Description
the current retail scenario in India. How it created competitive advantage through supply chain. Shopper stop's supply chain objectives and the competitive advantages it creates
Competitive Advantage through Supply Chain
Presented by Shoppers’ Stop
Flow of Presentation
• • • • • • • Retail Scenario Shoppers’ Stop The Pentagon Triangle Model Dimensions of Our Business Supply Chain Objectives Past Situation Strategic Actions based on the Triangle
– Systems – Logistics – Partners
• Impact & Benefits
Indian Retail Scenario
• Retail Market valued at Rs 900,000 cr • Only 2% is organized with a value of Rs 18,000 cr • Unorganized independent stores dominate the retail trade structure • Highest number of outlets per capita in the world
– There are ~ 12 million retail outlets in India
• Only 4% stores are larger than 500 sq ft in size
Global Retail Scenario
• World’s largest private industry at $6.6 trillion (25 times the Indian Market) • Organized retail market holds 40% of the market • 50 of the top Fortune 500 companies and 25 of the top 200 Asian companies are retailers • The retail industry is one of the largest employers
We pioneered a revolution….
• From 2,800 sq. ft. to over 680,000 sq. ft. • From 1 store to 15 international class stores. • From unknown customers to creating a relationship programme with over 300,000 loyal customers. • From being just a departmental store to being the only Indian store represented in the IGDS. • From One company to Group companies.
CROSSWORD
All this has been possible due to our constant endeavour to EXPAND OUR HORIZON and become the No. 1 global retailer in India.
Our Vision…….
“To be a global retailer in India and maintain its No. 1 position in the Indian Market in the Department Store Category.”
Our Mission…….
“Nothing but the
best.”
Snapshot
• 2003-2004 Annual Turnover • Retail Space • Number of Stores • Customer Care Associates • Year Founded Rs 404 cr. 680,000 sq. Ft. 15 1610 1991
Our Sales Performance
Company Performance:1992-2004
450.0 400.0 404
Revenues (Rs Cr.)
350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 1992 1 1993 1 1994 1 1995 2 1996 1997 1998 1999 2000 2 2 3 5 No. of Stores 2001 7 2002 8 0.6 4.7 17.0 27.9 76.1 47.2 90.7 127.0 148.4 210.3 249.6
303.8
2003 9
2004 13
Industry Honours
• Supply Chain Award for the Second best Supply chain Co. in the Country across all Industries by S.P.Jain Institute of Management in 2004. • CMAI industry honours in 2003& 2004 for
– CEO of the Year - RetailNagesh – Retailer of the Year – Retail Outlet of the Year-
Mr. B S
Delhi (2003) & Hyderabad
(2004) – Top Management Team of the Year (2003)
• In 2003 NASSCOM award for the “Best IT User” in the retail vertical(2003) • Lycra Images Fashion Award to Shoppers’ Stop for “Best Retail Chain of the Year” and Mr. B S Nagesh for “Retail Professional
The Eight Ways To Win In Retailing
Place
Communication
Systems
Product
Logistics Partners
People
Value
The Pentagon & The Triangle Model
The Pentagon
Size
Place
Location Layout & Design Style & Fashion Intensity Product Assortment
Positional
Communication
Promotional
Service Knowledge Climate
People Value
Price Quality
• The Pentagon is customer centric and customer facing • The retailer can impact the customers’ perceptions, by leveraging the above elements
The Triangle
Systems
Logistics
Partners
• The Triangle is organization centric • A strong and differentiating triangle would result in better service offering to customer
Dimensions of Our Business
• 2 primary and 6 secondary seasons • 85 merchandise categories • over 260,000 SKUs • 400 vendors • 15 stores across India • 33,000 customer walk ins everyday
Customer profile
Shoppers’ Stop caters to consumers who are demanding and discerning • Age group: 25 to 50 years (77% of total customers)
Our Positioning
Customer Philosophy
“Feel the experience. While you shop.”
Service Philosophy
“It’s Magical. It’s Comfortable. It’s My Store.”
Bi-annual tracks for Customer Satisfaction Index
Supply Chain Objectives
The Supply Chain Objectives covers 3 main areas • Customer Objectives • Partner Objectives • Organization Objectives
The Customer Objectives
• Customer always gets the merchandise of his / her size and choice • Merchandise is always presentable and ready before customer entry • Customer easily locates price tags and product information • Price on the price tag and Point of Sale System always match • Timely replenishment of fast moving merchandise
The Partner Objectives
• Partners always deliver the right quantities as per schedule • Partners are always paid as per credit terms • Sharing of information with partners related to sales stocks and purchase orders
Organization Objectives
• Customer Response Time • Merchandise Availability • Distribution Cost • Shrinkage • Efficiency of executive time • Collaboration with Partners
The Past Situation of SCM
In 1999, Shoppers’ Stop implemented the ERP; JDA MMS, well ahead of time and its capabilities
– 3 stores and a turnover of Rs 127 cr only
• Turnaround time: 4 days • Poor hit rate from partners • Difficulty in tracking merchandise • No sharing of inventory data with partners • High Distribution Cost
Contd...
The Past Situation of SCM
• High inventory • High Shrinkage
contd.
• Shutting down all operations for 48 hours for annual stock take • High variance between books stock and physical stock • Inefficient use of executive time
Strategic Actions
Systems
JDA - MMS - WMS PICS
Infrastructure Delivery Mechanism Intake Consolidation
Logistics
Partners
B2B Source Tagging Receipts Direct Store Delivery
Systems
Systems
JDA - MMS - WMS PICS
• Shoppers’ Stop implemented the JDA Retail Merchandise Management System (MMS) • First retailer in Asia to implement the state-of-the-art ERP
Merchandise Management System
• An end to end solution for managing merchandise throughout the chain • Right from purchase orders, to sales, to replenishment, to markdown and inventory management • A integrated online system connected with the back end, front end (stores) and the distribution centers.
MMS Triggers
• Auto Purchase Order
– Pre-determined level of minimum stocks for core styles at distribution center – Drop in level generates an Auto Purchase Order to the vendor
• Auto Replenishment
– Pre-determined level of minimum stocks for core styles at each store – Drop in level generates an Auto Replenishment command at SKU level to the concerned distribution center – Daily Auto Replenishment to all 15 stores
The WMS
• Warehouse Management System
– Prior to WMS, inventory was monitored manually and transfers required more than 96 hours – With WMS, entire process controlled electronically – Transfers are executed in 24 hours
The WMS Process
– Distribution Center mapped onto a rack and bin system – Calculates storage capacity – Allocates designated area to each product category through PUT AWAY document – PICK LIST identifies exact location of merchandise at SKU level – Maintains records of perpetual inventory online – Minimize shrinkage – Reduces turnaround time to 24 hours
Perpetual Inventory Control System
• • • • • • • • Also known as PICS Distribution Center scans one department per day All departments scanned in a quarter Pre-determined schedule of all departments Operations process not affected Helps in checking pilferage Variances are known everyday Major tool for reducing shrinkage resulting in cost savings
Ability to match physical stock with systems stock on a daily basis without affecting day to day operations
Logistics
Infrastructure Delivery Mechanism Intake Consolidation
Logistics
• 4 Dedicated Distribution Centers, covering 85,000 sq ft, supply merchandise to 15 stores across the country • Distribution Center Management is outsourced to and managed independently by regional service providers • Regional Distribution Centers connected online to the central systems.
Shoppers’ Stop Footprint
Delhi Gurgaon Jaipur Kolkata Locations
33,000 customers per day
Mumbai Locations Pune Andheri Bandra Chembur Kandivili Bangalore Mulund Malad
Elgin Rd. Salt Lake
Chennai Hyderabad
Distribution Centers
Distribution & Logistics
Outbound Logistics
Partner 0 Store Mumbai DC Partner 1 Store Western Region
Delhi DC Partner 2 Kolkata DC
Store
Store
Northern Region
Store Partner 3 Bangalore DC
Store
Eastern Region
Operations Outsourced
Reverse Logistics BConnectB WMS
Store
Store
Southern Region
Win DSS / MMS
New Initiatives
• Intake Consolidation
– Also known as the Milk Run – Currently for Own Brand Partners – Delivery Authorization indicating quantity to be received for the week – National Transporter to follow up with vendors for merchandise – One truck to visit and collect goods from the vendors – Distribution center is informed of the ETA – Delivery status monitored and tracked through website
Reduction in turnaround time to 24 hrs Savings of Rs 1 Lac per month
Partners
Partners
B2B Source Tagging Receipts Direct Store Delivery
• To ensure smooth flow of merchandise through the entire supply chain • To improve the visibility and velocity of information through supply chain • Partners can proactively improve efficiency and business results
B2B
• BConnectB from Siemens • Launched in 2002 with less than 10 partners • Currently 150 partners connected online with Shoppers’ Stop • Features include – Order Processing • Purchase Orders • Receipt Details – Payment • Ledger Details – Sales & Stock • Style-wise / location-wise
B2B Advantages
• Reduction in communication expenses • Faster information exchange with Business Associates • Frees up executive time for other value added activities • On line information of sales and stock to vendors which increases service levels
Source Tagging
• Bar codes capturing style and price details are attached to the merchandise at the partners’ premises • Ensures smooth flow of merchandise through the supply chain and reduces turnaround time
Reduction in turnaround time from 96 hrs to 24 hrs Reduction in Manpower cost
Receipts & Payments
• Payment against Receiver’s Confirmation
– Receiver’s confirmation report prepared on receipt of goods at the distribution center – Report sent to the corporate office against which payment is released
100% reconciliation of receipts ensuring timely payment to vendors
Direct Store Delivery
• Ability to receive the merchandise directly at the stores • Bypassing the distribution center further reduces turnaround time to 12 hours • Reduction in distribution cost
Reduction in lead time
New Initiatives
• Auto Style Set-up
– Currently Shoppers’ Stop team creates styles manually – The printed barcodes are then sent through courier – In Auto Style Setup partner sets up the style codes (based on a standard template) and prints the barcodes at his end – The entire file is sent electronically to Shoppers’ Stop – Details of style codes to be uploaded directly into the ERP – Shoppers’ Stop B&M team to only fill in quantities – Reduces courier cost and turnaround time
Frees up 30% executive time Error reduction process
Strategic Actions - Summary
JDA - MMS - WMS - Improved Efficient Consumer Response PICS - Shrinkage beats global standards
Systems
Logistics
Infrastructure - Scalability to 50 stores Delivery Mechanism - Turnaround time 24 hrs Intake Consolidation - Cost Savings
Partners
B2B - Seamless Integration Source Tagging - Seamless merchandise flow Receipts - 100% reconciliation Direct Store Delivery - 20% of merchandise
Financial Impact
D&L Expenses TURNOVER Year 2001-02 2003-04 (Rs Crores) 249.5 404.5 (Rs Crores) 2.64 3.35 EXPENSE % to Turnover 1.06% 0.83%
– No Shrinkage at Distribution Center
A financial cumulative saving of Rs 1.21 cr
Financial Impact
Shrinkage at Store Level TURNOVER Year 2001-02 2003-04 (Rs Crores) 249.5 404.5 (Rs Crores) 1.65 1.62 Shrinkage % to Turnover 0.66% 0.40%
A financial cumulative saving of Rs 1.2 cr
Service Standards
Shipments Allocated v Shipments Executed Month April-01 April-04 Allocated 2,410 11,537 Shipped 2,187 11,366 Percentage 91% 99%
Competitive Advantages
• Customer
– Improvement in CSI from 62 to 65 through better availability of merchandise.
• Partner
– B2B, Auto P.O and Source Tagging ensures faster transactions – B2B will drive seamless integration between Shoppers’ Stop and Partners in the future – Partner Satisfaction Index will strengthen partnership
• Stakeholder
– Leverage SCM strength for multi-fold growth at lower cost – Reduction in shrinkage resulting in higher profit
Results of SCM Initiatives
Objective Customer Partner Stakeholder Intangible Benefits
q
Tangible Benefits
q q
Latest merchandise availability
Merchandise Availability Correct Product and Price information Timely Payments Greater Efficiency Growth Profitability Lower distribution cost Greater efficiency in executive time Scalability to 50 stores
q q
Transparency Partnership
q q q
q
Higher Customer Satisfaction levels through CSI (Customer Satisfaction Index)
q q q
q
doc_657357744.pdf
the current retail scenario in India. How it created competitive advantage through supply chain. Shopper stop's supply chain objectives and the competitive advantages it creates
Competitive Advantage through Supply Chain
Presented by Shoppers’ Stop
Flow of Presentation
• • • • • • • Retail Scenario Shoppers’ Stop The Pentagon Triangle Model Dimensions of Our Business Supply Chain Objectives Past Situation Strategic Actions based on the Triangle
– Systems – Logistics – Partners
• Impact & Benefits
Indian Retail Scenario
• Retail Market valued at Rs 900,000 cr • Only 2% is organized with a value of Rs 18,000 cr • Unorganized independent stores dominate the retail trade structure • Highest number of outlets per capita in the world
– There are ~ 12 million retail outlets in India
• Only 4% stores are larger than 500 sq ft in size
Global Retail Scenario
• World’s largest private industry at $6.6 trillion (25 times the Indian Market) • Organized retail market holds 40% of the market • 50 of the top Fortune 500 companies and 25 of the top 200 Asian companies are retailers • The retail industry is one of the largest employers
We pioneered a revolution….
• From 2,800 sq. ft. to over 680,000 sq. ft. • From 1 store to 15 international class stores. • From unknown customers to creating a relationship programme with over 300,000 loyal customers. • From being just a departmental store to being the only Indian store represented in the IGDS. • From One company to Group companies.
CROSSWORD
All this has been possible due to our constant endeavour to EXPAND OUR HORIZON and become the No. 1 global retailer in India.
Our Vision…….
“To be a global retailer in India and maintain its No. 1 position in the Indian Market in the Department Store Category.”
Our Mission…….
“Nothing but the
best.”
Snapshot
• 2003-2004 Annual Turnover • Retail Space • Number of Stores • Customer Care Associates • Year Founded Rs 404 cr. 680,000 sq. Ft. 15 1610 1991
Our Sales Performance
Company Performance:1992-2004
450.0 400.0 404
Revenues (Rs Cr.)
350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 1992 1 1993 1 1994 1 1995 2 1996 1997 1998 1999 2000 2 2 3 5 No. of Stores 2001 7 2002 8 0.6 4.7 17.0 27.9 76.1 47.2 90.7 127.0 148.4 210.3 249.6
303.8
2003 9
2004 13
Industry Honours
• Supply Chain Award for the Second best Supply chain Co. in the Country across all Industries by S.P.Jain Institute of Management in 2004. • CMAI industry honours in 2003& 2004 for
– CEO of the Year - RetailNagesh – Retailer of the Year – Retail Outlet of the Year-
Mr. B S
Delhi (2003) & Hyderabad
(2004) – Top Management Team of the Year (2003)
• In 2003 NASSCOM award for the “Best IT User” in the retail vertical(2003) • Lycra Images Fashion Award to Shoppers’ Stop for “Best Retail Chain of the Year” and Mr. B S Nagesh for “Retail Professional
The Eight Ways To Win In Retailing
Place
Communication
Systems
Product
Logistics Partners
People
Value
The Pentagon & The Triangle Model
The Pentagon
Size
Place
Location Layout & Design Style & Fashion Intensity Product Assortment
Positional
Communication
Promotional
Service Knowledge Climate
People Value
Price Quality
• The Pentagon is customer centric and customer facing • The retailer can impact the customers’ perceptions, by leveraging the above elements
The Triangle
Systems
Logistics
Partners
• The Triangle is organization centric • A strong and differentiating triangle would result in better service offering to customer
Dimensions of Our Business
• 2 primary and 6 secondary seasons • 85 merchandise categories • over 260,000 SKUs • 400 vendors • 15 stores across India • 33,000 customer walk ins everyday
Customer profile
Shoppers’ Stop caters to consumers who are demanding and discerning • Age group: 25 to 50 years (77% of total customers)
Our Positioning
Customer Philosophy
“Feel the experience. While you shop.”
Service Philosophy
“It’s Magical. It’s Comfortable. It’s My Store.”
Bi-annual tracks for Customer Satisfaction Index
Supply Chain Objectives
The Supply Chain Objectives covers 3 main areas • Customer Objectives • Partner Objectives • Organization Objectives
The Customer Objectives
• Customer always gets the merchandise of his / her size and choice • Merchandise is always presentable and ready before customer entry • Customer easily locates price tags and product information • Price on the price tag and Point of Sale System always match • Timely replenishment of fast moving merchandise
The Partner Objectives
• Partners always deliver the right quantities as per schedule • Partners are always paid as per credit terms • Sharing of information with partners related to sales stocks and purchase orders
Organization Objectives
• Customer Response Time • Merchandise Availability • Distribution Cost • Shrinkage • Efficiency of executive time • Collaboration with Partners
The Past Situation of SCM
In 1999, Shoppers’ Stop implemented the ERP; JDA MMS, well ahead of time and its capabilities
– 3 stores and a turnover of Rs 127 cr only
• Turnaround time: 4 days • Poor hit rate from partners • Difficulty in tracking merchandise • No sharing of inventory data with partners • High Distribution Cost
Contd...
The Past Situation of SCM
• High inventory • High Shrinkage
contd.
• Shutting down all operations for 48 hours for annual stock take • High variance between books stock and physical stock • Inefficient use of executive time
Strategic Actions
Systems
JDA - MMS - WMS PICS
Infrastructure Delivery Mechanism Intake Consolidation
Logistics
Partners
B2B Source Tagging Receipts Direct Store Delivery
Systems
Systems
JDA - MMS - WMS PICS
• Shoppers’ Stop implemented the JDA Retail Merchandise Management System (MMS) • First retailer in Asia to implement the state-of-the-art ERP
Merchandise Management System
• An end to end solution for managing merchandise throughout the chain • Right from purchase orders, to sales, to replenishment, to markdown and inventory management • A integrated online system connected with the back end, front end (stores) and the distribution centers.
MMS Triggers
• Auto Purchase Order
– Pre-determined level of minimum stocks for core styles at distribution center – Drop in level generates an Auto Purchase Order to the vendor
• Auto Replenishment
– Pre-determined level of minimum stocks for core styles at each store – Drop in level generates an Auto Replenishment command at SKU level to the concerned distribution center – Daily Auto Replenishment to all 15 stores
The WMS
• Warehouse Management System
– Prior to WMS, inventory was monitored manually and transfers required more than 96 hours – With WMS, entire process controlled electronically – Transfers are executed in 24 hours
The WMS Process
– Distribution Center mapped onto a rack and bin system – Calculates storage capacity – Allocates designated area to each product category through PUT AWAY document – PICK LIST identifies exact location of merchandise at SKU level – Maintains records of perpetual inventory online – Minimize shrinkage – Reduces turnaround time to 24 hours
Perpetual Inventory Control System
• • • • • • • • Also known as PICS Distribution Center scans one department per day All departments scanned in a quarter Pre-determined schedule of all departments Operations process not affected Helps in checking pilferage Variances are known everyday Major tool for reducing shrinkage resulting in cost savings
Ability to match physical stock with systems stock on a daily basis without affecting day to day operations
Logistics
Infrastructure Delivery Mechanism Intake Consolidation
Logistics
• 4 Dedicated Distribution Centers, covering 85,000 sq ft, supply merchandise to 15 stores across the country • Distribution Center Management is outsourced to and managed independently by regional service providers • Regional Distribution Centers connected online to the central systems.
Shoppers’ Stop Footprint
Delhi Gurgaon Jaipur Kolkata Locations
33,000 customers per day
Mumbai Locations Pune Andheri Bandra Chembur Kandivili Bangalore Mulund Malad
Elgin Rd. Salt Lake
Chennai Hyderabad
Distribution Centers
Distribution & Logistics
Outbound Logistics
Partner 0 Store Mumbai DC Partner 1 Store Western Region
Delhi DC Partner 2 Kolkata DC
Store
Store
Northern Region
Store Partner 3 Bangalore DC
Store
Eastern Region
Operations Outsourced
Reverse Logistics BConnectB WMS
Store
Store
Southern Region
Win DSS / MMS
New Initiatives
• Intake Consolidation
– Also known as the Milk Run – Currently for Own Brand Partners – Delivery Authorization indicating quantity to be received for the week – National Transporter to follow up with vendors for merchandise – One truck to visit and collect goods from the vendors – Distribution center is informed of the ETA – Delivery status monitored and tracked through website
Reduction in turnaround time to 24 hrs Savings of Rs 1 Lac per month
Partners
Partners
B2B Source Tagging Receipts Direct Store Delivery
• To ensure smooth flow of merchandise through the entire supply chain • To improve the visibility and velocity of information through supply chain • Partners can proactively improve efficiency and business results
B2B
• BConnectB from Siemens • Launched in 2002 with less than 10 partners • Currently 150 partners connected online with Shoppers’ Stop • Features include – Order Processing • Purchase Orders • Receipt Details – Payment • Ledger Details – Sales & Stock • Style-wise / location-wise
B2B Advantages
• Reduction in communication expenses • Faster information exchange with Business Associates • Frees up executive time for other value added activities • On line information of sales and stock to vendors which increases service levels
Source Tagging
• Bar codes capturing style and price details are attached to the merchandise at the partners’ premises • Ensures smooth flow of merchandise through the supply chain and reduces turnaround time
Reduction in turnaround time from 96 hrs to 24 hrs Reduction in Manpower cost
Receipts & Payments
• Payment against Receiver’s Confirmation
– Receiver’s confirmation report prepared on receipt of goods at the distribution center – Report sent to the corporate office against which payment is released
100% reconciliation of receipts ensuring timely payment to vendors
Direct Store Delivery
• Ability to receive the merchandise directly at the stores • Bypassing the distribution center further reduces turnaround time to 12 hours • Reduction in distribution cost
Reduction in lead time
New Initiatives
• Auto Style Set-up
– Currently Shoppers’ Stop team creates styles manually – The printed barcodes are then sent through courier – In Auto Style Setup partner sets up the style codes (based on a standard template) and prints the barcodes at his end – The entire file is sent electronically to Shoppers’ Stop – Details of style codes to be uploaded directly into the ERP – Shoppers’ Stop B&M team to only fill in quantities – Reduces courier cost and turnaround time
Frees up 30% executive time Error reduction process
Strategic Actions - Summary
JDA - MMS - WMS - Improved Efficient Consumer Response PICS - Shrinkage beats global standards
Systems
Logistics
Infrastructure - Scalability to 50 stores Delivery Mechanism - Turnaround time 24 hrs Intake Consolidation - Cost Savings
Partners
B2B - Seamless Integration Source Tagging - Seamless merchandise flow Receipts - 100% reconciliation Direct Store Delivery - 20% of merchandise
Financial Impact
D&L Expenses TURNOVER Year 2001-02 2003-04 (Rs Crores) 249.5 404.5 (Rs Crores) 2.64 3.35 EXPENSE % to Turnover 1.06% 0.83%
– No Shrinkage at Distribution Center
A financial cumulative saving of Rs 1.21 cr
Financial Impact
Shrinkage at Store Level TURNOVER Year 2001-02 2003-04 (Rs Crores) 249.5 404.5 (Rs Crores) 1.65 1.62 Shrinkage % to Turnover 0.66% 0.40%
A financial cumulative saving of Rs 1.2 cr
Service Standards
Shipments Allocated v Shipments Executed Month April-01 April-04 Allocated 2,410 11,537 Shipped 2,187 11,366 Percentage 91% 99%
Competitive Advantages
• Customer
– Improvement in CSI from 62 to 65 through better availability of merchandise.
• Partner
– B2B, Auto P.O and Source Tagging ensures faster transactions – B2B will drive seamless integration between Shoppers’ Stop and Partners in the future – Partner Satisfaction Index will strengthen partnership
• Stakeholder
– Leverage SCM strength for multi-fold growth at lower cost – Reduction in shrinkage resulting in higher profit
Results of SCM Initiatives
Objective Customer Partner Stakeholder Intangible Benefits
q
Tangible Benefits
q q
Latest merchandise availability
Merchandise Availability Correct Product and Price information Timely Payments Greater Efficiency Growth Profitability Lower distribution cost Greater efficiency in executive time Scalability to 50 stores
q q
Transparency Partnership
q q q
q
Higher Customer Satisfaction levels through CSI (Customer Satisfaction Index)
q q q
q
doc_657357744.pdf