CHAPTER-1

INDUSTRY ANALYSIS

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RETAIL INDUSTRY
1.1 INTRODUCTION
Retailing is a distribution channel function, where one organization buys products from
supplying firms or manufactures products themselves, and then sells these directly to consumers.
In majority of retail situations, the organization, from whom a consumer buys, is a reseller of
products obtained from others, and not the product manufacturer. However, some manufacturers
do operate their own retail outlets in a corporate channel arrangement.

Retailers offer many benefits to suppliers and customers as resellers. Consumers, for
instance, are able to purchase small quantities of an assortment of products at a reasonably
affordable price. Similarly, suppliers get an opportunity to reach their target market, build
product demand through retail promotions, and provide consumer feedback to the product
marketer.

The Indian retail industry has emerged as one of the most dynamic and fast-paced
industries due to the entry of several new players. It accounts for over 10 per cent of the
country’s Gross Domestic Product (GDP) and around 8 per cent of the employment. India is the
world’s fifth-largest global destination in the retail space.

The Boston Consulting Group and Retailers Association of India published a report titled,
‘Retail 2020: Retrospect, Reinvent, Rewrite’, highlighting that India’s retail market is expected
to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, driven by income
growth, urbanisation and attitudinal shifts.The report adds that while the overall retail market is
expected to grow at 12 per cent per annum, modern trade would expand twice as fast at 20 per
cent per annum and traditional trade at 10 per cent.

Retail spending in the top seven Indian cities amounted to Rs 3.58 trillion (US$ 53.7
billion), with organised retail penetration at 19 per cent as of 2014. Online retail is expected to be
at par with the physical stores in the next five years.

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1.2 HISTORY
1.2.1 ANCIENT INDIA AND RETAILING:

The Indian Retailing of lifestyle goods dates back to prehistoric period. (Nehru,
Discovery of India, 1950). Evidences of ornaments, designer apparels, foot wares, handicrafts,
paintings and sculpture are found in the excavations at Mohenjo-Daro and Harappa. Since
ancient period the diversity exist in food and clothing habits in India. In the ancient period the
diversity in clothing and food habits was largely depending upon the climate, physical features
and traditions in the respective regions. There is vast difference between the habits of ancient
Indian life and modern Indian life. The commonality is found in the retailing practices. The
common is about the retailers who were selling in ancient period and who are selling in modern
times also. In both the times they are found catering to the demands of the customers. In
medieval times the customers were found more commanding. The customers in medieval India
were found to be worthy of setting the rules of marketing. (Premchand, 1986). Indian Lifestyle
goods were always in demand in India and abroad. Evidences are found that trade flourished in
India since ancient times and urbanization of Indian towns has roots in the growth of trade.
Paithan in Maharashtra and Warangal in Andhra Pradesh were flourished mainly due to the
production of fine cloths. (Maharashtra State Bureau of Textbook Production and Curriculum
Research, 2008).

1.3 INVESTMENT SCENARIO

The Indian retail industry in the single-brand segment has received Foreign Direct
Investment (FDI) equity inflows totaling US$ 344.9 million during April 2000–September 2015,
according to the Department of Industrial Policies and Promotion (DIPP).

With the rising need for consumer goods in different sectors including consumer electronics and
home appliances, many companies have invested in the Indian retail space in the past few
months.

 Amazon India expanded its logistics footprint three times to more than 2,100 cities and
towns in 2015, as Amazon.com invested more than US$ 700 million in its India
operations since July 2014.

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 Adidas AG, renowned for its Adidas and Reebok sports brands, has become the first
foreign sports company to get government approval to open 100 per cent foreign-owned
stores in India.

 Walmart India plans to add 50 more cash-and-carry stores in India over the next four to
five years.

 Aeropostale, an American teen fashion retailer, has chosen to enter India over China, and
expects India to be among its top three markets over the next four years with revenue
target of Rs 500 crore (US$ 75 million).

 Opinio, a hyper local delivery start-up, has raised US$ 7 million in a Series-A funding
from Gurgaon-based e-commerce fulfillment service firm Delivery along with investment
from Sands Capital and Accel Partners.

 Textile major Arvind Limited has announced a partnership with Sephora, owned by
LVMH Moet Hennessy Louis Vuitton, a French luxury conglomerate, in order to enter
into the beauty and cosmetics segment.

 Mobile wallet company MobiKwik has partnered with Jabong.com to provide mobile
payment services to Jabong’s customers.

 Data Wind partnered with HomeShop18 to expand its retail footprint in the country.
Under the partnership, HomeShop18 and Data Wind would jointly launch special sales
programmes across broadcast, mobile and internet media to provide greater access to the
latter’s tablet range.

 FashionAndYou has opened three distribution hubs in Surat, Mumbai and Bengaluru to
accelerate deliveries.

 Abu Dhabi-based Lulu Group plans to invest Rs 2,500 crore (US$ 375 million) in a fruit
and vegetable processing unit, an integrated meat processing unit, and a modern shopping
mall in Hyderabad, Telungana.

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  Aditya Birla Retail, a part of the US$ 40 billion Aditya Birla Group and the fourth-largest
supermarket retailer in the country, acquired Total hypermarkets owned by Jubilant
Retail.

 With an aim to strengthen its advertising segment, Flip kart acquired mobile ad network
AdiQuity, which has a history of mobile innovations and valuable experience in the ad
space.

 US-based Pizza chain Sbarro plans an almost threefold increase in its store count from
the current 17 to 50 over the next two years through multiple business models.

1.4 GOVERNMENT INITIATIVES

The Government of India has taken various initiatives to improve the retail industry in India.

 The Ministry of Urban Development has come out with a Smart National Common
Mobility Card (NCMC) model to enable seamless travel by metros and other transport
systems across the country, as well as retail purchases.

 IKEA, the world’s largest furniture retailer, bought its first piece of land in India in
Hyderabad, the joint capital of Telangana and Andhra Pradesh, for building a retail store.
IKEA’s retail outlets have a standard design and each location entails an investment of
around Rs 500–600 crore (US$ 75–90 million).

 The Government of India has accepted the changes proposed by RajyaSabha select
committee to the bill introducing Goods and Services Tax (GST). Implementation of
GST is expected to enable easier movement of goods across the country, thereby
improving retail operations for pan-India retailers.

 The Government has approved a proposal to scrap the distinctions among different types
of overseas investments by shifting to a single composite limit, which means portfolio
investment up to 49 per cent will not require government approval nor will it have to
comply with sectoral conditions as long as it does not result in a transfer of ownership
and/or control of Indian entities to foreigners. As a result, foreign investments are
expected to be increase, especially in the attractive retail sector.

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1.5 RETAIL CLASSIFICATION
Retail industry can be broadly classified into two categories namely- organized and unorganized
retail.

 Organized retail - Organized traders/retailers, who are licensed for trading activities and
registered to pay taxes to the government.

 Unorganized retail – It consists of unauthorized small shops - conventional Kirana shops,

general stores, corner shops among various other small retail outlets - but remain as the
radiating force of Indian retail industry.

1.5.1 KEY DRIVERS OF THE INDIAN RETAIL INDUSTRY

 Emergence of nuclear families

 An increase in the double-income households trend

 Large working population

 Reasonable Real estate prices

 Increase in disposable income and customer aspiration

 Demand as well as increase in expenditure for luxury items

 Growing preference for branded products and higher aspirations

 Growing liberalization of the FDI policy in the past decade

 Increasing urbanization,

 Rising affluence amid consumers

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1.5.2 BOTTLENECKS

 A long way to meet international standards

 Lack of efficient supply-chain management

 Lack of required retail space

 No fixed consumption pattern

 Shortage of trained manpower

 Lack of proper infrastructure and distribution channel

1.6 EMERGING SECTORS/TRENDS IN INDIAN RETAILING

Within retail, the emerging sectors would be food and grocery, apparel, electronics, e-
commerce, fashion and lifestyle.

Incorporation of technology in the organized retail segment has been something to reckon
with in the past few years. Use of computers for merchandise planning and management, control
of inventory costs and supplies and replenishment of goods done electronically, internal store
billing, etc has changed the face of product retailing.

Online retail business is the next gen format which has high potential for growth in the
near future. After conquering physical stores, retailers are now foraying into the domain of e-
retailing. The retail industry is all set to test waters over the online medium, by selling products
through websites. Food and grocery stores comprises the largest chunk of the Indian retail
market.

An emerging trend in this segment is the virtual formats where customer orders are taken
online through web portals which are delivered at the door step the very same day or the
following day. This trend has been catching up with most of the large sized retail chains that
have their websites.

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1.7 MAJOR PLAYERS IN RETAIL IN INDIA
1.7.1 RELIANCE RETAIL LIMITED
Corporate office – Mumbai, Maharashtra | Establishment – 2006 |Market share– 40-80%

Reliance retail limited was incorporated in 2006, a part of Reliance industries. The company has
been rated among the best retail companies in India. It offers complete retail solutions such as
food items, lifestyle, fashion, consumer electronics products, home decorative products etc. The
company has a total of 1500 outlets in the country.

Fig 1.1 Reliance retail logo

1.7.2 PANTALOONS RETAIL LIMITED

Corporate office – Mumbai, Maharashtra | Establishment – 1997 |Market share– 43%

It is a flagship company of Future group and one of the leading retail company in India. The
company has more than 1000 outlets across the India and 35000 employees. Company’s brands
include Big Bazaar, food Bazaar Brand factory, Top 10 and Sitara.

Fig 1.2 Pantaloon retail logo

1.7.3 ITC -LRBD

Corporate office – Kolkata, West Bengal | Establishment – 1910 |

Lifestyle Retailing Business division is a premier clothing retail company in India branding
through Wills Lifestyle and John players. The Company has a diversified range of business
activities in FMCG, Hotels, Paper board, Packaging and Agriculture.

Fig 1.3 ITC logo

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1.7.4 ADITYA BIRLA RETAIL
Corporate office – Mumbai, Maharashtra | Establishment – 2006 |

Aditya Birla retail limited is a subsidiary of Aditya Birla group established in year 2006 which
owns over 500 supermarkets and 15 hypermarkets. The company is rated as top 10 retail
companies in India and received prestigious Master brand Award 2012 by World Brand congress
in retail brand category.

Fig 1.4 Aditya Birla logo

1.7.5 TITAN INDUSTRIES

Corporate office – Bengaluru, India | Establishment – 1984|Market share– 60%

Titan is joint venture between Tata group and the Tamil Nadu Industries development
corporation established in year 1984. Titan is dominating the Indian Watch Industry since then
and become global international brand. Titan also has a great retail presence in jewellery
business and its brand Tanishq is one amongst the top retail jewelry in India.

Fig 1.5 Titan logo

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1.8 PORTER'S FIVE FORCES MODEL

Fig 1.6 Porter’s Five force model

1.8.1 THREAT OF NEW ENTRANTS.

One trend that started over a decade ago has been a decreasing number of independent
retailers. Walk through any mall and you'll notice that a majority of them are chain stores. While
the barriers to start up a store are not impossible to overcome, the ability to establish favorable
supply contracts, leases and be competitive is becoming virtually impossible. Their vertical
structure and centralized buying gives chain stores a competitive advantage over independent
retailers.

1.8.2 BARGAINING POWER OF SUPPLIERS.

Historically, retailers have tried to exploit relationships with suppliers. Bargaining power
of buyers is moderate because of the size and concentration of major retailers. To reduce power
and you retain customers, retailers seek to differentiate products and create strong brands.
Individual private customers have a relatively low bargaining power in front of large retail
chains, however, their power is greater for small retailers, who are less organized. A contract
with a large retailer such as Wal-Mart can make or break a small supplier. In the retail industry,
suppliers tend to have very little power.

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1.8.3 POWER OF BUYERS.

Individually, customers have very little bargaining power with retail stores. It is very
difficult to bargain with the clerk at Safeway for a better price on grapes. But as a whole, if
customers demand high-quality products at bargain prices, it helps keep retailers honest.

1.8.4 THREAT OF SUBSTITUTE PRODUCTS.

The tendency in retail is not to specialize in one good or service, but to deal in a wide
range of products and services.This means that what one store offers you will likely find at
another store. Retailers offering products that are unique have a distinct or absolute advantage
over their competitors.

1.8.5 COMPETITIVE RIVALRY

It is increased by equal size and power of dominant retailers who are pushing to increase
market share.The trend of extinction of small retailers through acquisitions, mergers alliances
and high cost to exist this market.Among leading group there are More, Reliance store, Big bazar
and Flipkart that are dominating the large markets of retail sector in India.

Table 1.1 Analysis of 5 forces

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 CHAPTER-2

COMPANY PROFILE

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2.1 COMPANY INTRODUCTION

Reliance Retail, Ltd. is a subsidiary company of Reliance Industries. Founded in 2006

and based in Mumbai, it is the second largest retailer in India. Its retail outlets offer foods,
groceries, apparel and footwear, lifestyle and home improvement products, electronic goods, and
farm implements and inputs. It focuses on consumer goods, consumer durables, travel services,
energy, entertainment and leisure, and health and well-being products, as well as on educational
products and services

Reliance Retail is the retail initiative of the group and an epicenter of our consumer
facing businesses. It has in a short time forged strong and enduring bonds with millions of
consumers by providing them unlimited choice, outstanding value proposition, superior quality
and unmatched experience across all its retail stores.

Reliance Retail has adopted a multi-format strategy and operates convenience stores,
supermarkets, hypermarkets, wholesale cash & carry stores, and specialty stores and has
democratized access to all types of products and services across all segments for all Indian
consumers.

2.2 MISSION OF THE COMPANY

Reliance’s mission is:
 To provide the best and most value-adding advice within investor relations, financial
communications, media relations, crisis communications, issues management and CSR
reporting

 To be an independent sparring-partner and to provide excellent advice for our clients in

connection with IPOs, ECM and M&A transactions, corporate governance-related issues
as well as in connection with preparations of contingency communications plans
regarding public takeovers

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2.3 VISION OF THE COMPANY
Reliance’s vision is:
 To be our clients’ ’first call’ and preferred collaboration partner within our business areas

 To consistently exceed our clients’ expectations for professional and value-adding advice

2.4 VALUES OF THE COMPANY

They are governed by their fundamental values:
 Quality: We do not compromise – we have a passion for the best quality

 Innovation: We are innovative and wish to enthuse our clients

 Ambition: We set high objectives and push to achieve the best results

 Honesty: We are honest towards our clients, also when it may be unpleasant

 Integrity: We keep our word, guard confidentiality, and maintain a high level of integrity

2.5 MARKET ENVIRONMENT AND OUTLOOK

Twenty-first century India reflects the potential to withstand challenges and emerge as a
significant contributor to the global economy. Aspirations and capabilities of over a billion
people are creating a huge market for both domestic and global investment.

India is the world's fifth largest retail market (Source: Retailing-Sector-Analysis-Report

by Equity Master November 2014). There are several favourable factors at an interplay, which
are driving consumption boom in the Indian market. Favourable demographics, urbanisation and
rising education levels are affecting growth in incomes, and increasing spending power is
translating further into increasing household consumption. As incomes rise, the shape of the
country's income pyramid is also getting transformed. The cascading effect of wealthier
households, wanting to live an aspirational lifestyle would further drive India's consumption
boom.

Overall India's retail business is projected to nearly double to $ 1 trillion by 2020 from $
600 billion in 2015. The retail market is expected to grow by 12% in line with historical trends.
(Source: Retail 2020: Retrospect, Reinvent, Rewrite by BCG and RAI, 2015)
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 Modern trade is expected to grow three times to $ 180 billion by 2020 from $ 60 billion
in 2015. Traditional trade is projected to grow at 10% annually, while modern trade is projected
to grow at almost twice this pace.

India's e-commerce market is expected to grow exponentially over the next five years.
Internet users are expected to increase three times from ~200 million in 2014 to ~600 million by
2020, due to increased proliferation of smartphones, lower cost of connectivity and improved
quality and expanded reach in lower tier cities.

Even though, India continues on its current high-growth path for the long term, the
economy is prone to headwinds in the short run. The growth path began slowing down in the last
few years, because of low level of macro-economic activity, caused by high interest rates, rising
inflation and investor pessimism.

Amid escalating food prices, high borrowing rates and marginal real wage growth,
consumers tend to postpone discretionary spend.

Going forward, the Indian economy is expected to maintain its growth momentum aided
by stronger growth enabling factors like stress on improved governance, reforms towards more
competitive and market oriented policies, restructuring of welfare measures aimed at improving
end level benefits.

India's organised retail would continue to surge as customers look for an aspirational
lifestyle, and are willing to pay for superior shopping experience and better quality products at
attractive prices.

2.6 RETAIL BUSINESS AND COMPETITIVE POSITION

2.6.1 OPERATING STRATEGY

Reliance Retail is the retail initiative of the group and is central to Reliance's consumer facing
businesses. Reliance Retail leads group's efforts in enabling inclusion, growth, opportunity and
building sustainable societal value for millions of Indians.

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  Leadership: Over the years, Reliance Retail has aimed to create an operating model that
can provide scalability and sustainable value. In its short but meaningful journey, it has
attained leadership position in key format sectors. It continues to make investments in
building retail infrastructure that is aimed at improving the shopping experience for
millions of consumers and improving the lives of kiranas and small shopkeepers.
 Innovation: The intrinsic strategy of Reliance Retail remains in its ability to respond to
evolving consumer demands and provide innovative products and services that enhance
their shopping experience. It has embraced technology to innovate customer experience
in the stores. 3D rendering of Mock Shop Planogram for in-store execution, analytics to
slice and dice millions of transactions to understand what customers buy and how their
experience can be further improved, introduction of innovative merchandise through own
brands and 'Reliance One' loyalty programme across multiple formats are examples of
innovation and uniqueness which give Reliance Retail a competitive advantage.
 Operational Excellence: Reliance Retail is committed to achieving the highest levels of
operating efficiencies and effectiveness across all business activities, both customer
facing and internal. Efficient planning, superior processes supported by automation and
meticulous execution driven by operating discipline forms the bedrock of all operations.

2.7 SECTOR OVERVIEW

Reliance Retail operates in five core format sectors viz., Value Formats and others, Fashion and
Lifestyle, Digital, Brands and Jewellery.

2.7.1 VALUE FORMATS AND OTHERS

Food and grocery constitutes the largest category in the consumption basket and is
estimated at around 60% of consumer spending (Source: Deloitte – Indian Retail Market
Opening More Doors, January 2013). The penetration of organised retail is among the lowest in
this category, which creates an unprecedented opportunity for growth of modern retail.

Value formats offer a comprehensive range of products ranging from fresh produce,
dairy, staples, processed food, food/non-food FMCG products and much more to delight

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customers. Value formats operate the largest chain of full service convenience stores,
supermarkets and hypermarkets on a highly integrated supply chain model.

The linkages with the farm has brought about transformational changes in the quality of
life of farmers, also enhancing the quality of produce, reducing wastage by shortening the time to
move fresh produce and reducing intermediaries in the value chain, thereby benefiting all.

Modern grocery retail has evolved in India and so have the customers. To remain relevant
to weekly and monthly shopping missions of a household, value formats have successfully
maintained a fine balance of serving local tastes by offering small brands, as well as national and
international brands.

Value formats have been focusing on own label products that stand true to the tag-line
of 'Trusted Quality, Reliance Price'. Several new products and categories were added to the
strong own label portfolio. During the year, the business recorded a participation of up to 25%
from own label brands in key categories, such as Home Personal Care and Dairy. With a broad
selection of own label products, complemented by well-known brands, value formats optimally
meet the diverse needs of Indian consumers.

Value formats also lanched a e-commerce channel through www.reliancefreshdirect.com.

The site has received overwhelming response and is still under pilot. The online channel
provides the convenience of delivery of fresh produce, dairy, packaged food and much more at
the door step.

Reliance Fresh has been included in the list of 'Most Trusted' service brands in India by
Brand Equity, The Economic Times and continues to improve its position year after year. This
represents the faith of consumers in patronising the chain, which continues to remain as India's
largest grocery retailer.

Traditional retail is characterised by the presence of over 12 million kirana shops in the
country. These kirana shops operate their retail business on a fragmented distribution network,
with presence of a number of intermediaries. Reliance Market, the wholesale cash-and-carry
format aims at supporting their growth and providing them with a modern distribution system.

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 Reliance Market serves traditional kiranas, hotel, restaurant and catering (HORECA),
small and medium institutions, thereby generating sustained social value.

Reliance Market serves deliveries to kiranas to ensure that they focus on their business,
while it empowers them with the right merchandise on a timely basis. In a short duration,
thousands of kiranas have benefited from this programme and the business continues to enroll
and engage with newer kirana members each day.

Reliance Market has established leadership in wholesale cash-and-carry segment in the

country with 43 operational stores and enjoys patronage of more than 1.5 million registered
members.

2.7.2 FASHION AND LIFESTYLE

India's apparel market is worth around ` 2.3 lakh crore (Source: Deloitte – Indian Retail
Market Opening More Doors, January 2013), of which the organised sector accounts for 24% of
the overall pie. The entire market is growing at a CAGR of 9% with women's wear and kids'
wear being the fastest growing categories.

With rising disposable income, exposure to western broadcast media, access to better
education and younger demographics, the fashion and lifestyle sector is poised for robust growth.

Reliance Trends, the apparel and accessories specialty format, is a fashion destination for
young at heart, value conscious style seeking men and women. The format offers an extensive
range of own labels, apart from other national and international brands. Over the years, it has
successfully democratised fashion by making 'fast fashion' accessible to the young and
aspirational customers.

Reliance Trends sells over 1,50,000 pieces of garments per day across its stores with a
portfolio of over 20 private label brands (targeting different customer segments), which account
for 70% of its turnover. Through its private brands, Trends has been able to establish a unique
differentiated offering to its customers.

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 Reliance Trends is the largest apparel retailer in the country with largest geographical
footprint. Reliance Trends has continued on its growth trajectory in the period and has opened 45
new stores taking the total store count to 200 across 100 cities.

With an eye on offering the most fashionable clothes to its customers, Reliance Trends
operates a state-of-the-art design studio, fully integrated with a sampling and quality testing
facility. With quality and comfort in mind, Trends offers to its customer's affordable fashion that
is designed to meet everyday fashion desires.

Trends continues to leverage its international sourcing capabilities to source the best of
fabric and product technology from around the world. International sourcing offices as well as its
existing regional sourcing offices across India aid in converting the fabric to the finished product
at best prices, while ensuring the highest adherence to quality.

Reliance Footprint, the specialty footwear format is offering footwear and accessories
through a range of own, national and international brands. The format attained a milestone of
opening 200th store during the year, making it a leading national multi-brand footwear chain.

Own brands contribute 15% of turnover and gives it a competitive edge, so that the
format is able to offer superior designed products at great value.

Payless Shoe Source, which runs the largest family footwear store chain in western
hemisphere was launched in India in an exclusive partnership with Reliance Retail during the
year. In a short period, the chain has expanded to over 14 stores and is witnessing great
enthusiasm from customers for innovative designs at affordable prices.

The successful partnership with Marks & Spencer (M&S) continued to grow with strong
same store sales growth, as well as roll out of new stores during the year. During the year, the
business opened 12 stores, including launching the first M&S standalone beauty and lingerie
store and men's only M&S store in India. The business continues to maintain thrust on
innovation and focuses on several meaningful innovations, like providing an anti-bacterial finish
in all shirt packs, quick dry swimwear products, sleek and sculpt body shaping innerwear among
several other product innovations.

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2.7.3 DIGITAL

Consumer Durables and Information Technology (CDIT) is one of the major categories
in the consumption basket that reflects the aspirational lifestyle of India's consumers.

The sector has been hit by industry slowdown. To add to the pain, high interest rates have
compelled consumers to postpone spending on large ticket items to restrict their family budgets.

The sluggish consumption pattern of digital products is expected to be a transient

phenomenon, as younger demographic population supported by new job creation and aspirational
lifestyle is likely to bring back industry demand.

Fig 2.1 Reliance Digital Express Store

Unabated by the industry impact, Reliance Retail continued its growth in the digital
sector during the year. Reliance Digital operates multiple formats, offering consumer electronics,
home appliances, IT and telecom products.

Reliance Digital, the CDIT products retailing format, has established itself as a complete
destination store that offers comprehensive assortment of top brands, a large selection of
innovative products, attractive pricing and best-in-class service.

Digital Express Mini is a smaller store format catering to mobility and communication
needs of the consumers. The rate of opening stores during the year has been on an accelerated
path for Digital Express Mini format. In a short period, the format has established itself as the

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country's largest mobile phone retail chain. The format is increasingly becoming a distribution
platform for most of the national and international brands as it offers tremendous reach to over
150 cities in India, with further plans to take the format to over 800 cities.

ResQ, the service arm of digital continues to expand and strengthen its capabilities. It is a
full-fledged service organisation and is India's first multi-product, multibrand and multi-location
service network that provides solutions encompassing end-to-end product life cycle requirements
for the entire range of CDIT products and other value-added services.

Reliance Digital offers cutting-edge, aesthetically designed, high value products through
the own-label brand 'ReConnect'. ReConnect products are offered in over 100 products across all
core product categories ranging from Tablets, TVs to accessories. ReConnect contributed up to
18% penetration for several CDIT product categories representing steady increase in the own
label penetration.

Digital format sector continued its rapid expansion during the year. It added 912 stores to
its tally of 284 stores at the beginning of the year and built upon its leadership position and
achieved a distinction of crossing the 1,100 stores mark.

Built around the central theme of providing cutting-edge technology solutions, the Digital
Express format offers a wide range of products and helps customers connect with their world
from anywhere at any time.

2.7.4 JEWELLERY

During the year, jewellery demand remained sluggish owing to weak macro environment.
Regulatory changes severely curtailed gold imports, resulting in scarcity and spiralling cost of
imported gold. The inevitable outcome was higher gold prices and weak consumer demand.

Reliance Jewels was focused on undertaking several process improvement initiatives to

augment the customer experience in the stores. These initiatives included introduction of
technology solutions catering to jewellery retail, setting up of centralised distribution centre for
faster delivery of goods to stores, training of store staff to improve better service to customers
and others.

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 There is also an added focus on building in-house designs so that customers can get most
exquisite designs, which are uniquely available at Reliance Jewels store.With the Government
relaxing import restriction recently, better availability of bullion and stabilising of gold prices,
the business growth should return in the sector in the near future.

2.8 BRANDS

Reliance Brands has a portfolio of 40 brands that span across the entire spectrum of
luxury, bridge to luxury, high-premium and high-street lifestyle space. Reliance Brands continue
to partner with new and revered international brands. During the year, Reliance Brands
announced partnership with ABG Juicy Couture, LLC for a distribution agreement for the Brand,
Juicy Couture in India. Reliance Brands also partnered with BCBG MAX Azria Group, Inc. to
bring in India, an international women's wear brand known for its contemporary fashion
sensibilities.

Reliance Brands now operates 107 stores for international brands. The strong partner
portfolio reassures that Reliance Brands is seen as a partner of choice for international brands.

Fig 2.2 Business division of Reliance retail

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The Following fig 2.3 Shows the Progressive Joint Venture of Reliance Retail with Global Brands

Fig 2.3

2.9 FINANCIAL PERFORMANCE

Fig 2.4 EBIT

Reliance Retail business grew by 21.2% to reach revenue of ` 17,640 crore as

against ` 14,556 crore registered in the previous financial year. EBIT for the year grew by 3.5x
to ` 417 crore.

It continued to grow profitably, achieving earnings before depreciation, finance cost and
tax expense (EBDITA) of ` 784 crore, up 116% on y-o-y basis. The format sectors collectively
witnessed a five-year CAGR of 31% in revenues.Reliance Retail witnessed strong same store
sales growth up to 17% across format sectors over the last year. Continued focus on providing

23
better shopping experience, coupled with strong store operations and utilisation of back-end
infrastructure efficiencies, has resulted in this year's strong performance.

2.9.1 STORE COUNT AND ADDITIONS

Fig 2.5 Revenue mix

During the year, Reliance Retail consolidated its market leadership in all of the focus
sectors of digital, lifestyle and value sectors. During the year, Reliance Retail undertook an
unprecedented store opening plan on an accelerated pace and added a net total of 930 stores to
further increase its reach in the underserved markets. A total of 0.9 million square feet area was
added during the year.

As on 31st March 2015, Reliance Retail operated 2,621 stores, covering an area of over
12.5 million square feet across 200 cities.

The performance of various format sectors during the year is detailed below fig 2.6.

Fig 2.6

24
2.10 HUMAN RESOURCE (HR) TRANSFORMATION

RIL HR has earmarked a dedicated team reporting to Group Chief Human Resource
Officer (CHRO), under the newly formed role of 'Governance, Integration, Risk & Assurance' to
drive the 'Reliance Management System (RMS)' journey for RIL HR. As a result, RIL HR
function has strengthened its impact in its day-today functioning, and is raising its bar of
excellence to ensure timely availability of necessary talent and capabilities and engage and help
talent to perform sustainably.

During FY 2014-15, RIL has implemented three of the four 'waves' of the R-HR Transformation
process, which included:

 Rolled out 'Our Values & Behavior’s', to guide it through its mission and vision in the
coming years

 Unification of RIL's position grading across the Company

 Performance management that balances long term and short term goals, as well as
delivery and behaviors

 Annual cash bonus alignment to market rates and linked to performance outcomes

 Consistent delegation of authority to empower managers to make decision on people

related matters

 Best-in-class talent management and succession planning practices for building RIL's
leadership pipeline

 Career Acceleration Programme (CAP) for young and high potential employees

 Alignment of internal and external job markets, underpinned by a standard recruitment

process

 Five-day working week

Wave 4 of R-HR Transformation, comprising Leadership Development and Learning, is

expected to be rolled out by July, 2015.

25
2.10.1 HEALTH AND WELLBEING

RIL is driven by the philosophy of 'One Reliance. Healthy Reliance!'

RIL employees undergo regular periodic medical examinations which are also extended
to contract employees at manufacturing sites. The results are maintained online, and analysed to
provide targeted interventions at individual and group levels. A high alert recall is then sent as
per the pre-defined criteria, and a follow up is done until the parameter returns to normal.

RIL has also implemented a Programme called 'Task Based Health Risk Assessment'
(TBHRA). The programme focusses on approach to evaluate occupational hazard effects on
individual with respect to task and job position, and also provide 'exposure data' linked to each
employee or group of employees. A significant initiative, 'REFERS' (Reliance Employee and
Family Emergency Response Services) offers 24x7 assistance in case of any medical, accident,
fire and security exigencies.

In addition to emergency medical services, the Occupational Health Centres (OHC) offer
preventive, promotive, curative and rehabilitative health services to its employees. All centres
are equipped with state of- the-art diagnostic and therapeutic equipment.

Across RIL, as a part of awareness, it celebrates No Tobacco Day, World Diabetes Day,
Women's health awareness drive and World Heart Day. During the FY 2014-15, RIL's
expenditure on HSE was ` 289.75 crore.

RIL has been accredited by agencies like Joint Commission International, National
Accreditation Board for Hospitals, National Accreditation Board for Laboratories, etc. for its
initiatives and activities in the field of health and well-being.

2.10.2 SAFETY

RIL targets zero injuries and incidents. Safety is a critical aspect in delivering responsible
products, and hence, RIL conducts its operations considering safety of its employees, suppliers
and vendors, as well as communities in which RIL operates. A fully equipped and well-qualified
HSE organisation is in place at all locations providing necessary governance, documentation and
HSE assurance. To support its HSE organisation, RIL is backed by a Centre of Excellence at the

26
Corporate, which brings in subject matter expertise in various fields of HSE, apart from
governance. To ensure the effective functioning of the Health, Safety and Environment
Management Systems (HSE-MS), and for conducting regular performance reviews, RIL has also
formed a board level HSE Committee.

Fig 2.7 Injury rate at manufacturing location

Fig 2.8 Lost day rate at manufacturing location

RIL's HSE Learning and Development (L&D) programmes and e-modules are designed
to equip employees with skills needed for safe operations. These modules cover workplace risk
and process risk management. This e-learning is corroborated by field training. Collaborating
and networking with global institutions and industries has helped in improving the competencies
at every level of line management.

The management of Process Safety Risk is part of Process Safety Management in HSE
Management framework. At RIL, an integrated robust system is in place to monitor process
safety incidents and other HSE incidents.

27
 RIL has implemented 'Learning From Incidents' across its sites to interpret incidents and
make improvements in the existing practices. A team of qualified specialists provide
recommendations. The action plan is monitored through a comprehensive and robust tracking
system to ensure complete adoptability of the plan.

2.10.3 NURTURING AND MANAGING TALENT

RIL's business strategy is aimed at building social capacity, which leads to sustained
growth. RIL has adopted the 70:20:10 principle for nurturing talent. The principle focuses on
providing its people three categories of experience, 70% through the challenging work on hand,
20% through interaction with people and 10% from training activities.

While the five functional and four business academies give emphasis to enhancing the
functional and domain competencies of employees - through e-learning, classroom training and
on-the-job assignments. The Reliance Institute of Leadership focused on building core RIL
values and behaviours among employees, through a series of customized workshops to firmly
establish the principle that, 'How' we do things at RIL, matters as much as 'What' we do.

RIL imparted more than a million man-hours of trainings (1.76 million man-hours) to its
people, both through internal and external subject matter experts in FY 2014-15.

Fig 2.9 Traning

RIL partnered with leading institutions and professional bodies worldwide, including the
Indian Institutes of Management, Indian Institutes of Technology, Harvard Business School,

28
Bersin by Deloitte and Corporate Executive Board, among others, to provide 'anywhere-
anytime', world-class e-learning and classroom programmes.

To build tomorrow's leaders, RIL has rolled out the Career Acceleration Programme
(CAP). This programme identifies, supports and accelerates the development of employees, who
demonstrate high potential and the level of excellence required to move into senior positions
within the organisation.

RIL has created a strong bench strength for leadership roles in the organisation and
focusing on long-term development initiatives, such as mentoring and coaching by leadership
teams, job rotations and stretch assignments.

At RIL, trainings are extended to contractual workforce with a focus towards developing
their capacities, especially on HSE.

To inculcate the culture of quality and enhance the knowledge of business process
excellence, people are being trained on Six-Sigma protocol. This year, a total of 14,546 person
hours of training have been provided on Six-Sigma. During the year, 82 Six Sigma projects have
been executed.

2.10.4 DIVERSITY & INCLUSION

RIL believes in creating an environment for its employees which is free from any
discrimination. The Company culture embraces diversity and aims at treating everyone with
dignity and respect. RIL believes in equality irrespective of gender, sexual orientation, disability,
caste or age.

As on 31st March 2015, RIL's total people strength is 24,930 including 1,195 female
employees. RIL employs people from 19 nationalities.

RIL is strongly committed to gender diversity and has taken progressive measures to increase
representation of women in the organisation, especially at the leadership level. Diversity
initiatives taken at the corporate level includes:

29
  Extension of maternity leave

 Introduction of Adoption leave

 Launched a first ever radio show at RIL to hold discussion on gender diversity

 Organizing Self-defense workshops for women

 Introduction of Internal Complaints Committee

 Pan-India toll free Helpline for safety & security

R-Aadya Initiative: RIL introduced a common platform for women workforce to connect,
converse and collaborate. R-Aadya is about the power of women at RIL. RIL believes that
women have the same potential to contribute towards realizing the organization’s vision. Under
the R-Aadya platform RIL has introduced "Nirbhaya: Be Fearless©" which is an Android
emergency application that can send a distress call or emergency message to a specified contact
or group in an emergency situation.

2.11 COMPETITORS

Reliance retail Vs. Future group retail Vs. ITC retail

Analysing the unique model of Reliance’s retail venture and its growth prospects, the
case facilitates a comparison and evaluation of the three retailing business models based on the
sustainability and effectiveness of the models in the context of Indian retailing sector’s untested
growth trajectories.

Organised retail is still in its nascent stages in India as Indian corporate houses were late
in realising the potential of organised retail. The sector, which was on a boom, was hit hard by
the global financial crisis during 2008. Many of the retailers have resorted to reducing costs by
consolidating formats and models. However, at a time when the existing retailers are tackling
their blues, Reliance Industries Limited (RIL) has made a grant entry to the retail sector through
Reliance Retail Limited (RRL), its retail arm. RRL has opened stores in each of the verticals and
by mid-2009 has been operating around 12 formats, above 920 stores – spread across the country
– in about 4.2 million sq. ft. Though it is the biggest conglomerate in the country, RRL is facing

30
tough competition from two powerful and ambitious retailers – Future Group and ITC. Future
Group’s retailing arm Pantaloons Retail India Ltd. has managed to find growth even during the
recession and its pan-Indian retail model has gained loads of acclamations. ITC has presence in
rural and urban areas alike with its well-positioned national brands in FMCG and Lifestyle
Retailing Business Division (LRBD). The three famous corporate houses, emerging from three
different backgrounds have different operational models. While wading through the crisis, the
three retailers are trying to script a right combination to succeed in the Indian organised retailing
sector.

2.12 TECHNOLOGY

2.12.1 BAR CODING AND SCANNERS

Point of sale systems use scanners and bar coding to identify an item, use pre-stored data
to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept
where the consumer pushes the full shopping cart through an electronic gate to the point of sale.
In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the
consumer has to do is to pay for the goods.

2.12.1 PAYMENT

Payment through credit cards has become quite widespread and this enables a fast and
easy payment process. Electronic cheque conversion, a recent development in this area,
processes a cheque electronically by transmitting transaction information to the retailer and
consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back
to the consumer along with a receipt, having digitally captured and stored and image of the
cheque, which makes the process very fast.

31
2.12.3 ERP SYSTEMS

Various ERP vendors have developed retail-specific systems which help in integrating all
the functions from warehousing to distribution, front and back office store systems and
merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting
his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the
customer better .
2.12.4 SAP
Today, technology is the driving force for business organisation. Reliance Retail limited
is well aware of this and hence it has customized SAP to provide real time solutions to its
business problems. The entire company is system driven. It chiefly relies on SAP. It also makes
use of retailix especially for its chain of stores.

2.13 OPERATIONS IN RETAIL-GETTING PRODUCTS TO SHELF

2.13.1 INDENTING & PURCHASE ORDERS (PO’S)

Indenting – DC Delivery:-

Indenting will be happen after checking stock in the store and goods in transit. Or
whenever if required any changes in indenting due to season, weekends or any festivals then the
quantity is modified. For branded goods there is a automatic indenting system which is handled
by the head office (Mumbai). Delivery of fruit & vegetables is after 48hours after being raised.
Indenting for milk and dairy products is delivered after 36 hours.

2.13.2 RECEIVING

Checking of Delivery in DC
All the Dry DC delivery will be checked by a store staff in the DC staging area before
packing and loading. This is to minimize delivery count error and ensure that right quantity is
delivered to the stores. Behind this all the activity owner is Store Manager.

32
2.13.3 REPLENISHMENT OF GOODS

Replenish Shelf from Goods Receiving Area

Process of moving goods from goods receiving area to the respective

bays/freezers/chillers as per the priority fill rule.

2.13.4 GETTING PRODUCTS FROM SHELF TO CUSTOMERS

Promotion management (setting up the store for new promotions)

Store check that all new promotional stock has been received from the DC and the free
gift under promotional offer are bundle along with the promotional stock. If the free gift is too
large to be accommodated on the shelf – the gift should be provided to the customer at the till.
2.14 ORGANIZATIONAL HIERARCHY

CEO

DIRECTORS

NATIONAL
MANAGER-
OPERATIONS

REGIONAL
MANAGER

STATE
MANANGER

TERITORY TERITORY
MANAGER
MANAGER

CLUSTER CLUSTER CLUSTER CLUSTER

MANAGER 1 MANAGER 2 MANAGER3 MANAGER 4

33
 CLUSTER
MANAGER

STORE STORE STORE STORE STORE

MANAGER 1 MANAGER 2 MANAGER 3 MANAGE 4 MANAGER 5

Store
manager

Asst store
manager

Department Finance Marketing

manager department

Assistant Head Visual

department cashier merchandize

Team
Cashier 2
leader Cashier 1

Team
members

34
 2.15 SWOT ANALYSIS

SWOT Analysis

1.It is Indian retail chain with 3383 stores in 679 cities in India

2.It owns various private label brands

4.It has strong distribution network- 1600 channels in villages

Strengths 5. Strong backing of the parent company

1.Product variety is available but more SKUs are not present due to
inefficient back end infrastructure

Weaknesses 2. Poor inventory control at certain locations is a concern

1.Sourcing directly from farmers; no middlemen could earn more

profit as number of farmers will increase five times in next 5 years

2.Leveraging on brand name and entering into Reliance saloon

3.Large potential to reduce operation cost in cities using strong

Opportunities supply chain

1. Strong competition globally from Carrefour, Metro A.G., Tesco

2.Operationg cost are too high

3.Wallmart is biggest competitor when it comes to sourcing/

Threats backward integration

Fig 2.1 SWOT analysis of Reliance retail

35
 CHAPTER-3

TASKS ACCOMPLISHED DURING

INTERNSHIP

36
I worked as an operation Intern at Reliance Retail Ltd lasted from 13th of April, 2015 to 4th of
June, 2016 and I reported to Mr.Ramesh Thanupillai, Zonal Manager and other mentors of the
Team –Reliance Retail Ltd.
3.1 ROLES AND RESPONSIBILITIES
The following were the roles and responsibilities handled during the internship period.
 To study the about the company profile and the kind of products it deals with and retails.
 To study the operations of three different distribution centres and understand the variants
it’s warehousing.
 Observed and understood all the activities that are carried out in FD08,DR08,CPC
distribution centres of Reliance Retail Ltd.
 Setting up and scheduling the appointment for PO through telecalling and email for the
vendors.

 Created VRN (Vehicles recognition number) ,ASN (Advance shipping notification) for
the inbound vehicles using SAP.
 Created GRN for the goods at the receiving dock.
 Quality check for the inbound goods on daily basis.
 Worked with the inventory team in managing the SKU’s while put away as well as
replenishment and also with the logistics for the outbound goods.

3.2 DESCRIPTION OF TASKS HANDLED

At Reliance Retail distribution centre I was first asked to observe and study the process
involved in supply chain management at FD08.As the process carried out at all the reliance
distribution centres were different for different sub categories , I worked for 3 weeks at FDO8.A
part of the study is understand the role of Distribution Centre in supply chain management by
Examining the internal records at Reliance Retail, Karnataka.

To know about the operations at DC I worked with the inbound team in scheduling the
appointments for the suppliers and created VRN(Vehicle Recognition Number) for the incoming
vehicles which helps to track the vehicle for further process ,ASN(Advanced Shipping
Notification) which helps to notify the customer about when shipping occurs and provide
37
physical characteristics about the shipment and GRN(Goods receipt notice) which used to
confirm that all goods have been received and often compared to the PO before payment is
issued. These are created by using SAP(System Application products) software for the inbound
goods. Also checked the quality of cargo coming inside the DC by using sampling technique
where random SKU’s are picked from different locations, then I worked with the inventory team
in monitoring the goods and replenishment both during put away stage and picking up stage.
Worked with the damage and theft prevention team in developing new ideas for the theft
prevention. I worked with outbound team and Logistics team in dividing the stores into two
waves as per the indent raised by the stores.
Similar tasks are handled in other DC’s (DR08 and CPC) with little changes in process.
At DR08,along with Inventory team also monitored the Y121 goods (i.e.) Private labelled goods
which are produced by Reliance and scheduled transport table for this hub-hub movement goods.
At CPC I worked with the commercial team which is a confluence of both inbound and
outbound. Also worked with NRL(Non Reliance) Vendor management team to sell the rejected
F&V goods to local vendors.

At all three DC’s ,conducted a Semi-structured Informal Interviews of Key Executives

involved in process of supply chain at Reliance Retail, Bangalore to know about basic details
about the DC’s, also Challenges faced by each department and importance of DC in supply chain
of Reliance Retail. As part of Internship, also observed the employees at work at Reliance Retail,
Bangalore.

3.3 CONTRIBUTION TO THE ORGANIZATION

 Helped them to find the lapses between the system and the actual work carried out at the
distribution centre.
 Saved time by generating ASN and GRN, so they could focus on other responsibilities.
 Made report on the recurring default list, by studying on the vendor record.
 Suggested them to use Plastic cable Strap which should be unsealed and it should be
handled by the authorized person at the store .This will prevent the theft during
transportation.

38
 CHAPTER-4
ANALYSIS OF RESEARCH UNDERTAKEN

39
4.1 TITLE
A Study on supply chain management at Reliance Retail,Bangalore.
4.2 INTRODUCTION
Supply chain management can be defined as the flow of goods or services between
entities in the chain to realize delivery of end products or services, satisfying customers at
minimum cost. The research and analysis of the internship program is qualitative. The purpose of
the study was to evaluate the role and operations of Distribution Centre in supply chain
management.
4.3 STATEMENT OF THE PROBLEM
A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into intermediate and
finished products, and the distribution of these finished products to customers. The complexity of
the supply chain will vary with the size of the business and the intricacy and numbers of items
that are manufactured. This study focuses on the supply chain process at Reliance Retail Ltd and
the role and operations of distribution centre in supply chain management.
4.4 OBJECTIVES
 To understand the importance of supply chain management at Reliance retail.
 To understand the role of distribution Centre in supply chain management.
 To analyse the operations of distribution Centre at reliance retail.
4.5 SCOPE OF THE STUDY
Place: Nelamangala, Bangalore
Period:April-June2016
Product: FMCG, General merchandise, Fruits and vegetables
Company: Reliance Retail
4.6 RESEARCH METHOD

In order to obtain in-depth understanding of the processes implemented at the distribution

Centre ,observation and Semi structured interviews are required. Hence a Exploratory research is
undertaken.

40
Data was collected by three methods. They are

 Examination of internal records at Reliance Retail, Bangalore.

 Semi-structured Informal Interviews of Key Executives involved in process of supply
chain at Reliance Retail, Bangalore.
 Observation of employees at work at Reliance Retail, Bangalore.
4.7 DESCRIPTION OF ANALYSIS
4.7.1 THE ROLE OF DISTRIBUTION CENTER IN SUPPLY CHAIN MANAGEMENT
Although warehouses and distribution centers appears to be interchangeable terms, they
do have different characteristics. A warehouse is a commercial building where goods are stored
for some period of time, while the distribution centers trends to store for goods for short time as
per requirement of orders fulfillment i.e on daily basis or weekly or monthly basis. If only a
distribution center is used in supply chain, the production units would need to constantly produce
orders to replenish a distribution center servicing retail stores. Longer and globally oriented
supply chain have often required usage of warehouses where the output of production units can
be stored. Such warehouses can be used to replenish the orders of distribution centers that can be
quite distant (example long distance container shipping).
4.7.1.1 WAREHOUSING
A warehouse is a large, spacious and secured building intend for commerce and
government use. It functions as a storage place for large quantities of goods. There are three
types of warehouses i.e public, company-owned and owned by third party logistic (3PL). The
government uses public warehouses to store temporarily. The business sector usually restores to
company-owned or 3PL.
Warehousing may also cover the completion of goods before distribution. The components and
packing materials are just delivered to the building. The assembly and packing of goods will be
done in warehouse. The product cover will still look new and enticing upon delivery to
distribution centers.
4.7.1.2 DISTRIBUTION
Distribution refers to the delivery of finished goods to buying centers like retail stores,
markets and super marts. Some manufacturers deliver their goods directly to their accredited
retailers. This is advantageous when retailer’s business establishment are just nearby the

41
manufacturer’s place. Direct delivery of goods to retailers can save you from warehousing costs.
However, if You are far from distribution centers, you have to deal with the logistic cost and
inventory frequently. Thus, it is safe to say that warehousing and distribution go hand-in-hand in
providing amore cost effective way of delivering goods. Some warehouses are also utilized as a
buying or retailing center while maintaining its original function.
Distribution center requirement includes location, design and operations, determining the
information and technology requirement, and measuring performance.
Location: Distribution center location is determined based on location of market and customer,
location of supplier, volume of product, transportation rates and the product characteristics,
Local conditions includes cost of labor, land and building, IT infrastructure, transportation
structure and government policies.

Design and operation: The product, how it is received, the nature of customer orders, service
levels and transportation mode are the primary determinants of distribution center design and
operation. Product characteristics include weight, packaging, shelf life, temperature, etc. How
the product is received is critical to both inbound operation efficiency and space utilization.

Information and technology: Information is the critical driver for successful distribution center
operations. Short-term forecast provide information to determine labor and space requirements
over short term planning horizon. Long term forecasts are used for capacity planning
(distribution center size, workforce and equipment requirements). Information technology is
critical in achieving distribution center performance. Warehouse management system directs
where products should be store and provide the necessary functionality for the completion and
optimization of receiving, storing and shipment operations, additional functionality may permits
use of hand held devices, bar coding to optimize efficiency and reduce errors.

Measuring performance: Distribution centers primary objective is to provide right product, at

the right place, in right time and damage free. Distribution centermost common performance
measure includes handling productivity, space utilization, accuracy, damage, service, cost and
inventory. Handling productivity measured in units or lines picked per hour. Space utilization is
evaluated based on total space available storage. Accuracy includes measure of location and

42
record accuracy, percentage of item pick correctly and percentage order pick correctly. Damage
measure includes percentage item picked undamaged when receive by customer and percentage
of order picked undamaged merchandise. Service measures includes fill rate which is based on
number order that were filled completely.
4.7.1.3 KEY FUNCTION OF DISTRIBUTION CENTERS
A distribution center offers value-added services: A well organized and managed
distribution center will provide services like transportation, cross docking, order-fulfillment,
labeling and packaging along with services are necessary to complete the order cycle including
order processing, order preparation, shipping, receiving, transportation, returned goods
processing and performance measurement.
A distribution center is customer focused: Distribution center mission is to provide
outstanding services to its customers.
A distribution center is technology-driven: distribution centers of today must have in place
state of art order processing, transportation management.
A distribution center is relationship-centric: Distribution center must remain focused on its
customer requirements. Distribution center link between supplier and customer, and its
management not only fulfill the customer need efficiently and cost-effective methods of meeting
those needs.
4.7.1.4 IMPACT OF IMPROPER WAREHOUSING AND DISTRIBUTION
Major and minor mistakes alike in warehousing and distribution can result high losses.
Incorrect storage can damage the goods. If the damaged goods are sold, they will either be sold
in a much lower price or not be sold at all. The manufacturers will not be able to get back their
investments. Failures to deliver the goods to the right destinations will cause the business to
cover another round of delivery costs to do two things: to bring back the wrong goods and to
deliver the right ones. Due to delay, goods can get damaged and intended recipients may not
want to accept and pay for the delivery. Another adverse effect of wrong warehousing and
distribution is that it can destabilize the prices of goods. If there is not enough supply due to the
incompetence of the warehousing management, the prices of goods may raise to meet the
unchanged demand of the consumers.

43
4.7.2 DETAILS OF DISTRIBUTION CENTRE
Reliance retail ltd has 18 distribution Centre’s across India.

It maintains its warehouse through WMS (Warehouse management system).

FD08:

It warehouses FMCG,GM products.

Area – 65,000sq.ft

Dispatch Value-22-23crores per month(approx.)

Value of DC-7crores(approx..)

Transportation cost-20 lakhs per month(approx.…)

DR08:

It warehouses GM, dairy products and Reliance private label.

Area – 55,000sq.ft

Dispatch Value-2-3crores per month(approx.)

Value of DC-5.5crores(approx..)

Transportation cost-10 lakhs per month(approx.…)

CPC:

It warehouses fruits and vegetables.

Dispatch Value-20-30lakhs per day(approx.)

Transportation cost-10 lakhs per month(approx.…)

44
4.7.3 OPERATIONS IN DISTRIBUTION CENTRE

4.7.3.1 FD08-Five functions of Warehousing

 Inbound
 Outbound
 Transport
 MIS,QA
 Flow through(fast moving items)

INBOUND:

 Setting up the appointment for PO through telecalling and email.

 PO-9 Series(flow through),4 series(put away).
 First step of inbound is creating the VRN(Vehicle recognition number) for the vehicles.
 Second step of inbound is creating ASN (Advance shipping notification) by using SAP.
 ASN is created by checking 5 points which are called as the panchanamas.
 After creating the ASN we will print out the labels.
 At the receiving dock for 4 series products the GRN (Goods receipt note )will be created
and only then the products are accepted.
 For the 9 series products, they are brought into the dc and then the GRN is created at the
flow through point.
 Once the GRN and the receiver note is created then the process ends for the vendor.
 The merchandize would be detected using RF and then its put away in the racks first in
the bin and then in the buffer.

OUTBOUND

 There are two stages in outbound.

 Picking up the SKU’s based on indent raised by the store.
 Sorting out the products according to store’s requirement at outbound area.
 From outbound staging area, the goods are ready for loading.

45
TRANSPORT

 FD08 caters to 69 stores within and outside of Karnataka.

 It caters to 35-36 stores per day.
 It has the service of 18 vehicles.
 According to the picking schedule the transport is done in 1st WAVE and 2nd WAVE.
 On time delivery is the main target of Transport team.

MIS,QA

 The main function of inventory management is to decide on the stock and to decide how
much stock has to be bought.
 The main target of the inventory management is to reduce the dump as much as possible.
 The DC follows Kaizen and 5s’(sort, set in order, shine, standardise, sustain).
 When the cargo arrives, a quality check is performed, if the products are not up to the
mark the merchandise is rejected by DC.

4.7.3.2 DR08

 The DR08 distribution centre warehouses the general merchandise, frozen, diary,
chocolate.
 They cater products from DC to stores and from DC to DC across India.
 Along with the general merchandise the DR08 warehouses the private label.
 Private label-It is the Hub movement (i.e) DC to DC movement.
 General merchandise and the frozen products are store movement.

Four functions of Warehousing

 Inbound
 Outbound
 Transport
 MIS,QA

46
INBOUND:

 Setting up the appointment for PO through telecalling and email.

 First step of inbound is creating the VRN(Vehicle recognition number) for the vehicles.
 Second step of inbound is creating ASN (Advance shipping notification) by using SAP.
 ASN is created by checking 5 points which are called as the panchanamas.
 After creating the ASN we will print out the labels.
 At the receiving dock for the products the GRN (Goods receipt note)will be created and
only then the products are accepted.
 Once the GRN and the receiver note is created then the process ends for the vendor.
 The merchandize would be detected using RF and then its put away in the racks first in
the bin and then in the buffer.
 The private label products would be put away and stored at Y121 Hub.

OUTBOUND

 There are two stages in outbound

 Picking up the SKU’s based on indent raised by the store.
 Sorting out the products according to store’s requirement at outbound area.
 From outbound staging area, the goods are ready for loading.

TRANSPORT

 DR08 caters to 92 stores within and outside of Karnataka and cold room caters to 60
stores.
 It caters to 35-36 stores per day.
 It has the service of 10 vehicles
 According to the picking schedule the transport is done.
 On time delivery is the main target of Transport team.

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MIS,QA

 The main function of inventory management is to decide on the stock and to decide how
much stock has to be bought.
 The main target of the inventory management is to reduce the dump as much as possible.
 The DC follows Kaizen and 5s’(sort, set in order, shine, standardise, sustain).
 When the cargo arrives, quality check is performed, if the products are not up to the
mark the merchandise is rejected by DC.

4.7.3.3 CPC

 The CPC distribution centre warehouses fruits and vegetables.

 They cater to 92 stores across and outside of Karnataka.

Six functions of Warehousing

 Inbound
 Outbound
 Transport
 QA
 Commercial
 NRL Vendor management

COMMERCIAL

 Setting up the appointment for PO through national vendors and local vendors.
 First step is creating the VRN(Vehicle recognition number) for the vehicles.
 Second step is creating ASN (Advance shipping notification) by using SAP.
 ASN is created by checking 5 points which are called as the panchanamas.
 After creating the ASN we will print out the labels.

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INBOUND/OUTBOUND

 At the receiving dock for the products the GRN (Goods receipt note )will be created and
only then the products are accepted.
 Quality check is performed for the SKU’s according to the reliance quality chart.
 Once the GRN and the receiver note is created then the process ends for the vendor.
 The merchandize would be detected using RF and F&V are sorted manually or by
machines.
 After sorting they are allocated according to the stores indent.

TRANSPORT

 CPC caters to 92 stores within and outside of Karnataka.

 It caters to 92 stores per day.
 It has the service of 28 vehicles.
 According to the picking schedule the transport is done everyday.
 On time delivery is the main target of Transport team as all the goods mostly perishable.

MIS,QA

 The main function of inventory management is to decide on the stock and to decide how
much stock has to be bought.
 The main target of the inventory management is to reduce the dump as much as possible.
 The DC follows Kaizen and 5s’(sort, set in order, shine, standardise, sustain).
 When the cargo arrives, quality check is performed, if the products are not up to the
mark the merchandise is rejected by DC.

NRL VENDOR MANAGEMENT

 The cargo rejected by the DC will be sold to local vendors as non reliance label.
 This is done to reduce the dump.

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4.8 CHALLENGES

 The main challenge for the inbound team is checking the quality of cargo entering the
DC.
 They face the problem of either running out of stock at the wrong time or carrying too
much stock and thus decreasing cash flow while increasing expenses to warehouse extra
materials.
 Lack of inventory oversight can cause a build up of inefficiencies within the warehouse
that slows operations and increases costs.
 They also faced technical challenges in technology the use like SAP software, RF
scanner.
 The major challenge of transportation team is On-Time delivery, Vehicle rotation and
transport cost reduction.
 When the actual quantity handed over by the DC is not as per the R-GRN, the problem of
allocation to the stores is to be solved by manually.
 Handling of fragile goods and theft during the transit.

4.9 FINDINGS

Distribution centre helps in:

 Reduction in inbound transportation cost.
 Reduction in outbound transportation cost because distribution center combines products
from many suppliers in to single outbound shipment.
 By carrying product near to the point of sale distributors provides better responsive time
than manufacturers can.
 Distribution centres may able to offer one stop shopping with products from several
manufacturers.
From distribution operation:
 Inbound department plays a crucial role in whole operations at distribution centre.
 Among three distribution centre,FD08 owns the highest cargo value and movement goods
is high.

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  At CPC, there is no Inventory team since the F&V(fruits and vegetables) has to be
transferred daily to the stores.
 The organisation is top-down hierarchy.

4.10 CONCLUSION
The research shows that as reliance retail ltd is a successful organization and it was
established a decade ago it strategically planned its supply chain management and has
benchmarked the best practices in the business. however, the organization is investing on
technology and infrastructure as they believe in upgrading their technology and processes to
sustain in the business and to obtain a competitive edge. They are replacing their obsolete
practices with contemporary processes as they are venturing into e-commerce.
4.11 SUGGESTIONS
 RFID can be used for the vehicles. It will help to track the movement of the vehicle,
given to the 3PLG service providers.
 Organization can follow bottom-down approach to gain high visibility on organizational
changes and to have higher impact on organisation.
 Since Reliance retail has a good market share in Karnataka they can diversify their
business into E-commerce.

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