1.

The retail sector-an overview

A retailer is a merchant or occasionally an agent or a business enterprise, whose main
business is selling directly to ultimate consumers for non-business use. He performs
many marketing activities such as buying, selling, grading, risk-trading, and
developing information about customer's wants. A retailer may sell infrequently to
industrial users, but these are wholesale transactions, not retail sales. If over one half
of the amount of volume of business comes from sales to ultimate consumers, i.e.
sales at retail, he is classified as a retailer. Retailing occurs in all marketing channels
for consumer products.

Retailers differ from industrial companies in that they do not produce tangible
products. They purchase merchandise from manufacturers in large quantities for
resale to consumers at a profit. The domestic Retail Store industry is mature and
highly competitive. Many retailers have been in business for the better part of a
century and, thus, have had time to fully cover targeted markets. These companies
must provide desirable products, while managing inventory and controlling costs, to
succeed. From an investment perspective, the sector generally tracks the broader stock
market, on average. Some retail stocks can be volatile, though, making them best
suited for short-term accounts. However, there are a few well-established companies
suitable for the conservative investors.

A Retailer thus, provides value creating functions like assortment of products and
services to the consumers, breaking bulk, holding inventory and provides services to
consumers, manufacturers and wholesalers.

Retailing broadly involves:

1. Understanding the consumers’ needs

2 .Developing good merchandise assortment.

Display the merchandise in an effective manner so that shoppers find it easy and
attractive to buy.

Retail Concept

The retailing concept is essentially a customer oriented, company-wide approach to

developing and implementing a marketing strategy. It provides guidelines which must
be followed by all retailers irrespective of their size, channel design, and medium of
selling.

The retailing concept covers the following four broad areas:

1. Customer orientation

The retailer makes a careful study of the needs of the customer and attempts to satisfy
those needs.

2. Goal orientation

The retailer has clear cut goals and devises strategies to achieve those goals.

3. Value driven approach

The retailer offers good value to the customer with merchandise keeping the price and
quality appropriate for the target market.

4. Coordinated effort

Every activity of the firm is aligned to the goal and is designed to maximize its
efficiency and deliver value to the customer

Economic Indicators

Consumer spending typically accounts for some two-thirds of Gross Domestic

Product. Therefore, GDP trends usually indicate the health of the retail sector. In
addition, measures of Consumer Confidence help gauge consumer spending and
savings rates, which also relate to the performance of retailers. In tough times,
consumers, having less disposable income, limit their outlays to necessary day-to-day
items. Conversely, during strong economic periods, consumers are more willing to
make big-ticket purchases. Observers should also keep watch on the Consumer Price
Index. Most retailers resist absorbing higher wholesale prices, and attempt to pass on
any increases to their customers. At a certain point, however, consumers will push
back against price hikes, and retailers' sales and margins will then come under
pressure.

Gross Margin

The difference between the prices retailers pay manufacturers for their goods and the
prices they charge is called the markup. Cost of sales is what is paid to the
manufacturers plus outlays for freight, store occupancy, employees, insurance, and
utilities. Gross margin is a good measure of how well a company builds sales, sets the
markup, and controls costs and expenses. Proper inventory management is vital. Too
much inventory increases carrying costs and forces markdowns to improve turnover.
(Turnover is the cost of sales divided by the average value of inventory over a given
period.) Conversely, an overly lean inventory may translate into lost sales
opportunities. Generally, the higher the turnover, the greater the flexibility in setting
the markup; this improves the chances of maximizing profit.

1.1 The Global Retail Scenario: An Overview

• Retail has played a major role world over in increasing productivity across a wide
range of consumer goods and services .The impact can be best seen in countries
like U.S.A., U.K., Mexico,India, Thailand and more recently China. Economies
of countries like Singapore, Malaysia, Hong Kong, Sri Lanka and Dubai are also
heavily assisted by the retail sector.

• Retail is the second-largest industry in the United States both in number of

establishments and number of employees. It is also one of the largest Industry
world wide. The retail industry employs more than 22 million Americans and
generates more than $3 trillion in retail sale annually.

About Retail Worldwide

• Retail is the biggest industry in the world with sales of $ 7.2 trillion.

• Every 10th billionaire in the world is a retailer.

• 25 of the top 50 Fortune 500 companies are retail. Retail generated a shareholder
return of 18%.
1.2 Retailing in India

Retailing in India is one of the pillars of its economy and accounts for 14 to 15
percent of its GDP. The Indian retail market is estimated to be US$ 500 billion and
one of the top five retail markets in the world by economic value. India is one of the
fastest growing retail markets in the world, with 1.2 billion people.
As of 2013, India's retailing industry was essentially owner manned small shops. In
2010, larger format convenience stores and supermarkets accounted for about 4
percent of the industry, and these were present only in large urban centers. India's
retail and logistics industry employs about 40 million Indians (3.3% of Indian
population).
Until 2011, Indian central government denied foreign direct investment (FDI) in
multi-brand retail, forbidding foreign groups from any ownership in supermarkets,
convenience stores or any retail outlets. Even single-brand retail was limited to 51%
ownership and a bureaucratic process.
In November 2011, India's central government announced retail reforms for both
multi-brand stores and single-brand stores. These market reforms paved the way for
retail innovation and competition with multi-brand retailers such as Walmart,
Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The
announcement sparked intense activism, both in opposition and in support of the
reforms. In December 2011, under pressure from the opposition, Indian government
placed the retail reforms on hold till it reaches a consensus.
In January 2012, India approved reforms for single-brand stores welcoming anyone in
the world to innovate in Indian retail market with 100% ownership, but imposed the
requirement that the single brand retailer source 30 percent of its goods from India.
Indian government continues the hold on retail reforms for multi-brand stores.
In June 2012, IKEA announced it had applied for permission to invest $1.9 billion in
India and set up 25 retail stores. An analyst from Fitch Group stated that the 30
percent requirement was likely to significantly delay if not prevent most single brand
majors from Europe, USA and Japan from opening stores and creating associated jobs
in India.
On 14 September 2012, the government of India announced the opening of FDI in
multi-brand retail, subject to approvals by individual states. This decision was
welcomed by economists and the markets, but caused protests and an upheaval in
India's central government's political coalition structure.
On 20 September 2012, the Government of India formally notified the FDI reforms
for single and multi brand retail, thereby making it effective under Indian law.
On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-
brand retail in India. The government managed to get the approval of multi-brand
retail in the parliament despite heavy uproar from the opposition. Some states will
allow foreign supermarkets like Walmart, Tesco and Carrefour to open while other
states will not.

1.2.1 Retail formats in India

1.Hypermarts/supermarkets
Large self-servicing outlets offering products from a variety of categories.
2. Mom-and-pop stores
They are family owned business catering to small sections; they are individually
handled retail outlets and have a personal touch.
3. Departmental stores
Are general retail merchandisers offering quality products and services.
4. Convenience stores
Are located in residential areas with slightly higher prices goods due to the
convenience offered.
5. Shopping malls
The biggest form of retail in India, malls offers customers a mix of all types of
products and services including entertainment and food under a single roof.
6. E-trailers
Are retailers providing online buying and selling of products and services.
7. Discount stores
These are factory outlets that give discount on the MRP.
8. Vending
It is a relatively new entry, in the retail sector. Here beverages, snacks and other small
items can be bought via vending machines.
9. Category killers
Small specialty stores that offer a variety of categories. They are known as category
killers as they focus on specific categories, such as electronics and sporting goods.
This is also known as Multi Brand Outlets or MBO's.
10. Specialty stores
Are retail chains dealing in specific categories and provide deep assortment.
Mumbai's Crossword Book Store and RPG's Music World are a couple of examples.
1.3 Contemporary issues in organized retailing

In Indian retail sector organized retail is a recent phenomenon. It is a zero-sum game

between 2 players:

a) Organized sector &

b) Unorganized sector

India’s retail is dominated by a large number of small retailers consisting of the local
kirana shops, owner manned general stores, chemists, footwear shops, apparel shops,
paan & beedi shops, hand-cart hawkers, pavement vendors etc. which together make
up the so-called Unorganized retail.

Unorganized 96%

Organized 4%

Organized retail is reflected in sprawling shopping centers, multiplex-malls & huge

complexes which offer shopping, entertainment and food all under one roof. The last
3-4 years have witnessed the entry of a number of organized retailers Opening stores
in various modern formats in metros and other important cities. Organized retailing
has begun to tap the enormous market but its share is small. A number of large
business houses have entered the retail business with very ambitious expansion plan.
However, opinions are divided on the impact of growth of organized retail in the
country.

Concerns have been raised that growth of organized retail may have an adverse
impact on retailers in the unorganized sector. It has also been that growth of organized
retailing will yield efficiencies in supply chain, enabling better success to markets to
producers (including farmers and small producers) and enabling higher prices, on the
one hand and, lower prices to consumers, on the other.

In India, organized retail contributed roughly 4% of the total Indian retail 2006-07,
which is very small even compared with most of the emerging market economics.

During the coming 9 years. It is projected to grow at a compound rate of 40-45

percent per annum and is estimated to contribute 16% to total Indian retail by 2011-
12.
1.5.1 Inventory management

Inventory refers to the goods stocked for future use. Every retail chain has its own
warehouse to stock the merchandise to be used when the existing stock replenishes.
Inventory management refers to the storage of products to be used at the time of
crisis.

The retailer keeps a track of the stocked goods and makes sure there is surplus
inventory to avoid being “out of stock”. Such a process is called as inventory
management.

Supply chain management and inventory management (IM) was used interchangeably
in the past but this has changed in the recent years. IM is now recognized as a
discipline under supply chain management together with manufacturing operations,
purchasing, transportation and physical distribution .Lambert (2001) defines SCM as
an all-encompassing discipline that involves all integrated activities that bring the
product to the market and satisfies the customer’s need and aims at linking all the
partners from the manufacturers, distributors to the retailers until the product reaches
the customer. These activities are cost drivers in an organization and would affect its
profitability and competitive advantage. It is therefore the aim of any firm to
minimize the cost to efficiently and sustainably meet demand.

Several key themes in supply chain management have emerged over time. There is
need for a shift from push demand to pull demand where inventory flow results from
actual consumer demand. Customers have become central in the when, what and how
goods are delivered as well as by whom. There is now an increased role of
technological systems to manage the supply chain. Firms are now focusing on the
core activities and there is increased outsourcing for the non-core to field specialists.
Inventory management and elimination of waste in the supply chain has also become
a key theme in SCM.

Inventory management is both a science and an art of ensuring that just enough
inventory is held by the organization to meet demand. The main objective of IM is to
inform managers how much to re-order, when to re-order, how frequently products
should be reordered and the minimum safety stock required. Ogbo, Okenanma &
Ukpere (2014) notes that an effective inventory management ensures that inventory is
held at the right place, at the right time and at the desired quantities. It also involves
setting of replenishment cycles, forecasting, valuation, available space for inventory,
quality management, managing returns and defective goods and demand forecasting.

Excessive inventory results to additional holding costs and hence increased

operational costs affecting the bottom line of the organization. Inventory management
results to faster inventory turnover hence cash management. On the other hand, out of
stocks result to lost sales and poor customer service which impact the top line of the
firm. Miller (2010) acknowledges that the profitability of a business is affected by the
inventory management systems and controls operationalized by the organization. An
effective inventory management system enables the firm to minimize any
complexities encountered and anticipated in planning or execution and controlling of
resources. By improving the inventory management system, a firm can greatly
improve the top and bottom line of the business. In most cases, inventory is the largest
contributor to the working capital and operational cost of a company and hence
should be given great emphasis by firm management.

Inventory management is one of the key factors for a firm’s competitiveness

especially in modern retail. Its complexity increases with the number of store keeping
units, the degree of varying demand and the complexity of the supply chain. It is
almost impossible to have goods arriving where needed at the exact time when the
need for them arises. Fluctuation in demand at the different levels and unreliability of
a supply chain could cause firms to hold inventory to cushion them from going out of
stock in case of delayed deliveries. Other times, organizations hold inventory for price
protection, to gain quantity discounts or to achieve less ordering costs. Whereas these
could be beneficial reasons to hold inventory, it causes incremental costs to the
company. It is therefore of great importance for a firm to have proper inventory
management systems that ensure that the right levels of inventory are held to achieve
the desired service levels at minimum cost.

Out of stock levels in retail stores are quite frequent. This not only affects the sales
and conversion of inventory to cash, but also affects the service levels of the store. In
the modern retail industry, the unavailability of product does not only result to
immediate sales misses, but is also a major reflection of poor quality. Firms therefore
tend to hold excess inventories while avoiding the poor service levels and lost sales.
The excess inventories on the other hand can cause unnecessary costs to the firm.Noel
& Jeff (2001) notes that in today’s competitive retail environment, delivering high
quality service can be treated as the basic retailing strategy. The retail service quality
is characterized by the quality of interaction, the physical environment quality and the
outcome quality. The physical environment quality includes the presence and quality
of the goods being consumed. This indicates that lack of product on shelf affects the
service quality of a retailer and eventually affects ability to attract retail customers.

It is common to find the retailers leveraging their suppliers in responsibility for actual
management of the inventory at the stores that they supply through vendor-managed
inventory arrangements. Inventory in a retail firm could be in the headquarters
warehouse, in the backroom of the branches, in-transit between supplier to warehouse
or warehouse to branch or at the shelf. Inventory management would ensure that the
retailer is in control of the levels of inventory at these stages. There has been
extensive research on inventory management models and strategies and specifically
for the modern retail firms. Since inventory management has been established as a
core item in the operation strategy, efforts should be made to incorporate the firm-
appropriate inventory models and strategies to ensure sustainable competitive
advantage.

1.5.2 Inventory Management and Control

An inventory management policy is required for a retail business to thrive. A
successful inventory policy is one that guides the stores on how much to order, the
reorder points, and the optimum replenishment cycles. For this to work, demand
planning and forecasting is needed and required safety stocks should be defined. To
maintain competitive edge in a world that has higher variability in demand, retailers
would need to have an appropriate inventory policy to ensure that they do not run out
of stock and hence loss of sales. Variability in demand also leads to overstock which
leads to higher costs and lower inventory turnover.
Inventory valuation and control is critical for the retailers. Issues such as inadequate
stock, pilferage, undersupply, wastages and damages could result to improper
inventory valuation and losses to the company. In the traditional inventory
management systems, there was an assumption that the inventory recorded and the
actual physical inventory was equal but in the real world, this hardly is the case.
Inventory inaccuracy is common in the warehouse and in the backroom as well as
from the shelf (Rekik, 2010). This could either result from shrinkage, misplacement
or transaction errors. After investigating 370,000 skus, DeHoratius and Raman (2008)
reported that about 65% of inventory records in retail stores did not match the
physical amount being held. In fact, about 20% of the records differed from the
physical count by six or more times. Many investigations have been done to
determine the cause of the discrepancies. Rekik (2010) found that shrinkage
accounted to the main cause of inventory inaccuracy.
Warehouse management is one of the key enablers in executing inventory
management. It increases operational efficiency while ensuring cost reduction. The
key performance indicators to impeccable warehouse operations are quality,
flexibility, agility and reliability. Its design, layout and capacity assessment
synchronizes the demand and supply gap and ensures a smooth operation flow.
Technology, by use of the warehouse management system has been used in the recent
past to ensure inventory management and control through inventory record accuracy
(Ferdoush, Mahadi, Mamun, & Zurina, 2014).

1.5.3 Some Important terms on Inventory Management

 3PL

Third party logistics is any provider of outsourced logistics. This could include
warehousing, fulfillment services, shipping, or any other inventory-related logistics.

 Buffer Stock

Buffer stock (also known as safety stock) is stock held in a reserve to guard against
shortages: maybe customers suddenly can’t get enough and haven’t factored that into
the demand, or maybe there’s a delay with the supplier. In any case, buffer stock
keeps covered.

 Cost of Goods Sold

COGS are the direct costs associated with the production of goods, and carrying costs
associated with those goods.
  CSV file

Comma Separated Value file. This is a file, usually in Excel, which allows values to
be saved in a table format, keeping separate columns for different information.

 Economic Order Quantity

EOQ is a complicated-looking equation used to measure something pretty simple:

how much should re-order, taking into account demand and inventory holding costs.

 Inventory Holding Costs/Carrying Costs

The cost business incurs in storing and holding inventory in warehouse until sale to
the customer.

 Landed Costs

Cost of shipping, storing, import fees, duties, taxes and other costs associated with
transporting and buying the inventory.

 Re-order point

The point at which we decide it’s time to re-order - taking into account current and
future demand, along with how long it will take supplier to send the new order.

 SKU

Stock Keeping Units or SKUs are unique tracking numbers/letters that assign to each
of products, indicating style, size, colour and other attributes.

 Stock out

Stock out refers to a situation when the retailer fails to fulfill the customer’s
requirement due to lack of merchandise. The merchandise is not available in the
current inventory and thus the customer has to return home empty handed.
1.5.4 NEED TO HOLD INVENTORIES
Martin and miller identified three general motives for holding inventories
 TRANSACTION MOTIVE:
This refers to the need of maintaining inventory to facilitate smooth production and
sales operations.
 PRECAUTIONARY MOTIVE:
Precautionary motive for holding inventory is to provide a safeguard when then actual
level of activity is differ than anticipated. This inventory serves when there is a
unpredictable changes in the demand and supply forces.
 SPECULATIVE MOTIVE:
This motive influences the decision to increase or decrease the levels of inventory to
take the advantage of price fluctuations.

Types of Distribution center & from where stock comes to pantaloons

Pantaloons Brand

For pantaloons brand, stocks are receiving from following distribution center,

(a) City Distribution Center

(b) Mother Distribution Center

(c) Regional Distribution Center

(d) Other pantaloons store

Non-Pantaloons Brand

For Non-pantaloons brand, Stocks are receiving from following

(a) Vendors

FSC (Future Supply Chain Solutions Ltd.)

FSC is India's first fully integrated and IT enabled end- to- end Supply Chain and
Logistics service provider in India. It provides services to large corporates in Food &
FMCG; Apparels, Footwear & Accessories; Consumer Electronics & Hi- Tech;
Automotive; Pharma and Light Engineering domain.

Promoted by Future Group and Fung Capital, FSC has been a pioneer in modernizing
supply chain and logistics by implementing global best practices in the Indian context.
This has enabled FSC to provide customized Supply Chain Solutions & Services
which reduce Time- to- Market and Cost- to- Market of customers.

Blue Dart

Blue Dart Express, incorporated in 1991, is one of the leading logistics company in
the world. Blue Dart Express is South Asia's premier courier, and integrated express
package distribution company.It is South Asia's premier courier, and integrated
express package Distribution Company. Its warehouses are at 69 locations across the
country as well as bonded warehouses at the 7 major metros of Ahmedabad,
Bangalore, Chennai, Delhi, Mumbai, Kolkata and Hyderabad.
Under Courier services it offers services such as Domestic Priority, Dart Apex, Dart
Surfaceline, Regional services. The company delivers cargo through its own charter
planes.

RIVIGO

Rivigo is a unique logistics network that aspires to be India’s largest logistics

platform, where all categories of goods (from e-commerce to temperature controlled)
in the country move through our network. Its contributing to building the new India
by defining the next-generation trucking industry with accurate predictions, high
levels of efficiency, simple automated operations, and by making logistics human.

Gati KWE

Gati, founded in 1989, is India’s pioneer in Express Distribution and Supply Chain
Solutions, with a strong presence in Asia Pacific region and SAARC countries, along
with an extensive network across India providing timely deliveries to 19,000
pincodes, covering 672 out of 676 districts in India.

Gati’s integrated and IT backed multi modal network of air, road and rail coupled
with Pan India warehousing facilities across India, allows us to provide customized
Supply Chain Solutions to customers across industries.

Job work done of a Warehouse in-charge

(a) Maintaining warehouse Dash board on Daily basis

(b) In transit Report

(c) Inward of the merchandise

(d) Outward of the merchandise

(e) Maintaining register

(f) Proper merchandising handling at the warehouse

(g) Proper segregation of cartoons

(h) Brand wise segregation at back storage area

(i) NSM & Defective demarked separately

(g) Checking of Tagging standard of merchandise

Inwarding at warehouse

Objective: - To ensure smooth movement of stock and merchandise from warehouse,

Vendor and any other location to shop floor, updating the inventory & subsequently
be available for sale.

Process:-

For CDC stock

1st step:- Goods are received according to the Stock Transfer note(STN)

Checking of Documents whether it belongs to store or not

Counting Of cartoons while unloading

Checking of Docket no. in cartoons

Tally of HU (Handling Unit) number with Invoice Document.

Discrepancy stock should be done if in case of shortage or damaged

2nd Step:- Unloaded cartoons are weighed & compare with packaging slip

Stamps and signature posted on Docket for stock receiving

3rd step:- Open SAP software in computer

 Finding IRN (Inbound Register Note) by using transcode- ZREG1

Finding GRN (Goods Receipt Note) by using transcode- ZSTORE

Finding ITC (Input Tax Credit) by using transcode- J_1IG_INV

The details of STN, GRN and actual quantity received are recorded in the warehouse
inwards register.

For Vendor stock

1st step:- :- Goods are received according to the Stock Transfer note(STN)

Checking of Documents whether it belongs to store or not

Tally of LR (Lorry Received) no. with cartons & packages

2nd Step:- Unloaded cartoons are weighed & compare with packaging slip

Stamps and signature posted on Docket for stock receiving

3rd step :- Open SAP system software.

Enter ZSTORE & Put Site code

Put P.O (Purchasing Document), Invoice no. & IRN no

Press F8 and scanning the product in the cartoons.

Tally the scanned quantity with invoice quantity

After that, post the scanned file data

Then automatically GRN no. generated

The details of STN, GRN and actual quantity received are recorded in the warehouse
inwards register.
For Shortage & Excess

As per current process 5% tolerance (line item) will be allowed.

• If store received any shortage: - We create manual (paper) discrepancy note as

per current process. We inform immediately to concern vendor/HO
category/zonal inventory/zonal commercial for shortage within 48 hours.
• If store received excess stock: - For excess stock 5% tolerance (article level)
will be allowed as per current process. For more than tolerance level stock, we
sent back to vendor with NRGP & immediately to concern vendor /HO
category/zonal inventory/zonal commercial for the same within 7days.

Discrepancy Note: -

While shortening & excessive, we follow the discrepancy note in below process

 No of shortage in cartoons
 Mailing to concern authority about shortage & excess
 Put IRN no. in the SAP
 Then Put P.O & GRN no.
 Consignee Name
 Challan no./Invoice & Date
  Quantity-price-amount
(P.O-Purchasing Order –Contains 10 numeric digits no.)
GRN no. – Contains 10 numeric Digits no.
Invoice no.- Contains Alpha-numeric digits no.

Proof of Delivery to the vendor

Security staff to stamp the suppliers delivery challan with the inwards received stamp

Store Name/Site code-

IRN No-
GRN No-
P.O. No-
Nos. of cartoon& pieces received-
Received Date-

Outwarding at Warehouse
Objective: - To ensure smooth movement of stock and merchandise from stores to
warehouse, vendors and any other location and updating the inventory.

Process:

Outward of merchandises are done due to seasonal changes & defective stocks.

1st Step:- For stocks to be outwarded, article list shared through mail

2nd Step:- Mailing to zonal head for approval.

Generating of Delivery no. after receiving STO no.

3rd Step:- Open SAP & enter VL02N transaction code

Scanning & packaging of each stock

4th Step:- All stocks stored brand wise into separate cartoons.

Generate packaging slip by HUPAST transaction code in SAP

5th Step:- Cartoons are properly weighed and weights are recorded in the Outward
Packing slip.
6th Step:- We generate a SAP gate pass of all the deliveries outward against each LR

(One SAP gate pass generated for one LR)

The details of outward no, Delivery no. and actual quantity outward to recorded in the
warehouse outwards register.

Proof of Delivery:-

Security Personnel affixes a seal containing store’s stamp as followed

Site name & Code:-

Security outward no:-
Delivery no.:-
No of cartons:-
Gate pass no:-

Negative Stock report:-

Negative stocks are obtained due to scanning of other barcodes of same brand while
billing.
Negative inventory are checked on daily basis.
(a) Open SAP and enter MB51 transaction code
(b) Put site name& storage code
(c) Put movement type & posting date
(d) Press executes and enter
(e) Click on Display negative stocks only and execute.

Register & files Maintained by supply chain department:-

There are various purposes for maintaining register to recording, inventory control,
security purposes & auditing.
(1) CDC/MDC/RDC & store inward register
(2) CDC/MDC/RDC & Store outward register
(3) Tag inventory register
(4) Warehouse to floor movement Register
(5) Discrepancy file and book
(6) NRGP (Non returnable gate pass) files
(7) Barcode control register

Literature Review
In the theoretical literature, a vast array of inventory management best practices (for
example, just in time, vendor managed inventory, collaborative planning, forecasting
and replenishment, automatic replenishment, agile system, and material requirement
planning) abound. But experience and empirical evidence has revealed that there is
limited knowledge and understanding of these practices, their mode of operation, and
practical relevance in the Nigerian manufacturing industry; including the Flour
milling sub-sector (Eloranta and Raisanen, 1988;Adeyemi and Salami, 2010; Alao,
2010). This lack of awareness and limited embrace of these cutting-edge practices in
inventory management could account for the rising increase in raw material wastages,
longer lead-time, lost sales, product shortages, backorder penalties, increasing
production cost, and poor quality issues currently ravaging the industry. Thus, there
appears to be a huge wall of disparity between theoretical inventory management and
the practical approach in the context of Nigerian flour milling industry, and the need
to bridge the theory-practice gap is imperative.
Several practices have been put forward for effective management of inventory
including the use of Economic order quantity (EOQ), Economic Batch Quantity
(EBQ), and more recent collaborative models: Vendor managed inventory system,
automatic replenishment etc. The Automatic replenishment and Just-In-Time
inventory management models-an automated system seeks to ensure swift service
availability when needed while minimizing stock handling cost. While the
collaborative models are demand pull strategies, the deterministic approaches(EOQ,
EBQ) act based on forecast information. The EOQ/EBQ attempt to determine the
quantity to order or produce at any point in time taking consideration of all relevant
costs-ordering costs, handling costs, stock-out and backorder costs. The EOQ includes
parameters such as annual usage in unit, order cost and carrying cost. When
implementing the EOQ method, it is advised to manually check the result obtained,
run a simulation by using a sampling of items, and maintain the EOQ formula by
reviewing the interest rates, storage costs and operational cost periodically.
Fig:- EOQ Model
In this direction, Dave (2001) presents an inventory model for calculating optimal
order quantity that used the Economic Order Quantity (EOQ) method. He points out
that many companies are not using the EOQ method due to poor results arising from
inaccurate data input. He clarifies that many errors in the calculation of EOQ in the
computer software package are due to the failure of the users in understanding the
data inputs and system setup that control the output. Dave (2001) posited that EOQ is
an accounting formula that determines the point at which the combination of order
costs and inventory cost are the least.
Farzaneh (2012) presents a mathematical model to assist companies in their decision
to switch from the economic order quantity (EOQ) to the Just in Time (JIT)
purchasing policy. The author highlights that the economic order quantity model
focuses on minimizing the inventory costs rather than on minimizing the inventory.
From the mathematic model presented, Farzaneh (2012) concludes that JIT can
eliminate the storage, capital, insurance, ordering, and transportation costs. However,
it depends on certain conditions.
Under the ideal condition, whereby all the conditions meet, it is economically better
off to choose JIT over EOQ because it results in a simultaneous reduction in purchase
price, holding cost and ordering cost. Nevertheless, it should be noted that in reality,
the manufacturers produce a large quantity of items even though they may deliver
them in very small quantities to fulfill customers’ needs.
Kisaka (2006) analyzed the role of Economic Order Quantity model in reducing the
cost of raw material inventory at a dairy farm Project. He compared total costs of raw
material inventory incurred through the project-employed method with the total costs
of raw material inventory which could have been incurred under the EOQ application.
Kisaka found that there was a cost saving which could have been observed through
employing the EOQ model.
Wild and Axsater (2005), used inventory technique methods in solving real inventory
issues for business in a variety of industries from aerospace to retail consumables and
from automotive to process chemicals. They noted that appropriate database was a
prerequisite for the application of the techniques. This implies that manufacturing
entities need to have a well identifiable database for the application of more
sophisticated models.
Research Gaps
After a review it is observed that any study of inventory system is incomplete without
merging the complete chain in any business. In an integrated inventory system,
profitability is considered for all the parties involved in it, not for a single person. So
in this case to maximize the profit, the vendor, the supplier and the retailer will
cooperate to raise their business, and as a result they all will be in win-win situation.
In the field of seasonal and expiry products attention is not given to the time value of
money, which is a very important factor in the calculation of optimal cost of the system.
With the increment of time, the value of money decreases.
In today’s market when a vendor offers different schemes on bulk purchasing, it is
obvious for the retailer to attract and buy more than his requirement. In most of all
existing models it is assumed that all the stock is consumed and shortages occur, but it
is not necessary, that all the stock, purchased by the retailer is sold out in a single
season. In many situations the retailer had to hold this remaining stock up to the next
season, which will incur an extra cost of holding.
So to avoid this cost, the remaining stock can be transferred to any secondary market,
where it was required at that time.
Scope of the Study
Store inventory
Objectives of the Study
The main objective of this study is to have a deeper understanding on Store Inventory
Management (SIM) with special reference to Pantaloons, Bhubaneswar.
General Objective
The general objective is to assess the inventory management in Pantaloons.

Specific Objectives
The specific objectives of the study were;
 To examine the adherence to professionalism with respect to materials
management.

 To examine the level of technology adopted to ensure inventory control.

 To examine the method used in evaluating inventory.

  To examine stock replenishment done continuously in related to customers.

General Question
The general question was to what extent is inventory managed in pantaloons?
Specific Questions
The specific questions of the study are;
 Is the system adopted adequate for proper control of stock?

 How is the inventory priced to ensure efficiency?