Final Project of MIS

8/8/2019 Final Project of MIS

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PROJECT REPORT ON

IT APPLICATIONS IN APPAREL INDUSTRIES

POST GRADUATE DIPLOMA IN MANAGEMENT

Under the valuable guidance of

Dr. T.K.Singhal (Faculty, INMANTEC)

Ghaziabad

INTEGRATED ACADEMY OF MANAGEMENT AND

TECHNOLOGY

Ghaziabad

Submitted by-

SANDIP MANDAL(PG09-092)

PRITAM GHOSAL(PG09-074)

SHUBHAM SINGH (PG09-099)



INTRODUCTION

The Indian apparel industry also has a vast existence in the economic life of the country. It plays a

critical role in the economic development of the country with its contribution to industrial output,

export earnings of the country and the generation of employment.

The Indian apparel industry has seen remarkable changes in the past few years and it is also one of the India's largest foreign exchange earners. Embroidery being the traditional art form of the

country has contributed hugely for apparel industry. Indian embroidery market stands out as being

extraordinary in the international markets. For more comprehensive information on Indian

textiles, home decor, clothing and fashion accessories browse through the pages of

sourcing.indiamart.com.

Get ready to be in touch with the vast array of apparel and fashion accessories just with the single

click of mouse.

An 'MIS' is a planned system of the collecting, processing, storing and disseminating data in the

form of information needed to carry out the functions of management. In a way it is a documented

report of the activities that were planned and executed. According to Philip Kotler "A marketing

information system consists of people, equipment, and procedures to gather, sort, analyze,

evaluate, and distribute needed, timely, and accurate information to marketing decision makers."

The terms MIS and information system are often confused. Information systems include systems

that are not intended for decision making. The area of study called MIS is sometimes referred to,in a restrictive sense, as information technology management.

That area of study should not be confused with computer science. IT service management is a

practitioner-focused discipline. MIS has also some differences with Enterprise Resource

Planning (ERP) as ERP incorporates elements.

INFORMATION TECHNOLOGY (IT)

The IT department at apparel industries look after the IT infrastructure and its maintenance. There

are various types of server like, E-mail, application, DNS(Domain Name Server) and anti-virus.

ERP (Enterprise Resource Planning) such asSAP (System Application of Production Planning)

and Production Fast-react areused. Switches are used and bus topology is used for wired and star

topology forwireless networks. Virtual LAN system is used for network configuration. The

SAPsystem is centrally controlled from H.O. There are four main modules of SAP such as

• Production planning (PP module)

• Material management (MM module)

• Sales and distribution (SD module)

• Finance module (FI module)

http://sourcing.indiamart.com/apparel/apparel-industry/

http://sourcing.indiamart.com/apparel/apparel-industry/embroidery-market/

http://sourcing.indiamart.com/apparel/apparel-industry/

http://sourcing.indiamart.com/apparel/apparel-industry/embroidery-market/



Store departments use MM modules for inward and outward. The productiondepartments such as

cutting, sewing and finishing use the PP module for recordinginput and output. SD module is used

by marketing and sales departments. The FImodule is used by finance, accounts and

administration department. Various otherreports are maintained manually using MS-excel other

than ERP for backuppurpose. Major reports maintained are:

14.1.1 DFR (Daily Factory Report)

14.1.2 DER (Daily Efficiency Report)

14.1.3 DPR (Daily Production Report)

14.1.4 End-line report (hourly)

14.1.5 Daily rejection report (DR)

14.1.6 DHU percentage report (Defects per Hundred Units)

14.1.7 Operator efficiency report (daily weekly monthly and yearly)

14.1.8 Style efficiency report (daily weekly monthly and yearly)

14.1.9 Incentive reports

14.1.1 DFR (Daily Factory Report) – A daily factory report is compiled at the end of

the day. The report contains detailed production statistics of the work departments cutting,

sewing, finishing, embroidery, printing and packaging. The production is compiled buyer/style-

wise and line-wise. This report overall view of production of the factory.14.1.2 DER (Daily Efficiency Report) – An efficiency report is maintained line-wise on daily

basis for a month.14.1.3 DPR (Daily Production Report) – A DPR is maintained on daily basis

buyer-wise and line-wise for all the work activities performed. The DPR defers from the DFR asit represents size-wise details of each work activity.14.1.4 End-line report (hourly) – End-line report is maintained for each line on an hourly basisfor end-line production.14.1.5 Daily rejection report (DR) – The daily rejection report is maintained for both sewing and

finishing.14.1.6 DHU percentage report (Defects per Hundred Units) – The DHU

percentage is measured as the amount of defects per hundred units produced. The DHU is

important for the purpose of quality control and to identify major/frequently occurring

departments. The defects are classified and recorded respectively andline-wise.14.1.7 Operator efficiency report (daily weekly monthly and yearly) – The report is compiledfor the purpose of assessments and learning curve developments.14.1.8 Style efficiency report (daily weekly monthly and yearly) – This report is maintaineddate-wise and line-wise. It contains the efficiency and the production achieved in a particular

style. At the end of the style production a summary is compiled to know the average efficiency atwhich the style was produced.14.1.9 Incentive reports – This is generated on daily basis for calculating andrecording incentives line-wise.



Fig 5.3.2.1:-Welcome screen

Fig 5.3.3.1 – Consumption

report for Merchandiser

5.3.2 WELCOME SCREEN

The welcome screen contains a calculate button connected to the calculator worksheet. This

screen is purely a start-up screen meant for introductory display purposes.5.3.3 REPORT SCREEN

The report sheet consists of the report format which has links with that of

the calculator so as calculate the consumption for not only per garment

for various thread types but also for the order quantity of the particular

style. This report helps in shortening the process required for compiling

consumption for a order quantity.

Fig 5.3.4.1.1– Total consumption calculation

5.3.4Development tools and techniques

The calculator has been made using formulas, referencing and programming tools. Linking has

using sheet reference technique has been used for the purpose of value retrieval.5.3.4.1 Formulas

The formulas used range from mathematical, logical, lookup and reference andinformation.Some of the main formulas used are as follows:

• SUM()[mathematical]

• IF()[logical]

• OR()[logical]

• VLOOKUP(Lookup and referencing)

• ISERROR(information)

Fig 5.3.4.1.3 – Needle /bobbi

USE OF RFID IN APPAREL INDUSTRIES

Jan. 12, 2010—Continuing on its venture into item-level tagging of garments at its hundreds of

stores, clothing retailer American Apparel is moving forward with its RFID deployment by

installing the technology at two additional locations, thus providing the retailer with a total of 10

RFID-enabled shops.

All 10 stores will use Xterprise's Clarity Advanced Retail Solution (ARS) Electronic Product

Code (EPC) and inventory-management RFID software application. Previously, eight of the

locations had utilized an RFID software application other than Xterprise's. In 2008, AmericanApparel had indicated it would test the Clarity Advanced Retail System (see American Apparel

Expands RFID to Additional Stores). ARS, says Zander Livingston, the retailer's director of

RFID, will provide the company with greater flexibility than the previous RFID system it used,

http://www.americanapparel.com/


http://www.xterprise.com/


http://www.rfidjournal.com/article/view/4510








because it will allow the retailer to easily add new stores to the system, and because it offers an

interface between the RFID software and the RetailPro software application that American

Apparel utilizes for enterprise resource planning, inventory management and point-of-sale (POS)

processes.

Thus far, American Apparel's IT department has written a command into the Xterprise software

allowing the RetailPro application to receive an item's RFID number at the point of sale as if it

were a bar-coded stock-keeping unit (SKU) number. This enables the staff to simply read the

RFID tag in order to complete the checkout process (rather than reading an item's RFID tag andthen scanning its bar-coded SKU number to link the sale with RetailPro). RetailPro and the ARS

application still operate separately, however, and are not integrated with each other. American

Apparel intends to link the two inventory-management systems, Livingston says, by making the

necessary changes to the ARS software by writing applications that will allow that integration,

which had not been possible with the previous software solution.

The Xterprise solution employs Microsoft's Windows Server 2009 R2 platform, SQL Server 2008

and BizTalk Server 2009, which includes BizTalk RFID and can manage hundreds of

interrogators from a central server, says Dean Frew, Xterprise's founder and CEO. In that way, he

says, the stores can run a central server, transmitting their data to that central location, which

allows new stores to be easily added to the existing server. "The installation timeline for a new

store can be measured in hours," Frew states.

The next phase for the company—which claims to be the largest clothing manufacturer in the

United States—is to install an RFID-based electronic article surveillance (EAS) system in six

Florida stores, Livingston says, which will send alerts if anyone attempts to take an item out of a

store without paying for it.

At American Apparel's factories, workers apply an Avery Dennison RFID-enabled hangtag toeach garment. The system also includes an RFID reader at the company's distribution center in

Los Angeles. There, workers use a Motorola FX -7400 interrogator to read the EPC Gen 2 passive

UHF RFID tag embedded in each garment's hangtag before the clothing is shipped to the stores.

At the 10 RFID-enabled stores—nine of which are located in New York, the other in Santa

Monica, Calif.—employees use RFID interrogators to record the receiving of those goods, take

inventory of items in the back room and on the sales floor, and identify clothing being purchased.

When garments arrive at a store's receiving station, staff members utilize a fixed Motorola FX-

7400 RFID interrogator to capture the ID number encoded to each item's tag. That information isthen sent to the ARS software in the back-end system via a cabled connection. The Xterprise

software stores the unique ID numbers, each linked to the appropriate garment's SKU number.

Workers then take the items to what is called the fill station, where they use an RFID interrogator

to read the tags and determine which items to bring to the sales floor, and which should go into

the back room for storage. As the goods are carried up to the store front, workers stop at a

validation point, where another fixed interrogator reads the tags once more and displays

confirmation that the correct items are being taken to the store front—or an alert is sent indicating

that an item is missing, or that a garment is present that should not be there. Periodically,

employees use handheld readers to take inventory on the sales floor.

Because the company acted rapidly in installing the system at its stores, Livingston says, it now

needs to fine-tune the technology to make it more manageable for those using that system, such as

http://www.microsoft.com/

http://www.averydennison.com/avy/en_us/

http://www.motorola.com/rfid

http://www.microsoft.com/

http://www.averydennison.com/avy/en_us/

http://www.motorola.com/rfid



linking the ARS inventory-management software with the RetailPro application in order to reduce

the need for workers to both read the tags and manually enter data related to inventory in the

RetailPro system.

"Because RFID was running independently," Livingston says, "we were asking employees to do

both the RFID and [RetailPro] ERP functions," which meant that when receiving a new item at

the store, or when processing a customer purchase, workers often had to employ a bar-code

scanner in order to input information into the RetailPro system, as well as using the RFID reader.In some cases, employees would have different inventory counts on the separate systems, and

would then need to reconcile those figures; typically, he says, the RFID system had the accurate

count.

American Apparel has successfully brought the ARS RFID software together with the RetailPro

POS system, however, by writing software code enabling the ERP system to treat an RFID read as

if it were a bar-code scan. Employees now simply place an item on the desktop reader and ring the

item up, Frew says, without going through the separate function of scanning a bar code to enter

the sale into the RetailPro software. "That speeds up the checkout process," he explains. "There is

no change to the POS system—we're just putting an interface hook into it as if we are a bar-code

scanner."

Since RFID was installed at the stores, Livingston says, the company has seen sales lift,

because more items are on display at each location, and the sales staff has more time available to

work with customers. Each shop carries approximately 38,000 items. Identifying the amount by

which sales has increased due to the RFID system, however, has proved more difficult than

expected, Livingston says, due to the many mitigating circumstances that can affect sales.

Because of the rapid opening of new American Apparel stores, a few have "cannibalized" sales

from some of the retailer's other nearby already-existing stores, but other circumstances— anything from a sick employee to a broken sign or the slumping economy—could affect sales, he

says, though he adds, "If we are providing 10 percent more product on the shelf, then you have a

sales lift. We just don't have a definitive number." Shrinkage (loss of products due to lost or mis-

shipped items or theft) has dropped at the RFID-enabled stores, he adds, with employees having

access to better data regarding the location of inventory. Staff turnover is expected to drop as well,

Livingston notes, since employees are happier working in a store in which inventory is easy to

track and inventory counts are reliable and not difficult to accomplish.

According to Livingston, the Xterprise software allows American Apparel to offer a user

interface that makes it easier to add new stores to the system, as well as make changes onreporting within a particular shop. "We are at a point now where we have a stable, scalable

solution performing up to our requirements," he says, and the retailer is now better prepared to

begin expanding its use of the technology.

The next step for American Apparel is to deploy RFID gates at the doorways of six

Florida stores, in order to read EPC Gen 2 RFID tags inserted in security tags on any items

removed from one of those shops. The staff will attach an RFID-based EAS hard tag that locks

onto an item just as a non-RFID hard tag does. When the tag passes through a gate's RFID reader,

its ID number will be captured and the gates will sound an alarm, indicating an item is being

stolen. If an item goes through the point of sale, however, its hard tag will be removed. Hardware

vendors for the RFID interrogators and tags have not yet been identified.



American Apparel operates 250 retail stores in the United States, Europe and Asia,

Livingston says, and eventually intends to install an RFID system in all of them. In the meantime,

he adds, the company's focus is on improving the software to integrate more closely with the

store's inventory-management system, thereby reducing the amount of tasks workers need to

accomplish during such processes as receiving items, transferring goods and accepting returns.

Once RFID is deployed in a store, Livingston says, the increase in that location's sales ranges

anywhere from 2 to 8 percent, though he calls that a conservative figure. Inventory accuracy is at99 percent, Livingston says

SAP Apparel and Footwear Solution

SAP Apparel and Footwear is the SAP business solution for the apparel and footwear industry.SAP AFS was developed in collaboration with renowned industry leaders to address the particular requirements of the apparel and foot-wear industry. The development of the solution was mainlyfocused on illustrating industry-specific processes based on the SAP business platform SAP ERP,a family of solutions and services that empowers employees, customers, and business partners tocollaborate successfully – anywhere, anytime.

The application’s support for industry best practices is based on 15 years of feedback from morethan 300 SAP apparel, footwear, sports, and fashion customers as well as feedback from SAP

partners who have managed hundreds of implementation projects and rollouts. In addition,numerous analysts have rated SAP number one in terms of functional completeness. And SAP is arecognized leader in the development of solutions for supply chain management, supplier relationship management, customer relationship management, and product life-cycle management.

The SAP AFS system has most recently been rated #1 in functionality in the 2006 ApparelMagazine “Software Scorecard”, which evaluated all major software vendors selling to thisindustry.

House of Pearl operates in multiple countries and provides ready-to-wear clothes. The company has anextensive distribution and manufacturing system.

House of Pearl has implemented SAP ERP applications, SAP Best Practices for Apparel and Footwear package, and Collaboration Folders software. Integrating the benefits of enterprise-wide operations willimprove the company's ability to plan and forecast. Improved cost analysis will improve the company's

bottom line. The addition of SAP ERP will allow H.O.P to implement a greater variety of business processes which will include yarn procurement, wholesale and distribution of Licenses and Privatelabels around the world.

House of Pearl credits SAP applications with helping the company to achieve a 30% year-on-year

growth and an increase (over 50%) in the monthly book closure cycle times. By increasing thevisibility and efficiency of its supply-chain benefited from the addition of SAP applications. H.O.Plocated in India and has warehouses in many countries including the United States and theUnitedKingdom.

Some of the expected benefits of implementing SAP ERP include an increase growth in business eachyear, an increase in the reduction of book closure cycle times, decrease in management lead times, anincrease in supply-chain efficiency, lower cost from improved inventory levels, and faster responsetimes. No longer will the company have to deal with gaps in communications because of the improveddistribution and logistics aspects of SAP ERP applications.

The post-2005 role of RFID in the Indian apparel retail sector

RFID can change the mechanisms of the retail scenario in the Indian apparel industry. As FDI inthe retail sector is being allowed, several apparel majors are expected to join the domestic apparel



retail battle. This article evaluates the role of Radio Frequency Identification (RFID) in the Indianapparel retail sector, and how far it can increase the technology index of the sector. Acomprehensive analysis shows the various areas and applications of RFID in apparel retail, andhow it can increase inventory management and help in cost saving. RFID is a technology that canchange the mechanisms of the entire retail scenario in the Indian apparel industry. It is a newmulti-dimensional implication model that can enable companies to create niches and develop corecompetence.

RFID is an identification or tagging method that functions similar to a barcode on an apparel product or shipping carton. The tags can be read through packaging and cartons without the lineof sight necessary for reading barcodes. RFID technology has three components: microchip tagsthat carry the data, antennas that send the data, and readers that interpret the data. Cartons or

products using RFID technology carry a transponder made from a microchip attached to anantenna.

RFID can find quite a few applications in the apparel retail industry.

Re-stocking alerts and replenishment

Shelves are monitored to ensure that they remain stocked at appropriate levels. When they fall

below that level, an alert is sent to the stockroom or office to bring out or order moremerchandise. For stores with stockrooms, RFID monitoring alerts employees when stock levelsreach the threshold. Depending on how the system is configured, re-orders may be doneautomatically for items that the store plans to continue selling. For example, if many black trousers of waist 32-size are being sold and are getting out of shelf, RFID can send an alarm toorder more such trousers from the storeroom.

Returns are quickly added back to inventory

When any apparel product is returned or exchanged, its RFID tag could be read and automaticallyadded to the inventory database. Employees who do re-stocking could read the RFID for returned

items; they could be given information about where to place them (that is, the appropriate shelf if the item is not defective, or a particular area in shipping for returning to the vendor if the item isdefective). An application could automatically compare the RFID code of the returned itemagainst recall notifications.

Merchandise leveling across stores

By monitoring inventories at different stores within a retail chain, the management could makeintelligent decisions about how to meet customer demand and reduce discounting by shippingitems between stores. For example, Delhi will have a longer season for selling sweaters thanBangalore. If, in February, Bangalore stores are oversupplied for what remains of their season,while sweaters are still selling well in Delhi, they may decide that enough discounting would beeliminated to justify the cost of shipping items from Bangalore to Delhi. RFID could be used totrack inventories and indicate when the sweaters actually reached the Delhi store so that Delhiwould not be billed for them until it received the merchandise.

Reduced need to check merchandise carried by customers into a store

Some stores require customers to leave merchandise that they are carrying at a desk or provideevidence of purchase. However, if a store has RFID readers or writers and RFID-taggedmerchandise, shoppers could avoid this step. Instead, at checkout, the readers would chargecustomers only for items with tags that indicate that they were not already paid for.

Custom video presentation for merchandise brought into fitting room

If fitting rooms are equipped with RFID readers to identify the merchandise brought in, shopperscould see a video in the fitting room describing the features of that apparel and could see a personmodelling the garment and suggesting accessories. A sophisticated system could even scan the



shopper or use pictures of the shopper stored in a profile associated with the shopper’s personalRFID. It can then display the shopper in the RFID-tagged apparel with the recommendedaccessories.

Tracking employees to improve labour effectiveness and efficiency

Knowing where an employee is at a particular time would allow the management to dispatch theclosest-qualified employee to a location requiring assistance. If an RFID reader detects an RFID-tagged employee approaching a security door, the door could be designed to open automatically.This would allow employees carrying packages or carts to move more efficiently. Additionally, if store management could verify through an automated system that an employee was at theappropriate station at the start of the shift or end of a break, some aspects of labour managementcould be automated, requiring less effort by employees and the management. This type of monitoring would also allow the management to know, for instance, if an employee spendsexcessive time in the break room or if he is not getting enough break time. Reports could begenerated automatically to flag exceptions for management attention.

Customer-specific shopping reminders and promotions

With RFID on loyalty cards to identify the customer, and a customer shopping-history database,

items could be priced differently depending on the characteristics of the shopper (e.g. special promotions for first-time shoppers and rewards for frequent shoppers). Different promotions could be offered to different customers via their personal digital assistants or cell phone displays, atkiosks, and by employees receiving prompts on their point-of-sale terminals. Additionally, if customers have

submitted their profiles to the store, they could be reminded of upcoming events such as birthdays, and have purchases suggested to them. These can be added on to the loyalty cardswhich already exist at places like Shopper’s Stop, Wills Lifestyle, etc, and can be centralised to allthe stores in different cities so that customers, for example, get a similar welcome whether theyare in Bangalore or Mumbai or Delhi.

Future directions

The two major issues plaguing the RFID industry are price and standardisation. In an attempt toreduce tag costs from 50 cents to 5 cents, Alien Technology has developed a low-costmanufacturing technique in which chips are suspended in liquid, followed by passing the liquidover chip mounts. New Zealand-based Sandtracker claims to have produced a low-silicon chipthat can be manufactured for about 6 cents. Sandtracker says that its technology uses less siliconthan conventional RFID chips do, and that its bare-bones design (it contains only a number identifying the goods tagged) allows it to be manufactured for less than 10 New Zealand cents.The company adds that it has developed its chips to work in different environments, particularly

those that are troublesome for conventional RFID chips and readers.

However, the unique design of Sandtracker’s RFID technology means that it doesn’t conform toEPC global standards. This could be a major obstacle for the company since its tags can’t be usedin supply chain applications where goods have to be moved to different locations. As things standright now, Sandtracker tags are restricted to single business-location applications such asinventory. Standardisation is still a long way off, though low-frequency RFID has beenstandardised at 13.56 MHz.

At this stage, privacy may not be a major concern, but as RFID moves from the warehouse tostore shelves, kill switches (whereby a tag’s data can be switched off permanently) are growing indemand.

What is

Retail?



The everyday definition of retail can be described as the act of selling of goods andmerchandise from a fixed location. In other words retailing is a distribution channelfunction where the retailing organization will buy products from certain manufacturers andthen sell it directly to consumers. A retailer is a reseller from which a consumer

purchases products.

The origin of the word retail is considered to be from the French word ‘retaillier’ which

means to "cutting off, clip and divide" in terms of tailoring. To use the concept, retailingdirectly converts into the meaning that it is breaking of products in larger consignments intosmaller packages for general consumption.

Perhaps the concept of retail exists from the times of established currencies if not from thetimes when the barter system was prevalent. However, the irony of the Indian retailingindustry is that even tough it is one of the basic financial activities carried out in aneconomy, it is considered to be the newest when taken in the form of an organised sector initself.

The retail industry in United States is considered to be most evolved. This fact is proved by the

fact that the biggest retail corporations of the world that appear in the top 50 ranks of theFortune 500 list are all headquartered in United States. The famed list is headed byWalmart Stores Inc. and there are other very reputed like Home Depot, Kroger, Costco andTarget. The significance of this fact is that the organised retail sector is driven by the

practices of the United States Retail industry and the concepts are based around the same.

Stages of

retailing

Retailing does not only comprise of selling the products to customer but it is also taking careof the entire product movement cycle. This path from manufacturer to the consumer has a veryimportant stage known as the Retail Supply Chain. The retailing cycle involves the following

key components:

1. Suppliers and/or



Manufacturers

2. LogisticsPartners

3.Warehouse

4. DistributionCentres

5.Stor es

6.Customer

s

Popular formats of

retailing

Since the retail industry covers a wide range of corporations, it can be classified in variousformats. However the most popular format of classification is by the type of businesschannel the retailer implements to do business. Some of the popular categories are:

Kirana Stores: This is represented by the small, individually owned and operated retailoutlet. It is often seen that these are family-run businesses which cater to the localcommunity and are capable to provide high level of service. However they often have alimited product selection.

Mass Discounters: These are the type of retailers who sell either general or specialtymerchandise. But their forte is in offering discount pricing to their customers. Compared todepartment stores, mass discounters offer fewer services and lower quality products.

Warehouse Stores:This is a form of mass discounter retailer. The prices offered by these

types of retailers is even less than traditional mass discounters. However, the constraint on buyers is that they need to make purchases in quantities that are greater the quantities that can be purchased at mass discount stores. The level of service is often low and product selectioncan also be limited. Also notable is that these stores are of warehouse style where customersmight be found selecting products off the ground from a shipping package. Another formof warehouse stores is warehouse clubs where customers need to be members to be ableto make purchases.



Category Killers: Major retailers also focus on a concept of specialty stores wherein theyservice by providing multitude of options within that product category. In Indian parlance, theconcept of “category killers” is often found in the product categories as electronics (The E-Zone), office supplies (Office Linc) and Books (Crosswords).

Department Stores: These retailers offer mid-to-high quality products and strong level of service. However in most cases these retailers do not fall into the full-servicecategory. Even tough the Department stores are classified as general merchandisers; some

retailers may opt to carry a more selective product line. For instance, while Big Bazaar carries a wide range of products from grocery to electronics, Shoppers Stop focuses

primarily their products on apparel and lifestyle products.

Boutique: These are usually small stores catering very specialized or niche products which isoften high-end merchandise. Also in all cases the level of service is very high for thisformat. They often follow a full-pricing strategy and have prices which are more than the

prices of merchandise available in any of the other formats.

Catalogue Retailers: The concept of this form of retailing is that the customers will placeorders after seeing products from a published catalogue. Tata Sons retail venture Croma

utilizes this business channel. Orders can either be delivered by in house logistics or athird-party shipper. The format utilized by McDonalds and Pizza Hut outlets for their delivery model can be identified as this format.

e-tailers: In this format the retailer principally sells via the Internet. There are thousands of online-only retail sellers of which Ebay is the most famous in India. The benefit of thisformat for customers is that it is open 24X7 and for the retailer is that it does not need tostock the merchandise.

Franchise: This form of retailing comprises of a contractual channel where one part the

franchisor controls the business activities of the other party franchisee. The franchisee hasaccess to the franchisor’s business methods and other important business aspects, such as thefranchise name. In return the franchisee shares a part of the revenue with thefranchisor. The common examples are McDonalds and Pizza Hut.

Convenience Store: As the name implies these general merchandise retailers cater tooffering customers an easy purchase experience. Convenience is offered in many waysincluding through easily accessible store locations, small store size that allows for quick shopping, and fast checkout. The product selection offered by these retailers is verylimited and pricing can be high.

Vending: This form of retailing involves utilizing automated methods for customers toquickly purchase the desired product.This can be interactive kiosks and vendingmachines. The presence of vending machines for purchase of smaller items, such as

beverages and snack food, is already common in case of products like beverages andmagazines. However newer devices are entering the market which will be able to vendmore expensive and bulkier products. By access of either Internet or telecommunicationslink, these systems will enable customers to use credit cards.



Application of Information Technology in Retail

The Indian organized retail industry is the fastest growing in the world. To keep pace with therapid expansion, companies are forced to leverage technology to bring in operationalefficiency. With the government of India allowing 100% FDI in retail, major retail

companies have started entering the Indian market. The competition is getting tougher by theday and companies are using technology as a differentiator. The following sectionshighlight the various operational areas of retail industry and how information technology isused for competitive advantage.

IT in Supply Chain Management

Supply Chain may be defined as the series of companies that eventually make productsand services available to consumers, including all of the functions enabling the production,

delivery, and recycling of materials, components, end products and services.

Supply Chain Management may be defined as the systematic, strategic coordination of thetraditional business functions and the tactics across these business functions within a

particular company and across business within supply chain for the purpose of improving thelong term performance of the individual companies and the supply chain as a whole. SCMgives a value-enhancing and long-term benefit for the organisation. Firms with largeinventories, many suppliers, complex product assemblies, and highly valued customershave a lot to gain by good practices in SCM. The cost of inventories was over $2.2 trillion inU.S in 2000. Transportation and inventory carrying cost in U.S totalled $434 billion in 2000(U.S Central Bureau’s Annual Survey of Manufacturers).

The best way to leverage the potential of SCM is by the efficient use of IT in this area. Theimportance of IT in SCM has long been acknowledged but little work has been done in thisarea. But with growing competition and greater emphasis to keep price as low as possible thecompanies are looking towards strengthening their supply chain.IT can be used in SCM in various areas such

as:

• Purchasing Management

• Demand Forecasting

• Performance Evaluation

MIS in Organized Retail

• Inventory Management

• Implementation of JIT

• ERP Systems

• RFID

• SAP



IT in Purchasing

Management

Electronic data interchange was developed in 1970 to improve the purchasing process. Therapid advent of internet technology in the 1990’s spurred the growth of non-proprietary andmore flexible internet based e-Procurement systems. Earlier critics argued that e-Commerce have been over inflated and it results in larger expenses than its savings. Todaythough many well managed e-commerce firms are beginning to thrive as users realize the

benefits of their services.

The material user initiates the e-procurement process by entering a material request andother relevant information. This is then submitted to the purchasing department. After verification of this the buyer transfers this data to the e-procurement system and assigns

qualified suppliers to bid for it. Suppliers connected to this system receive the bidinstantaneously. The purchasing department maintains a list of preferred suppliers for eachcategory of material. Thus the buyer is able to submit the bid request to numeroussuppliers within seconds.

The traditional manual purchasing system is a tedious and labor intensive task. The new e- procurement system is a time saving system. It also results in a lot of cost saving as manualtasks are reduced. This system is much more accurate than the manual system. It allowsmobility to the system. Audit trails can be maintained for all transactions in electronicform thus increasing the track ability. This system results in overall better management.

This also results in various benefits for buyers.

IT in Forecasting

Demand

Forecasting provides an estimate of future demand and the basis for planning and sound business decisions. The goal of a good forecasting technique is to minimize the gap between actual and forecast demand. All the factors that influence demand, the impact of these factors and there time frame must be considered in developing an accurate forecast.Also buyers and sellers should share all the relevant information about the forecasting so

that a correct decision can be made.

Various forecasting techniques are as

follows:

Jury of executive method, Delphi method, Sales force opinion, Consumer survey, Simpleaverage forecasting, Moving average, Weighted moving average, Exponential smoothening,Regression analysis

IT in Performance Measurement

It is said that “You can’t improve what you can’t measure”.Performance measurement is the use of statistical evidence to determine progress towardspecific defined organizational objectives. The daunting task of measuring performance for



organizations across industries and eras, declaring the top performers, and finding thecommon drivers of their success did not occur to anyone until around 1982, when TomPeters and Bob Waterman got down to work researching and writing In Search of

Excellence. This publishing sensation challenged industrial managers’ actions andattitudes, and inspired researchers and scholars to further pursue the theory of high

performance. This task becomes more complex as corporations diversify into multipleindustries. A researcher must take this into consideration when conducting a comparativeanalysis of companies.

Performance Measurement in SCM:

• Total SCM cost

•

Supply Chain production flexibility

• Supply chain delivery performance

• Supply chain e-business performance

• Supply chain perfect order fulfillment

The evaluation of performance of the suppliers, material etc. requires a lot of data andcontinuous evaluation is required. Due to large volume of information available it has

become almost impossible to do this evaluation process manually and thus the role of IT inthis area has been increasing. One of the most recognized methods for integrating supply

chain and measuring their member’s performance is the Supply Chain OperationsReference (SCOR). This model is used as a supply chain management diagnosis,

benchmarking and process improvement tool by manufacturing and service firms in avariety of industries across the globe. This follows weighted approach to the areas thatneed more competencies.

IT in Inventory

Management

In traditional supply chain inventory management, orders are the only information firmsexchange, but information technology now allows firms to share demand and inventory dataquickly and inexpensively. The inventory management directly influence how howeffectively the organisation deploys its assets and capacity in producing its goods andservices. The problem of inventory is compounded in an integrated supply chain, where amissed due date or stock out cascades downstream, affecting the entire supply chain.

In this area IT is used in The Chase Production System in which the capacity is adjusted in thedemand pattern. It is also used in Master Production Scheduling, listing the exact end itemsto be produced in a specific period. IT is also used in Material Requirement Planning andManufacturing Resource Planning.

IT in Just In

Time



Just-in-time (JIT) is an inventory strategy implemented to improve the return oninvestment of a business by reducing in-process inventory and its associated carrying costs.When implemented correctly, JIT can lead to dramatic improvements in a manufacturingorganization's return on investment, quality, and efficiency.

Implementing lean/JIT practices significantly reduces lead time. Lean/JIT practicesmediate the influence of IT integration on lead-time performance. Process improvements thatresult from lean/JIT practices are important contributors to the success of ITintegration. Even companies that have experienced success in reducing lead time throughlean/JIT practices may benefit from IT integration practices such as those embodied inenterprise resource planning systems. Two general approaches have been taken to reduce leadtimes in manufacturing: information technology (IT) integration within and between firms inthe supply chain and process improvements that, as a group, are often referred to as lean/just-in-time (JIT) manufacturing practices. IT integration refers to information systems thatelectronically transmit information within firms and between firms. Although these ITintegration and lean/JIT initiatives are complementary in concept, in practice they are oftenconsidered to be competing. The sense of competition stems from two major sources. First,

the source of organizational expertise required

is quite different for each approach, IT professionals in the case of IT integration versusmanufacturing management and manufacturing engineering for the lean/JIT approach.Second, the financial resources and top management attention required by each of theseapproaches often obviate initiating both IT integration and lean/JIT in a large scale at the sametime.

Store management

Store management involves selling profitably and satisfying customers, while keeping thestore associates motivated to accomplish the first two objectives. As the benefits from better supply chain management and supplier collaboration no longer offer any competitiveadvantage, retailers are now focussing on customer’s in store experience to differentiatethemselves. The store is the place where the retailer’s strategy and efforts converge. Thelevel of customer’s satisfaction with in the store shopping experience is the retailer’sultimate test.

AMR Research states that a customer will stop shopping at a retailer after 3 negativeexperiences. These include a product running out of stock, rude or uninformed salesassociates. The lifetime value of these lost customers can be $ 200,000 or more as estimated

by Wall mart. Observing inconsistent store management tops the priority list of over 90% of the retailers and further more than 71% of the retailers believe that efficient storemanagement is very important for the overall business success.

Traditionally, the retail industry has taken a limited view of store management with the primary goal being channeling of the retail workflow. All the other tasks such ascommunications and corporate task assignments are taken separately so that the store canconcentrate on its primary goals. On the contrary, the scope and focus of store managementshould cover all in-store activities such as customer service, store promotion, new productlaunch, receiving inventory and store manager- associate relation.

Along with a comprehensive view of store management, it is important that all the retailer operations and IT initiatives take a holistic look towards store management. For example, a

point of sale upgrade would improve check out efficiency, but it could also impact other areas like customer profile management program or attendance maintenance for the store



employees.

Tools for Improving Store Management

Selection of right tools for the implementation of various building blocks of storemanagement is very critical for a store’s success.

Improving customer satisfaction

Today, the point of sale is transforming into the point of convergence of all the channelsincluding store, web, catalog and all the services that a customer may demand. This

process has been accelerated by the use of customer-enabling devices such as kiosks, portable/ handheld shopping devices, self check out and employee enabling devices. POSsystems these days enable customer recognition, tracking purchase history, making

personalized offers, providing product and pricing information and line busting.

Some retailers use web based kiosks successfully for line busting as well as improvingcustomer service. One of the major recent advances enables the associates with mobilecomputers or laptops to perform POS functions resulting in automatic queue busting. The

plasma screens and in-store signs can be used for dynamic promotions by includingvarious updates and price discounts based on the product demand.

Store Management Software

To keep your retail business running smoothly, you need a cost-effective store

management system. SAP solutions is a company which makes such store management processes.Store management systems need to cater to the fast-changing needs of customers today.These systems must quickly gain fast and reliable, accurate, and insightful customer information in many ways, including:

• Quick receipt of payment monies

• Kiosks where customers can view information on products or store services

• Mobile point-of-sale devices for upsell opportunities, used by sales associates in thestore while showing other products, or anchored in changing rooms

Point-of-sale store management systems need an inherent flexibility to deliver the rightcustomer service. These systems must be driven by access to real-time customer information. Retailers can then deliver personalized offers and services that are up to theminute and targeted to each individual. An example of such a system is given below:

IT in Point Of Sale

Point of Sale (sometimes also known as Point of Service) as per the literary connotation is theactual location where the monetary transactions between the buyer and the seller of goods take

place. It is usually used to indicate a retail shop or the check out counter in shops,supermarkets, casinos, hotels, restaurants, stadiums, reservation counters at airports and



railways and all other types of retail enterprises. Nowadays, the term POS is used to

describe the system which is in place at the counter, consisting of both the hardware and thesoftware components and it has evolved from the Electronic Cash Registers (ECR) system.

POS – Evolution from

ECR

ECR (Electronic Cash Register) was programmed in software which was proprietary innature and hence the ECR was very limited in terms of functionality and had nocommunication capabilities. However, it was affordable to most of the small and mid sizeretailers. The Electronic Cash Register simply gave a sales total for the day or moresophisticated registers that provided sales by department reporting via a cash register tape atthe end of the day. Far too expensive for small retailers, there were also the moresophisticated registers used by larger retailers that were connected to mini or main framecomputers to track individual sales by product number.

Expenses Reduce, Sales Increase: How?

Reduction in check out timeFaster check out of customers at the transaction or billing counter takes place due to

the scanning of the items that the customer purchases. The scanning of itemsthrough various technologies like RFID retrieves the item from the inventory

database and displays it along with its price on the screen of the cashier, whichfacilitates faster billing process. Such a smooth and quick process also preventscustomers from diverting to the competitor due to long queues or during peak

periods.

Faster approval of purchases from the inventory of the retailer

The POS system enables the PC at the billing counter to be always connected either

through LAN or some other networking technology to the central database of theinventory. Thus, it enables faster purchase of the goods and enhances the

experience of the customer.

Capturing the product detail

The “out of stock” problem that most retailers experience due to inaccurate

inventory management can be avoided by having a re-ordering software whichwould facilitate in increasing the in stock position of merchandise.

Software with related item or suggested item prompts

When an item is scanned, if there is a related or add-on item available, the softwarewill prompt the sales associate to ask the customer if they would like the additionalitem) which leads to increases in average transaction value.

Transaction Suspend

This feature places a transaction in suspense while the customer either goes to their

car to get their check or charge card or goes back to the store to get an additional

item and resumes the transaction when the customer returns. This speeds up processing of customers in line behind this customer and reduces waiting time. Italso makes it easier for a customer to add on items to their purchase.

Automatic store credits

These credits can be given on returned goods which lead to a reduction in cash

refunds and tracks returned items. These store credit notes are serialized and can beused just like a gift card and often small credit balances either are not used or lead to



larger sales when they are redeemed. They also replace manual issuance of storecredit notes which are time consuming and open to fraudulent use.

Capture of customer information

This feature enables after-marketing to individual customers based on purchase

habits and practices. Also particular customers due to their loyalty or high spendinginclination can be given further discount on products or additional perks such asredemption of points they secure on purchases made in that store. This leads to high

sales and a niche customer base which can be targeted for micro marketingstrategies of the company.

Reconciliation

At the end of the day, the owner can easily track the price of the products sold with

the cash generated in the cash register, hence the occurrence of theft by the staff atthe billing counter is greatly controlled.

Time Stamping

All the transactions are time stamped implying the exact time of the occurrence of the transaction is registered in the system. This can be tracked by the retailer todetermine the peak hours so that he can increase the shop floor assistants during that

period, and also the low revenue hours for which he can offer incentives such as further discounts or free parking to attract customers.

Clocking In Period

Sales associates clock in on the cash register and hence their work hours can be

tracked. This saves time and money which was earlier employed for this process andalso reduce the payroll staff as this data can be directly transported to them.

Constraints in Implementing POS

Training

Usually, the managerial employees require training of approximately 20 hourswhereas the unskilled staff requires approximately 40 hours of training. The trainingtime can decrease depending upon the information technology education of theemployees.

Initial Rise in Expenses

According to the field research data by the Microsoft, initially the expenses rise due

to the lack of integration of the system and the unease of the employees in using the

new system.

Not every retailer can reap the benefits

Many cost cutting measures are dependent on how the individual retailer uses the

technology.For example, a pure fashion retailer may not get relevant benefits from automatic

replenishment as fashion changes so often that most purchases are not replenishment of existing product but rather new product. This hypothetical fashion retailer however, would reapextensive benefits from fast/slow seller reporting as well as a suggested item feature in the POSsystems.

IT in Customer Relationship Management

Customer insight plays a major role in retail profitability. The current economy is customer driven and now requires revolutionary methods of differentiating a retail business in a



crowded market place. Retailers are going beyond the brick and mortar store and trying to build relationships with the customer. The focus has shifted from transactions to buildingrelationships. Retailers started asking if they knew as much about their customers as theyknow about their inventory. To develop an effective strategy for CRM, the retailer must startwith the following basic questions:

1. Who are the most valued customers (MVC)?2. What do they need?

3. What motivates them to purchase?4. Beyond transactions, how can one interact with MVCs in a relevant and profitable

manner?5. How can one customize aspects of the business to meet customer’s needs and drive

impact?

Retailers must find answers to these questions and act on that information to reap tangible benefits. Knowing how, when and what to offer to the customer can mean the difference between a profitable and an unprofitable business.

Role of

Technology

Technology is one core competency that enables companies to generate opportunity andcreate value. Customer insight cannot be fully leveraged without technology to enable therelationship. Collecting, housing, analyzing and disseminating this insight into the rightcustomer facing employee at the right time depends on technological infrastructure. If aretailer is able to identify its most valuable customers and anticipate their needs, it canleverage that information across marketing, sales and operations. Success comes whenretailers are able to maximize the value of the customer information to create a meaningful in-store experience for their best customers.

Leveraging information in building customer relationships

Customer purchase history is tracked by the system allowing the store to query data for specific items and advertise very cost effectively to individual customers. For example, aretailer would be able to identify for every new item that they receive of a specific product or

brand what customers would most likely be interested in purchasing based on data from previous purchases of a similar product or that specific brand. They would simply query thedatabase for every customer who purchased that particular item and then merge the datawith a word-processing file. They could then send a letter or postcard telling the identified

customers that a product that they may like has been received.

Most Valuable Customers: The customer database also allows tracking and reporting of gross margin by customer which allows retailers to identify their most profitable customers andreward them to increase their loyalty.

Loyalty Points: Many stores offer loyalty points to their customers which essentially

reward customers for shopping at the store. The POS tracks each purchase and assigns points

for the total value of the sale as well as over time. This, while it builds loyalty and increases

the likelihood that

the customer will shop in the store again, also increases sales by increasing the averagetransaction and number of visits.

Missing Persons Query is one of the most powerful tools in CRM. A retailer simplyqueries their data base for the names of every customer who has spent over a certain





Retail ERP System

Components

Supply Chain Planning and Execution: This component helps retailers to keep track of theentire supply chain beginning at the manufacturer and ending at the consumer. A major costin retail operations is in inventory. This module aims at better forecasting to reduce cycletimes and consequently reduce operation costs. Currently retailers are sharing forecastdata with suppliers and manufacturers for complete integration of the supply chains of allthe partners. In this context, the concept of Collaborative Planning and Forecasting(CPF) is gaining prominence.

Merchandise Management: The Merchandise management component of an Enterprise

Resource Planning (ERP) package covers all the activities centered on the merchandiseoffered at the retail store. This component includes activities such as:

• Maintenance and Management of retail outlet

• Keeping track of price items• Inventory management

• Key reporting functions

The merchandise management component acts an integrated interface between other retailapplications.

Retail Planning: This component helps the retailers in planning the various sales and promotional events aimed at boosting or increasing the sales of the merchandise offered at thestore. This way, retail planning forms an important and critical component of the retail ERP



systems as it performs the critical function of offering the planning activities that may beundertaken at the micro as well as macro level to give a push to the merchandise sales at theretail store.

Store Operations: This component takes care of all functions related to the operation of thestore. It includes activities such as:

Store Inventory Management

Sales Audit

Returns ManagementPerishables Management

Labour ManagementCustomer Management

Promotion Execution

Corporate Administration: This component serves the information needs of the

management. It includes the following functionalities:

Process ManagementCompliance Report

Accounts ReceivablesAccounts Payable

General Ledger Asset ManagementHuman Resource Management

The corporate administration component mainly falls in the category of Decision Support for the managers. It gives an idea of the overall health of the organization. Moreover thismodule is used to provide various compliance reports to regulatory bodies. These reports notonly enables adherence to industry standards, it also enables the management toformulate effective strategies to achieve desired results.

Advantages of Using ERP in Retail

Configuration and Scalability: ERP systems allow a high degree of scalability allowing the

system to grow with the organization. It also allows a high degree of customization.

Phased Implementation Support: Most ERP packages allow phase wise implementationsupport. This allows companies to give the users sufficient time to familiarize themselveswith the ERP package before the complete suite is deployed. Also following the big bangapproach introduces the risk of integration problems of the ERP with the existing software,

which is mitigated by the phase wise implementation.

Support for Advanced Functionality: Most ERP systems have advanced decision supportmodules aiding the managers to devise effective strategies. These systems include:

Formulating Price Strategies

Merchandise Planning Inventory Optimization

Store Execution

Workflow Automation and Enterprise Process Management: This allows the workflow to be smooth and seamless across the organization. This includes functionalities likeautomated order placement when the reserve inventory reaches a threshold.

Technology and Application Integration: ERP allows integration of processes running on



different platforms. This includes interaction with legacy systems as well as externalentities such as suppliers and customers.

Graphical User Interface Support: This facility makes it easier for non-technical users touse the application.

Optimal Utilization of Resources: ERP implementation allows optimal utilization of

resources which results in reduction in costs and higher profits.

Reduction in Overhead and Inventory: Inventory accounts for a major share in the cost of doing business of a retail industry. ERP systems enable companies in better forecastingwhich leads to reduction in lead times as well lesser inventory requirements. This in turnleads to a substantial drop in cost.

Timely Responsiveness: ERP systems allow companies to respond to customer demands

more quickly.

Knowledge Transfer between Industries: ERP enables sharing of knowledge betweenindustries which in turn stimulates innovation and growth. Companies integrated in thesupply chain exchange information for collaborative forecasting through ERP implementation.

Benefits and

Challenges

The key challenges in this project were not in the implementation. Rather, the difficultieswere faced during the data migration and in managing the interim period when the project was

underway for about six months. Migrating unorganized data to an organized format is achallenging task. Pantaloon has not been able to see immediate benefits from thisimplementation. This application certainly has long term benefits which will be seen when the

performance of various aspects will be analyzed. Pantaloons have already started working onMAP (Merchandise Assortment Planning), Auto-Replenishment and Purchase Orders. Thesesystems would optimize their inventory and cut it by about two to four weeks (dependingon the line of business).

Highlights from customer survey:

ERP packages in use:The retailers can be classified as large and medium size retailers. Some of the retail giants in

each category are as follows:

Medium size

retailers:

1. Reebok: Package used is Logic Apparel. Logic Software is the organization that

developed this software. It is based in Chandigarh. Some of its other esteemed

customers are Killer Jeans and Levi’s.

2. Nike: Package used is the same as used by Reebok i.e. Logic Apparel.

3. Adidas: Package used is Shopper Retail.



Large size

retailers:

1. Shopper’s Stop: Package used is JDA, which is a US based software.

2. Westside: Package used is SAP, which is used by quite a few major Indian retail

giants.

3. Pantaloons: Package used is SAP.

We conducted a survey at some of the retail outlets namely Reebok, Nike, Adidas andLevi’s and made a few observations:

1. Educational qualification of the person at POS (point of sale): Passed 12th.

2. Computer usage in the store: Adequate. The classifications of being less, adequate

and excessive.

3. Some advantages of using computers are fast billing, appropriate knowledge of stock and database, proper inventory management.

4. Not aware of the terms ERP and CRM but aware of the softwares being used at the

outlet.

5. Investment in IT is directly related to customer satisfaction.

6. Proper training is given before using the software.

Conclusion

The mood is upswing in this sector as more and more players are joining this sector withhuge investment and the focus is in every stage of this service oriented industry. Basicoperational information systems like Computerized Inventory Management, Point of Sale



Systems are just to name a few, will be with every player in this sector. The key challengewill be to source, develop or deploy those information systems which will have both

backward and forward integration capabilities. More and more retailers will look todiverge to all the different formats and likely to create synergy between these differentformats so as to reach to the same customer at all times. Gartner Inc. predicts that theonline shopping will be such a key component of business that it will contribute around11% of total revenue when considered on industry wide level.

Need of the hour is to have that the visibility of this convergence by retailers and beforetreading on the path of any technology upgrades, they foresee the integration challenges.

Bibliography

Books1. Retail Management - S.N. Mitra.2. Supply Chain Management - James B.Ayers, Mary Ann Odegaard.

3. Retail Management: An Introduction - V. V Gopal4. Retail Management – Michael Levy.

5. Retail Management :Text & Cases – Swapna Pradhan

Online Resources

1. Wikipedia, the free encyclopaedia - www.w ikipedia.co m2. Customer Relationship Management - www.c rm infoline.org

3. Infosys Shopping Trip 360 – www.fibre2fash ion.com4. IT innovations in Indian Retail - www.expresscom puteronline.co m

5. RFID Technology - www.m ic r oso f t.co m /ind u stry/ r etail/businessvalue/r f idoverview.m spx

6. Store Management – www.infosys.com7. ERP – www.sap.com

http://www.wikipedia.com/



http://www.crminfoline.org/

http://www.fibre2fashion.com/

http://www.expresscomputeronline.com/

http://www.microsoft.com/industry/retail/businessvalue/rfidoverview.mspx





http://www.crminfoline.org/

http://www.fibre2fashion.com/

http://www.expresscomputeronline.com/



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