SUPPLY CHAIN MANAGEMENT AT FUTURE GROUP INDUSTRY

Contents
Introduction

Supply chain management (SCM) is the oversight of materials, information, and

finances as they move in a process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain management involves coordinating and
integrating these flows both within and among companies. It is said that the ultimate
goal of any effective supply chain management system is to reduce inventory (with
the assumption that products are available when needed). Supply chain
management flows can be divided into three main flows:

Supply chain management flows can be divided into three main flows:

• The product flow

• The information flow

• The finances flow

The product flow includes the movement of goods from a supplier to a

customer, as well as any customer returns or service needs. The information
flow involves transmitting orders and updating the status of delivery. The
financial flow consists of credit terms, payment schedules, and consignment
and title ownership arrangements.
• There are two main types of SCM software: planning applications and
execution applications. Planning applications use advanced algorithms to
determine the best way to fill an order. Execution applications track the
physical status of goods, the management of materials, and financial
information involving all parties.
• Some SCM applications are based on open data models that support the
sharing of data both inside and outside the enterprise (this is called the
extended enterprise, and includes key suppliers, manufacturers, and end
customers of a specific company). This shared data may reside in diverse
database systems, or data warehouses, at several different sites and
companies.
• By sharing this data "upstream" (with a company's suppliers) and
"downstream" (with a company's clients), SCM applications have the potential
to improve the time-to-market of products, reduce costs, and allow all parties
in the supply chain to better manage current resources and plan for future
needs.

Increasing numbers of companies are turning to Web sites and Web-based

applications as part of the SCM solution. A number of major Web sites offer e-
procurement marketplaces where manufacturers can trade and even make auction
bids with suppliers.
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of
India's leading business houses with multiple businesses spanning across the
consumption space. While retail forms the core business activity of Future Group,
group subsidiaries are present in consumer finance, capital, insurance, leisure and
entertainment, brand development, retail real estate development, retail media and
logistics.

In the report we will study about the SCM of the Future group.

Literature Review

Understanding SCM

the APICS dictionary defines the term supply chain as either the “processes from the
initial raw materials to the ultimate consumption of the finished product linking across
supplier-user companies,” or as the “functions within and outside a company that
enable the value chain to make products and provide services to the customer.”
The APICS dictionary defines value chain as those “functions within a company that
add value to the products or services that the organization sells to customers and for
which it receives payment.”

Supply chain—1) The processes from the initial raw materials to the ultimate
consumption of the finished product linking across supplier user companies. 2) The
functions within and outside a company that enable the value chain to make
products and provide services to the customer.

The differences between the definitions of the supply chain and the value chain are
illustrated in Figure 1.1. In Figure 1.1 the supply chain is shown as a series of arrows
moving from the raw materials stage to the final customer.
Each of these arrows represents an individual firm, which has its own value chain. In
Figure 1.1 this value chain is enlarged for one firm in the supply chain so that some
of the internal functions of the firm that add value can be shown. In this example note
that purchasing, marketing, and operations management are shown as part of the
firm’s internal value chain. These are internal functions of the firm and they occur in
every firm that is a member of a supply chain.

Figure 1.1

Value chain—The functions within a company that add value to the products or
services that the organization sells to customers and for which it receives payment.
Another term used in some firms is pipeline. A pipeline is the supply chain for just
one part used in a product. In these firms a supply chain for a complex product
consists of many pipelines. An example of a pipeline would be a product that begins
with rolled steel. A second step in the pipeline is the cutting process. This is followed
by the stamping of the steel into a fender or other component. The component is
then assembled into the final product.
For example, it may be a fender which is assembled onto a car body. Figure 1.1 also
illustrates that the supply chain consists of more than the movement of physical
goods between firms. It is also involves the flow of information between firms. This
communication is necessary to manage and maintain the supply chain. Another
supply chain flow is the flow of money. This is also shown in Figure 1.1 to illustrate
that the primary purpose of every firm in the supply chain is to make money. This
helps to remind all supply chain members that increasing their own income requires
them to do everything in their power to improve the operations of the supply chain

Supply Chain Management Evolution

Supply Chain Management (SCM) represents a significant change in how most
organizations view themselves. Traditionally, firms view themselves as having
customers and suppliers. Historically, a firm did not consider the potential for either
its supplier or its customer to become a partner. In many industries each firm was
very competitive with its suppliers and customers, fearing that they would be taken
advantage of by them.
Beginning in the 1960s and 1970s firms began to view themselves as closely linked
functions whose joint purpose was to serve their customers. This internal integration
was often referred to as materials logistics management or materials management.
In this structure those management functions involved in the material flow were
grouped together. Firms that adopted the materials management structure integrated
their purchasing, operations, and distribution functions to improve customer service
while lowering their operating costs. Those firms that successfully integrated these
functions did improve their performance. But, the firms were still constrained by other
functions in the firm, which were not integrated, such as product development.
Or, the firms were constrained by either their customer’s or their supplier’s
unresponsiveness. These constraints prevented the firms from responding quickly to
changes in the market which delayed their responses to meeting the changed needs
of their customers.
In the 1980s and 1990s many firms continued to further integrate their materials
management functions. As it became clear that leading companies in this integration
were able to increase their profits, more firms began to adopt supply chain
management practices.
An Evolution: From Material Management to Supply Chain Management
Information technology is the key driving force for moving material management to
supply chain management in the second half of the 20th century. In 1970, the cost of
one megahertz of computing power was $7,600. By the end of the century, it was 17
cents. The cost of storing one megabit of data was $5,256 in 1970. It is less than 17
cents now2. Ever since the 1960s, technology has enabled business to create tools
to ease the management of materials. The stages of the business model evolution
are illustrated in Figure 1.3, with Bill of Materials (BOM) processor in the early 60s,
Material Requirement Planning (MRP) in the 70s, Manufacturing Resource Planning
(MRPII) in the 80s, Enterprise Resource Planning (ERP) in the 90s, and supply chain
management (SCM) packages in the early twenty-first century. The impact in the
evolution of advanced technology and computer power on materials and supply
chain management is phenomenal.

In the early 1960s, a BOM processor was written on a 1400 disk computer in
Milwaukee. In mid 1960, the first use of the computer for planning material was
introduced and was named MRP. IBM was the first to introduce MRP software to the
market. The significance of MRP is that it identifies what product is required by the
customer; compares the requirement to the on-hand inventory level and calculates
what items need to be procured and when. By itself, MRP does not recognize the
capacity limitation. It will schedule order release even when the capacity is not
available. Closed loop MRP was then introduced to include capacity requirement
planning as a part of material requirement planning. Advancement of computer
capacity makes the extra mathematical computations for capacity planning available
and affordable In the Mid 80’s, Manufacturing Resource Planning (MRPII) evolved
out of MRP and closed loop MRP. MRPII is a method for the effective planning of all
resources of a manufacturing company. MRPII closed the loop not only with the
capacity planning and accounting systems but also with the financial management
systems. Consequently, all the resource of a manufacturing company could be
planned and controlled as the information became more accessible using MRPII. In
the 1980s, labor cost decreased and material cost increased due to the automation
of production process. Reducing inventory and shortening lead-time became
inevitable to survive the competition. Companies searched for new business
paradigms that would lead to competitive advantage. Just in Time (JIT), Theory of
Constraints (TOC) and Total Quality Management (TQM) are examples of strategies
that helped companies to improve production processes, reduce costs and
successfully compete in a variety of business environments. The late 80s and early
90s witnessed the shift of ‘time to market.” Customers demanded to have their
products delivered when, where, and how they wanted them. JIT requires
cooperation along the entire supply chain with the ultimate goal of maximizing the
profit of the supply chain. The beginning of JIT started along the assembly line and
was not necessarily controlled by a computer but by a Kanban card using pull tags to
suppliers. Sending a Kanban card or an empty container upstream along the
assembly line was the signal to replenish inventory. A phone call to the supplier with
an order was the trigger to deliver the next order. Companies world-wide began to
embrace the philosophy of JIT and supplier partnership as a way to remain
competitiveness. The 1990s caught sight of increased globalization and the Internet
In order to improve competitiveness, companies began realize the potential of
information technology to dramatically transform their business. Instead of
automating old, inefficient processes, companies began to reengineer business
processes using technology as the enabler. This led to the development of ERP
systems that give complete visibility to the organization, integrating previously stand-
alone systems. ERP became more acceptable during the mid- and late 1990s. ERP
is not just MRPII with a new name. ERP is the next logical sophistication level in an
evolutionary series of computer tools for material and supply chain management.
ERP systems provide an integrated view of information across functions within a
company and with the potential to go across companies.
In late 90s and the beginning of 21st century, electronic communications as opposed
to paper transactions allow for a decrease in amount of lead-time required to
replenish inventory. Cutting lead-time minimizes the risk of uncertainty in demand
and decreases the probability of over or under-stocking inventory. The 90s marked
the wide use of the Internet. This provided great opportunity for companies to
integrate E-commerce into their business models. The primary emphasis during that
period was business-to-customer (B2C). Today, the emphasis expands to include
business-to-business or B2B. Back-end system integration, especially supply chain
management provides greater visibility and more strategic capability for companies
to improve profitability and competitiveness

Supply chain management models emerged. A supply chain consists of all stages
involved, either directly or indirectly, in fulfilling a customer request. A supply chain
includes manufacturer, supplier, transporters, warehouses, retailer, third-party
logistic provider, and customer. The objective of supply chain management is to
maximize the overall value generated rather than profit generated in a particular
supply chain
SCM issues in Asia
Supply chain management in Asia is considered more fragmented and less
competitive than those in the United States and Europe, but the gap between these
regions is closing. First, the Asian market is made up of many countries varying in
culture, religion, political system, language, legal system, and stages of economic
development. Some of the major countries include Japan, China, India, Australia,
Indonesia, South Korea, and Thailand. This list of countries presents an obvious
diversity in various aspects. Culturally speaking, most Asian cultures differ greatly
from Europe and the United States. As an example, Asian culture values
relationships greatly, and they are established over time and past dealings. This
precludes the establishment of quick business deals. The focus tends to be on the
establishment of respectful relationships over time.
Second, the transportation infrastructure in many developing countries in Asia is less
developed as compared to that of the US and Europe. Traditionally, rail
transportation was a dominant public transportation in countries such as India,
China, and Japan. Air transportation is undergoing fast development in recent years,
and highway construction is advancing at a rapid pace. For example, China is
aggressively developing its highway system as well as improving the efficiency of its
rail freight industry. In 2000, 50,000 kilometers of new highway was added in China.
Finally, technology is also a major concern to developing efficient supply chains in
Asia. There is weak availability of information technology in many developing Asian
countries. Lowering production costs has been prevalent in Asia. However, the
opportunity to reduce costs now lies in developing efficient logistics and distribution,
which is a weak area in Asia. The use of information technology can assist greatly in
this regard. Collaboration is an area of opportunity in Asia. Currently many of the
collaborative efforts have been informal. As a more formal form of collaboration
develops, especially at the industry level, greater efficiency can be achieved and
savings will occur. One of the main areas that need to be developed to enable this
increased collaboration is information technology. Data integrity needs to be
increased and information needs to be available upon request. This may require
some companies to undergo a certain amount of re-engineering of their supply
chains. In the near future, the outsourcing of logistics and supply chain functions will
pay great dividends in the Asian market. As manufacturing companies begin to
compete for a larger piece of the global market, they will need to compete on more
than just low cost labor. Quality and cycle time management will be essential. To
capitalize on the supply chain efficiency many small manufacturing companies, who
lack the capability, have the need to turn to third party logistics providers to attain a
competitive efficiency.

The Objective of a Supply Chain

The objective of every supply chain is to maximize the overall value generated. The
value a supply chain generates is the difference between what the final product is
worth to the customer and the effort the supply chain expends in filling the
customer’s request. For most commercial supply chains, value will be strongly
correlated with supply chain profitability, the difference between the revenue
generated from the customer and the overall cost across the supply chain. For
example, a customer purchasing a computer from Dell pays $2,000, which
represents the revenue the supply chain receives. Dell and other stages of the
supply chain incur costs to convey information, produce components, store them,
transport them, transfer funds, and so on.
The difference between the $2,000 that the customer paid and the sum of all costs
incurred by the supply chain to produce and distribute the computer represents the
supply chain profitability. Supply chain profitability is the total profit to be shared
across all supply chain stages. The higher the supply chain profitability, the more
successful the supply chain. Supply chain success should be measured in terms of
supply chain profitability and not in terms of the profits at an individual stage. Having
defined the success of a supply chain in terms of supply chain profitability, the next
logical step is to look for sources of revenue and cost. For any supply chain, there is
only one source of revenue: the customer. At Wal-Mart, a customer purchasing
detergent is the only one providing positive cash flow for the supply chain. All other
cash flows are simply fund exchanges that occur within the supply chain given that
different stages have different owners. When Wal-Mart pays its supplier, it is taking a
portion of the funds the customer provides and passing that money on to the
supplier. All flows of information, product, or funds generate costs within the supply
chain. Thus, the appropriate management of these flows is a key to supply chain
success. Supply chain management involves the management of flows between and
among stage sin a supply chain to maximize total supply chain profitability.

link along the way.

Power of Supply Chain Management

The power of supply chain management is its potential to include the customer as a
partner in supplying the goods or services provided by a supply chain. Integrating the
customer into the management of the supply chain has several advantages.
First, integration improves the flow of information throughout the supply chain.
Customer information is more than data. Customer information is data that has been
analyzed in some manner so that there is insight into the needs of the customer. In
the typical supply chain the further the members of a chain are from the end
customer, the less understanding these members have of the needs of the customer.
This increases the supply chain member’s uncertainty and complicates the planning.
Firms respond to uncertainty differently. Some firms may increase inventory while
others may increase lead times. Either action reduces their ability to respond to their
customers. As uncertainty is reduced because they have more information, firms are
able to develop plans with shorter lead times. By improving the information flow in
the supply chain, firms throughout the chain have less uncertainty to resolve during
the planning process. This allows all the firms in the supply chain to reduce inventory
and consequently to shorten their lead times while reducing their costs. This, in turn,
allows the chain to respond to their customer faster.
A second advantage of integrating the customer into the supply chain is that this
integrates the product development function with the other functions in the firm. This
integration allows the product development staff to communicate more with the
customer both internally and externally to the firm, which decreases the firm’s
response time to the customer’s needs and tends to reduce product development
time.
Some firms use the concept of internal customer to remind their employees that
each employee performs just one step in a supply chain whose purpose it is to
provide a good or service to the end customer. The purpose of the internal customer
logic is to keep each employee focused on the needs of the end customer. This
helps employees recognize that not only is their firm just one link of a larger supply
chain, but that the firm itself can be viewed as a chain of processes each of which is
a customer of the preceding process.
Internal customer—The recipient (person or department) of another person’s or
department’s output (product, service or information) within an organization.

By focusing on customers, particularly the end customer, all members of the supply
chain see the need and benefits of obtaining and using information about the end
customer. For example, Figure 1.2 is a simplified presentation of a supply chain for
apparel sold at retail. If information from the end customer can be spread throughout
the supply chain, there can be faster reaction from the supply chain to the end
customer’s requirements. If the retail firm shares its inventory status with the
distributor, the distributor can prepare for reorders. If this information is shared with
the apparel manufacturer, it can prepare for reorders also. As this information travels
back through the chain and helps to eliminate surprises, the lead times for everyone
can be reduced, which also reduces the amount of capital tied up in inventory. If
enough information is being shared, the uncertainty in the demand faced by each
step in the chain is reduced, which also leads to a reduction in inventory throughout
the chain. Reducing uncertainty reduces the need for inventory in each level of the
supply chain, because there is less need for just-in-case inventory.
Since the supply chain members can use the information to produce inventory that is
needed, the information sharing allows each firm to maintain or even improve its
level of service. The following example illustrates the profit that can be made through
proper supply chain management. To illustrate, let’s consider a supply chain with 3
members. In this hypothetical supply chain, if the finished goods inventory for Firm 3
(which sells to the retail store) can be reduced by 50 pieces, its raw materials can
also be reduced by 50 pieces. Considering only the cost of its raw materials, which
is $25, then the firm has reduced its capital invested by $1,250 (50 _ $25) by using
information to reduce inventory by 50 pieces. Assume that Firm 2 pays about $13 for
the raw materials in the finished goods that it sells to its customer, Firm 3, at $25. If
Firm 2 can reduce its finished goods and raw materials by the same 50 pieces Firm
3 was able to reduce, then the amount of its reduction in capital invested due to the
elimination of the 50 pieces of inventory is $650 (50 _ $13). For Firm 1, if it
experiences the same reduction in inventory as the other firms, and its raw material
costs are $6 for each part sold at $13, then its reduction in capital is $300 (50 _ $6).
The total savings in the supply chain due to the reduction of this inventory is $2,200
($1,250 _ $650 + $300).

Problems addressed by supply chain management

Supply chain management must address the following problems:

• Distribution Network Configuration: number, location and network missions of

suppliers, production facilities, distribution centers, warehouses, cross-docks
and customers.

• Distribution Strategy: questions of operating control (centralized,

decentralized or shared); delivery scheme, e.g., direct shipment, pool point
shipping, cross docking, DSD (direct store delivery), closed loop shipping;
mode of transportation, e.g., motor carrier, including truckload, LTL, parcel;
railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC
(container on flatcar); ocean freight; airfreight; replenishment strategy (e.g.,
pull, push or hybrid); and transportation control (e.g., owner-operated, private
carrier, common carrier, contract carrier, or 3PL).

• Trade-Offs in Logistical Activities: The above activities must be well

coordinated in order to achieve the lowest total logistics cost. Trade-offs may
increase the total cost if only one of the activities is optimized. For example,
 full truckload (FTL) rates are more economical on a cost per pallet basis than
less than truckload (LTL) shipments. If, however, a full truckload of a product
is ordered to reduce transportation costs, there will be an increase in
inventory holding costs which may increase total logistics costs. It is therefore
imperative to take a systems approach when planning logistical activities.
These trade-offs are key to developing the most efficient and effective
Logistics and SCM strategy.

• Information: Integration of processes through the supply chain to share

valuable information, including demand signals, forecasts, inventory,
transportation, potential collaboration, etc.

• Inventory Management: Quantity and location of inventory, including raw

materials, work-in-progress (WIP) and finished goods.

• Cash-Flow: Arranging the payment terms and methodologies for exchanging

funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of

materials, information and funds across the supply chain. The flow is bi-directional.

Activities/functions

Supply chain management is a cross-function approach including managing the

movement of raw materials into an organization, certain aspects of the internal
processing of materials into finished goods, and the movement of finished goods out
of the organization and toward the end-consumer. As organizations strive to focus on
core competencies and becoming more flexible, they reduce their ownership of raw
materials sources and distribution channels. These functions are increasingly being
outsourced to other entities that can perform the activities better or more cost
effectively. The effect is to increase the number of organizations involved in
satisfying customer demand, while reducing management control of daily logistics
operations. Less control and more supply chain partners led to the creation of supply
chain management concepts. The purpose of supply chain management is to
improve trust and collaboration among supply chain partners, thus improving
inventory visibility and the velocity of inventory movement.
Several models have been proposed for understanding the activities required to
manage material movements across organizational and functional boundaries.
SCOR is a supply chain management model promoted by the Supply Chain Council.
Another model is the SCM Model proposed by the Global Supply Chain Forum
(GSCF). Supply chain activities can be grouped into strategic, tactical, and
operational levels . The CSCMP has adopted The American Productivity & Quality
Center (APQC) Process Classification FrameworkSM a high-level, industry-neutral
enterprise process model that allows organizations to see their business processes
from a cross-industry viewpoint.[6]

Strategic level

• Strategic network optimization, including the number, location, and size of

warehousing, distribution centers, and facilities.

• Strategic partnerships with suppliers, distributors, and customers, creating

communication channels for critical information and operational improvements
such as cross docking, direct shipping, and third-party logistics.

• Product life cycle management, so that new and existing products can be
optimally integrated into the supply chain and capacity management activities.

• Information technology chain operations.

• Where-to-make and make-buy decisions.

• Aligning overall organizational strategy with supply strategy.

• It is for long term and needs resource commitment.

Tactical level

• Sourcing contracts and other purchasing decisions.

• Production decisions, including contracting, scheduling, and planning process

definition.

• Inventory decisions, including quantity, location, and quality of inventory.

• Transportation strategy, including frequency, routes, and contracting.

• Benchmarking of all operations against competitors and implementation of

best practices throughout the enterprise.

• Milestone payments.
 • Focus on customer demand and Habits.

Operational level

• Daily production and distribution planning, including all nodes in the supply
chain.

• Production scheduling for each manufacturing facility in the supply chain

(minute by minute).

• Demand planning and forecasting, coordinating the demand forecast of all

customers and sharing the forecast with all suppliers.

• Sourcing planning, including current inventory and forecast demand, in

collaboration with all suppliers.

• Inbound operations, including transportation from suppliers and receiving

inventory.

• Production operations, including the consumption of materials and flow of

finished goods.

• Outbound operations, including all fulfillment activities, warehousing and

transportation to customers.

• Order promising, accounting for all constraints in the supply chain, including
all suppliers, manufacturing facilities, distribution centers, and other
customers.

• From production level to supply level accounting all transit damage cases &
arrange to settlement at customer level by maintaining company loss through
insurance company

Supply chain business process integration

Successful SCM requires a change from managing individual functions to integrating

activities into key supply chain processes. An example scenario: the purchasing
department places orders as requirements become known. The marketing
department, responding to customer demand, communicates with several
distributors and retailers as it attempts to determine ways to satisfy this demand.
Information shared between supply chain partners can only be fully leveraged
through process integration.
Supply chain business process integration involves collaborative work between
buyers and suppliers, joint product development, common systems and shared
information. According to Lambert and Cooper (2000), operating an integrated
supply chain requires a continuous information flow. However, in many companies,
management has reached the conclusion that optimizing the product flows cannot be
accomplished without implementing a process approach to the business. The key
supply chain processes stated by Lambert (2004) are:

• Customer relationship management

• Customer service management

• Demand management style

• Order fulfillment

• Manufacturing flow management

• Supplier relationship management

• Product development and commercialization

• Returns management

Much has been written about demand management. Best-in-Class companies have
similar characteristics, which include the following:

a) Internal and external collaboration

b) Lead time reduction initiatives

c) Tighter feedback from customer and market demand d) Customer level

forecasting

One could suggest other key critical supply business processes which combine
these processes stated by Lambert such as:

a. Customer service management

b. Procurement

c. Product development and commercialization

d. Manufacturing flow management/support

e. Physical distribution

f. Outsourcing/partnerships

a) Customer service management process

Customer Relationship Management concerns the relationship between the
organization and its customers. Customer service is the source of customer
information. It also provides the customer with real-time information on scheduling
and product availability through interfaces with the company's production and
distribution operations. Successful organizations use the following steps to build
customer relationships:

• determine mutually satisfying goals for organization and customers

• establish and maintain customer rapport

• produce positive feelings in the organization and the customers

b) Procurement process

Strategic plans are drawn up with suppliers to support the manufacturing flow
management process and the development of new products. In firms where
operations extend globally, sourcing should be managed on a global basis. The
desired outcome is a win-win relationship where both parties benefit, and a reduction
in time required for the design cycle and product development. Also, the purchasing
function develops rapid communication systems, such as electronic data interchange
(EDI) and Internet linkage to convey possible requirements more rapidly. Activities
related to obtaining products and materials from outside suppliers involve resource
planning, supply sourcing, negotiation, order placement, inbound transportation,
storage, handling and quality assurance, many of which include the responsibility to
coordinate with suppliers on matters of scheduling, supply continuity, hedging, and
research into new sources or programs.

c) Product development and commercialization

Here, customers and suppliers must be integrated into the product development
process in order to reduce time to market. As product life cycles shorten, the
appropriate products must be developed and successfully launched with ever shorter
time-schedules to remain competitive. According to Lambert and Cooper (2000),
managers of the product development and commercialization process must:

1. coordinate with customer relationship management to identify customer-

articulated needs;
 2. select materials and suppliers in conjunction with procurement, and

3. develop production technology in manufacturing flow to manufacture and

integrate into the best supply chain flow for the product/market combination.

d) Manufacturing flow management process

The manufacturing process produces and supplies products to the distribution

channels based on past forecasts. Manufacturing processes must be flexible to
respond to market changes and must accommodate mass customization. Orders are
processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes
in the manufacturing flow process lead to shorter cycle times, meaning improved
responsiveness and efficiency in meeting customer demand. Activities related to
planning, scheduling and supporting manufacturing operations, such as work-in-
process storage, handling, transportation, and time phasing of components,
inventory at manufacturing sites and maximum flexibility in the coordination of
geographic and final assemblies postponement of physical distribution operations.

e) Physical distribution

This concerns movement of a finished product/service to customers. In physical

distribution, the customer is the final destination of a marketing channel, and the
availability of the product/service is a vital part of each channel participant's
marketing effort. It is also through the physical distribution process that the time and
space of customer service become an integral part of marketing, thus it links a
marketing channel with its customers (e.g., links manufacturers, wholesalers,
retailers).

f) Outsourcing/partnerships

This is not just outsourcing the procurement of materials and components, but also
outsourcing of services that traditionally have been provided in-house. The logic of
this trend is that the company will increasingly focus on those activities in the value
chain where it has a distinctive advantage, and outsource everything else. This
movement has been particularly evident in logistics where the provision of transport,
warehousing and inventory control is increasingly subcontracted to specialists or
logistics partners. Also, managing and controlling this network of partners and
suppliers requires a blend of both central and local involvement. Hence, strategic
decisions need to be taken centrally, with the monitoring and control of supplier
performance and day-to-day liaison with logistics partners being best managed at a
local level.

g) Performance measurement

Experts found a strong relationship from the largest arcs of supplier and customer
integration to market share and profitability. Taking advantage of supplier capabilities
and emphasizing a long-term supply chain perspective in customer relationships can
both be correlated with firm performance. As logistics competency becomes a more
critical factor in creating and maintaining competitive advantage, logistics
measurement becomes increasingly important because the difference between
profitable and unprofitable operations becomes more narrow. A.T. Kearney
Consultants (1985) noted that firms engaging in comprehensive performance
measurement realized improvements in overall productivity. According to experts,
internal measures are generally collected and analyzed by the firm including

1. Cost

2. Customer Service

3. Productivity measures

4. Asset measurement, and

5. Quality.

External performance measurement is examined through customer perception

measures and "best practice" benchmarking, and includes 1) customer perception
measurement, and 2) best practice benchmarking.

h) Warehousing management

As a case of reducing company cost & expenses, warehousing management is

carrying the valuable role against operations. In case of perfect storing & office with
all convenient facilities in company level, reducing manpower cost, dispatching
authority with on time delivery, loading & unloading facilities with proper area, area
for service station, stock management system etc.
Components of supply chain management are as follows: 1. Standardization 2.
Postponement 3. Customization

The management components of SCM

The SCM components are the third element of the four-square circulation framework.
The level of integration and management of a business process link is a function of
the number and level, ranging from low to high, of components added to the link
(Ellram and Cooper, 1990; Houlihan, 1985). Consequently, adding more
management components or increasing the level of each component can increase
the level of integration of the business process link. The literature on business
process re-engineering, buyer-supplier relationships, and SCM suggests various
possible components that must receive managerial attention when managing supply
relationships. Lambert and Cooper (2000) identified the following components:

• Planning and control

• Work structure

• Organization structure

• Product flow facility structure

• Information flow facility structure

• Management methods

• Power and leadership structure

• Risk and reward structure

• Culture and attitude

However, a more careful examination of the existing literature leads to a more

comprehensive understanding of what should be the key critical supply chain
components, the "branches" of the previous identified supply chain business
processes, that is, what kind of relationship the components may have that are
related to suppliers and customers. Bowersox and Closs states that the emphasis on
cooperation represents the synergism leading to the highest level of joint
achievement (Bowersox and Closs, 1996). A primary level channel participant is a
business that is willing to participate in the inventory ownership responsibility or
assume other aspects of financial risk, thus including primary level components
(Bowersox and Closs, 1996). A secondary level participant (specialized) is a
business that participates in channel relationships by performing essential services
for primary participants, including secondary level components, which support
primary participants. Third level channel participants and components that support
the primary level channel participants and are the fundamental branches of the
secondary level components may also be included.

Consequently, Lambert and Cooper's framework of supply chain components does

not lead to any conclusion about what are the primary or secondary (specialized)
level supply chain components (see Bowersox and Closs, 1996, p. 93). That is, what
supply chain components should be viewed as primary or secondary, how should
these components be structured in order to have a more comprehensive supply
chain structure, and how to examine the supply chain as an integrative one

Reverse supply chain Reverse logistics is the process of managing the return of
goods. Reverse logistics is also referred to as "Aftermarket Customer Services". In
other words, any time money is taken from a company's warranty reserve or service
logistics budget one can speak of a reverse logistics operation.

Role of Supply Chain in Indian Organized Retail

The role of supply chain in Indian organized retail is very significant for on it depends
he growth of this sector. The Indian Supply Chain Council have been formed to
explore the challenges that a retailer faces and to find possible solutions for India.

The role of supply chain in the organized retail sector in India should be a shelf-
centric partnership between the retailer and the manufacture for this will create
supply chains that are loss free. This will also give rise to top and bottom line growth.
In the organized retail sector in India the presence of fresh produce (vegetables
and fruits) is very small. This is so for the nature of supply chain is very fragmented.
This shows the important role of supply chain in the organized retail sector in India.

In the organized retail market in India the role of supply chain is very important for
the Indian customer demands at affordable prices a variety of product mix. It is the
supply chain that ensures to the customer in all the various offerings that a company
decide for its customers, be it cost, service, or the quickness in responding to ever
changing tastes of the customer.

The infrastructure in India in terms of road, rail, and air links are not sufficient. And
so warehousing plays a major role as an aspect of supply chain operations. To
overcome these problems, the Indian retailer is trying to reduce trans portion costs
and is investing in logistics through partnership or directly. The Indian organized
retail sector is growing so the role of supply chain becomes all the more important. It
should become all the more responsive and adaptive to customers demand. There is
also need for the supply chain to be more cost efficient and collaborative to win the
immense competition in this sector.

The role of supply chain in Indian organized retail has expanded over the years with
the boom in this industry. The growth of the Indian retail industry to a large extent
depends on supply chain, so efforts must be made by the Indian retailers to maintain
it properly.

Advantages Of SCM in Retail sector

The competitive advantages between retail enterprises lie in the advantage of their
upply chains, the level of supply chain operations will directly determine the overall
competitiveness of retail enterprises . At present, there are more than twenty of the
world’s top retailers entering China, retail industry of China is not only facing fierce
international competition, but also facing domestic market saturation. Faced with the
pressure of market competition, retail enterprises of China must enhance their
competitive advantages through strengthening the building of information echnology.
Supply chain management (SCM) is the process of planning, implementing and
controlling the operations of the supply chain as efficiently as possible. SCM spans
all movement and storage of raw materials, work-in-process inventory, and finished
goods from point-of-origin to point-of-consumption . SCM is the active management
of supply chain activities to maximize customer value and achieve a
sustainable competitive advantage. It represents a conscious effort by the supply
chain firms to develop
and run supply chains in the most effective and efficient ways possible. Supply chain
activities cover
everything from product development, sourcing, production, and logistics, as well as
the information systems needed to coordinate these activities. To achieve a SCM
system, retailer needs to manage the supply chain effectively and apply IT to system
such as communications technology, computer technology. In order to promote the
SCM, retailer must establish a management system. System model must be
established before the establishment of management system. In addition, the unified
modeling language (UML) has been identified as a way of providing a solution to the
modeling bottleneck . Being the standard modeling language in software
engineering, UML has received wide attention not only in academia, but also in
professional software development. The wide acceptance of UML makes it an ideal
language to be used by a critical mass of people to build high quality models of
information system

At present, many experts and researchers have put forward SCM software model,
but most of them are based on the traditional structured method, this paper uses
UML and object-oriented analysis method to analyze business modeling of SCM
system for retail industry, the model can enhance the exchange among the experts,
software designers and users, making system develop smoothly.

Analysis of processes of retail SCM system

Generally speaking, the major functions of retail SCM system include: “project
management”, “procumbent management”, “warehouse management”, “sales
management”, “supplier management”, “management of goods and prices”. Retail
SCM software module is the principal business of procurement management,
warehouse management, sales management, which support enterprise internal
business process. Each business module plays two roles in the supply chain: the
supply side and demand-side. Vendor management module is the retail business
and external supply chain network interface . Integration system model of retail
supply chain management is shown in Figure 1. For the sake of brevity of the paper
and complication of the system, we choose the procurement management as
example to show the process of modeling of SCM system using UML.

3 Modeling of retail SCM system using UML

3.1 Use case analysis

Use case diagrams address the business processes that the system will implement.
Use cases describe the functional capabilities of the system and the external actors
that interact with it . Use case modeling is very popular within the software
engineering community and service requirements can be effectively analyzed
through use case modeling. Use case modeling makes the user understand how the
system works through the relationships between actors and use cases. Use case
modeling is user based and a function oriented analysis method. It is quite effective
as the requirements analysis method. Effective procurement of goods contributes to
the competitive advantage of a retailer. The procurement process links members in
the supply chain. The process of the procurement is normally run by the retailer’s
purchasing department. The structure of a typical process includes the following
stages:
1) Purchasing department set up purchasing plan according to the user’s need plan
and formulate expenditure plan which is delivered to financial department ;
(2) Purchasing department transmit purchase documents to suppliers. Electronic
data interchange (EDI), which involves the electronic transfer of purchase
documents between the buyer and seller, can help shorten order cycle time. EDI
transactions, particularly through the Internet, will increase over the next several
years .
(3) Warehouse department receipt/inspection/in storage goods and delivery
warehouse warrant to financial department.
(4) Financial department formulate account receivable
3.2 Static modeling
Class diagram technology is the core technology of the object-oriented method; it is
well known and widely used among software developers. Class diagram shows the
classes in a system and variety of relationships among classes . Through designing
of class to realization of each use case into the specific class so as to complete the
design of the process of refinement . The analysis of system class is built on the
basis of use case. As analyzed above, the classes of retail SCM system includes
purchasing department, warehouse, examine department, purchasing project
management, purchasing&receiving goods, financial department, purchasing project
management, purchasing list management, supplier management. The class
diagram is shown in figure 3.

3.3 Dynamic Modeling

Use case and class model belong to the static model, system dynamic behavior can
be described using UML dynamic modeling. Dynamic model is used to describe the
function of the system. In the actual application, many diagrams can be used such
as sequence diagram, collaboration diagram, activity diagram and state chart
diagram; these dynamic modeling diagrams can describe object behavior and
interaction between objects from different perspectives . Specifications are
generated.
3.3.1 Activity diagram
Activity diagram emphasizes the flow of control among objects and models the
functions of a system . Procurement management activity diagram is shown in
Figure 4.
1.7.1 Supply chain management challenges
Supply chain integration is difficult for two primary reasons: first, the supply chain is
an integrated system that requires cohesive decisions to optimize the system profit
and value. In practice, different facilities in the supply chain may have different,
conflicting objectives. Second, the supply chain is a dynamic system, which has its
own life cycle and continually evolves. For example, customer demand and supplier
capabilities change over time, as do supply chain relationships. A number of
important challenges exist for supply chain managers. For example, supply chain
design and strategic collaboration are quite difficult because of the dynamics and the
conflicting objectives employed by different facilities and partners. Inventory control
is another tough issue. What is the effect of inventory on system performance? Why
should a supply chain member hold inventory? Distribution network configuration
involves management’s making decisions regarding warehouse locations and
capacities; determining production levels for each product at each plant; and set
transportation flows between facilities to minimize total production, inventory, and
transportation costs and satisfy service level requirements. The sharing of data,
information, and knowledge is a challenge of virtually integrating a supply chain. It
must be noted that a large extent of corporate technical knowledge is difficult to
articulate and tacitly resides in the minds of knowledge workers. To what extent can
emerging information technologies help explicate complex tacit knowledge so that
they can be shared across dispersed or virtual organizational environments?

1.4 Supply Chain Management Models

1.4.1 Competitive priorities and manufacturing strategy

The ability of a supply chain to compete based on cost, quality, time, flexibility, and
new products is shaped by the strategic focus of the supply chain members. A firm’s
position on the competitive priorities is determined by its four long-term structural
decisions: facility, capacity, technology, and vertical integration, as well as by its four
infrastructural decisions: workforce, quality, production planning and control, and
organization. The cumulative impact of infrastructural decisions on a firm’s
competitiveness is as important as long-term structural decisions.
Manufacturing strategy focuses on a set of competitive priorities such as cost,
quality, time, flexibility, and new product introduction. It classifies production
processes to five major types: project, job shop, batch, line, and continuous flow.
“Make-to-stock”, “assemble-to-order”, “build-to-order” and “engineer-to-order” are a
few of the manufacturing strategies used to address competitive priorities to compete
on the market place.
Make-to-stock involves holding products in inventory for immediate delivery, so as to
minimize customer delivery times. This is in the category of push system. Demand is
forecasted and production is scheduled before demand is there.
Assemble-to-order is the strategy to handle numerous end-item configurations and is
an option for mass-customization. Assemble-toorder items use standardized parts
and components. They require efficient and low cost production in the fabrication
process and flexibility in the assembly or configuration stage to satisfy individualized
demand from customers.
Build-to-order, on the other hand, produces customized products in low volume after
the manufacturer receives the orders. Build-to-order items are usually in very small
volumes and require high technical competency, high product performance design,
and effective due date management.
Engineer-to-order produces products that are with unique parts and drawings
required by customers. Product volume is very small and typically is one-of-a-kind in
a job-shop environment. The cycle time from order to delivery is usually long
because of the unique customization nature. MRP planning is extremely important
for engineer-to-order.
1.4.2 Efficient supply chain and responsive supply chain

One of the causes of supply chain failure is due to the lack of understanding of the
nature of demand. The lack of understanding often leads mismatched supply chain
design. Fisher (1997) suggested two distinctive approaches, efficient supply chain
and responsive supply chain, to design a firm’s supply chain.
The purpose of responsive supply chain is to react quickly to market demand. This
supply chain model best suites the environment in which demand predictability is
low, forecasting error is high, product life cycle is short, new product introductions
are frequent, and product variety is high (Table 1.1). The responsive supply chain
design matches competitive priority emphasizing on quick reaction time,
development speed, fast delivery times, customization, and volume flexibility. The
design features of responsive supply chains include flexible or intermediate flows,
high-capacity cushions, low inventory levels, and short cycle time.
The purpose of an efficient supply chain is to coordinate the material flow and
services to minimize inventories and maximize the efficiency of the manufacturers
and service providers in the chain. This supply chain model best fits the environment
in which demands are highly predictable, forecasting error is low, product life cycle is
long, new product introductions are infrequent, product variety is minimal, production
lead-time is long and order fulfillment lead-time is short. The efficient supply chain
design matches competitive priority emphasizing on lowcost operations and on-time
delivery. The design features of efficient supply chain include line flows, large
volume production, and lowcapacity cushions.
Table 1.1. Efficient supply chain and responsive supply chain

Responsive supply
Efficient supply chain chain
Fluctuate, based on
Demand Constant, based on forecasting customer orders
Product life
cycle Long Short
Product
variety Low High
Contribution
margin Low High
Order fulfill Allowed longer fulfillment lead Short or based on
lead time time quoted due date
According to product
Supplier Long-term life cycle
Assemble-to-order,
Make-to-order,
Production Make-to-stock Build-to-order
Capacity
cushion Low High
Parts, components,
Inventory Finished goods inventory subassembly
Flexibility, fast-
delivery, high-
Supply Low cost, consistent quality, performance design
selection and on-time delivery quality

What Is New about Supply Chain Management

Supply chain management, just-in-time production (JIT), quick response
manufacturing,vendor management, and other terms such as agile manufacturing all
share the goal of improving vendor response to customer demand. All of these
philosophies or concepts share the same core values. They attempt to improve
customer service by eliminating waste from the system in all of its forms including
wasted time. Supply chain management embraces the other philosophies and
extends their scope from one firm to all the firms in a supply chain.
There are two forces driving supply chain management. First, is that there is the new
communications technology available now that allows managers to actively manage
a supply chain. Second, customers are demanding lower prices and better products
and services. To meet their customers’ demands, firms are optimizing the entire
supply chain. Supply chain management allows all the firms in a supply chain to look
beyond their own objectives to the objective of maximizing the final customer’s
satisfaction. The payoff for supply chain members that can do this is increased
profits for their shareholders.
The largest barrier to successfully managing a supply chain is perhaps the human
element. Failure to correctly manage the issues of trust and communication will abort
any attempt to manage the supply chain.When there is a lack of trust and
communication, the supply chain’s members will soon succumb to greed or
suspicion that other members of the supply chain are profiting at their expense.When
the communication is not adequate, the supply chain will not improve its response
enough to increase profits for its members. Without an increase in profits, the efforts
to manage the supply chain will be reduced, because there will be no reward for
actively managing it.
Supply chain management requires an unprecedented level of cooperation between
the members of the supply chain. It requires an open sharing of information so that
all members know they are receiving their full share of the profits. Since many of the
firms in a supply chain do not have a history of cooperatio n, achieving the trust
necessary for supply chain management is a time-intensive task
Another way that the firms in the supply chain can save money is by ensuring that
their marketing strategies correspond to the supply chain’s capabilities—i.e., from
their position in the supply chain they can actually
provide what the customer wants. They are also able to gain money by improving the
supply chain’s capabilities to match the market demand with a decreased level of
inventory. Firms are able to do this because they have additional information to
forecast needs and as the lead time is reduced, their need to forecast is reduced.
This reduced need to forecast reduces the need to carry inventory stocks for the just-
in-case scenario.
Collaborative Planning
Many major retailers and large manufacturers have reduced their operating costs
through their use of supply chain management techniques. But, there has been little
effect on the price of the item to the consumer. Some argue that this occurred
because the total amount of inventory in the supply chain was not reduced. Instead,
the inventory may have been transferred to the second and third tier suppliers, but
not eliminated from the supply chain.
Collaborative planning requires the firm to work with customers and suppliers to
ensure that every day all of them have production and delivery schedules that agree
with the needs of the customer. This has to be done routinely and not when the
supply chain or a member is in a crisis. Some firms are using Advanced Planning
and Scheduling (APS) software to aid their collaborative communication. This is a
trend that is just starting, but it may develop into a set of methods by which supply
chain partners could have joint sales forecasts and/or production plans in which a
revision by one partner would be immediately transmitted to the next partner.
For the APS to be effective for collaborative forecasting and planning throughout the
supply chain, it is necessary that a reliable method for passing information between
the different APS systems be in use.When a supplier has only one or two major
customers, it is possible for them to have the same type of software as their
customer.When a supplier has many customers, they cannot have software that
matches each of their customer’s needs.
How to Implement Supply Chain Management
A firm in the supply chain must initiate the attempt to form partnerships and actively
manage the supply chain. Often a firm that has a large amount of market power in
the chain will become the leader of the supply chain. This firm needs to justify the
effort to manage the supply chain by explaining the benefits that will accrue to each
member in the supply chain and to itself. To do this, the supply chain leader must
show the partners where the improvements in the supply chain will arise and how
these will lead to a gain for everyone. To establish trust among the members of the
supply chain, the lead firm must also suggest how communication can be opened up
and how every member will be ensured that it is receiving its fair share of profits.
One recent example of this has been Wal-Mart. For years it has gathered extensive
data on customer buying patterns.Wal-Mart has used this data internally to manage
its own layouts and inventory.Now it is beginning to share all of this data with its
most trusted suppliers. This will allow the supplier who knows how to take advantage
of this data an opportunity to improve service to Wal-Mart while
decreasing its own costs.
Managing a supply chain is more complex and difficult than managing an individual
firm. But, the principles of management used to integrate a firm’s own internal
functions also apply to managing the entire supply chain. For example, a well-
understood phenomenon in the management of a firm is that there is always a
bottleneck that constrains sales. This bottleneck may be internal to the firm (a
process that cannot produce enough to meet demand) or it may be external to the
firm (market demand that is less than the capacity of the firm). This principle applies
to the entire supply chain.While the supply chain is driven by customer demand, it is
constrained by its own internal resources. One difference is that these resources
may not be owned by the same firm. It is possible for the output of an entire supply
chain to be limited because one firm does not have capacity to meet surging
demand. It is also possible for every firm in the supply chain to be operating at a low
utilization because there is not enough demand in the market for the products from
the supply chain. There are bottlenecks inside the supply chain just as there are
bottlenecks inside firms. To properly manage the supply chain, its members must be
aware of the location of their bottlenecks internally and also of the bottlenecks in the
supply chain.

Road map for supply chain management

This text is about managing supply chain through collaboration and is divided into six
major parts: “Concepts and Strategic Issues,” “Purchasing, Supply Network, and
Strategic Sourcing,” “Demand Transformation in Supply Chain,” “Distribution
Network and Transportation,” “e-Business Solutions,” and “Supply Chain
Management Performance and Evaluation.” The flow of topics reflects the theme of
how supply chain management can provide a sound basis for market
competitiveness and sustainable growth through collaboration.
Figure 1.5 shows a road map that spans across departmental and organizational
boundaries of a supply chain. Once it is clear about the concept of supply chain
management, the discussion is extended to how to create supply network and build
strategic partners, how to transform customer’s demand to goods, and how to deliver
the right products to the right customers at the right time and right place.
Since the recent driver in the evolution in supply chain management is information
technology, the text covers cutting-edge e-solutions that trigger many of the current
initiatives in supply chain management. In the last part, the focus is placed on
evaluating effective supply chain performance, which is interfaced with every supply
chain stage.

After the initial wave of e-business, many companies realize that beneath the
Internet application is sourcing structure and physical distribution. Supply chain
management is concerned with more than just movement of materials from raw
material producers to manufacturers, and finally to the end users. The goal of supply
chain management is to create value for the supply chain members with an
emphasis on the end users. The mechanism to realize value-added activities in
supply chain is collaborative planning, forecasting, and replenishment among the
supply chain members.

Future group

Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one of
India’s leading business houses with multiple businesses spanning across the
consumption space. While retail forms the core business activity of Future Group,
group subsidiaries are present in consumer finance, capital, insurance, leisure and
entertainment, brand development, retail real estate development, retail media and
logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates over 16 million
square feet of retail space in 73 cities and towns and 65 rural locations across India.
Headquartered in Mumbai (Bombay), Pantaloon Retail employs around 30,000
people and is listed on the Indian stock exchanges. The company follows a multi-
format retail strategy that captures almost the entire consumption basket of Indian
customers. In the lifestyle segment, the group operates Pantaloons, a fashion retail
chain and Central, a chain of seamless malls. In the value segment, its marquee
brand, Big Bazaar is a hypermarket format that combines the look, touch and feel of
Indian bazaars with the choice and convenience of modern retail.

In 2008, Big Bazaar opened its 100th store, marking the fastest ever organic
expansion of a hypermarket. The first set of Big Bazaar stores opened in 2001 in
Kolkata, Hyderabad and Bangalore.

The group’s speciality retail formats include supermarket chain – Food Bazaar,
portswear retailer - Planet Sports, electronics retailer - eZone, home improvement
chain - Home Town and rural retail chain, Aadhaar, among others. It also operates
popular shopping portal

Future Capital Holdings, the group’s financial arm provides investment advisory to
assets worth over $1 Billion that are being invested in consumer brands and
companies, real estate, hotels and logistics. It also operates a consumer finance arm
with branches in 150 locations.
Other group companies include, Future Generali, the group’s insurance venture in
partnership with Italy’s Generali Group, Future Brands, a brand development and
IPR company, Future Logistics, providing logistics and distribution solutions to group
companies and business partners and Future Media, a retail media initiative.

The group’s presence in Leisure & Entertainment segment is led through, Mumbai-
based listed company Galaxy Entertainment Limited. Galaxy leading leisure chains,
Sports Bar and Bowling Co. and family entertainment centres, F123. Through its
partner company, Blue Foods the group

operates around 100 restaurants and food courts through brands like Bombay Blues,
Spaghetti Kitchen, Noodle Bar, The Spoon, Copper Chimney and Gelato.

Future Group’s joint venture partners include, US-based stationery products retailer,
Staples and Middle East-based Axiom Communications.

Future Group believes in developing strong insights on Indian consumers and

building businesses based on Indian ideas, as espoused in the group’s core value of
‘Indianness.’ The group’s corporate credo is, ‘Rewrite rules, Retain values.’

Values

• Indianness: confidence in ourselves.

• Leadership: to be a leader, both in thought and business.

• Respect & Humility: to respect every individual and be humble in our conduct.

• Introspection: leading to purposeful thinking.

• Openness: to be open and receptive to new ideas, knowledge and

information.

• Valuing and Nurturing Relationships: to build long term relationships.

• Simplicity & Positivity: Simplicity and positivity in our thought, business and
action.
 • Adaptability: to be flexible and adaptable, to meet challenges.

• Flow: to respect and understand the universal laws of nature

Mission

The group share the vision and belief that our customers and stakeholders shall be
served only by creating and executing future scenarios in the consumption space
leading to economic development.

The group will be the trendsetters in evolving delivery formats, creating retail realty,
making consumption affordable for all customer segments – for classes and for
masses.

The group shall infuse Indian brands with confidence and renewed ambition.

The group shall be efficient, cost- conscious and committed to quality in whatever we
do.

The group ensure that our positive attitude, sincerity, humility and united
determination shall be the driving force to make us successful.\

Group companies

• Pantaloon Retail (India) Limited

Pantaloon Retail (India) Limited (PRIL), is India’s leading retailer that operates
multiple retail formats in both the value and lifestyle segment of the Indian
consumer marker. Headquartered in Mumbai, the company operates 16
million square feet of retail space, has over 1,000 outlets (including shop-in-
shops) across 73 cities in India and employs over 30,000 people.

The company’s leading formats include Pantaloons, a chain of fashion outlets,

Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a
supermarket chain, and Central, a chain of seamless destination malls. Some
of its other formats include Depot, Brand Factory, Blue Sky, Star and Sitara.
 Pantaloon Retail is part of the Future Group which has presence in multiple
businesses in the consumption space including consumer finance, capital,
insurance, retail media, mall development, logistics and brand development.

• Home Solutions Retail India Limited

Future Group’s business offers complete retailing solutions for all products
and services related to home building and home improvement. The key
product categories are CDE (Consumer Durable & Electronics), Furniture,
Home Furnishing & Decor, Home Improvement and Home Services. HSRIL
operates retail format Collection i, Furniture Bazaar, Electronics Bazaar,
Home Town and eZone.

• Future Brands Limited

Future Brands Limited (FBL) has been incorporated on November, 2006 and
is involved in the business of creating, developing, managing, acquiring and
dealing in consumer-related brands and IPRs (Intellectual Property Rights).

• Future Media (India) Limited

Future Media (India) Limited (FMIL) was incorporated as the Group’s media
venture, aimed at creation of media properties in the ambience of
consumption and thus offers active engagement to brands and consumers.
FMIL offers relevant engagement through its media properties like Visual
Spaces, Print, Radio, Television and Activation.

• Future Supply Chain Solutions Limited

Future Supply Chain Solutions Limited (FSCS) has been incorporated as a

separate entity and is involved in the business of providing logistics,
transportation and warehousing services for all group companies and third-
parties.

• Convergem Communication (India) Limited

Convergem Communication (India) Limited (CCIL) (formerly known as

Convergem Retail (India) Limited) was incorporated to set up a chain of retail
outlets for dealing in areas of communication, data & voice storage and other
 related products. The company operates mBazaar, mPort and GenM, among
other retail formats.

• Pantaloon Food Product (India) Limited

Pantaloon Food Product (India) Limited (PFPIL) was incorporated with the
object of sourcing and backward integration of food business of the company.
PFPIL has sourcing and distribution bases at all key cities across the country.

• Future Knowledge Services Limited

Future Knowledge Services Limited (FKSL) was incorporated on January,

2007 and is engaged in the business of business process outsourcing and
knowledge process outsourcing.

• Future Capital Holdings Limited

Future Capital Holdings Limited (FCH) was formed to manage the financial
services business of Pantaloon Retail (India) Limited and other group entities.
FCH is one of the fastest growing financial services company in India, with
presence in Asset Advisory, Retail Financial Services and Proprietary
Research. The company operates a consumer finance retail format, Future
Money and manages assets worth over US$ 1 Billion through its various
funds including Indivision, Kshitij, Horizon and Future Hospitality. FCH
subsidiary companies include Kshitij Investment Advisory Company Ltd.,
Ambit Investment Advisory Company Ltd., and Indivision Investment Advisors
Ltd.

• Future Generali India Insurance Company Limited

Future Generali India Insurance Company Limited (FGIICL) was incorporated
on October 30, 2006 to undertake and carry on the business of general
insurance. The approval for carrying on General Insurance Business has
been received from the Insurance Regulatory and Development Authority of
India (IRDA) on September 4, 2007.
 • Future Generali India Life Insurance Company Limited

Future Generali India Life Insurance Company Limited (FGILICL) was

incorporated on October 30, 2006 to establish and conduct the business of life
insurance in India, which comprises of whole life insurance, endowment
insurance, double benefit and multiple benefits insurance etc. The approval
for carrying on Life Insurance Business has been received from the IRDA in
September, 2007.

• Future bazaar India Limited

Future bazaar India Limited (FBIL) is set up as the e-Retailing arm of the
Future Group for providing on-line shopping experience. Futurebazaar.com
was launched on January 2, 2007, and has emerged as one of the most
popular online shopping portals in India. It was awarded with the “Best Indian
Website” award, in the shopping category, by the PC World Indian Website
Awards.

• Weavette Texstyles Limited

Weavette Texstyles Limited was incorporated on December 8, 1994 and is

involved in the business of designing, manufacturing, buying and selling,
importing, exporting, spinning etc of various types of textile fabrics.

• Winner Sports Private Limited

Winner Sports Pvt. Limited caters to the Sports and Lifestyle consumer space.
Winner Sports is the exclusive India Licensee for retailing and marketing
leading international brands including Converse, Speedo, Wilson,
Prince, Spalding and Callaway. It has over 57 stores across 23 locations.

• Staples Future Office Products Private Limited

The company operates:

• Multi-brand sports specialty stores - Planet Sports

• Value-based sports lifestyle format - Sports Warehouse

• Mono brand stores - Adidas, Converse, Puma

The company's flagship format, Planet Sports, is a leading name in multi-brand
sports and lifestyle speciality retail space. It has one of the largest collection of
international sports and lifestyle brands and has an extensive offering for sportswear
and equipment across all categories including running, training, fitness, swimming,
tennis, golf, basketball, soccer as well as other lifestyle products across categories
like footwear, apparel, accessories and sports equipments.

• Talwalkars Pantaloon Fitness Private Limited

The company aims to be among the most admired sports player in a multi-sports,
multi-product format and to augment India’s sports culture. Winner Sports strives to
provide integrated, reliable and cost efficient sports offerings to Indian consumers.

• Staples Future Office Products Private Limited

Staples Future Office Products Private Limited (SFOPPL) was incorporated
on January, 2007 and is involved in the business of dealing in all kinds of
office supplies, office equipments and products. SFOPPL is a joint venture
between the Company and Staples Asia Investment Limited (a subsidiary of
Staples Inc USA). The company’s first retail outlet opened in Bengaluru in
December, 2007.

• ConvergeM

The company has entered into a 50:50 joint venture with Axiom Telecom LLC,
UAE on July 20, 2007 to do sourcing and wholesale distribution of mobile
handsets, accessories and setting up service centres and authorized after
sales service centres for mobile handsets in India.

• Indus League Clothing

A subsidiary company, Indus League Clothing owns and manages the brands
Indigo Nation, Scullers, Urban Yoga, Urbana and their retail formats.

• Galaxy Entertainment Corporation Ltd

 It is a group company that operates leisure and entertainment chains, The
Bowling Company, The Brew Bar, The Sports Bar, Sportsbar Express and
Chamosa.

• Future Consumer Products Limited

FCPL is a subsidiary company of Pantaloon Retail India Limited, incorporated

in September 2007. The company has two brands under its
umbrella - SACH & S Drive, inspired by Sachin Tendulkar. These brands
operate in categories such as foods, apparels, personal care and general
merchandize among others, and are available through Future Group formats.

• Future Ventures India Limited

Future Ventures seeks to promote and participate in innovative and emerging

business ventures in India. The group intends to play a role in powering
entrepreneurship, by promoting or participating in diverse business activities,
primarily in consumption-led sectors in the country, which will be determined
primarily by the growing purchasing power of Indian consumers and their
changing tastes, lifestyle and spending habits.

• Foot Mart Retail

FootMart Retail is a joint venture between Liberty Shoes and the group and operates
the Shoe Factory format.

Supply chain management of Future group

Logistics forms a critical business activity across Future Group’s businesses. Future
Supply Chain Solutions Limited (FSCS), a specialized subsidiary, offers strategic,
focused and consolidated approach to meet the group’s large supply chain
requirements as well as those of select supply and business partners.

The Future Supply Chain Solutions team currently oversees the operations of an
existing fleet of over 600 dedicated trucks, contracted from established regional and
national transport carriers, most of which are now equipped with GPS sets. In
addition it provides integrated end-to-end SCM, warehousing and distribution, multi-
modal transportation and container freight station. The total consolidated warehouse
space that the company intends to have operational by 2010-11 is nearly 7.50 million
square feet

Logistics forms a critical business activity across Future Group’s businesses. Future
Supply Chain Solutions Limited (FSCS), a specialized subsidiary, offers strategic,
focused and consolidated approach to meet the group’s large supply chain
requirements as well as those of select supply and business partners.

The Future Supply Chain Solutions team currently oversees the operations of an
existing fleet of over 600 dedicated trucks, contracted from established regional and
national transport carriers, most of which are now equipped with GPS sets. In
addition it provides integrated end-to-end SCM, warehousing and distribution, multi-
modal transportation and container freight station. The total consolidated warehouse
space that the company intends to have operational by 2010-11 is nearly 7.50 million
square feet

Kishore Biyani’s Future Group is making a vigorous push to increase its share in the
fruit and vegetables business, a category that has traditionally been an Achilles heel
for the country’s largest retailer. The group behind supermarket chains such as Food
Bazaar and Big Bazaar is forming a specialised entity that will set up and manage an
efficient supply chain for fruits and vegetables (F&V), marking a shift away from the
outsourced model it has followed so far.

“Globally, F&V sales for most retailers is about 10% and we want to take it to that
level. Within a year, we want to definitely hike the billing share of fruits and
vegetables to 8-10%,” Mr Biyani, chief executive of the Future Group, told ET. Fruit
and vegetables currently account for 3-4% of total supermarket sales for the group,
which expects to end the fiscal in June with retail sales of 9,200 crore.

A team headed by S Radhakrishnan, a 15-year veteran of the retail trade, will

manage the new company and own an equity stake in it. Mr Radhakrishnan helped
set up the Food World chain for RPG Group’s Spencer Retail and was head of
Reliance Retail’s value format businesses until the beginning of this year. Mr Biyani
is betting that by putting in place new sorting and grading technologies, better cold
storage and aggressively cutting out middlemen, he can bring down the prices of
fruits and vegetables by about 15-20% across categories. “The efficiencies created
by this exercise will be passed on to the consumer,” he observed.

He declined to reveal how much he was investing in new company or what stake the
new management team will have. The Future Group now outsources retailing of
fruits and vegetables to vendors, who are allowed to use space in its shops in
exchange for a share of their revenue. Mr Biyani’s move to take direct control of the
fruits and vegetables business brings to focus the challenges faced by organised
retailers in selling fresh and perishable goods. India lacks a network of cold storages
and refrigerated trucking facilities that can efficiently transport fresh fruits and
vegetables from a farm to the shop-floor while retaining its freshness.

Smaller, unorganized ‘kirana’ stores sell fruits and vegetables to most of the
country’s population, but the extensive network of middlemen and high levels of
wastage mean that the price paid to farmers is only a fraction of the retail price. The
organised retail trade relies heavily on APMC ‘mandis’ and agents to source the bulk
of its stock of fruits and vegetables. Among the large ones, Reliance Retail procures
the most from farmers – about 50% of its daily need of 700 tonne, a company official
said.

Future Group has a separate company that handles its dry vegetables supplies as
well, but the new entity will have independent profit and loss responsibilities as well.
It will rent out space from Future Group’s stores and separately branded counters
will handle sales of fruits and vegetables.

“The new company will have end-to-end responsibilities. That way the back-end
won’t be able to blame the front-end and vice-versa for poor produce or sales
performance,” a person familiar with the initiative said. F&V is also a unique
category in terms of customer loyalty, Mr Biyani said. “If a customer can find fresh
vegetables in our stores around the season, he will keep coming back.”
Findings And Analysis

For employees

1. Which company of future group do you work with

• Foot Mart Retail
• Future Consumer Products Limited
• Indus League Clothing
• Staples Future Office Products Private Limited
• Pantaloon Food Product (India) Limited
• Home Solutions Retail India Limited
• Pantaloon Retail (India) Limited

Response

No of
Company respondenst
Foot Mart Retail
3

Future Consumer Products Limited

1
Indus League Clothing

Staples Future Office Products Private

Limited

Pantaloon Food Product (India) Limited

2

Home Solutions Retail India Limited

1
Pantaloon Retail (India) Limited 0

Analysis
 For the better idea of the SCM of the group as a whole employees of all the
comoanies has been interviewd. The employees of foot mart retail and staples
has been specifically taken due to their easy availability as well as better role
of SCM in these companies.

1. Since when are you working in the company

• Less than 1 year
• 1year to 3 years
• 3 years to 5 years
• 5 years above

Response

Years of working No of respondets

Less than 1
year 3
1year to 3 years
2
3 years to 5
years 2
5 years above 3

Analysis
The question has been put to the employees to get an understanding of how
well the employee knows about the system of the company.
30 % of the employees had an experience of less than 1 year, and 30% of
them had more than 5 years, while 40% of the employees had an experience
between 1 to 5 years in the company.
 1. Which department do you work with in the company
• Production
• Logistics
• HR
• Finance
• Warehousing
• Procurement
• Inventory management
• Others

Response
Departments No of respondents
Production 2
Logistics 1
HR 1
Finance 1
Warehousing 3
Procurement 1
Inventory
management 1
Others

Analysis
The employees taken for the survey belong to all the major departments that
in combination constitutes the supply chain management this gives me a
better understanding of the SCM in the company.

1. Which among the two does the company choose for its supply chain
management
• Outsource Supply chain management
• Managed by company itself
• Managed by group companies
Response
 No of
Response respondets

Outsource Supply chain

management
1

Managed by company itself

Managede by group companies 8

Analysis
Most of the employees say that the retail group of companies like
pantaloons and food mart, outsiurce their SCM to their own sister
concern company named Supply chain management Pvt lmited. This
company deals with oly SCM activity for the group companies as well
as other companies.

1. Does the company has any history of outsourcing SCM

• Yes
• No
Responces
Responses No of responces
Yes 7
No 2
Don’t know 1

Analysis
As per the respondents the company outsouced its distribution department to HUL.
After the formation of supply chain management Pvt Ltd under the future group tree,
the whole of SCM of all the group companies has been handed over to this
company.

1. Rank the following components of SCM in order of companies control and

effectiveness over it.
• Plan(over-all strategy of the SCM program including the development
of SCM metrics to monitor)
• Source
• Manufacturing
• Delivery
• return

Response
Response Ranking
Plan 1
Source 5
Manufacturin
g 4
Delivery 2
return 3

Analysis\
According to the respondents the company really needs to look after the
source for raw meterials. Though lots of changes has been done in the recent
 years in the department , still the repaondents feel the need of further
improvement in the policies.
Next improvement are is t manufacturing unit of the company, the
respondents say that this department has the highest level of retrenchments.
And so the work delays .
The 3rd ranking is given to the Return. Here the return sysmbolises the
feedback return. As per the employees due to the presence of the company in
many fields, the pathway of feedback from the end customer becomes
difficult.
The 2nd ranking is for the Dilivery. As per the respondents due to the presence
of a separate company for the SCM activity, the delivery and the planning is
very well managed.
The employees feel that the company has a very solid planning for its SCM
activity as a whole, and as a result the materials are deliverd to the end
customers on time

1. How would you rate the companies SCM in comparison to other competitive
companies
• Excelent
• Very good
• Good
• Poor
Response No of respondents
Excelent 6
Very good 3
Good 2
Poor 0

Analysis
The majority portion of the employees( 55%) rank the companies SCM as “Excellent”
when compared with other competitive companies . 27% rate it as Very good, while
18% rate it as Good.
None of the employees rate the SCM of the group as “poor”

1. Is their any R&D for betterment of SCM

• Yes
• No
• Don’t know

Response No of respondents
Yes 5
No 3
Don’t know 2

Analysis
According to the employees the future group have a separate R&D
center for the better and automatic SCM systems. As and when the
group come up with the new planning, the company excercises it.

1. What do you have to say about the SCM of the group as a whole
Needs improvement
Is fine, does not need furtur improvement
 No comments
No of
Response respondents
Needs improvement 8
Is fine, does not need furtur
improvement 1
No comments 1

Analysis
8 out of 10 respondents feel that the company the company still needs
improvement of its SCM activity. Though planning and delivery has been
outsourced to the sister concern company , still the manufacturing unit of the
group suffers due to its own internal problem.

Findings
1. Each company under the future group has its own Planning and
manufacturing unit.
2. The warehousing, and logistics has been outsourced to the sister concern
company named, SCM pvt ltd.
3. These companies earlier used to outsource the SCM activilty to HUL till
SCMpvt Ltd was formed.
4. The employees feel that the planning For the SCM activity of all the
companies under the future group is very strong
5. The manufacturing unit of the companies under the group suffer from major
retrenchment, and hence needs serious improvement.
6. In recent times many organizational changes has been done for the
betterment of SCM
7. The group has its own R&D centers which keep work for better technological
advancements to improve SCM
8. The employees see further areas of improvements
9. The Feedback system of all the companies is week, and needs serious
improvement

Recommendation’
 • The company needs to work upon its manufacturing unit.
• The Group has to seriously plan for the feedback systm.
• The group has to speed up its R&D seeing the competition
• Though the planning for SCM is strong still needs to cope with the
compition.

Conclusion

Supply Chain Management (SCM) is a kind of integrated managing system which

regulates the supplying operations in the process of production. The SCM is adopted
to provide better services for the customers and to improve product’s competition
ability at the minimum costs through regulating and smoothing various factors such
as materials transportation, capital flow and information exchange and so on .
As modeling is crucial for system development, it is necessary to develop a well-
organized modeling before software development. UML is a kind of powerful, object-
oriented system-analyzing, visual modeling language . It uses a set of advanced
modeling technology and is widely applied to various fields. This paper research on
retail SCM system based on the UML and it mainly illustrates the software structures
and how to establish a well functional system model, including use case model,
static model and dynamic model. Predictably, some more in-depth study needs to be
carried out for the integration of information system between different enterprises on
the supply chain.

The competitive advantages between retail enterprises lie in the advantage of their
upply chains, the level of supply chain operations will directly determine the overall
competitiveness of retail enterprises . At present, there are more than twenty of the
world’s top retailers entering China, retail industry of China is not only facing fierce
international competition, but also facing domestic market saturation. Faced with the
pressure of market competition, retail enterprises of China must enhance their
competitive advantages through strengthening the building of information echnology.
Supply chain management (SCM) is the process of planning, implementing and
controlling the operations of the supply chain as efficiently as possible. SCM spans
all movement and storage of raw materials, work-in-process inventory, and finished
goods from point-of-origin to point-of-consumption . SCM is the active management
of supply chain activities to maximize customer value and achieve a
Sustainable competitive advantage. It represents a conscious effort by the supply
chain firms to develop and run supply chains in the most effective and efficient ways
possible.
Future Group companies has a strong SCM system and its own SCm company
which takes care of all the logistics and warehousing responsibilities of his group
companies. But planning , manufacturing and return is managed by individual
companies.
I believe that the report serves its purpose of understanding the basics of SCM, with
e example of future Group and shown the road ahead.