

collected by RFID to analyze the consumer behavior.

According to Venture Development Corporation, the major implementation milestones

of RFID at V-Mart are to expand Regional and domestic implementation of RFID

throughout 2014. These include Regional Distribution Centers, Grocery Distribution in

India. And, by 2015, V-Mart aims to mandate RFID implementation for all its suppliers.

V-Mart is looking forward to expand all over the country using the expertise of its

partners and plans to open 15 outlets in its wholesale format by end-2014 . The

Company currently operates many cash and carry stores in the country at Amritsar,

Ludhiana and Jalandhar and is catering to the small and mid-sized business with the

wholesale cash and carry service. This partnership also sees the opportunity for growth

hoping that India‟s government will lift restrictions on FDI so that it can open more and

more stores in India and be able to cater to the public directly. V-Mart not only benefits

the firms but is also working towards the improvement of the retail industry by

improving the supply chain management and is helping in the economic development of

the country by helping the farmers and small business. V-Mart can bring in

revolutionary changes to the Indian Retail Industry.

In their strategy the logistics platform is a driver for growth, where acquisitions that

have logistics synergies are prioritised. From a pure logistics viewpoint logistics are

not optimal because of a very large, broad, and overlapping assortment of driving

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costs in warehousing and also costs that are tied up capital and administration. The

logistics practice is thus not aimed at minimizing the wholesaler cost but in providing

the company with a strategic leverage.

This is supported from a centralized and very flexible logistics platform that

makes it possible to replenish individual stores in a country as well as countries or cities

with multiple stores.

In the study of V-Mart , this picture is confirmed with functional costs, mainly

wholesaling costs, in terms of the logistics network. SCM and logistics are tools to

reduce costs in wholesaler warehouses, for example, and to reduce logistics costs in

the interface between the wholesaling function and retail stores.

The results of the study suggest V-Mart‟s process of procurement involves reducing its

purchasing costs as far as possible so that it can offer best price to its customers. The

company procures goods directly from the manufacturers, bypassing all intermediaries.

The fast & responsive transportation system and the distribution centers in Delhi are

well coordinated. The truck fleets enables shipping of goods from distribution centers to

the stores within 2 days and replenish the store shelves twice a week. This indicates a

prompt and quick response to the logistics management of the V-Mart stores in Delhi.

It is clear from the data that V-Mart ensures that unproductive inventory is as less as

possible, by allowing the stores to manage their own stocks, thereby reducing pack sizes

across many categories and timely price markdowns. V-Mart makes full use of its IT

infrastructure to make more inventories available in case of items that customers wanted

most, while reducing overall inventory. By making use of Bar-coding & RFID

technologies, different processes like efficient picking, receiving & proper inventory

68 | P a g e
control of the products along with easy packing and counting of the inventories is

ensured.

Focus and limitation

The study scope is limited by focusing on a single case which is V-Mart Convenience

Stores in Delhi. Furthermore this study, mostly focused on the process from V-Mart

distribution centers to its stores. Moreover, the researcher specifically framed the

research between Distribution Center (DC) and the store.

The selected case study is a convenience store chain, V-Mart in Delhi; therefore it may

mainly reflect norms and practices considerably within the firm‟s environment. On top

of that, the convenience store management policies on certain areas normally differ at

each location since they are tightly tied to local customer needs. It could then give a

deviated data from the retail convenience store in other firms or in other states.

EXPECTED CONTRIBUTION OF THE STUDY

Retailing is a significant part of economic activity with wholesaling and retailing value-

added. The major goal of the retail industry or retail merchandising system is to

influence possible consumers to purchase a particular products assortment at a particular

retail store. Retail activities turn out to be one of the significant themes playing the role

in supply chain management and logistics.

The management task is concerned with the element of distribution mix (for example

storage facilities and communication, etc), which have to be integrated for successful

retail distribution .This researches focus on the mentioned information will surely affect

retail business in one way or another as it will be able to highlight the day to day

problems faced by the staff and the management in supply chain and logistics .The study

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will also contribute towards suggesting various measures for improving the present

supply chain and logistics management scenario in Delhi stores in particular.

DIRECTIONS FOR FUTURE RESEARCH

Moving on to the next research topic, the researcher see the connection between supply

chain management, enabling IT, and retail management tightly tied together. To be able

to generate sales in retail industry, knowing to response to the market is crucial.

Moreover, the succession in retail also depends on the sales per slip which is helped

through the category management perspective.

Efficient Consumer Response or ECR puts forth those mentioned criteria believed to be

the key success factors to retail business. However, pursuing ECR would need a help in

logistics and distribution systems. Again, the connections to the supply chain

management also have implication to the application of ECR.

However, the evidence of success case of ECR is controversial. Some firms can achieve

and benefits enormously, while some are failed. While retail industry welcomes ECR

techniques, self-estimation of firm‟s capabilities should be identified before embracing

ECR to be implemented. The further research on the key success factors of bringing up

as well as the failure case of implementing this program will be worthy to investigate.

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INTERVIEW

QUESTIONS

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 INTERVIEW QUESTIONS

ON

“LOGISTICS MANAGEMENT IN RETAIL INDUSTRY: A CASE STUDY V-

MART RETAIL LIMITED IN DELHI”

Q 1 What has made V-Mart Leader in Supply Chain Management?

Q 2 Explain V-Mart‟s use of innovative IT tools and IT-enabled processes to benefit

supply chain

Q 3 Analyze the retail industry through Porter‟s Five Forces

Q 4 Why is it lucrative for V-Mart to offer Cash-and Carry services with its partners?

Q 5 How do you describe Supply Chain Management at V-Mart?

Q 6 When did you initiate plans to employ RFID technology in the supply chain?

Q 7 How efficient is supply chain with RFID?

Q 8 Who are the suppliers for the V-Mart?

Q 9 What is the challenges for the supply chain management in V-Mart?

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