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Chapter 1
Executive SummaryExecutive Summary
The warehouse or distribution centre plays a key role in an organization’s logistical strategy, properly designed; planned, organized and managed distribution centre can offer higher levels of service with lower inventory and lower costs. It is a facility where goods are constantly moving towards their ultimate destination, thereby minimizing storage and its attendant costs.Warehousing is integrally involved in four distinct Supply-chain processes: sourcing/inbound logistics, processing/manufacturing, outbound distribution, and reverse logistics (returns, recycling etc.)
Principle functions that takes place at warehouse are Receiving - that includes functions like quality and quantity checks, Storing - includes attendant task of moving goods from receiving to the storage location, Order Picking - includes transportation from storage to and order picking location and other tasks like further checking and packing and Dispatch – which often includes staging or interim storage.
This study on Warehouse Management in a Retail Industry was carried out at Pantaloon City Warehouse, which is located at Kondhwa Budruk, Pune. Pantaloon has a chain of retail stores all over India; now Pantaloon has its four retail stores in Pune. Stock replenishment to these four Pantaloon retail sites is done from Pantaloon City Warehouse, Kondhwa. In this study warehousing processes like Inbound- outbound processes, storage and material handling, cross docking, Goods receipt and reverse logistics implemented at pantaloon warehouse was studied.
In Pantaloon City Warehouse finished goods like Apparels, Home accessories, Plastic items, Utensils, sports and toys are stored, these storage areas are divided as Central, Pantaloons Outlet, Home Solutions and Big Bazaar. During the study of warehousing activities, Material handling and storage systems at Big Bazaar Warehouse was observed. Inventory status at Big Bazaar warehouse was studied by classifying SKUs with respect to their categories and Stock status of each category items was observed.
At Big Bazaar warehouse all merchandise items are kept in boxes on wooden pallets, for easy material handling and order picking manual tracking system is implemented.
This study report would help to put light on Warehouse management processes and storage systems at Pantaloon warehouse.
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Chapter 2
Objectives of the study.Objectives of the study.
This Study is an attempt to illustrate the warehouse management processes and practices in the Retail Industry including physical distribution
The objective of warehouse Management Study is to know and understand warehouse processes such as Information Systems, GRN Accounting, Bar coding, Unitization, etc.
This study is an attempt to minimize Storage and inventory carrying cost, Material handling and labor cost by analyzing flow of inventory at warehouse.
To find out ideal systems in warehouse that will improve productivity through cost reduction.
To recognize the strategic importance of storage and material handling in fulfilling the demand from retail site.
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Chapter 2
Statement of the Problem.Statement of the Problem.
1. Inventory Control:
At Pantaloon City Warehouse, Category Management manages procurement of Inventory in PRIL; Category is responsible for replenishment of stock to Warehouses and retail sites, category gives allotment of finished goods to central warehouse or suppliers. Therefore, finished goods are received continuously at warehouse, without considering previous stock dump and non moving stock at Warehouse. There is lot of excess stock and non-moving stock lying at warehouse; at Big Bazaar warehouse, stock is not differentiated or identified as per their consumption value and monthly consumption.
2. Order Picking:
As the finished goods are inwarded, the inwarded stock gets updated in ERP system and it is viewed at retail store and Stock Transport Order for replenishment of material is created against warehouse from retail store.
When a staff from warehouse receives an order, order pick list is generated, which gives details about the product (article code, description, category etc.) to be dispatched, There are thousands of products with different SKUs and barcodes (article codes) at Big Bazaar Warehouse, and after receiving stock transfer order for a particular item, it is difficult to find out an item of particular description from storage area, as there are thousands of SKUs in warehouse this material is to be taken from the storage area.In storage area the material is kept category wise, as per the merchandise category of the product, but it is practically time consuming to take out goods with particular description and article code from boxes, thus the material to be dispatched is taken out from the storage area, scanned and delivery challan is prepared.Due to in adequate storage space and storage equipments, this process consumes more time.
3. Optimum Utilization of Warehouse Space
At Big Bazaar warehouse finished goods are stored on wooden pallets on warehouse floor horizontally, this space is inadequate to stag the stock available at warehouse, due to shortage of storage space, the finished goods boxes are required to place between aisle space and on the top of
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each other, this will led to damages and sometimes it is difficult to move material handling equipments during order picking and put away process. At Big Bazaar warehouse, finished goods after moving from the inwarding
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area, are packed in boxes as per the merchandise category and placed on wooden pallets,There are around 120 pallets placed on warehouse floor horizontally in the storage area, on each Pallet 18 boxes can be staged by placing boxes on each other, therefore in big bazaar warehouse approximately 2000 boxes can be placed for smooth movement of material and efficient functioning. Warehouse required holding more boxes, than the capacity of pallets. Due to such type of storage, material movement and material picking is very difficult, as there is no proper tracking system to find out a particular item code.
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Chapter 2
Scope and Limitations of the StudyScope and Limitations of the Study
This study would help future managers to understand warehousing procedures and activities in Pantaloon Retail India Limited.
This study would help to understand the relative importance of different processes in warehouse management.
This study would help to increase usable capacity i.e. cubic capacity of warehouse and this will help to minimize warehouse’s operating cost.
All the processes mentioned in study are practical practices observed in Pantaloon warehouse and Big Bazaar warehouse, for interpretation and analysis data from Big Bazaar warehouse, five months stock status report is used.
The study and analysis for finished goods is done according to their product category and monthly consumption, as the study at item or SKU level will be very vast, consumption of products is determined from material outwarded to retail store.
Procurement of finished goods and ordering cost for items at Big Bazaar is not studied as procurement is managed at Head Office through category management.
In this study classification and identification of inventory levels is done to find out type and category of stock stored at warehouse.
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Chapter 2
Introduction.Introduction.
Warehouse management monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems and communication between product stations. Warehouse management deals with receipt, storage and movement of goods, normally finished goods to intermediate storage locations or to final consumer.
Many retail organizations, have large chain of retail stores, flow of finished goods to these retail stores is accomplished by network of warehouses and distribution centers. This distribution management of finished goods to the required store plays important role in business. Activities in distribution include freight transportation, warehousing, material handling, protective packaging, plant & warehouse site selection, order processing, marketing forecasting, and customer service.
Materials Warehouse Management Management
Logistic Management
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Raw Material
Packaging Materials
Finished Product
Inventory
Storage Facilities
Unitization
Transportation
Communication
C O N S U M E R
The case of distribution, in practical terms, is all of those operations involved from the receipt of the request for goods to be shipped from the finished products warehouse to the actual satisfactory receipt of goods by the customer.
The faster goods move through the pipeline the less cost is incurred in storage and transport and the faster the business gets paid. Handling and delay Chapter 2
adds costs, not value. Distribution clearly has a vital role to play in attaining a smooth and rapid flow.
Consumer revolution and modern retailing concept puts pressure on organizations Logistics and supply chain to serve customer better, Logistics Management deals with Network Design, Information Systems, Inventory Control, Transport and Distribution (warehousing, materials handling, packing).
The growing importance of warehousing function is the increasingly demanding nature of the business environment. In the past it was not uncommon for companies to hold large inventories of raw materials and components. Although industries and individual firms differ widely in their stockholding policies, nowadays, stock levels are kept to a minimum wherever possible. Holding stock is wasting working capital for it is not earning money for the company. A more financially analytical approach by management has combined to move the responsibility for carrying stock onto the supplier and away from the customer.
Processes in Warehouse Management:
1. Inbound Processing and Receipt Confirmation
Inbound processing covers the physical inbound delivery processing that succeeds the procurement process. It includes ASN processing, physical Goods Receipt and put away of materials in Warehouse Management up to sending the proof of delivery to the business partners
2. Outbound Processing
Outbound processing comprises the preparation of goods to be delivered from a warehouse to a receiving location. Outbound processing within the scope of warehouse management typically comprises activities like the notification of goods to be supplied from a warehouse to a customer for which the outbound delivery serves as the reference document, picking, packing, physical goods issue in warehouse, loading, goods issue and goods issue posting to IM, advising advanced shipping notifications to business partners and, obtaining a proof-of-delivery from the receiving business partner.
3. Warehousing and Storage
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Warehousing and Storage includes multiple processes throughout the warehouse from the time materials enter the warehouse via Goods Receipt until they exit the warehouse with a Post Goods Issue. Specifically covered in this process you will find the management of inventory including put away strategies and replenishment. Possible variants include task and resource management and Radio Frequency (RF) support. Optional steps include support for production supply, Value Added Services and Yard Management. Chapter 2
4. Cross Docking
Cross docking is a way to move materials directly from the goods receipt area to the shipping area without first being stored. Cross docking can be planned or opportunistic, as well as executed in one step (directly from GR to GI) or two steps (going first to a specified cross-docking storage type for repacking or labeling for example).
5. Physical Inventory
Physical Inventory is a process that all companies with their own stocks or special stocks in their warehouse eventually face. In this case, a rough statement is given on the storage location level, without further detailed information.
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Chapter 2
Distribution Network in PRILDistribution Network in PRIL
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V1V1
City Warehouse
S1 S2
V2V2
V3V3
V5V5
West ZoneCentral Warehouse
City Warehouse
City Warehouse
S3 S4 S5
Home Solutions Retail India Limited
V4V4
Vx - Vendors Sx – Retail Stores
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Pantaloons retail stores in Pune are Central, Pantaloons Factory Outlet, Pantaloons-India’s family store and Big Bazaar, and it is planning to launch few new stores soon.
For holding, storage, and distribution of material and finished goods, PRIL City Warehouse is situated in 20000 sq. ft. area at Kondhwa Bk., Pune. That manages flow of finished goods to all these Retail Stores.
This warehouse supplies finished goods to all pantaloon retail sites in Pune (like Big Bazaar, Central and Pantaloons Factory Outlets). This warehouse stores different types of finished goods like Garments and General Merchandise stock like toys, gifts, stationary, Plastics, utensils etc.
Pantaloons FO, and Pantaloons are mega Stores that has merchandise categories like Clothing and Fashion accessories. Central is a Shopping Mall that has entertainment outlets and stores, these stores includes merchandise like Garments, General Merchandise, electronics, furniture etc. Big Bazaar is a hypermarket it has products of categories from Apparel, fashion accessories, books, stationary, Plastics, toys, crockery, footwear, furniture, electronics etc. Food Bazaar has products ranging from grocery, cosmetics, personal care, and daily consumable items.
Another company from PRIL group, Home Solutions Retail India Limited supplies finished goods like furniture and electronics goods to Central and Big Bazaar Store.
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Chapter 3
Company ProfileCompany Profile
Pantaloon Retail India Limited.
Corporate Vision:
We will provide Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner.
Corporate Manifesto:
Knowledge is the only weapon at our disposal. Everything else is temporary, transient and misleading. Our quest for knowledge will be focused, systematic and unwavering. But, it will never be at expense of our values or our beliefs.
Core Values:
Indian-ness – confidence in ourselves Dedication – to customer satisfaction Leadership – to be a leader both in thought and business Self Development – by continuous hard work Respect – for every individual Introspection – leading to purposeful thinking
Pantaloon Retail India Limited has its retail chain stores all over India with production factory situated at Tarapur and head office situated at Jogeshwari, Mumbai. The company has shares in other major brands in garments such as Indigo nation, skullers etc. company plays a vital role in the retail field and also build the economic structure of a society.
The company operates multiple retail formats catering to a wide cross-section of the Indian society. In the Lifestyle retailing segment it has Pantaloons (department store), Central (seamless malls), Blue Sky (fashion accessories) and aLL (fashion apparel for plus size individuals). The company’s value retailing ventures include
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Big Bazaar (hypermarket), Food Bazaar (supermarket) and Fashion Station (popular fashion).
The company operates through 3.5 million sq ft of retail space and has over 100 stores across 25 cities in the country. Till date, PRIL has secured about 10 million sq ft of retail space that will be operational by end of 2008. PRIL employs over 12,000 people and has a customer base of over 12 crore Indians.
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The company was incorporated on October 12, 1987 as Manz Wear Private Limited. It was converted into a public limited company on September 20, 1991 and its name was subsequently changed to Pantaloon Retail (India) Limited.
Future Group
Pantaloon Retail (India) Limited is part of Future Group, a diversified conglomerate with presence in multiple consumer-centric businesses. The Future Group operates through six verticals: Future Retail, Future Capital, Future Brands, Future Space, Future Media, and Future Logistics. Future Capital is the financial arm of the group and is involved in asset management (both private equity and real estate funds) with plans to get into other financial services including insurance, credit and other consumer related financial services.
Joint Ventures & Partner Companies. The Company has a stake in Galaxy Entertainment that operates chains like Chamosa, Rain, Lush, F123, Bowling Company, Sports Bar, and Brew Bar.
It also has a stake in Planet Retail Holdings that owns the franchisee of brands like Marks & Spencer, Guess, Debenhams, The Body Shop, and Puma in India.
PRIL has entered into joint ventures with kids apparel manufacturer - Gini & Jony and Liberty Shoes.
Pantaloon Industries owns a majority stake in Indus League that markets brands like Indigo Nation, Scullers, Urban Yoga, and Jealous
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Chapter 3
Milestones
1987: Company incorporated as Manz Wear Private Limited. Launch of Pantaloons trouser, India’s first formal trouser brand.
1991: Launch of BARE, the Indian jeans brand.
1992: Initial public offer (IPO) was made in the month of May.
1994: The Pantaloon Shoppe – exclusive men’s wear store in franchisee format launched across the nation. The company starts the distribution of branded garments through multi-brand retail outlets across the nation.
1995: John Miller – formal shirt brand launched. 1997: Pantaloons – India’s family store launched in Kolkata.
2001: Big Bazaar, ‘Is se sasta aur accha kahi nahin’ - India’s first hypermarket chain launched.
2002: Food Bazaar – ‘Wholesale Prices’ - the supermarket chain is launched.
2004: Central – ‘Shop Eat Celebrate In The Heart Of Our City’ - India’s first seamless mall is launched in Bangalore.
2005: Fashion Station – ‘Fashion Ka Big Bazaar’ - the popular fashion chain is launched
aLL – ‘a little larger’ - exclusive stores for plus-size individuals is launched
MeLa – ‘celebrate your home’ - the company's foray into the home solutions market
2006: Future Capital Holdings, the company’s financial arm launches real estate funds Kshitij and Horizon and private equity fund Indivision.
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Chapter 4
Background of StudyBackground of Study
WarehousingStorage of goods –raw material and finished goods is necessary for every business. It involves the making of proper arrangements for preserving goods in a condition of safety from any loss or damage. When storage of goods is done on a large scale and in a specialized manner, it is called warehousing.
The need for warehousing arises due to various reasons. In retail industry, retailers facilitate continuous availability of goods to consumers, to maintain customer’s needs & demand.
Warehouse Management monitors the progress of products through the warehouse. It involves the physical warehouse infrastructure, tracking systems & communication between product stations.
Warehouse Management deals with receipt, storage, & movement of goods, normally finished goods to intermediate storage locations or to final customer.Pantaloon Retail India Limited has different formats in its stores, Big Bazaar is a Value retailing format, where customer can have cheap priced goods that have good value for money, it has products from local brands and pantaloons own brands, Central and Pantaloon Stores are Lifestyle retailing formats which have products for higher class consumers from well known and reputed brands like Indigonation, John Player, Scullers etc.and pantaloons own brands.
Home Solution Retail India Limited is another part of PRIL, which deals with goods related Furniture and electronics, and supply these goods to Central and Big Bazaar Stores. HSRIL has different retail formats like Creation-I, ezone and Future Bazaar India Limited (FBI), FBI deals with e-retailing through e-commerce.
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Each format of pantaloon have different types, pricing and quality of products, to avoid misplace of merchandises and for effective storage and handling of goods material for each Store format, finished goods of separate formats are stored separately as Big Bazaar, Pantaloons, Pantaloons Factory outlet, Central.
PRIL City Warehouse is divided into Big Bazaar City Warehouse and Pantaloon City warehouse for Storage and operating. Big bazaar material is stored in 9000 sq ft area. And other formats material is stored in 11000 sq ft area.
Organization structure in PRIL warehouse:
WH Supervisor Inward/Outward Common
SR Executive Big Bazaar
SR Executive Central/ Inox / F.O.
Sr Executive Central
WH SupervisorInward/OutwardDocumentation
WH SupervisorBarcoding/Scannong
WH SupervisorInox/FO
WH SupervisorPantaloon
WH SupervisorTemplating
WH Asst. Dispatch /RTV
WH Asst. Inward/GRN A/c
WH Asst. Outwarding
WH Asst. Inwarding
Helper 2
Helper1
Helper3
Helper3
WH Asst. picking/Staging
WH Asst. Scanner
Helper1
Helper6
WH Asst. Templating
WH Asst. Scanner
WH Asst. Scanner
WH Asst. Bar-coding
Helper4
Helper2
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WH Asst. Templating
Helper5
Asst. Warehouse Manager
Warehouse Manager
Chapter 4
Warehouse Functions:
The principle functions that take place at PRIL City warehouse are receiving and inwarding, storage, Order Picking, dispatch and Transportation.
Receiving and Inwarding:
City warehouse stores Finished Goods (Saleable Goods) as well as Consumable goods (Non Saleable Goods) such as Carry bags, Staff Uniforms etc. Both saleable and nonsaleable goods are required to inwarded by the security in charge.
When any consignment arrives, Security in charge checks the challan of goods received as per the goods Inwards security checklist
GOODS INWARD SECURITY CHECKLIST YES NO
Are the goods accompanied with following items?
Copy of challan
LR
Packing list
Invoice
QC certificate
POIs the waybill attached along with the LR (Lorry receipt/Docket/Consignment note) and invoice?Have all the invoices been endorsed on the waybill?Is the value appearing in the waybill matching with the value of
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the invoice?Is the number of cartons received, matching with that mentioned in challan/docket/waybill?
Is the carton under the jute packing damaged?
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In case of any discrepancy observed as per the goods inward security checklist, executive withholds the LR and report the matter to the warehouse Manager. The
Warehouse manager conducts adequate checks with the vendor and ensures that all the missing documents are provided as agreed between them.
Security in charge allows the goods to enter only with consent of Warehouse manager in case of any discrepancy.
In case of any documents are missing the warehouse manager coordinates with the vendor and the concerned Category Manager to procure the document within 48 hours.
Security in charge makes entry of material in inward register and enters details like supplier details, item summary, total quantity, total weight, PO number, receiving date, time and Inward reference Note (IRN) as per the format. Separate registers are maintained for inward of saleable and non-saleable goods.
After security inward received goods are taken for Inwarding in system, stock delivered at warehouse is mainly from Central warehouse, from Vendor through Purchase Order (P.O.) or On Approval basis (O.A.).
If the material received is from Central Warehouse Tarapur.In case the products received are from Pantaloons Central Warehouse through delivery challan each piece is scanned/counted against the delivery number of that material. And GRN is created.
If the received material is from vendor (through PO).First Rough Goods receipt Note is Created through Purchase Order by checking quantity of material received
Each piece is scanned in system and GRN is created.
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If the goods received contain items that are not ordered then for those items, a goods outward is done. It is noted in the outward register by the security. Such goods are rejected and returned to the supplier.
Once GRN is created it cannot be amended if there is any mistake or left over item. Rough GRN gives a chance to correct.
If the received material is from vendor (through OA)After receiving of stocks the same are counted for any discrepancy and then the template sheets are prepared.
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Template are entered into a Microsoft excel format & are sent to Bangalore warehouse for cataloguing.
At Bangalore cataloguing is done & articles are created for the catalogued items. The same created articles are then sent to Mumbai at HO for creation of idocs (Inventory Documents) these idocs files are received and imported locally in system which is done by the local IT administrator.
After importing of idocs the barcodes are generated article wise through REM system. Barcodes are placed on the products as per the specified norms i.e. size, color, mrp, style brand etc. These products are now ready to get inwarded into the system.
The material along with the invoice is taken for inwarding. GRN (Goods Receipt Note) is prepared by scanning each product and the quantity is tallied with invoice of vendor. If any discrepancy is found while inwarding stocks then the Discrepancy report is generated through the system and sent to the respective vendors.
GRN quantity and Invoice Quantity is matched, if there is discrepancy in received Quantity, Discrepancy note is prepared. One copy of this note is sent to accounts department, one copy is sent to vendor and one copy is kept for warehouse reference.Here could be two cases; either there be excess delivery or it could be short supply Excess delivery – in case where excess is more than 10% of PO qty (subject to max 100 pcs) then a formal approval should be obtained from SC or category before accepting goodsIn case of shortage (>10%) intimation should go to supplier and GRN/inward process should be completed only after clearance from vendor. A period of 48 hrs could fixed for clearing such disputed cases. If vendor does not respond within 48 hrs, the goods may be inwarded (actually received qty only) and a formal
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discrepancy note should be sent to vendor with shortage communication and/or remarks.
Till GRN is approved, goods will be stored in specified location (i.e. Aisle, Bin, & level number for inward bay) for that particular item.There should not be any carry forwards. It is a procedure that RGRN of that material must complete within 24 hours and GRN must be done within 48 hours after receiving the material.
The GRN along with the documents received from the vendor is entered in a GRN to Account register and sent to the accounts department and signatures of the receiver is taken in the register. Accounts person books amount for payment of vendor and send it to zonal Office.
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Ensuring printing & Pasting of barcodes on each SKU.
When goods are received from vendor at warehouse, the warehouse manager ensures barcodes on the products, barcode printing is assigned to one person in warehouse, or sometimes barcodes are generated from vendors.
For each consignment received, it is checked whether products carry pantaloons barcodes, If not then the barcodes are received from the category, or generated for the PO against which the goods have been received.Barcodes generated to be pasted on the main label of the product for apparel, next to statutory information printed on Packaged products, or at a place easily accessible/visible for scanning. The barcodes to be pasted neatly so as not to obscure product information.
If the product carries AIC (Automatic Identification Code), then it is confirmed whether it is captured in the system against SKUs of correct item name, brand, color, size, MRP.
If there is no AIC code or it is not capturing it then barcode for the correct SKU code-checking Brand, Item name, color, size, MRP is generated.
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Chapter 4
Material Handling and storage:
Material handling refers to all movement of finished goods within a warehouse; in pantaloons warehouse movement of goods is done with the help of balancing truck trolleys and pallets.
There are few storage areas created at PRIL City Warehouse described as: Security Inwarded Material: After unloading the vehicle and security inward, this material is stored in primary inward area; warehouse staff pastes a label mentioning I.R.N. number, I.R.N. date and number of boxes in that lot.
Inwarded material: After RGR and scanning of goods are packed in boxes and a label mentioning GRN number, GRN date, and total boxes in that lot is pasted on these boxes.
After GRN completion, material is stored in inwarded goods area, there is no fixed storage area in for a particular item or product as the demand for finished goods is changing according to the season and customer demand (e.g. rainwear, Winter wear, sun coats etc.) therefore storage location is created as per the availability of material.
As material is stored warehouse staff gets location display data prepared and displays it at that location. These goods are stored in shelves or pallets; it is made sure by the warehouse staff that there are no goods lying on the floor. Warehouse staff maintains a first In First out (FIFO) concept for stacking goods. Goods are stacked from one side of the storage stack and retrieved from the other side.
Inwarded goods may have non-saleable goods (consumable goods) these goods are stored separately in non-salable goods storage area. These goods involve Staff Uniforms, Consumable Stationary, Carry Bags, hangers etc.
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Outward Area:After order picking, material ready for dispatch is kept in this area, this dispatch area may have Return to Vendor goods, and these goods are kept ready with documentation on pallets as per the dispatch location and loaded with the help of trolleys in the vehicles. Work In Progress area: In WIP area activities like templating, bar coding, and repacking of products for promotion, assembly of products etc. happens.
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Return from stores:Store returns are in two cases first is excess & the second is damage or return to vendor consignments. The stocks are received at warehouse counted & the same is inwarded in the system. If it is excess it is stacked in their respective locations.If it is to be returned to vendor then the same is done through Return to Vendor Procedure.
The goods that returned from store may be fall under any of the following classification.a. Goods damaged in the store.b. Slow moving stockc. Dead stockd. Price changee. Defective products.
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Chapter 4
Order Picking:
Order picking is a task of selecting items from bulk of the items the customer wants, in the quantities he wants, when he wants them.
It is the breaking down of neatly packed and often bulk into handfuls. It generally involves taking cartons from a pallet or items from a carton, often these have to be marked, checked, and then repacked.
Sales staff keeps a track of all the products on display in the store and identify products that need to be replenished on a continuous basis.
Sales staff from stores gives requisition for the specific products, through mail, by phone or by visiting to warehouse and Stock Transport Order of that products is created in system.
On receipt of the STO, the warehouse staff creates pick list for that products and collects the required product from pallets or shelves at warehouse in required quantity, each piece of product from the pick list is scanned against that Stock Transport Order.
Outbound delivery of these items is saved and this material is packed and marked placing one or more items of an order in to appropriate container with store shipping data as well as other handling information that may be required.
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Chapter 4
Transportation:
Transportation physically moves products from warehouse to the retail stores, where they are needed.
If the product is not available at the precise time it is needed, there may be expensive repercussions such as lost of sales and customer dissatisfaction.
Transportation moves products to retail sites that are geographically separated and provides added value to customer when they arrive in time, undamaged and in the quantities required.
For PRIL City Warehouse two LCV vehicles are contracted for transportation of goods to all the stores in Pune. And for outstation dispatches vehicle is hired or it is dispatched through companies authorized transporters.
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Chapter 4
Inventory Control:
Inventory (or stockholding) can be described as ‘the accumulation of an assortment of items today for the purpose of providing protection against what may occur tomorrow’.
In retail chain of pantaloon variety of products are sold and these products are divided into different categories; inventory flow of each category of products at warehouses and retail sites is maintained by that particular category.
Planning for EOQ and reorder level is done at category level; by studying demand at each retail site, category creates order for a particular stock.
A) Procurement process for saleable Goods:
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INVENTORY FLOW
PHYSICAL DISTRIBUTION
CATEGORY MANAGEMENT PROCUREMENT
BIG BAZAAR
SUPPLIER X2
P R I L WAREHOUSE
PANTALOONS
FACTORY OUTLET
SUPPLIER X4
SUPPLIER X1
SUPPLIER X3
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Each product group is divided in four divisions as Clothing and Fashion, General Merchandise, Communication and Home & Hard Goods; these divisions are differentiated into different departments, Sub departments, Category & Classes according to type of Merchandise Products.
In Pantaloons, Category Management manages procurement system of finished goods for all the Pantaloon retail sites; Departmental Managers from respective departments sends their requisition as per customer demand for finished goods to the respective Category Manager.
Category Management is in process of buying finished goods for a firm, by getting feedback from retail store Managers and customer demands. Pantaloon stores have a central warehouse located in Tarapur. Big Bazaar Chain doesn't have a central warehouse
All Private label products in case of Pantaloon Stores are routed through central warehouse. Based on allocation by category, merchandise is distributed to city warehouses.
Other label vendors may deliver the merchandise at the central warehouse (Central Purchase) or directly at the city warehouse or store (in case of Local Purchase or Consignment)In case of Big Bazaar the products are directly delivered at the city warehouse or store.A respective category head raise purchase order at Head Office as per the requirement from stores. Copy of P.O. is sent to vendor and supply chain and transporter is intimated about the same. After receiving Purchase Order from category, vendors dispatch their consignments to the respective locations through authorized transporter; supply chain follows up with the transporter about the status of consignment, when stocks are delivered to the Central Warehouse in Tarapur.
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INFORMATION FLOW
CENTRAL
Central warehouse staff generates pick list as per the stock allocation to various stores by category, items from the list are picked and material is dispatched to the respective warehouses. At City Warehouses stock is received and inward is done. Store may request material from warehouse over phone, email or by personal visit. For these required items Stock Transfer Order is raised at warehouse and lot is dispatched to the Store. Store receives material and inward of material at store is done.In some cases of branded goods vendor takes approval of the category and send their consignment to the city warehouse this material is inwarded at city warehouse as On Approval (OA) basis.
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B) Procurement process for Consumables (non-saleable):
Future logistics that is a part of pantaloon retail India limited develops/reviews EOQ, inventory norms for consumables based on consumption pattern. Warehouse sends request for consumables by 7th of every month for the next month, Future Logistics receive request for consumables, feed the requirement in the system, SAP system checks if the requirement within the norms, if it is not, approval from procurement in charge is taken and purchase order is placed. GRN process is completed and material is stored in warehouse, Retail Stores place requirement for consumables to the warehouse, warehouse creates STO and dispatches material to stores At stores this material is inwarded and stock level in system updated
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Chapter 4
Bar-coding:
Pantaloon stores have more than 50000 SKUs of products, almost 75% of consumer products that pantaloon retail sell currently already come from suppliers with EAN barcodes source-marked on their products packaging which helps in receiving, stocking, tracking, transferring and sale of merchandise.
Such transactions are seamlessly integrated in the supply chain enabling common access to both the relevant suppliers and the retailers. This helps in faster identification of needs and the resultant actions on replenishment of stocks on the shelves of retail stores. The balance 25% of products come from suppliers who do not have compliant EAN barcodes or any barcodes at all on them and hence retailers are required to affix barcode stickers at their end so as to achieve 100% compliance level, which is essential for their efficient operations.
In pantaloon, it constantly try to achieve greater levels of customer satisfaction that often results in larger consumer spends in their stores in an effort to respond to customer need faster, pantaloon resort to efficient business processes driven largely by retail automation Consumer billing has been fully automated at many retail checkout counters using barcode scanners and point-of –sale (POS) systems.
By virtue of this automation, the stock at the retail outlets and warehouses are closely monitored and to timely action to avoid under-stocking or overstocking is taken. This also enables to monitor demand and develop more reliable sales forecasts, which in turn allows sufficient time for stock replenishment by suppliers avoiding out of stock situations.
If retailers and suppliers come together and have standard tools like EAN (European Article Numbering) barcodes, timely exchange of information will become possible and as a result customer response cycle times will be shortened.
Uniform and unique product identification using EAN product codes will also facilitate exchange of updated and accurate product information electronically
27
between suppliers and retailers, critical for ordering, dispatching and invoicing processes.
In turn, this will ensure faster new product introductions and withdrawal of absolute products along with updated or revised price lists. Modern retailers handle increasing product volumes and variants (SKUs) across their retail chains; this will prevent incurring avoidable costs, errors and delays in the process of having shelf ready merchandise.
The main advantage of bar coding is that a voluminous amount of data can be entered and retrieved with practically no error by just scanning through a series of black and white lines. The overall productivity of a warehouse can improve immensely not in terms of speed but in the fact that the element of human error is completely eliminated.
Chapter 4
At pantaloon warehouse each SKU is inwarded and outwarded by scanning their barcodes, therefore every time a material is added to or removed from a shelf the data gets updated in the system.
Stock Transfer to Pantaloon Stores:
A major function of the physical distribution system is transportation –shipping products to consumers, after order picking is done that packed material is kept on pallets in Outward area, all documentation of these goods are completed and this material is loaded in outbound vehicle.
If sufficient load is not available for a particular store, material from two stores is clubbed together and dispatched. Gate Pass for the loaded material is prepared along with delivery challan. Security incharge makes entry in outward register. On approval of warehouse manager material is shipped to a store.
Return to Vendor (RTV):
Warehouse staff initiates action of goods return to suppliers only after receiving confirmation from the category manager or Brand relation team from that product category.
Stocks, which are to be returned to suppliers, are outwarded from stores.
The stocks are received at warehouse, counted for no of piece, number of cartons & inwarded in the system. Details of all the stocks received back from stores are intimated to the Brand relation team.
The nominated transporters of the vendors are intimated about the material that is to be lifted from the Warehouse and are to be delivered to the respective vendors.
28
All the RTV consignments are sent to the Vendors on to pay basis.
Chapter 4
Reverse Logistics:
Pantaloon has Central Return Center (CRC) which is a dedicated specialized building/area within Central warehouse to handle returns and Zonal Return Center (ZRC) which handles returns of each zone at these warehouses recycling, reconditioning, remanufacturing and refurbishing of products are done which are- Customer return items, Defective items and Unsold goods/excess stocks.
Reverse logistics is the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.
Warehouse returns defective items and unsold/excess stock to CRC/ZRC, accompanied by Goods return forms
Customer Returns: reverse logistics warehouses receives the returned item with the Customer return note and decides whether these products to be sold as scrap locally at stores/ dispatched to vendor or dispatched to CRC(non apparel items)/ZRC(Apparel items)
Defective items: after quality inspection, CRC/ZRC takes decision about disposition of these items by Scrap saleAuction saleReturn to vendorsRefurbish/ rework and sale in factory outlets/RL storeRefurbish/rework and sale as fresh stock
29
Chapter 4
GRN Accounting:
The main objective of GRN accounting is Correct & Timely disbursal of payments to the vendorAfter completion of inwarding of goods, GRN note is prepared by the warehouse staff and it is submitted to accounts department along with vendors bills, the accounts receives GRN along with all the vendor invoice.If there is any discrepancy found in the material supplied by the vendor; discrepancy note is prepared by warehouse staff and submitted to accounts along with bills, stores accounts person checks invoice and discrepancy note and debits that discrepancy amount from vendors account. If there is excess quantity in goods received from vendor these products are returned to vendor.In some cases material received by warehouse staff from vendor is in damaged condition, in this situation this material is returned to vendor by taking approval from category of that product.Store accounts manager should ensure all relevant entries are made into the system. GRN gives cost figure payable to the vendor this figure along with PO and purchase bill should be a basis for passing and verifying vendor’s bill.Store accounts manager ensures timely disbursal of payments to the vendor.Commercial manager/store account manager generates statement showing bill wise due dates for payments and vendor wise age analysis of overdue on weekly basis, this forms the primary basis for payments scheduling to the vendors.
30
Chapter 4
Information:
Information flow is a key element of logistics operations, in physical distribution management; common forms of information include customer and replenishment orders, inventory requirements, warehouse work orders and transportation documentation.
In the past, information flow was largely paper based and resulted in slow, unreliable, and error-prone information transfer, paper based information flow both increases operating cost and decreases customer satisfaction.
Information systems combine hardware and software to manage, control and measure the logistics activities. Hardware includes computers, input/output devises, and storage media. Software includes system application programs used for processing transactions, management control, decision analysis, and strategic planning. The information base contains purchase orders, inventory status, and customer orders. The Data warehouse contains information describing the past activity levels and the current status, and is the basis for planning future requirements.
The execution components initiate, monitor, and measure the activities required to fulfill customer and replenishment orders.
These activities take two forms the first are the Planning and coordination activities to produce and deploy inventory and the second are the operating activities to receive, process, ship, and invoice customer’s orders.
Previously PRIL using REM (Retail Enterprise Manager) system for transactions in warehouses and in retail sites, Now PRIL implemented SAP as the solution provider due to its ease of use and long-term tactical relationship,
31
Chapter 4
With implementation of SAP certain store operation processes have been changed as indicated in the table below
Previous REM Processes SAP ProcessesSingle item can have multiple item codes depending on site and individual doing the cataloguing.
Every item will have single article number, independent of site and person. Multiple EANs (European Article Number) can be created from one article.
No tax masters maintained through system
Tax masters can be specified through article masters
Local and central cataloguing Central article creationAll stocks at retail site reflect as stocks on floor
Separate storage locations can be maintained like stocks on floor and Store Warehouse
Damaged goods inflate the store inventory
Damaged goods can be shifted into a separate storage location and thereby have a right inventory value
No transparency of goods in transit High level of clarity of goods movement from PO stage to receipts and transfer
Goods received at store from warehouse are inwarded to DNH file
Goods receipt can be undertaken at Handling Unit level
Negative inventories can be disallowed in REM
Articles created for both of these can be tracked like any other merchandise.
With the help of SAP Implementation:Automatic PO/STO generation is possibleStores can trigger replenishment from Distribution CentreStock replenishment will primarily happen through a push mechanism at DC level, but can also be triggered at store.Dumping of stocks at store and delivery challans can be avoided
32
There will be a transparency of stock movement across the chainCarton level scanning will be enabled for receipts.IRN and gate pass will be system generated (Rough GR)Pick list /STO/delivery management will happen from all warehousesStocks can be received and placed On Hold, thereby reducing exception handlingA provision has been made to book damages and non-saleable stocks separately.Advance shipment notice to sites for inbound delivery, ASN (Advance Shipment Notices) indicates: PO information, Expected arrival time, Carton contentsVendor and item descriptionsTruck/transporter information, these details are filled by the vendor and ASN is dispatched along with material.
Chapter 4
Application of new techniquesApplication of new techniques
Unitization of Products:
It is an important part of packaging as it relates to storage and material handling is the concept of unitization. Unitization describes the physical grouping of master cartons into one restrained load for material handling and transport.UOM and Prepack are the terms used for the packaging of finished products that are implemented in Pantaloon warehouses.For better control on inventory, easy handling and for easy PO creation packaging of products are done in such a way that Carton/bag has n number of SKUs e.g.1carton is equal to 100 EA (100 SKUs).
Unit of Measurement: It contains SKUs of same article, hence same article code, only with different EAN.
Prepack:
Prepacked articles are groups of variants of one or more generic articles that are purchased as separate articles that are purchased as separate articles and as such have an article number, a purchase price. Unlike a display, the components must belong to the same merchandise category as the prepack itself. Stock is managed at Prepack level at the distribution centre, and at the component level at the storee.g. shirts of different sizes or color clubbed together in a predefined ratio.It contains SKUs of different article than those of consisting in the prepack.
Benefits from UOM and Prepack:
33
Application of UOM and Prepack reduces scanning, results in faster work at different stages of supply chain, as individual pieces need not to be counted/scan every now and then.
Reports could be seen at both UOM used, thus better visibility of inventory.
Chapter 5
Presentation and Interpretation of DataPresentation and Interpretation of Data
1. Study of monthly consumption to classify Item Categories as per their monthly Usage value:
Merchandise products at Big Bazaar are differentiated into different departments and item categories as shown in Table A
DepartmentSub
Department Category Class
Clothing & FashionAccessories Boys Acc Boys Essential Boys Belts, Boys Handkerchief
Boys Innerwear Boys Brief, Boys socks, Boys VestGirls Acc Girls Essential Girls Belts, Girls Caps
Girls Innerwear Girls Brief, Slips, Socks
Ladies Acc EssentialsLadies Belt,Caps, Handkerchief,
Scarf, Socks
LingerieLadies Bras, Lingerie set, Panties,
slips
Mens Acc InnerMens Boxer shorts, Briefs, socks,
Vest
Other MensMens Belt, Cap, Handerchief,
Ties,Wallets
Clothing Childrens Wear Boys Wear
Boys Btm wear, Coordinates, Nightwear, Occasion wear, RW &
WW, Shirts, T shirtsGirls Wear Girls Blouses, Btms, Coordinates,
Frocks, Nightwear, T shirts, RW &
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WW
InfantInfant Boy, Girl, Necessities,
Seasonal
Ladies Ladies EthnicLadies Mix N Match, SKD, Suit Pcs,
SareesLadies Nightwear Ladies NightwearLadies Seasonal Ladies Seasonal Rain wear
Ladies Seasonal Winter wearLadies Sportswear Ladies SportswearBottoms
Ladies SportswearTopsLadies Western
Casuals Ladies Casual BottomwearLadies Casual Tops (Blouses)
Ladies Jeans, Tshirts
DepartmentSub
Department Category ClassLadies Western
FormalsLadies Formal Tops, Btms, Suits &
Jackets
Mens Formal Mens Formal ShirtsMens Formal Suits & Blazers
Mens Formal TrousersMens Jeanswear Mens Jeans, T- ShirtsMens Nightwear Bottom, SetsMens Seasonal Rainwear Gear, Winterwear
Mens SportswearMens Sports Sets, Bottoms,
Topwear
Ocassion WearEthnic, Party Bottomwear,
Topwear
CommunicationsHardware(Commnicatio
n Devices) Mobile Mobile Handsets
General Merchandise
Books & Multimedia Books Children Books
Activity, Board & Picture Books, Children Regference, Craft, Junior
fiction, Senior FictionFiction Books Adult Fiction
LiteratureGen Ref. Books Art, Language, self help
Management Books Business, HR , NewsPeriodicals Books General News, womenRegional Books Regional Fiction
Multimedia Home Video Home Video DVD, VCDHome Video VCD
Music Hindi Music Cassettes , VCD, CDSoftware General Games CDROM
Car & Bikes Auto Acc 2 Wheeler Acc Protective Gear4 Wheeler Acc DIY Acc, Installable acc.
Communications Mobiles Gadget & Accessory Charges, Handsets
Electronic & HardgoodsHousehold
UtensilsCutlery &
KitchenwareCooking Tools, Knife & Cutlery,
Kitchenware
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Loose Steel Utensils Copper Bottom, Plain
Nonstick/Hard Anodised
Hard Anodised, Nonstick, Brass items, Copper items, Stone items,
Wooden ItemsPressure Cooker Aluminium, Steel
Fashion AccessoriesFashion
Jewellery Kids Jewelley Kids Fashion
Ladies Jewellery1 Gm Gold, Ladies Fashion, Pearl
JewellaryMen Jewellery Men Fashion
Hair Acc Kids Kids fashionLadies Ladies Fashion
DepartmentSub
Department Category ClassSunglasses Basic Casualwear
Fashion CasualwearWatches &
Clocks Basic AnalogClocks
Footwear Footwear Boys Shoes – B, Sports- BGirls Shoes - GMens Shoes – M, Slipons-M, Sports-M
Womens Bin – W, Slipons-W,Sports-wGifts & Living Improvements
Gifts Crockery and Crafts Birthday City Birthday City
Crockery Glassware & Wireware Crockery & Glassware
Wireware & ChromeGift Accessories
GiftingGrooming &
Beauty Cosmetics Makeup AccessoriesFragrances Perfumes & Deos
Living Impovements Lamps and Lighting Lamps
LuggageBags And Baggage Bags
College Bags, Office Bags,Overnight Bag, School Bags
Ladies Handbag Basic, FashionTravel Accessories Pouches
Trolleys & Suitcases Suitcases, TrollyPlastics Toys &
StationeryHousehold Plasticware
Cleaning & Bathroom Items
Bathroom Accessories,Cleaning Articles
Household Items
Kitchen & Home Accessories,Melamineware,
Storage & serving,Thermoware
Sports Goods IndoorBoxing, games,skating, swimming,
table tennis
OutdoorBadminton, Basketball, Cricket,
Hockey, tennis
Stationery Non PaperColouring Material, Office
consumables, Writing Instruments
36
Paper Related Products Paper And Pads
Toys Non-Soft ToysActivity, CD ROM,
Dolls,Games,Puzzles,VehiclesPrams/Rides Infant Carriers
Soft ToysStuffed Animals,articles,
characters
Terry TowelsBed Linen Blankets, covers, Quilts, sheets
Home Accessories Utility Covers
DepartmentSub
Department Category Class
Home GoodsHome Linen Made-Ups Bath Linen Handloom Towels
Kitchen Linen Cleaning Aides, cooking
Living AccessoriesFurniture & Floor Coverings,
curtainsStuffed Article Fillers
Table LinenDining Accessories, table Lenin
covers
Stock Status report for Big Bazaar warehouse of few selected item categories-Footwear, Gift, Home, Kids, Ladies, Ladies Acc, Luggage, Men’s, Men’s Acc, Plastics, Stationary, Toys and Utensils is shown in Table no.1, 2,3,4 and 5, below for the month May 2006 to Sept 2006 respectively. Stock status report shows opening stock, closing stock and total inwarded and outwarded stock for the respective month.
37
Table no.1
MAY Stock Status Report May 2006 OPENING STOCK INWARD (RECEIPT) OUTWARD (DESPATCH)
CATEGORY Quantity Boxes Amount Quantity Boxes Amount Quantity Boxes Amount
FOOTWEAR 800 30 24563 593 27 217998.3 905 32 198524GIFT 4216 25 42187 9674 107 156756 9455 71 100478
HOME 1635 98 14854 6234 129 256842 4633 118 205561KIDS 11568 238 245988 29510 375 422586 20104 112 500425
LADIES 1811 149 155486 16838 212 707894 11847 170 680577LADIES ACC 2654 187 169845 4062 59 345690 3154 186 311893LUGGAGE 965 42 4586 2917 104 531261 3100 134 535785
MENS 18156 278 278569 24034 1023 503539 30150 752 376466MENS ACC 24856 248 157000 13420 97 259045 21545 140 319563PLASTIC 152 50 18452 7349 183 2712540 7501 233 2730992
STATIONARY 5000 27 8449 2663 15 53620 5545 14 55112TOYS 95 48 6897 7281 189 60124 4597 98 34527
UTENSILS 900 55 158998 8800 233 5246531 8800 233 5246531
TOTAL 72808 1475 1285874 133375 2753 11474426 131336 2293 11296434
Table no. 2
JUN Stock Status Report June 2006
38
OPENING STOCK INWARD (RECEIPT) OUTWARD (DESPATCH)CATEGORY Quantity Boxes Amount Quantity Boxes Amount Quantity Boxes Amount
FOOTWEAR 488 25 44037.3 352 20 202545 810 42 189458
GIFT 4435 61 98465 20921 105 189549 19523 90 165286HOME 3236 109 66135 4521 174 136688.3 5284 170 110423KIDS 20974 501 168149 9080 72 386782 15845 78 475720
LADIES 6802 191 182803 43222 177 1527527 37486 120 995783LADIES ACC 3562 60 203642 2829 38 112811.2 3454 44 190152LUGGAGE 782 12 62 1878 74 254111 956 32 92458
MENS 12040 549 405642 15528 450 500694.6 8216 348 298425MENS ACC 16731 205 96482 21809 168 575481.2 11552 89 201568PLASTIC 0 0 0 7276 91 1645278 7276 91 1645278
STATIONARY 2118 28 6957 15118 106 150786 11574 80 98465TOYS 2779 139 32494 17737 707 1367002 18511 30 1310554
UTENSILS 900 55 158998 5434 53 2564574 5450 48 2515786
TOTAL 74847 1935 1463866 165505 2235 9613829 145937 1262 8289356
Table no.3
JULY Stock Status Report July 2006 OPENING STOCK INWARD (RECEIPT) OUTWARD (DESPATCH)
CATEGORY Quantity Boxes Amount Quantity Boxes Amount Quantity Boxes Amount
FOOTWEAR 30 3 57124.3 1818 40 215458 1840 18 220845GIFT 5833 76 122728 8845 88 90456.96 4541 12 45689.21
HOME 2473 113 92400.33 21407 490 2050648 13440 70 986971.2KIDS 14209 495 79211 6753 67 513919.4 12399 42 378634
LADIES 12538 248 714547.1 56901 183 720635.5 15415 46 696522LADIES ACC 2937 54 126301.2 3766 25 208819.6 5832 10 212410LUGGAGE 1704 54 161715 1189 29 8056789 1099 7 635223
MENS 19352 651 607911.6 19817 752 2553162 20663 820 798341MENS ACC 26988 284 470395.2 8189 68 407926.8 6897 17 228138PLASTIC 0 0 0 1852 38 211584 1720 28 184578
STATIONARY 5662 54 59278 500 10 11596 5456 51 70250TOYS 2005 816 88942 1896 38 19754.82 3368 10 59493.95
UTENSILS 884 60 207786.3 1353 154 100243.8 1404 23 42869.66
TOTAL 94615 2908 2788340 134286 1982 15160994 94074 1154 4559965
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Table no.4
AUG Stock Status Report August 2006 OPENING STOCK INWARD (RECEIPT) OUTWARD (DESPATCH)
CATEGORY Quantity Boxes Amount Quantity Boxes Amount Quantity Boxes Amount
FOOTWEAR 8 25 51737.3 1600 25 142062 945 17 162470.7GIFT 10137 152 167495.8 19548 242 472292.7 7992 27 222656.3
HOME 10440 533 1156077 19266 264 1758674 11555 49 1101456KIDS 8563 520 214496.4 21476 649 2732565 27794 510 528490
LADIES 54024 385 738660.6 13606 50 1946940 5888 30 1027300LADIES ACC 871 69 122710.9 3532 28 941004 1848 5 90831.69LUGGAGE 1794 76 7583281 2915 163 361060 2423 17 245379.9
MENS 18506 583 2362733 25539 456 2703545 14581 55 2290851MENS ACC 28280 335 650184 13156 14 767915.1 10926 16 442256.4PLASTIC 132 10 27006 4189 72 108794.7 3789 24 28586.82
STATIONARY 706 13 624 2954 21 23548 2500 15 18458TOYS 533 844 49202.87 11497 91 334740.3 3055 14 89162.72
UTENSILS 833 191 265160.5 12375 165 1371659 12867 20 1588465
TOTAL 134827 3736 13709369 151653 2240 13664799 106163 799 7836363
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Table no.5
SEPT Stock Status Report September 2006 OPENING STOCK INWARD (RECEIPT) OUTWARD (DESPATCH)
CATEGORY Quantity Boxes Amount Quantity Boxes Amount Quantity Boxes Amount
FOOTWEAR 663 33 31328.61 4000 60 483321.4 3272 76 348796.6GIFT 21693 367 417132.2 8585 119 1492506 6181 83 188143.7
HOME 18151 748 1813295 18932 266 1276452 6418 196 548873.9KIDS 2245 659 2418571 23446 274 1104676 13750 96 1056968
LADIES 61742 405 1658300 22270 408 5968542 38217 125 4380332LADIES ACC 2555 92 972883.2 3819 43 73288.54 3675 8 551566.3LUGGAGE 2286 222 7698961 946 56 312682 1321 74 155268.7
MENS 29464 984 2775427 32225 990 3303762 48041 1026 3520916MENS ACC 30510 333 975842.6 10199 107 552007.3 2792 21 110051.3PLASTIC 532 58 107213.9 13562 150 90693.95 7847 119 126933
STATIONARY 1160 19 5714 468 12 15789 1250 8 10524TOYS 8975 921 294780.4 17468 247 511719.3 24549 116 593751.1
UTENSILS 341 336 48354.6 6458 220 185568 5811 142 47530.8
TOTAL 180317 5177 19217804 162378 2952 15371008 163124 2090 11639656
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42
Chapter 5
Analysis of DataAnalysis of Data
ABC Analysis for item categories on the basis of monthly consumption. ABC analysis for stock is done to identify different categories of stock at Big Bazaar warehouse, with the help of this analysis product categories differentiated as per their value of consumption. Dispatched quantity of finished goods to retail stores is taken as consumption quantity and consumption value for each item category is taken as shown in table B.Item categories are arranged in descending order of total value of consumption. Cumulative value of consumption is calculated. Percentage value of this cumulative value to the total monthly value of consumption quantity is calculated for all items as also cumulative percentage.
ABC ANALYSIS FOR ITEM CATEGORIES ON THE BASIS OF MONTHLY CONSUMPTION
Item Category
Average Quantity
Consumed per month
Usage per month in
Rs. RankingCumulative
UsageCumulative
Usage %cumulative
item % ClassUtensils 6866 1888236 1 1888236 22 7 ALadies 21771 1556103 2 3444339 39 15 AMens 24330 1457000 3 4901339 56 23 A
Plastics 5627 943274 4 5844613 67 31 AHome 8266 590657 5 6435270 74 39 BKids 17978 588047 6 7023317 81 46 BToys 10816 417498 7 7440815 85 54 B
Luggage 1780 332823 8 7773638 89 62 BLadies Acc 3593 271371 9 8045008 92 70 BMens Acc 10742 260315 10 8305324 95 78 CFootwear 1554 224019 11 8529342 98 85 C
Gift 9538 144451 12 8673793 99 93 C
Stationary 5265 50562 13 8724355 100 100 C
43
Table B
Chapter 5
Data from table B has been plotted to produce a cumulative frequency curve to create this graphical representation.
100100
9090
8080
70
60
50
40
30
20
10
0 23 10 20 30 40 50 60 70 80 90 100
CUMULATIVE ITEM %
From the above Cumulative frequency curve, it is seen that, 31 percent items in the product item categories account for 67 percent of the total consumption value, the items that make up this 31 percent are referred as ‘A ’ category items includes Utensils, Ladies and Mens Item categories, these item categories has high consumption value than other items at Big Bazaar warehouse Item categories Plastics, home, kids, luggage and Ladies Accessories are ‘B’ category items, accounts for approximately 39 percent of the total items in the
44
‘ B ’
‘C’
‘A’
C U M U L A T I V E C O N S U M P T I O N %
product categories, and accounts for additional 20 percent of total consumption value.Finally the C category items are represented by the remaining 30 percent of the item categories, which account only for approximately 8 percent of total consumption value, Mens accessories, footwear, gift and stationary are ‘C’ category items.Chapter 5
Determination of Excess and Nonmoving Stock.
The stock status of each item category is studied from the monthly stock status report of five months as shown in table no.1 to 5. From this data total quantity of each item category inwarded and total quantity of each item category outwarded (consumed) in five months is taken, from this data, average monthly consumption of each category is calculated as shown in Table C,Closing Stock of each item category, at the end of Sept 2006, is taken for analysis (b), it is assumed that average consumption of finished goods done in the five months may 2006 to Sept. 2006 will be continuing further.
A B c d e
ITEM CATEGORY
Closing stock at warehouse at the end of 5 th month
Cumulative quantity consumed at retail store in 5
months
Average Quantity Consumed per
month
Surplus Stock Over 1 months
consumption & above.
Quantity Amount Quantity Amount QuantityFootwear 1391 165853 7772 1120094 1554 -163
Gift 24097 1721494 47692 722253 9538 14559Home 30665 2540873 41330 2953285 8266 22399Kids 11941 2466279 89892 2940237 17978 -6037
Ladies 45795 3246510 108853 7780514 21771 24024Ladies Acc 2699 494605 17963 1356853 3593 -894
Luggage 1911 7856374 8899 1664115 1780 131Mens 13648 2558273 121651 7284999 24330 -10682
Mens Acc 37917 1417799 53712 1301577 10742 27175Plastics 6247 70975 28133 4716368 5627 620
Stationary 378 10979 26325 252809 5265 -4887Toys 1894 212749 54080 2087489 10816 -8922
Utensils 988 186392 34332 9441182 6866 -5878
Table C
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The average stock quantity ‘ d ’ consumed at retail store for each item category, in past 5 months is taken. It is assumed that ‘ d ’ is the quantity of items, required for next month’s consumption. This quantity is compared with the total stock available at warehouse at the end of September 2006.
Chapter 5
CategoryStock at the end
of 5th month
Inventory Value (in
Rs.)
Average Quantity
Consumed per month
Short Quantity after
1 months consumption
Excess Quantity considering 1
months consumption
Footwear 1391 165853.42 1554 163 -Gift 24097 1721494.47 9538 - 14559
Home 30665 2540873.39 8266 - 22399Kids 11941 2466279.03 17978 6037 -
Ladies 45795 3246510.11 21771 - 24024Ladies Acc 2699 494605.4 3593 894 -
Luggage 1911 7856374.46 1780 - 131Mens 13648 2558272.53 24330 10682 -
Mens Acc 37917 1417798.667 10742 - 27175Plastics 6247 70974.8 5627 - 620
Stationary 378 10979 5265 4887 -Toys 1894 212748.58 10816 8922 -
Utensils 988 186391.8 6866 5878 -
From this comparison it is seen that, for some categories much stock is lying at warehouse, after deducting one months stock from the actual stock, in some categories few stock is need to be ordered. Too much stock is lying at warehouse as excess or surplus stock, this data from table C is taken and bar chart is prepared as shown in diagram no.2
From this diagram it is seen that after 1 months consumption Gift, Home, Ladies, Luggage, Mens Accessories and Plastics category items have excess stock at warehouse, out of this categories percentage of excess stock in item categories Gift, Home, Ladies and Mens Accessories is highest, out of this four categories Mens and Ladies items are in ‘A’ category and are high value items, Value of total Excess stock lying at warehouse is 61,61,719 and due to this stock of storage cost and inventory value is increasing.
46
Chapter 5
Diagram no.2.
Inference:
In ‘A’ category items (Utensils, Ladies & Men’s) Stock for Utensils and Mens category items is not sufficient for next month, stock of these categories should be managed properly by observing their lead time, because their consumption value is high, if there is stock out in this categories, there will be loss in sale.Stock for Ladies items is very high, this stock is lying in double quantity than it is required for consumption, for ladies items consumption value is more. This nonmoving stock should be liquidated faster as this stock increases inventory value of the Big Bazaar Warehouse.
Out of ‘B’ category items, stock of home category items is more than the consumption quantity or the requirement, it is lying as non moving /dead stock and it should be sold quickly to reduce accumulation of stock on warehouse space. In case of Kids and Toys items stock need to be ordered to avoid stock outs.
In ‘C’ category items stationary items should be ordered urgently, as it is showing near about stock out condition for next month. In Men’s and Gift items, there are
47
few nonmoving and dead items, which should be liquidated quickly, as it is occupying space at warehouse unnecessarily.
Chapter 5
Warehouse efficiency:
Warehouse efficiency is how you regulate inward Quantity as per the demands of Outward quantity and achieving lowest possible closing stock, this means
Outward QuantityWarehouse efficiency =
Inward Quantity + Closing Stock.
From Monthly Stock Status Report following data is taken and bar chart is drawn (Diagram.3) from this data warehouse efficiency is calculated as-
MonthOpening
StockInward
(Receipt) Outward(Despatch)
Closing stock
Warehouse efficiency =Outward
/(Inward+Closing stock)
May 72808 133375 131336 74847 0.63June 74847 165505 145937 94615 0.61July 94615 134286 94074 134827 0.41
August 134827 151653 106163 180317 0.37September 180317 162378 163124 179571 0.48
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Chapter 5
It is seen that closing stock is going up and up thus inward is increasing, this is due to lack of understanding of customer demand in sales team and category management.In month of May Inward and Outward is balanced but there is no movement of goods from Opening stock, in June, July and August inward is more than outward thus closing stock gets increased, In September inward and outward is balanced, but Opening stock does not moved.From the study of five months warehouse stock it is seen that stock is not reducing from warehouse closing stock is increasing in most cases, therefore it is obvious; more quantity is inwarded than required for outwarding.The demand pattern of each month must be regulated so as to achieve much lower closing stock.It is obvious that there are nonmoving stocks in each category, which we need to identify and dispose them or find a way for disposal.
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this diagram shows that warehouse efficiency is going down, this means inventory at warehouse is increasing this leads to blocking of lot of money.
Chapter 6
RecommendationsRecommendations
1. Stock Control and minimization of excess stock:
1. Warehouse must have enough inventories to satisfy the demands from retail site for finished goods but should not have too much inventory on hand because of the cost of carrying inventory, but at Big Bazaar Warehouse it is seen that few items has too much stock quantity and for few items there is not sufficient stock for doing replenishment at retail site.
2. For the item categories like Ladies, Men’s Accessories and Home, ordering of stock should be stopped from category or Central warehouse, as these categories already has lot of excess stock at warehouse, and after liquidation of this stock, authorization to order stock should be given to Warehouse manager, he will order
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further stocks before lead time by forecasting past consumption requirement from retail store.
‘A’ category items should ordered weekly as per their consumption, B items in 15 days and C items in 1 month,
3. For dead and damaged goods register should be maintained and updated, to liquidate this nonmoving, dead or damage stock, approval should be taken from Category immediately for sending the stocks to Central warehouse or to reverse logistics.
4. Before giving allotment to Central warehouse for dispatches, Category management should check Stocks lying at City warehouses and retail stores, to manage the supply of category items stock properly.
5. Application of DRP system in Big Bazaar: DRP is widely used and potentially powerful technique for outbound logistics systems to help determine the appropriate level of inventory.This will helpful in to improve customer service (decrease stock out condition) and to Reduce overall level of finished goods inventories, reduce transportation cost and improve distribution center operations.
With DRP system replenishment requirements will be developed by- Forecasting of demand for each SKU- From current inventory level of the SKU (balance on hand)- Considering Lead time for replenishment
Chapter 6
2. Order picking:
When any consignment is inwarded at warehouse in ERP system, a Handling Unit number is generated in system; from this number details of scanned finished goods can be viewed, after inwarding of a consignment completed, GRN number is created, Handling Unit number and GRN Number should be pasted on the box these boxes are then placed on pallets in a respective category.
A
B
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C
D
E
Layout of Big Bazaar Storage area
In storage area at Big Bazaar warehouse the pallet lines should be numbered alphabetically as Line ‘A’, Line ‘B, Line ‘C’, Line ‘D’…Suppose Line ‘A’ has 10 pallets, each pallet is numbered as A1, A2, A3…A10.
Chapter 6
A sheet should be prepared and updated on daily basis, as shown below
Category Item Line Pallet Number
Handling Unit Number
GRN Number
Line A A1 1000042823 6200457863 A2 1000040283 A3 1000028534 Line B B1 B2 B3
Sheet No.1.
This sheet will be updated daily in Excel, from this sheet, box with a particular handling Unit can be easily tracked
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SCANNING AREA
CONSUMABLES
Second excel sheet of article codes is to be prepared, as shown
GRN Number Handling Unit Number Product Details Article No. Description Quantity6200457862 1000021483 302145856 xxxxxxxxxx 1 309000510 xxxxxxxxxx 2 309000511 xxxxxxxxxx 2
Sheet No.2.
Details from Handling Unit Numbers like article code, Description and Quantity of finished goods can be taken out from SAP system, this details are filled in the format above, so that product with particular description and article code can be found easily, with the help of this sheet, Handling Unit number can be tracked and from Handling Unit number pallet number and pallet line is tracked easily from sheet no.1.
As the finished goods are moved from pallets to the scanning area; for outward, details from Sheet 1 and Sheet 2 should be updated daily.
Chapter 6
3. Optimum utilization of Storage Space:
1. At big bazaar warehouse the buildings height as much as possible should be utilized. In Big Bazaar warehouse much space is wasted by not storing goods as high as possible to use warehouses vertical space.Horizontal warehouse space is usually the most obvious and easiest to fill. but a vertical dimension is also a cost factor, and a warehouse operation must utilize this space effectively in order to be efficient.
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Upper Space at warehouse Remains Vacant, It should be utilized.
Chapter 6
At Big Bazaar warehouse material is stored only in horizontally on the warehouse floor, the vertical space remains unused, if this space were used storage capacity of warehouse would be doubled.In the upper portion of the warehouse, a floor can be created that will store lightweight items.
2. Implementation of Material handling system.
Racks are frame works designed to store loads in upright columns diagonally braced for strength, racking to store pallets may created so that material can be lifted with pallets with the help of trolley, few racks with shelves for storage of goods like apparel, delicate goods, gift and crockery items should be prepared in the upper space of warehouse.
For storage of lightweight items vertical carousels can be used, this equipment has a moving belt with number of shelves in it. This equipment will be helpful in quick retrieval and order picking of finished goods.
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Hydraulically operated scissor jack platform trucks can be used for removing pallets from racks. 3. While palletizing goods received, packages should be laid out so that they interlock and build up to a self-supporting unit load, Same SKUs should be stored on a pallet, as it is easier to stack, the stack is self-supporting as same units fit perfectly, it is easy to locate and pick later on
4. To Reduce double handling, the prepared pallets should be sent directly to the designated location without any intermediate storage point to avoid double handling, Pallets to be kept at level above 3(from ground) should be handled by forklifts only to avoid double handling.
6. Cross docking of finished goods should be done.
In this method of storage, on arrival of goods at the warehouse the product is transferred to a staging area or to the delivery vehicle. In this system, the product is not allocated any storage area, because it has been pre-allocated to the individual retail stores.
The merchandise arrives at the distribution facility as pre-labeled or non labeled Merchandise. The non-labeled product requires a laborer to print and place the retail store delivery address label on each cartonHence in this case the GRN and STN will be raised simultaneously, against each invoice unlike the normal process followed in receiving and dispatch.Cross docking is an efficient and cost effective method of retail distribution. It helps to reduce the inventory holding cost and enables more efficient space utilization
Chapter 6
8. Warehouse must reduce handling of material, if a warehouse is to operate efficiently. Therefore the design of any material handling system and its associated activities should minimize movements to flow through the warehouse rapidly and efficiently. The aisle space in the warehouse should not be narrow enough to impede movement in the warehouse facility.
9. Storage according to the moving class the areas should be arranged according to the pick frequencies and the picking attributes of the article.Overall walking distance should be minimized by storing fast movers in the best locations nearest to the receiving and dispatch area,Fast moving products should be stored as close to the main aisle as possible routes
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Goods In Goods Out
Chapter 7
Conclusion.Conclusion.
On time customer delivery, in right quantity, with right cost, at right time, in undamaged condition is the basic objective of warehousing in any organization, keeping this objective in mind, this study at Pantaloon Retail India Limited warehouse was carried out to understand the warehouse management processes, During this study in Big Bazaar Warehouse It was found that few warehousing processes like Order picking, Material handling & storage and control on Inwards (receipts) needed to be improved.
From the data analysis, and study of processes at Big Bazaar Warehouse, I have concluded that by classifying inventory according to ABC Analysis, and carrying out the replenishment of inventory by studying their monthly consumption and lead times the inventory at warehouse can be reduced and controlled
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Low Usage
High usage
Medium usage Bulk Storage
efficiently. This will reduce inventory value and ultimately capital cost of the organization. If the proper storage systems as pallet racks and shelve racks are used First In First Out can be implemented more efficiently, double handling as well as manpower at warehouse can be reduced.
In above recommendations, after implementing we should aim to have inventory not more than one weeks requirement in due course of time after implementation of recommendation given in this report. If we want to be world class the focus for future should be on daily basis instead of weekly stock approach and finally establish a JIT (Just In Time) way of working this will make the company most competitive.
ReferencesReferences
Books :
1. Author - Brian Merchant. Title - Distribution.
2. Author - Geoff Lancaster. Title - Physical Distribution Management.
3. Author - Paul Freathy. Title - The Retailing Book. Principles and Applications.
4. Author - Donald J. Bowersox and David J.Closs.
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Title - Logistical Management.
5. Author - John L. Gattorna. Title - Handbook of Logistics and Distribution Management.
6. Author - Kent N. Gourdin. Title - Global Logistics Management.
Website: www.pantaloons.com www.inventoryoups.com
Manual: Operating Manual of Pantaloon Retail (I) Limited.
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