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A STUDY ON ADAPTIVE SUPPLY CHAIN MANAGEMENT SYSTEM

(With special reference to BIG BAZAAR, Pune).
Mrs. Vidyut Kaustubh Deshpande
Assistant Professor, Sinhgad Business School, Pune
Email-id:mrsvkd@gmail.com, dvidyullata@sinhgad.edu
Contact:9371628915

ABSTRACT:
Supply chain management (SCM) is a kind of information system for the flow of goods.
It includes the movement and storage of raw materials, work-in-process inventory, and
finished goods from point of origin to point of consumption. Interconnected or interlinked
networks, channels and node businesses are involved in the provision of products and
services required by end customers in a supply chain. Retailers face many challenges timeto- market reductions are necessary due to Shorter and shorter product life cycles, Greater
product variety causing more fluctuations in demand calls for high responsiveness in
supply chains, and the ever increasing need for the shorter lead times continues. However,
as a result of the power that comes with control over consumer contacts, retailers today
have the opportunity to organize the work in their supply chains in suitable ways.
Adaptive Supply chain management has been defined as the "design, planning,
execution, control, and monitoring and prediction and optimization of supply chain
activities with the objective of creating net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply with demand and measuring
performance globally. Supply Chain Management consist of all parties (Including
Manufacture, Suppliers, Transporters, Warehouses, Retailers and even consumers) directly
or indirectly involved in fulfillment of a customer. The main objectives of Supply Chain
management are to improve the overall organization performance and customer
satisfaction by improving product or service delivery to consumer. Supply Chain
Management involves movement and storage of all materials including Raw material, WIP
(Work in Progress) and Finished Goods.
Big Bazar, a part of the Pantaloons Group, is a hypermarket offering a huge array of
goods of good quality for all at affordable prices. Big Bazar with over 50 outlets in
different parts of India is present in both the metro cities as well as in the small towns. Big
Bazar has no doubt made a big name in the retail industry of India; moreover shopping
here is further made a memorable experience with the varied rates of discounts on products
as well as discount vouchers available in a variety of amounts, on all Big Bazar products
and accessories

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The objective of this paper is to shows broad view of Supply Chain Management and how
the adaptive supply chain helps in retail sector in managing their inventory with better
decision making and by reducing their losses. It also helps to evaluate the performance of
the suppliers and which suppliers will be best for the organization for long term business.
Keywords:Supply Chain Management System (SCM), Material Requirement Planning
(MRP), Capacity Requirement Planning (CRP), Enterprise Resource Planning (ERP),
1. Introduction:
Traditionally, many supply chain activities were managed with paper transactions.
Since early business utilization of information technology, attention has been given to the
Automation of processes along the supply chain. The first software programs appeared in
the 1950s and the early 1960s and supported short segments along the supply chain.
Typical examples are inventory management systems, scheduling and billing. The major
objective was to reduce costs, expedite processing and decrease errors. Such applications
were developed in the functional areas independently of each other. During 1960s Material
Requirement Planning (MRP) model was devised as it requires daily updating. Later
Capacity Requirement Planning (CRP) was developed to smooth out the MRP plan.
Followed by enhanced MRP methodology and software called manufacturing
requirements planning or MRP II. During this evolution, information systems became
more and more integrated. This led to the concept Enterprise Resource Planning (ERP),
which concentrated on integrating enterprise transaction processing activities. Later ERP
was expanded to include internal suppliers and customers and then external suppliers
and
customers which is known as extended ERP/SCM. Thus SCM systems have
emerged as a complement to ERP systems to provide intelligent decision support
capabilities. Most crucial factor in ERP failure is that the organizations business processes
do not match those modeled in the ERP. Effective SCM requires that suppliers and
customers work together in a coordinated manner by sharing and communicating the
information necessary for decision making. In order to get better SCM, it is necessary to
reengineer its supply chain processes and hence to change the role of basic management
functions into intelligent Planning, Organizing, Directing, Controlling, and Reporting with
the help of adaptive business intelligent systems.
A supply chain is dynamic and involves the constant flow of information, product and
funds between different stages. The primary purpose from the existence of any supply
chain is to satisfy customer needs, in the process generating profits for itself. Supply chain
activities being with a customer order and end when a satisfied customer has paid for his
or her purchase. The term supply chain conjures up images of product or supply moving
from supplier to manufactures to distributors to retailers to customers along a chain. It is
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important to visualize information, funds and product flows along both directions of this
chain. The term
rm supply chain may also imply that only one player is involved at each
stage. In reality, a manufacture may receive material from several suppliers and then
supply several distributors. Thus, most supply chain arte actually networks. It may be
more accurate
te to use the term adaptive SCM or supply web to describe the structure of
most supply chains.
A typical supply chain may involve a variety of stages. These supply chain stages include
following stakeholders.
Customers
Retailers
Wholesalers/ Distributors
Manufactures
Components/ Raw materials suppliers

Figure 1: Basic concepts of SCM

Each stage need not be presented in a supply chain. The appropriate design of the
supply chain will depend on both the customers needs and the roles of the stages
involved.
The purpose of Supply Chain Management is to add value to the business by:by:
Ensuring that all procurement is made from suppliers who have been assessed as
being able to deliver that specified technical and quality requirements.
Reducing the costt base, controlling quality, improving operational efficiency and
protecting the commercial position of the company.
Optimizing the decision to source internally from the external supply chain.
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Optimizing the size of the supplier base.

Delivering controlled and predicable supply outcomes.
Applying a common graded approach to quality management in the supply chain.
Aligning sub-contracts and processes with customer requirements.

2 Traditional SCM & SCM as a information system:

There is a difference between the concept of supply chain management and the
traditional concept of logistics. Logistics typically refers to activities that occur within the
boundaries of a single organization and supply chains refer to networks of companies that
work together and co-ordinate their actions to deliver a product to market. Also traditional
logistics focuses its attention on activities such as procurement, distribution and
maintenance and inventory management. Supply chain management acknowledges all of
traditional logistics and also includes activities such as marketing, new product
development, finance and customer service. In the wider view of supply chain thinking
these additional activities are now seen as part of the work need to fulfill customer
requests. Supply chain management views the supply chain and the organizations in it as a
single entity. It brings a system approach to understanding and managing the different
activities needed to co-ordinate the flow of products and services to best serve the ultimate
customer.
This systems approach provides the framework in which to best respond to business
requirements that otherwise would seem to be in conflict with each other. Taken
individually, different supply chain requirements often have conflicting needs. For
instance the requirement of maintaining high levels of customer service calls for
maintaining high levels of inventory, but then the requirement to operate efficiently calls
for reducing inventory levels. It is only when these requirements are seen together as parts
of larger picture that ways can be found to effectively balance their different demands.
Effective supply chain management requires simultaneous improvements in both customer
service levels and the internal operating efficiencies of the companies in the supply chain.
Most basis level means consistently high order fill rates, high on time delivery rates and a
very low rate of products returned by customers for whatever reason. Internal efficiency
for organizations in a supply chain means that these organizations get an attractive rate of
return on their investments in inventory and other assets and those they find ways to lower
their operating and sales expenses.
3 Retail Industry Supply Chain System Overview:
General Retail Trends:
The retail industry can be defined generally as the composition of companies that sell
Merchandise to customers. When studying the supply chain practices of retail industry, we
study the retailers and customer relationship, which in turn drives the activities between
retailers and suppliers. In retail supply chains, the network consists of many suppliers that
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serve multiple retailers and retailers that are served by multiple suppliers. Between the
suppliers and the retailers, wholesalers and other intermediaries often reside and provide
the link between retailers and suppliers. There have been changes in the dynamics of the
relationship between these three key players in the supply chain due to the fourth major
player that drives these changes, the retail customer. Through their spending habits, retail
consumers drive the level customer service that is expected. The strategy behind each
retailer is focused on being able to fulfill that demanded service. Because of recent
changes in consumer spending, the focus in the retail supply chain has shifted from
handling customer demands through inventory levels to handling customer demand
through changes in trading partner relationship and the use of technology in their supply
chain. Griffith and Krampf (1997) address some of the trends that are driving these
changes in the retail industry supply chain by looking at the changes in the way consumers
shop. For example, consumers are now shopping in retail stores that appeal to consumer
convenience and price sensitivity. The time that consumers spend in certain stores is
declining and therefore, retailers are realizing that on-shelf availability is becoming more
critical. Due to the change in consumer spending habits, on which we will elaborate
further in this thesis, general merchandise stores that include a wide range of product
segments are emerging as revenue leaders in the retail industry. These general or mass
merchandisers are creating retail stores that provide all merchandise that a consumer needs
in one convenient location. Consumer habits changes are contributing factor driving retail
supply chain changes.

The diagram below depicts the structure of the internet retail supply chain.

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Figure 2: Internet Retailing

Internet Retail Supply Chain Overview:
The internet retail industry is a segment of the overall retail industry. The industry
consists of existing retailers with physical stores that also sell products over the internet,
and companies that do not operate retail stores and utilize only a website to sell products to
customers. The retailers that primarily sell product through their network of physical store
locations are commonly referred to as brick-and-mortar in retail literature. If these
traditional retailers sell through an online channel, that activity is known as click-andmortar or pure-play internet retailers are companies that only sell through product
through an online channel.
The lack of retail stores in pure-play environments requires a supply chain that can
service the needs of customers through a combination of shipping from distribution centers
and sourcing from partners.
Retail industry- conceptual review:
The analysis to uncover the key components of an excellent supply chain in the retail
industry is multi-faceted. The definition of an excellent supply chain differs by company
and is highly dependent on a particular companys business strategy. The opening portion
of this conceptual review focused on the importance of strategy in evaluating a supply
chain, including focus and fit on the activities that differentiate a company from
competitors. Additionally when looking at supply practices, opportunities for innovation
should be addressed as well as opportunities for improved efficiency, these factors, in
addition to understanding the functional or innovative nature of the products being sold,
illustrative the ideas that will constitute an excellent supply chain that supports a retailers
business strategy. In analyzing the retail industry and the internet retail segment, many
areas are taken into account, including collaboration efforts, use of technology, supply
chain design, and operational efficiency. From the analysis of the current trends in retail
show that collaboration is increasing with initiatives such as collaborative planning,
forecasting and replenishment (CPFR) and vendor managed inventory (VMI). Information
technology has enabled these efforts and continues to drive increased communication
across all parties in the supply chain. An analysis of internet retail illustrated the
importance of supply chain to business survival. An analysis of network design, supply
chain echelon co-ordination and various inventory and transportation tradeoffs show the
complex nature of a supply chain designed to meet internet retail requirements. In
summary strategic, collaboration, technology, operational innovation and efficiency are all
essential to maintaining an excellent supply chain in the retail industry.

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4. Outline of the problem:

Supply chain process was not proper.
Vendor rating needed some improvements.
Supply chain needed more integration and collaboration.
Supply chain needed help of IT enabled system so that its demand forecasting and
capacity planning.
5. Objectives: To study supply chain management system at Big Bazaar Pune.
To study vendor rating system at Big Bazaar Pune.

6. Theorotical background
Supply Chain Elements:

Strategic
Supply chain
design

Resource
acquisition

Long term
planning (1+ year)

Tactical
Production/
distribution
planning

Medium term
Resource Allocation planning (Quaterly/
monthly)

Operational
Shipment
sheduling

Resource
sheduling

Short term
planning (Weekly/
daily)

Strategic:
At this level, company management will be looking to high level strategic decisions
concerning the whole organization, such as the size and location of manufacturing sites,
partnerships with suppliers, products to be manufactured and sales markets.
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Strategic activities include building relationships with suppliers and customers, and
integrating information technology (IT) within the supply chain.
Tactical:
Tactical decisions focus on adopting measures that will produce cost benefits such as
using industry best practices, developing a purchasing strategy with favored suppliers,
working with logistics companies to develop cost effect transportation and developing
warehouse strategies to reduce the cost of storing inventory.
Studying competitors and making decisions regarding production and delivery would fall
under the tactical category.
Operational:
Decisions at this level are made each day in businesses that affect how the products
move along the supply chain. Operational decisions involve making schedule changes to
production, purchasing agreements with suppliers, taking orders from customers and
moving products in the warehouse.
The operational category includes the daily management of the supply chain, including the
making of production schedules.
Macro Processes in Big Bazaar supply chain:
1. C.R.M. Customer Relationship Management
Market
Price
Sell
2. I.S.C.M. Internal Supply Chain Management
Strategic Planning
Demand Planning
Supply Planning
Fulfillment
Field Service
3. S.R.M.- Supplier Relationship Management
Source
Negotiate
Buy
Design Collaboration
Supply Collaboration
Operational Transactions:
Few operational transactions are listed below.
Create excel sheet for PO.
Check the various registers.
Updating the received materials in register and system.
Sending daily received PO, transporter details, Suppliers details to HO.
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Checking home brands details.

Cross checking the PO and supplied quantities.
Sending goods for in warding.
Checking the incoming goods (QTY, damages, No. of boxes, LR.NO).
Checking security activities related supply chain (Register, Gate pass, challans other,
and documents).
Generating barcodes.
Stock entry.

Goods Received Process: (Figure 3)

Security Checked
LR. No. is verified
Bill of material checked
No. of box checked opened and closed
Verified and Checked
Received

Document required for verification: (Figure 4)

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FSC-POD Copy

Consign Copy

Tax Invoice
(Duplicate for Transporter)

Tax Invoice (octroi on MRP)

Tax Invoice (octroi on MRP)

Tax Invoice (Original Brand Cost)

At time of deliver required document: (Figure 5)

LR (Transporting)

Gate pass(Out /In QTY checked

DC (Article Description)
Acc. No, MRP, Cost, QTY, Amt (IRN)

List of Transporters
Safe Express
Guru
Star Logistic
K.P.Transporter
I P L Express
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Local Transporters
Future Logistics
Deluxe
Gold
Asian
DNX

Varanee
Trans Sptorn
AFL
Sharma transport
Goldmine
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Speed
Logic Express
New DB
Rematrix
TCT
VXP
Gati
Fast train

Redex
JDT
Royal
Trackon
Aviation
On. Dot
V transport
National Transporters
Om logistics Pvt. Ltd
TCI Express
Global Transporters
Blue Dart

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Supreme X
Tarakom
ERC
SRC
DZD
Prajakta Transport
J-Shai
VRL
Patel Roadways

UPS logistics
DTDC
The professional couriers
Figure 6: List of Transporters

7. Decision Making and Supply Chain:

To maximize the value added along the supply chain, it is necessary to make decisions
and evaluate their potential impact. In each link of the chain, decision must be made on
how to move material, information and money so as to most increase the value. Supply
chain management methods are even affecting nonmanufacturing operation. Adaptive
Supply chain management software is available for decision support for both primary and
secondary activities including optimization of manufacturing processes, scheduling,
inventory management and procurement. Special DSS/BI/BA models can determine the
costs and benefits of investing in information technologies in an attempt to create value
along the supply chain.
8.Data Analysis:
While doing survey it was observed that each and every activity is dependent on
previous activity. For strong supply chain and best performance it is important to have an
excellent communication and co-ordination. The higher the supply chain profitability or
surplus the more successful is the supply chain. The supply chain profitability is the
difference between the amount paid by consumer to purchase the product and the cost
incurred by organization to produce and supply the product to customer at right time.
There is only one source of revenue i.e. customer. Appropriate management of the flow of
information, product for funds is a key so as to keep tack on order status.
Vendor rating analysis:
As per data obtained from the vendor rating table the (pilot)data is interpreted as per
following for each vendor and for overall vendor creation and retention:
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Supplier 1: Remika apparels Pvt. Ltd.: As the composite rating after computing quality
rating, quantity rating, price rating, delivery rating and service rating is 89% which is
good. But the supplier can improve on their ratings by increasing the quality rating and
delivery rating.
Supplier 2: Bio merchandising: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 75% which is
satisfactory. But the supplier needs to improve to continue working with big bazaar. They
can improve their score by improving their product quality mainly.
Supplier 3: Titan Industries: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 98% which is very good.
Supplier needs to maintain their standards.
Supplier 4: Arvind Lifestyle ltd.: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 67% which is
satisfactory. But the supplier needs to improve to continue working with big bazaar. They
can improve their score by improving their product quality, quantity and delivering goods
on scheduled time also the service they are providing.
Supplier 5: Triumph: As the composite rating after computing quality rating, quantity
rating, price rating, delivery rating and service rating is 55% which is unsatisfactory. The
supplier needs to be warned as he is not meeting the company expectation. Supplier needs
to mainly work on the product quality and the price of the product. If still the score does
not improve in next few orders company might remove the vendor.
Supplier 6: Drop clothing Co.: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 65% which is
satisfactory. But the supplier mainly needs to improve to continue working with big
bazaar. Supplier needs to improve on the quality of the product and the services they offer
with them.
Supplier 7: Jockey: As the composite rating after computing quality rating, quantity
rating, price rating, delivery rating and service rating is 79% which is satisfactory. But
the supplier needs to improve to continue working with big bazaar. They can improve their
score by improving their product quality mainly.
Supplier 8: Indus League: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 85% which is good. But
the supplier can improve on their ratings by improving the services provided by them.
Supplier 9: Creative Education: As the composite rating after computing quality rating,
quantity rating, price rating, delivery rating and service rating is 80% which is good. But
the supplier can improve on their ratings by improving the services provided by them.
9. Findings:
Lack of Knowledge of adaptive SCM:

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Some of the members of the functional team dont have the complete knowledge of
the SAP modules hence there are some mistakes made during the updating of the
records.
Lack of Co ordination:
There is lack of co-ordination between the marketing, accounts, and HR teams.
This results in improper demand forecasting or lack of employees if there is no coordination between the store manager and the HR manager.
Improper documentation handling:
The documents get misplaced while documentation. Some materials are not entered
in the registers / systems due to documents misplaced during the process of
documentation. Few materials dont get ordered as the documents were not
received by the procurement team.
Improper material handling:
Some of the materials get damaged due to improper handling i.e. the materials are
dumped from the trucks or containers. The product like beverages gets damaged
during transportation as they are not kept properly.
Effective capacity planning.
Sometime the effective capacity planning fails as the demand of a particular
product is not determined properly which results in customer returning back
without getting the products which leads to customer dissatisfaction which may
lead to a customer
10. Conclusion:
The Big Bazaar distribution centers act as warehouses alone, unlike Wal-Mart where
these centers act as developers of suppliers.
There is no pull mechanism in order generation and it depends largely on the decisions
by individuals category managers on weekly basis whereas in Wal-Mart, it is a daily
pull mechanism based on store consumptions.
More collaborative timely product development through enhanced communication
between functional departments, suppliers, customers and even regulatory agencies.
Reduction of channel inventory and product obsolescence owning to closer linkage
across the supply chain and better insight into demand signals to drive product
schedules and ultimately achieve build to order capability
Reduction in communication costs and customer support costs with more interactive
tailored support capability inherent with internet technologies.
New channels capabilities to reach different customers segments and further exploit
current markets.
Ability to enhance traditional products and customer relationships through
customizations driven by internet connectivity and interactivity thus adaptability.

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References:Books:
Supply Chain Management by V.V.Sople, Pearson Education Ltd.
Retailing Management by Swapna Pradhan, TMG , 2009
Supply chain & Logistic Management. By Donald J. Bowersox, David J. Closs
& M. Bixby Copper
It Happened In India (11' Edition), Rupa Publications. by Kishore Biyani (2007),
Anthony Robbins (1992),Awaken The Giant Within You (I Edition), Simon
&Schuster UK Ltd.
Robbins, Stephen P. (2004), Organizational Behavior (OW Edition),Prentice-Hall
India
Griffith, David A. and Robert F. Krampf (1997), Emerging Trends in US
Retailing,Long RangePlanning: International Journal of Strategic Managemen
30(6), 847852
Web References:
www.scopeknowledge.com
www.en.wikipedia.org/wiki/Supply_chain_management
http://www.bigbazaar.com/

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