CHAPTER 1: INRTODUCTION

1.1 INTRODUCTION OF INVENTORY MANAGEMENT:

Inventories are assets of the firm and require investment and hence involve the
commitment of firm’s resources. The inventories need not be viewed as an idle asset rather
these are an integral part of firm’s operations. But if the inventories are too big, they
become a strain on the resources, or if they are too small, the firm may lose the sales.
Therefore, the firm must have an optimum level of inventories. Inventory is actually
money, which is available in the shape of materials (raw materials, in-process and finished
products), equipment, storage space, work-time etc. Inventory is a list of goods and
materials, or those goods and materials themselves, held available in stock by a business.
Inventory are held in order to manage and hide from the customer the fact that
manufacture/supply delay is longer than delivery delay, and also to ease the effect of
imperfections. In the manufacturing process that lower production efficiencies if
production capacity stands idle for lack of materials. Any organization which is into
production, trading, sale and service of a product will necessarily hold stock of various
physical resources to aid in future consumption and sale. While inventory is a necessary
evil of any such business, it may be noted that the organizations hold inventories for
various reasons, which include speculative purposes, functional purposes, physical
necessities etc.A component of supply chain management, inventory management
supervises the flow of goods from manufacturers to warehouses and from these facilities to
point of sale. A key function of inventory management is to keep a detailed record of each
new or returned product as it enters or leaves a warehouse or point of sale.

Inventory management is a science primarily about specifying the shape and placement of
stocked goods. It is required at different locations within a facility or within many locations
of a supply network to precede the regular and planned course of production and stock of
materials.

Inventory control is concerned with achieving an optimum balance between two competing
objectives.

Minimizing the investment in inventory.

Maximizing the service levels to customer’s and its operating departments.

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 1.2 CONCEPT OF INVENTORY MANAGEMENT:

The dictionary meaning of "Inventory" is “a detailed list-stock of goods

in this". A practical definition from the material management angle would be "Items of
stores or materials kept in stock to meet future demands of production, repairs,
maintenance, construction etc.". Since the materials held in the inventory are idle resource,
another definition of inventory would be "an idle resource of any kind which has an
economic value".

The inventory means and includes the goods and services being sold by the firm
and the raw materials or other components being used in the manufacturing of such goods
to be offered to customers whenever demanded by them. Inventory management also
means maintaining effective internal controls over inventory, including safeguarding the
inventory from damage or theft, using purchase orders to track inventory movement,
maintaining an inventory ledger, and frequently comparing physical inventory counts with
recorded amounts.

1.3 TYPES OF INVENTORIES:

Generally the inventories are classified into three categories and they are as follows;

RAW WORK IN FINISHED

MATERIALS PROGRESS GOODS

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1. Finished goods: -

These are the goods, which are either being purchased by the firm, or are being
produced or processed in the firm. These are just ready for sale to customers.
Inventories of finished goods arise because of the time involved in production process
and the need to meet customer’s demand promptly. If the firms do not maintain a
sufficient finished goods inventory, they run the risk of losing sales, as the customers
who are unwilling to wait may turn to competitors.

2. Work-in-progress: -

It refers to the raw materials engaged in various purchase of production

schedule. The degree of completion may be varying for different units. Some units
might have been just introduced; while some others may be 40%compleete or others
may be 90%complete. The work-in-progress refers to partially produced goods.

3. Raw materials: -
a. The raw materials include the materials, which are used in the production
process, and every manufacturing firm has to carry certain stock of raw
materials in stores. These units of raw materials are regularly issued
transferred to production department Inventories of raw materials are held
to ensure that the production process in not interrupted by a shortage of
these materials.

Inventory is very vital to every Company is that without inventory no company would
survive. Inventory is meant for ‘protection’ and for ‘economy’ in cost. Keeping
inventory of sufficient stocks will help to face lead times component, demand and
supply fluctuations and any unforeseen circumstances in the procurement of materials.
Though to have inventory is must, inventory is such a thing that will pile up and creep
into the area of profits to turn them as losses and can put the company in red. It is
therefore, necessary to have control over inventory to save the company from piling up
of inventories and to avoid losses. Better said than done is the world that suits the
inventory control.

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 Inventories constitutes second largest category of all manufacturing operation
exceeded only by plant and equipment and followed by receivables. The
objectives of inventory control are:

a) To keep required stock of materials so that production and maintenance activities do

not suffer.

b) Minimum blockage of funds in inventory. Optimization can be achieved and efforts

need to be made to improve input output ratio of materials by scientific methods of
determining.

1.4 DEFINITIONS

Inventory control can be defined as “Determining and

maintaining optimum investment in inventory given the significance of benefits
and cost association with holding inventory ”.

Inventory Control relates to “ a set of policies and procedure by which an

industries determines which materials it will hold in stock and the quality of
each that it will carry in stock “. Therefore inventory control is otherwise known
as STOCKCONTROL.

1.5 FACTORS INFLUENCING INVENTORY

“How much to buy at onetime” and “When to buy this

quality “. These are two fundamental things on which inventory control depends.
Many factors govern these fundamental things. The prime factors that govern
these two fundamental things are:

1. Requirements

2. Quality in stock or on order

3. Lead time

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4. Obsolesce.

1.6 CONTROL, MAINTENANCE AND MANAGEMENT

The essence of inventory control, broadly speaking consists of

revolving the following three factors:

1. Necessity for stocking an item

2. Time for reordering the items

3. Quality per order to be order.

Continuous and periodical review is required in the evaluation

of inventory management and treats it as a continuous process as costs, source
of supply, availability of materials; consumption will vary in the course of time
making the previous assessment invalid. This process also helps in
standardization of materials for procurement by using near equivalents and
eliminating material, which are discontinued as a regulation, which will remove
obsolescence.

1.7 INVENTORY CONTROL TECHNIQUES

Inventory is being maintained as a cushion in supply of

materials for continuous production without causing stock out situation. This
cushion should not be suicidal to any organization. The following scientific
techniques and methods are being used in control of inventory.

1. Inventory Management Techniques

2. Standardization

3. Selective Inventory Control

4. Just In Time

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5. Perpetual inventory system

6. Inventory turnover ratio

1.8 INVENTORY MANAGEMENT TECHNIQUES

1. Economic Order Quantity

If the firm is buying raw materials, it has to decide lots in

which it has to be purchased on replenishment. If the firm is planning a
production run, the issue is how much production to schedule. These problems
are called order quantity problems, and the task of the firm is to determine the
optimum or economic order quantity.

(a) Ordering cost:

The term ordering cost is used in case of raw materials and includes the entire
costs of acquiring raw materials.

(b) Carrying cost:

Cost incurred for maintaining a given level of inventory is called carrying

cost.Economic Order Quantity is given by the formula:

EOQ = √2AO÷C

And the total cost of inventory is given by the formula:

Total cost of inventory = (A×P) + (A×O)÷EOQ +(EOQ×C)÷2

Where A = Annual consumption (in units)

O = Ordering cost per order (in Rs)

C = Carrying cost per unit (in Rs)

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 P = Price per unit (in Rs)

2. Reorder Point

The reorder point is that inventory level at which an order

should be placed to replenish the inventory. To determine reorder point:

(a) Lead time is the time normally taken in replenishing inventory after the
order has been placed.

(b) Average usage

(c) Economic order quantity

3. Safety stock

The demand for material may fluctuate from day to day. The
actual delivery time may be different from the normal lead time. If the actual
usage increases or the delivery of inventory is delayed the firm can face
problem of stock out, which can be costly. So, in order to guard against the
stock out the firm may maintain a safety stock.

1.9 STANDARDIZATION

Standardization is very essential to control the inventory, as

by standardization reduction in variety of material is possible. And because of
the reduction in variety the advantages are low order cost, low inventory, less
storage stocks, conservation of materials, variety reduction, less paper work,
easy follow up with suppliers, less number of orders.

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The importance of this field has been recognized since the days of F.W.
Taylor, who first drew attention to this fundamental need in any organization.
Just as work study is necessary preliminary to work simplification, and a basic
technique for production control, quality control, materials handling, estimated
cost control, etc., “Standardization “ are preliminary necessity to design a basic
technique on build control and standardization procedure.

1.10 SELECTIVE INVENTORY CONTROL MANAGEMENT

Any manufacturing organization consumes few thousand items of stores. A

high degree of control on inventories of each item would, therefore neither be
practical considering the work involved, nor worthwhile since all items are not
of equal importance. Hence, it is desirable to classify or group items to control,
commensurate with importance. This is the principle of selective control as
applied to inventories and the technique of grouping is termed as selective
technique.

Selective inventory means variation in the methods of inventory control from

items to item and this differentiation should be on selective basis by
classification. A company has to stock thousands of items of raw materials,
standard parts, stores and spares, sub contract items, tools, stationery etc. To
have better control over the inventory/ stock on hand, selective inventory
control technique should be used in isolation/ or in conjunction. Thus selective
control means selecting the area of control so that required objective is
achieved as early as possible without any lost of time due to taking care of
full area –

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 • Minimum loss of energy and efforts.

• At minimum cost without loss of time.

There are following selective control techniques:

* ABC Analysis

* FSN Analysis

* XYZ Analysis

* VED Analysis

* HML Analysis

a). ABC Analysis

ABC analysis is a selective control technique which is

required to be applied when we want to control value of consumption of
the item in rupees obviously when we want to control value of the
consumption of the material we must select those materials where
consumption is very high.
In any company manufacturing, there are number of items which are
consumed or traded it may run into thousands.

Value of consumption of No. Of items Grade

items (value in Rs).
70% of consumption 10% of no. Of items A
20% of consumption 15% of no. Of items B
10% of consumption 75% of no. Of items C

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A items these are those items which are found hardly 5% 10% but their
consumption may amount 70% 75% of the total money spend on materials.

B items these are those items which are generally 10% 15% of he total items
and their consumption amounts to 10% 15% of the money spend on the
materials.

C items these are large number of items which are cheap and inexpensive and
hence insignificant. They are large in number s running into hardly 5% 10% of
the total money spends on materials.

'A' Class Items ‘B’ Class Items 'C Class Items

(High consumption value) (Moderate consumption (Low consumption value)
value)

1. Very strict control 1. Moderate control 1. Loose control.

2. No safety stocks or very 2. Low safety stocks. 2. High safety stocks

Low safety stocks.

3. Maximum follow up and 3. Periodic follow up 3. Follow up and

Expediting expediting in exceptional
cases
4. Rigorous value analysis 4. Moderate value analysis 4. Minimum value analysis

5. Must be handled by senior 5. Can be handled by 5. Can be fully delegated

officers management

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b.)FSN ANALYSIS

This type of analysis is more concerned from the point of

view of movement of the item or issue of the item or issue of the item under
this type of analysis.

‘F’ items are those items, which are fast moving i.e. in a given period of time,
say a month or a year they have been issued up till number of items. Although
fast moving does not necessarily mean that these items are consumed in large
quantities.

‘S’ items are those items which are slow moving in the sense that in
the given period of time they have been issued in a very limited number of
time

‘N’ nonmoving items are those, which are not at all issued for a
considerable period of time.

Thus, stores department whose concerned with the moving of items would like
to know and classify that the items are storing in the categories FSN. So that
they can manage operate and plan stores activity accordingly.

For example, for efficient operations it would be necessary that fast moving
items as far as possible should be stored as near as possible to the point of
issue. So that it can be issued with minimum of handling. Also such items
mus2t be stored at the floor level avoiding storing them at high heights.

Similarly, if the items are slow moving or issued once in a while in

a given period of time they can be stored in the interior of the stores and even
at the higher heights because handling of these items becomes very rare.

Further it is necessary for stores in charge to know about nonmoving items for
various reasons:

1. They mean unnecessary blockage of money and affecting the rate of

returns of the company.

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Further they also occupy valuable space in the stores without any usefulness and
therefore it becomes necessary to identify these items and go into details and
find reasons for their non-moving and if justified to recommend to top
management for their speedy disposal so that company operations are performed
efficiently.

Also inventory control to some extent can also be exercised on the basis of
FSN analysis.

For example, fast moving items can be controlled more severely, particularly
when their value is also high. Similarly, slow moving items may not be
controlled and reviewed very frequently since their consumption may not be
frequent and their value may not be high.

c.) XYZ Analysis

This type of analysis is carried out from the point of view

of value of balance stocks lying in the stores from time to time and classifies
all the items as given below.

‘X ‘items are those items whose value of balance stocks lying in the stock are
very high.

‘Y’ items are those items whose value of balance stock is moderate.

‘Z’ items are those items whose value of balance stock lying in the stocks is
very low.

After knowing this type of classifications and their items can be taken to
control the situation as shown below:

1] From security point of view high value items must be stored and kept under
lock and key or if not possible they should be kept in such a way that they are
always under supervision. Similarly arrangement can be made for y and z items
accordingly.

2] From inventory control point of view we must know why there is high
inventory for ‘X’ items. We should review inventory control procedure for each

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and every high item because stock should be maintained to take care of lead
time consumption and also to provide safety stocks. For high value items lying
in stores we should review the reasons for long lead time as well as demand
variations and see whether lead time consumption and safety stocks can be
reduced. Thus proper inventory control procedures can be developed on the basis
of XYZ analysis.

Thus proper selective control methods should be selected to control the materials
and prevent from facing loss, taking advantage and knowing what exactly is to
be done.

d.) VED analysis

VED analysis is carried out to control situation, which are

critical. When applied to material in VED analysis we try to identify material
according to their criticality to the production, which means the material, without
which the production will come to stop and so on from this point of view
material classified into three categories.

V vital,

E essential,

D desirable.

Vital categories of the items are those items for the want of which the
production will come to stop. For e.g. Power in the factory.

Essential group of items are those items because of non-availability of which

the stock out cost is very high.

Desirable group of items are those items because of non-availability of which

there is no immediate loss of production and stock cost is very less and it may
cause minor disruption in the production for a short time.

e.) HML ANALYSIS

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This analysis, analysis the material according to their prices and then classifies
them as H items or M items or L items.

H stands for high price,

L stands for low price and

M stands for medium price.

Since price is more concerned of purchase department mostly purchase

department people analyses the material according to HML analysis.

HML analysis must be carried out from any one of the following objectives or
some of the objective as the case may be.

 When it is desire that purchasing responsibility should be delegated to

right level of people.

 When it is desired to evolve purchasing policies then also HML analysis

is carried out i.e. whether to purchase in exact quantities as required or
to purchase in EOQ or purchase only when absolutely necessary.

 When the objective is to keep control over consumption at the department

level then authorization to draw materials from the stores will be given to
high level H item, low level for L items and medium level for M item.

 When it is desired to decide frequency of stock taking then very

frequently H category, very rarely L category and averagely M category.

 When it is desired to arrange security arrangements for the items, then

H item under lock and key, L items keep open on the shop floor and
under supervision for M items

1.11 JUST IN TIME INVENTORY SYSTEM

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Keeping in view the enormous carrying cost of inventory in the stores and go
downs, manufacturers and merchandisers are asking for more frequent deliveries
with shorter purchase order lead times from their suppliers. Now days
organizations are becoming more and more interested in getting potential gains
from making smaller and more frequent purchase orders. In other words, they
are becoming interested in just in time purchasing system. Just in time
purchasing (JIT) purchasing is the purchase of material or goods in such a way
that delivery of purchased items is Just in time purchasing recognizes too much
carrying costs associated with holding high inventory levels. Therefore, it
advocates developing good relations with suppliers and making timely purchases
from proven suppliers who can make ready delivery of goods available as and
when need arises. EOQ model assumes a constant order quantity whereas JIT
purchasing policy advocates a different quantity for each order if demand
fluctuates. EOQ lays emphasis on ordering and carrying costs but inventory
management extends beyond carrying and ordering costs to include purchase
costs quality costs and stock out. Just in time purchasing takes into
consideration all these costs and move—outside the assumptions of the EOQ
model.

Advantages of JIT purchasing

1. Investment in inventory is reduced because more frequent purchase orders of

small quantities are made.

2. Carrying cost is reduced as a result of low investment in inventory.

3. A reduction in the number of suppliers to be dealt with is possible. Only

proven suppliers who can give `quick delivery of quality goods are given
purchase orders . As a result of this reduction in negotiation time is possible.
The use of long—run contracts with some suppliers with minimal paper work
involved is possible.

4. Quality costs such as inspection cost of incoming materials or goods , scraps

and rework costs are reduced because JIT purchasing assures quick and frequent
delivers of small size orders which results in low level of inventories causing

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minimum possible wastage. Therefore, JIT purchasing is frequently applied by
organizations dealing in perishable goods assured before their use or demand.

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 CHAPTER 2: INTRODUCTION OF THE COMPANY

2.1 BIG BAZAAR

Big Bazaar is the largest hypermarket chain in India.

Big Bazaar was launched in September, 2001 with the opening of its
first four stores in Calcutta, Indore, Bangalore and Hyderabad in 22 days.Within a span
of ten years, there are now 161 Big Bazaar stores in 90
cities and towns across India.Big Bazaar has included a wide range of products and
service offerings under their retail chain.Big Bazaar was started by Kishore Biyani, the
Group CEO and Managing Director of Pantaloon Retail India.

Big Bazaar is a chain of hypermarkets in India, with more than 100 stores in operation.
It is a subsidiary of Future Group Venture Ltd's, and follows the business model of
United States-based Wal-Mart. Facilities offered by Big Bazaar Online shopping: Big
Bazaar has an official website, FutureBazaar.com, which is one of the most favorite
sites among people of India for online shopping. Future Bazaar is an online business
venture of Future Group, which sells an assortment of products such as fashion, which
includes merchandise for men and women, mobile accessories, mobile handsets and
electronics like home theatres, video cameras, digital camera, LCD TVs, kitchen
appliances and many more.

Discounts: “Hfte ka sabse sasta din was introduced by the Big Bazaar, wherein extra
and special discounts were offered on Wednesday every week, to attract the potential
buyers into their store.

Security check: At each exit of Big Bazaar, they use alarm systems or Electronic
Article Surveillance system, which detects the products that has attached tags or not.

1. Big Bazaar is a chain of hypermarket in India, which caters to every family’s needs
and requirements.

2. Big Bazaar has released the doors for the fashion world, general merchandise like
sports goods, cutlery, crockery, utensils, and home furnishings etc. at best economical
prices.

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3. Big Bazaar group offers more than 100 stores all over the country with an
amalgamation of Indian bazaars’ feel and touch with a convenience and choice of the
modern retail facilities

4. The worldwide country chain, Big Bazaar, is formed by CEO of Future Group, Mr.
Kishore Biyani. Their basic attraction associated with reasonable prices is their Unique
Selling Price.

5. Big Bazaar has become a massive hit with lower middle-class and middle class
people as a major client base.

6. Reflect the look and feel of Indian bazaars at their modern outlets

GROUP VISION

“To deliver Everything, Everywhere, Everytime to Every Indian Consumer in the most
profitable manner.”

GROUP MISSION

1 We 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.

2 We will be the trendsetters in evolving delivery formats, creating retail realty,

making consumption affordable for all customer segments – for classes and for masses.

3 We shall infuse Indian brands with confused and renewed ambition

4 We shall be efficient and cost-conscious and committed to quality in whatever we

do.

Board of directors

1. Managing director :- Mr. Kishore Biyani

2. Wholetime Director :-Mr Gopikishan Biyani

:- Mr Rakesh Biyani
3. Director :- Mr Shailesh Haribhakti

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 :- Mr S.Doreswamy
:-Mr Darlie Koshy
:- Mr Anil Harish

2.2 BIG BAZAAR SUPER CENTRE

Big Bazaar Hyper mart chain in India

Outlet 140 Outlets

Parent Group Future Group

Owner Kishore biyani

Founded 2001

Head Quarter Jogeshwari, Mumbai

Industry Retail

Tagline Is se sasta aur accha kahin nahi

2.3 SWOT Analysis

The SWOT analysis of Big Bazaar discusses the strength, weaknesses, opportunities
and threats for one of the major retailers of India – Big bazaar.

Strengths in the SWOT analysis of Big Bazaar

 High brand equity enjoyed by Big Bazaar

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 State of the art infrastructure

 A vast variety of stuff available under one roof

 Everyday low prices, which attract customers

 Maximum percent of footfalls converted in sales

 Huge investment capacity

 Biggest value retail chain in India

 It offers a family shopping experience, where entire family can visit together.

 Available facilities such as online booking and delivery of goods.

Weaknesses in the SWOT analysis of Big Bazaar

 Unable to meet store opening targets on time

 Falling revenue per sq. ft.

 General perception: ‘Low price = Low quality’

 Overcrowded during offers

 Long lines at billing counters which are time consuming

 Limited only to value offering low price products. A no of branded products are
still missing from Big Bazaar’s line of products. E.g. Jockey, Van heusen,

Opportunities in the SWOT analysis of Big Bazaar

 A lot of scope in Indian organized retail as it stands at approximately 4%.

 Increasing mall culture in India.

 More people these days prefer to visit big stores where they can find large
variety under one roof

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Threats in the SWOT analysis of Big Bazaar

 Competition from other value retail chains such as Shoprite, Reliance (Fresh and
trends), Hypercity and D mart.

 Unorganized retail also appears to be a threat to Big Bazaar’s business. A large

population still prefers to visit local convenient stores for daily purchases

 Changing Government policies

 International players looking to foray India

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 CHAPTER 3: RESEARCH METHODOLOGY

The methodology in this content involves the process of collection of data

from primary and secondary sources and interpreting the same by using the analytical
tools and techniques utilizing the consequent finding to put forward liable and insightful
suggestions to the company.

Generally Data collection is classified into two categories and they are as
follows;

1. Primary Data

2. Secondary Data

Primary data is the data which is collected for the very first time and
secondary data is the data which is gathered from the past data as a further references.

A large part of primary data was collected in the course of my interaction with
the personnel concerned departments and also developed in consultation with costing
manager, material manager and officers. The data collected was regarding various
aspects of inventory management like lead-time, ordering cost, carrying cost and
working of online computerized stores system.

3.1 TYPES OF RESEARCH DESIGN

Types of research design used in this research of inventory control techniques

are descriptive as well as analytical. It follows a descriptive research design it is
used to identify and classify the elements or characteristics of the subject.
Quantitative techniques are used to collect , analyze and summarize the data. In
Nalco Smelter Plant, data and information are collected to analyze the inventory
control techniques.

Here analytical research is also used as descriptive approach is extended to

suggest and explain the causes of changes in inventory and factors effecting
inventory and inventory control techniques.

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Applied research is also followed i.e. problem solving research is applied in this
project. The already known theories and knowledge of inventory control
techniques are studied and applied to practical situation like of Nalco’s inventory
and understand the variation in inventory level and finding out alternative
methods and models for better inventory control.

3.2 LIMITATIONS OF THE STUDY

 Some Information is some highly confidential so it is very difficult to get the

data from the organization.

 The result realized are applicable to this firm only the major constraints on this
endeavor. Where the policy of time and information, the scope of the work is
confined to the inventory management rather than material management as a
whole.

 The management of time for project completion is also a factor that limits
extensive study of the nature of projection process and its implications on
inventory aspects.

 It is based on the data supplied by the factory personnel.

 The schedule information is not available.

 More dependency on secondary data.

The analysis of inventory management is based on information available and if any

mistake would be reflected in the study.

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 CHAPTER 4: INVENTORY MANAGEMENT OF BIG BAZAAR

PROCESS OF INVENTORY MANAGEMENT

The store manager decides the level of inventory, he inspects the stocks time to time
and the demands of customers. Stock - in & Stock - out is maintained so as to decide the level
of inventory.Inventories such as apparel are ordered approximately after 45 days and for
every sample of clothes they have 10 backup pieces. A computerised automated system that
ensures the availability of backup once the product is sold off.

Product categories in Big Bazaar

Big Bazaar generally deals in national level brands like Lee, Levis etc, Other
than this it also deals in some Private label brands DJ&C in apparel, KORIA
in electronics etc. Then we asked about the product categories , that are
:FMCG, FOOD & NON- FOOD junction , Staple items , fruits &
vegetables , fashion & apparels ,chill section , home decorator , footwear ,
book zone, CDs etc

Location of Big Bazaar

Considering all the facts which we have studied, and seeing the strategic
location of Big Bazaar, we can say, that the location is the best, it could have
in. Firstly it is in the heart of the city. Secondly it is in a shopping
mall, which has all types of customers coming in and their, footfalls, being
easily converted into sale, by the efficient employees of big bazaar.
Moreover it is at the place where traffic inception is always high. It is near
station, which gives it another competitive advantage over its competitors.
Transportation is also good, as one can easily reach big bazaar through auto,
private vehicles etc.

Types of inventories maintained.

The inventories maintained in the outlet, are of different product category.
Mainly Cycle inventory is maintained for FMCG product category & Food
Category, Safety level of inventory for FMCG Products, and for Apparel,
Seasonal inventory is maintained, because of fluctuation in demand.

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Reorder points of inventories
The manager in charge told us that there is no such reorder points. Orders
are placed as and when required. However he told that there are no such
measures, except in a few items. Previously apparels were ordered once
there stock fell below 4 per item piece. For general merchandise, which
includes, food and non-food items, it was 7 days. However they always keep
in mind the transit time of 2 days. Vegetables are taken on a daily basis,
Form local vendors.

Perishable goods like vegetables are maintained with great care. Vegetables
are bought on daily basis on the basis of demand, and seasonal item. It is
also ascertained that damaged vegetables are sold at a low cost to some other
channels. Whereas imperishable goods like utensils and staple goods and
electronic items are brought from. The distribution channel used in
supply chain process is operated by Central Distribution Channel, which is
located in. From there goods are supplied to every Big Bazaar Store.
The modes of transportation which are used in supply chain process are
Truck & Rails, but in case of emergency, flights are also being used.

SAP Inventory Management

Inventory management in SAP is an important component of MM module. It deals
with the management of stocks and good movement.The stocks keeping is managed by the
quantity or the amount basis. This module is responsible for the entire goods movement
tracking from planning and generating various reports. Inventory management integrated
with various other modules like Sales & Distribution and Purchasing etc.

Different Formats of Future Group

Format -1
Pantaloon Retail (India) Limited, is India's leading retail company with presence
across multiple lines of businesses. The company owns and manages multiple retail
formats that cater to a wide cross-section of the Indian society and is able to capture almost
the entire consumption basket of the Indian consumer. Headquartered in Mumbai
(Bombay), the company operates through 5 million square feet of retail space, has over 331

25
stores across 40 cities in India and employs over 17,000 people. The company registered a
turnover of Rs. 2,019 crore for FY 2005-06.

Pantaloon Retail forayed into modern retail in 1997 with the launching of fashion retail chain,
Pantaloons in Kolkata. In 2001, it launched Big Bazaar, a hypermarket chain that combines
the look and feel of Indian bazaars, with aspects of modern retail, like choice, convenience
and hygiene. Food Bazaar, food and grocery chain and launch Central, a first of its kind
seamless mall located in the heart of major Indian cities, followed this. Some of its other
formats include, Collection i (home improvement products), E-Zone (consumer electronics),
Depot (books, music, gifts and stationary), all (fashion apparel for plus-size individuals),
Shoe Factory (footwear) and Blue Sky (fashion accessories). It has recently launched its
Etailing venture, future bazaar.com

Background: Founded in 1987 as a garment manufacturing company, the company forayed

into modern retail in August 1997 with the launch of its first department store, Pantaloons in
Kolkata.

Listing: Pantaloon Retail is a listed company on the Bombay Stock Exchange (BSE, Scrip
Code: 523574) and National Stock Exchange (NSE, Symbol: PANTALOONR).

Format-2

CENTRAL

Central, the showcase seamless mall concept is one of the more popular offerings in
the lifestyle segment that celebrates shopping in India. During the year, Central capitalized on
its positioning of being a destination where citizens can just come and unwind, whether it’s
for shopping for a wide range of national and international brands, enjoying their favorite
cuisine at the multiple specialty restaurants and food courts or watching the latest movie
releases at the in-house multiplexes.
The most reputed brandsare showcased in Central. It is also emerging as the destination of
first choice for new fashion brands in India. Central assures better visibility, instant
recognition, good quality and commercially viable space on the basis of the optimum space
utilization concept, taking the brand closer to the consumer. With brands within Central
competing against the best brands in the country, it also allows benchmarking for these
brands.

26
The coming year will also witness many new concepts being introduced at all
Central malls. Some of these concepts include communications (MPort and Gen M),
electronics (E-Zone), furniture and accents (Collection I), fitness equipment’s and wellness
zones, books, music, gifts & stationery (Depot) and fine dining restaurants etc. Some of the
new alliances that the group has entered into, like Etam, Lee Cooper and Gini & Jony will
also share space within all Central malls.

Format-3

PLANET RETAIL

A young and emerging India is also eager to experience international brands. We

sensed this opportunity some time back and have built a strong portfolio of international
brands through our strategic partnership with Planet Retail Holdings Pvt. Ltd. The alliance
with Planet Retail provides access to international fashion retail chains like Marks &
Spencer, with 9 stores at present; Guess the US brand that has 12 retail stores currently, and
the Spanish brand Women’s Secret which is retailed through 2 outlets. Planet Retail also has
a multi-brand international sportswear format under the brand ‘Planet Sports’. The company
is the sole licensee for sportswear brands such as Converse, Spalding and the Athlete’s Foot
the venture has also launched other formats like Sports Warehouse, Accessorize, Monsoon,
Next, and Debenhams.

Format-4
Depot
This largely untapped unorganized market for books and music with very few players,
throws up an enormous opportunity; something that prompted Pantaloon to make its foray
through its own format, Depot in 2005-06. Located as stand-alone stores and within most
Pantaloons, Central and Big Bazaar retail formats, Depot’s vision is to be a one-stop shop
where customers will find an extensive range of books, multimedia, toys, gifts and stationery,
thereby transforming the way books, music, multimedia and gifts are bought, sold and
perceived in India. This would be made possible by the creation of a portfolio of exclusive
titles, an Indian experience while shopping and connecting with the mind and soul through
different languages, ideas and tunes.
Books, Music and Gifts

27
 Reading as a habit is ingrained into the Indian psyche from time immemorial.
However, it is being increasingly associated with a select few. The company believes that
existing formats in the segment offer an intimidating environment that alienates the masses.
The company has therefore taken this initiative of launching a chain of books, music and gifts
stores that will once again democratize the reading habit in the country. The company
believes that with 1.2 billion people, the habit of reading can become a strong business
proposition. Depot seeks to work with communities in and around the area where it is located
and hopes to attract the entire family to spend quality time together. It is focusing on the
introduction of old classics and books in regional languages with an objective to make these
affordable to a mass audience

Format-5

Fashion Station

Fashion Station, which represents the company’s offering of the latest in fashion for
the masses, has met with reasonable success since its launch in 2004-05. These thematic
stores that offer the most contemporary in fashion and accessories, is another of the value
added propositions that Pantaloon seeks to offer. The aspirational mass of consumers who
are bombarded with the latest in style through media penetration, hedonism and peer
emulation, need an outlet that meets their requirements of trendy, latest and yet affordable
fashion. Fashion Station is positioned to meet their requirements, and thereby take fashion to
the masses.

Format-6

Home Improvement
Some of the key factors contributing to growth in the housing sector in India are
increasing purchasing power increasing number of nuclear families, softer interest rates, easy
availability of finance schemes and an overall real estate boom across the country. There is a
shortage of more than 33 million dwelling units. With the average age of a homebuyer
reducing from 50 to sub-30, 4 million new homes are being bought annually. With every
house, a dream is planted to decorate the house. And this creates a demand for furniture,
electronics and home improvement products. Modern retail is ideally placed to capture a
significant chunk of consumer spend made by a new homebuyer. The market for home décor

28
and improvement is largely unorganized and hence a new homeowner has to literally visit
several markets and stores for meeting his home needs. This was the opportunity that
Pantaloon perceived and the reason why it entered the Rs. 90,000 crore home solutions
market in 2004-05. With its presence in the modern retail and consumer space, this new
concept was an opportunity for the company to leverage its experience and offer the
consumer an alternative solution to canalize his consumption needs.

In the Rs.25000 crore consumer durable industry, which is growing at nearly 6 per cent
every year, E-Zone has already emerged as a force to reckon with. This lifestyle retail format
offers a never experienced before environment for shopping for the best in national and
international consumer electronic and durables brands. It retails products ranging from
music systems to laptops, from the latest plasma television sets to DVD players, from
washing machines to air-conditioners to name a few. Typically in excess of 12,000 square
feet in size, E-Zones are primarily stand-alone concepts, but are also present within the
company’s Central malls

Format-7

COMMUNICATION

With over 2 billion phone users worldwide, mobility has now become an intrinsic
part of our personal and working lives. Mobile operators, cell phone manufacturers, content
publishers, wireless application service providers and many other key players in the mobile
industry are all working to carve out the best position in the value chain, to find the right
place from where they can best serve both their own and their customers’ needs. En route
towards 3 billion phones worldwide, a major shift would occur in consumer interest from
carriage to content and from a verbal to a growing visual world. With more mobile cameras
sold in 2005 than digital cameras, with more music/video players in mobiles than iPods,
with more messaging reach than PCs, convergence with the online world is now very much
a reality. In India, the story is no different. With over 150 million mobile subscribers
expected by 2008, there exists a huge potential for all players in the mobility space. Most of
the mobile phones in India are sold through ‘mom and pop ‘stores, and there is a huge grey
market that exists.

29
MBazaar
Pantaloon realized this largely untapped opportunity and intended to be a dominant
modern retail player in the mobile space. This is what prompted the company to set up a new
division ConvergeM in 2005-06 to identify, develop and bring to the market, mobile
products and solutions tailor-made to suit the consumers requirements at competitive prices.
ConvergeM adopts a unique approach of establishing, multi-brand, multi-category, multi-
format and comprehensive solution outlets to lead and exponentially expand the market. As
in most other formats, ConvergeM too operates in the lifestyle and value platforms. Its value
offering, MBazaar is a format that addresses the value seeker’s quest for possessing latest
technologies at lowest prices. Primarily aimed at the replacement market, a typical
MBazaar is located within most Big Bazaar stores as well as stand-alone options. This 250-
500 square feet offering retails both GSM and CDMA and landline phones, while providing
options of M Pods, downloads to name a few. The mission for Converge M is to emerge as
the largest organized retailer in the mobile space, while leading innovation in mobile
applications and being the most favored destination for all communication needs.

Format-8

Restaurant, Leisure & Entertainment

Increasing urbanization and rising disposable incomes are characteristics that are
common in emerging economies like India. Estimates suggest a growth in urban consumption
at potentially 20% per annum in nominal terms for at least the next 5-7 year period.
The total number of middle to high income households is projected to reach 105 million by
2010, thereby adding a large number of people to the consuming class. These demographic
numbers represent a young nation, which has an increased propensity to spend in restaurants
and other food service sectors, fuelling growth in the Leisure, Restaurants and Entertainment
industries.
The company is using the collaborative approach to strengthen its position in the leisure and
entertainment space. This has helped the company build a complete bouquet of brands that
span from food courts to fine dining. As the shift from high street to malls continues, the
restaurant business is expected to increase significantly. For Indians, shopping comes hand in
hand with eating and celebrating and these formats are being developed keeping this in mind.

30
F123 is designed as a entertainment zone that can be present in every mall and this business
is expected
to gain traction in the coming year.

F123, the entertainment zone offering is a leisure solution for all age groups. The focus
would be to offer a wide range of gaming options from bowling and pool, interactive video
games to bumper cars. The entire concept is built around international thinking and gaming
knowledge, with Indian pricing. For the year ending 2005-06, there were three F123’s
operational, with the first one opening in November 2005.

Format-9

Star and Sitara

Delivery Formats Star & Sitara

In the beauty space, the company’s offering, Star & Sitara aims at pampering the beauty
conscious consumer by offering the latest beauty products, ranging from cosmetics, skin and
hair care, aromatherapy and fragrances. Star & Sitara is set to be part of most Big Bazaar and
every Beauty and Health Mall, which the company is in the process of setting up. There were
6 Star & Sitara operational as on June 2006.

Star & Sitara Beauty Salon

Star & Sitara, the beauty services offering, doubles as a unique parlor and salon for men and
women. Customers will be treated to the best quality hair and skin services at unbelievable
prices. One such store was operational as on the 30th June 2006.

Beauty & Health Mall

Pantaloon, will be the first retailer in India to offer health, beauty and wellness products and
services. This will be led through its Beauty & Health Mall format. Typically, of around
25,000 square feet each, these centers will include pharmacies and beauty product zones and
a host of other offerings such as health cafes, gymnasium, healthcare services, retailing
fitness equipments, yoga centers and books on health and fitness etc. The company plans to
open at least three Health & Beauty Malls during the year 2006-07 in Bangalore, Ahmedabad
and Mumbai.
31
Format-10
E-TAILING
The emergence of a mass base of net savvy Indians is realty today. Access to Internet
is no longer limited to a small segment of young, male urban people. Cutting across age
groups, gender, geography and socio-economic backgrounds, Indians are taking to the net
like fish to water. It is estimated that there are at least 25 million Indians who access the
Internet on a regular basis. Falling prices of personal computers and laptops coupled with
increasing penetration of internet, and broadband services is driving more and more Indians
to the Internet. In fact, Indians are no longer limiting their Internet usage to email and
chatting. Online shopping has finally come of age. As the leading retailer in India, Pantaloon
could ill afford to overlook this emerging segment. There is a sufficiently large segment of
online shoppers whose consumption spends needs to be captured. It’s with this belief that the
company started exploring this area. Pantaloon perceives its online business as yet another
delivery format that can potentially reach out to 25 million customers.Future Bazaar, has
modeled itself on a unique complete retailer platform. Etailing requires extensive sourcing
capabilities, warehousing capacity, buying trends understanding & most importantly a robust
& efficient logistic backend. Future Bazaar leverages the offline brand equity and brick &
mortar presence of the group via multi-channel integration to benefit on economy of scales,
economy of scope in promotion & distribution and utilizing the offline learning into online &
vice-versa to grow at a faster pace. As a new delivery format, Future Bazaar can benefit from
the learning’s and expertise gathered in existing formats as well as boost sales at these
formats through the online sale of gift vouchers

Format-11

Liberty Shoes

With fashion being the focus of the company, the intent is to provide a complete
wardrobe experience to the consumer that includes not just apparel but fashion accessories
also. Accessories speak a lot about the personality of the individual and are a reflection of
the attitude of the wearer. Footwear is one such category in the fashion sphere that truly
embodies the phrase-best foot forward.

Footwear as a category has been present in most of the company’s Big Bazaar; Fashion
Station, Pantaloons and Central retail formats. During the year under review, Pantaloon

32
explored the opportunity to get into branded footwear, by partnering with the well-established
footwear company Liberty Shoes. The joint venture named Foot Mart Retail (India)
Limited would launch branded footwear retail chains in the country under the ‘Shoe
Factory’ brand. These stores would be located within most retail spaces that Pantaloon
would be present in, and as stand-alone stores across the country. Shoe Factory stores would
be a destination for men, women and children of all ages, who can choose from a wide
variety of quality footwear at various price points, suiting their budgets. The venture
launched its first store in Ahmedabad on 5th May 2006. Spread over nearly 13,000 square
feet, this value format houses a wide range of the latest and trendiest foo
twear and accessories for all occasions, at unbeatable prices.

Format-12

GINI & JONY

The company recognizes that the organized kids wear category has shown signs of
sizeable growth over the past couple of years. In order to expand and consolidate its presence
in this category, the company entered into a joint venture with the country’s leading kids
wear retailer, Gini & Jony Apparels Pvt. Ltd. This equal joint venture named GJ Future
Fashions Limited, apart from gaining additional visibility within all existing and upcoming
Pantaloons stores and Central malls will set up a chain of exclusive kids wear stores
throughout the country, addressing fashion needs of children in all age groups, from 5 to 15
years. This initiative witnessed the opening of two stand-alone stores during the year 2005-06
in Indore and Ahmedabad.

Format-13
BIG BAZAAR
Isse sasta aur accha kahin nahi!
Big Bazaar has clearly emerged as the favorite shopping destination for millions of its
consumers, across the country, it’s success is a true testament to the emotional bonding it has
established with the Indian consumer, on account of its value offerings, aspirational appeal
and service levels.
Shop till you drop! Big Bazaar has democratized shopping in India and is so much more than
a hypermarket. Here, you will find over 170,000 products under one roof that cater to every
need of a family, making Big Bazaar India’s favorite shopping destination.
33
At Big Bazaar, you will get the best products at the best prices from apparel to general
merchandise like plastics, home furnishings, utensils, crockery, cutlery, sports goods, car
accessories, books and music, computer accessories and many, many more. Big Bazaar is the
destination where you get products available at prices lower than the MRP, setting a new
level of standard in price, convenience and quality.
If you are a fashion conscious buyer who wants great clothes at great prices, Big Bazaar is the
place to be. Leveraging on the company’s inherent strength of fashion, Big Bazaar has
created a strong value-for-money proposition for its customers. This highlights the
uniqueness of Big Bazaar as compared to traditional hypermarkets, which principally revolve
around food, groceries and general merchandise.
Boasting of an impressive array of private labels, Big Bazaar is continually striving to
provide customers with a ‘complete’ look. So be it men’s wear, women’s wear, kids wear,
sportswear or party wear, Big Bazaar fashions has it all!

Format-14

Food Bazaar

Across India, food habits vary according to community, customs and geography. Food
Bazaar, through its multiple outlets addresses this. At the same time it offers best quality
products at wholesale prices to a wide cross section of the India population. Food Bazaar
effectively blends the look, touch and feel of the Indian bazaar with the choice, convenience
and hygiene that modern retail provides. The food and grocery division of the company was
launched in 2002-03 and has grown to 47 stores nationwide at the end of the current financial
year. Most stores are located within Big Bazaar, Central and Pantaloons and act as strong
footfall generators. There are separate stand-alone Food Bazaars as well. The business
contributed just fewer than 50 per cent of value retailing, and about 20 per cent to the
company’s turnover during 2005-06. Food Bazaar offers a variety of daily consumption
items, which include staples, soaps and detergents, oils, cereals and biscuits. On the product
category side, the primary segregation is done on the basis of staples, fresh produce, branded
foods and home and personal care products.

34
Area of Maintenance

Since the store is fully computerized, in the sense, like billing, inventory

Management, electronic equipment’s near the gates, to check thieves, it has to

Take proper care of machines. Food items are to be regularly checked.

Inventory room has to be checked regularly for any sort of leakages. Air conditioners

Have to be regularly checked. Electrical wirings have to be

Closely monitored. Short circuit cameras have to be checked regularly as it is

a major factor in security arrangement.

Quality of Food-items

Food items are kept in a separate place, both in inventory and at store. Food

items which are required to be kept at cold places, like cold-drinks, cheese,

milk products, milk, fruits, etc. are kept in refrigerators, whereas those

which can be kept anyway, are kept on proper shelves.

35
Major Milestones

2005 Fashion Station - the popular fashion chain is launched all – ‘a little larger’ -
exclusive stores for plus-size individuals is launched

2006 Future Capital Holdings, the company’s financial arm launches real estate funds
Kshitij and Horizon and private equity fund in division. Plans forays into insurance
and consumer credit. Multiple retail formats including Collection Furniture Bazaar,
Shoe Factory, E-Zone, Depot, and futurebazaar.com and are launched across the
nation. Group enters into joint venture agreements with ETAM Group and Generali

2007 Big Bazaar launched its 50th store in Kanpur.Big Bazaar partnered with
Futurebazaar.com to launch India's most popular shopping portal

2008 Big Bazaar crosses the 100-store mark, marking one of the fastest expansions of the
hypermarket format anywhere in the world

2010 Pantaloons opened its 50th flagship store in New Delhi on 27th November
Big Bazaar introduced Family Centre in Kolkata on 27th March 2010

2011 Future Group entered elite gourmet retailing with the launch of its first gourmet food
chain Food hall in Mumbai on 26th May 2011.

2012 On 1st May 2012, the company introduced a new retail initiative – Public
Holiday Sale.Big Bazaar launched its home delivery services in Mumbai
2013 Future Group successfully introduced 'Big Bazaar Direct' an assisted
shopping concept where franchises will sell Big Bazaar products
through a catalogue on a 'tablet'

AWARDS

Indian Retail Forum Awards 2008

The INDIASTAR Award 2008
Retail Asia Pacific 500 Top Awards 2008

36
Coca-Cola Golden Spoon Awards 2008
The Reid & Taylor Awards for Retail Excellence 2008
Platinum Trusted Brand Award Images Retail Award 2005-06
DLF Award 2004

BOARD OF DIRECTORS

MR. KISHORE BIYANI, MANAGING DIRECTOR

MR. GOPIKISHAN BIYANI, WHOLE TIME DIRECTOR
MR. RAKESH BIYANI, CEO – RETAIL
VED PRAKASH ARYA, INDEPENDENT DIRECTOR
MR. SHAILESH HARIBHAKTI, INDEPENDENT DIRECTOR
MR. S.DORESWAMY , INDEPENDENT DIRECTOR
DR. D.O.K OSHY, INDEPENDENT DIRECTOR
MS. ANJU PODDAR, INDEPENDENT DIRECTOR
MS.BALA DESHPANDE, INDEPENDENT DIRECTOR

37
 CHAPTER: 5 TABULATION AND INTERPRETATION OF DATA

Inventory control renders to “The process whereby the investment in materials and parts
carried in stock is regulated within predetermined limits set in accordance with the inventory
policy established by the management. Inventory control refers to a planned method of
purchasing and storing the material at lowest possible cost without affecting the sales
scheduled. Inventory control therefore, is a scientific method of determining what, when and
how much to purchase and how much to have to stock for a given period of time.

ABC ANALYSIS:

As it is a retail store the ABC analysis is done only for the groceries and vegetables

1. For Grocery

A Category items are as follows:

S.no Description Unit/year Annual Cummulative Classification

(kg) Consumption value of annual
Rs./year consumption
1. Peanut oil 15600 134004 134004 A
2. Rice 21600 737360 2087400 A
3. Idly rice 14400 403200 2490600 A
4. Ghee 1080 399600 2890200 A
5. Black gram 4800 301920 3192120 A

B Category items are as follows :

S.no Description Unit/year Annual Cummulative value of Classification

(kg) Consumption annual consumption
Rs./year
1. Boost 540 180360 180360 B
2. Vermicelli 2440 131760 312120 B
3. Cardamoms 180 107820 419940 B
4. Maida flour 3000 106500 526440 B
5. Tea powder 360 104400 630840 B

38
 C Category items are as follows:

S.no Description Unit/year Annual Cummulative Classification

(kg) Consumption value of annual
Rs./year consumption
1. Ground nut 1200 98400 98400 C
2. Prunes 360 146880 245280 C
3. Asafetida 180 108000 353280 C
4. Sesame oil 720 185760 539040 C
5. Green gram 2880 207072 746112 C

2. For Vegetables

A Category items are as follows:

S.no Description Unit/year Annual Cummulative Classification

(kg) Consumption value of annual
Rs./year consumption
1. Onion 30000 57000 57000 A
2. Tomato 10800 140400 197400 A
3. Potato 6000 138000 335400 A
4. Green chillies 2600 21600 357000 A
5. ginger 720 43200 400200 A

B Category items are as follows:

S.no Description Unit/year Annual Cummulative value of Classification

(kg) Consumption annual consumption
Rs./year
1. Brinjal 2400 3600 1092600 B
2. Lady finger 1800 34200 1126800 B
3. Green peas 2440 31720 1158520 B
4. Cabbage 1080 21600 1204120 B
5. beetroot 360 19400 1223560 B

39
C Category items are as follows:

S.no Description Unit/year Annual Cummulative Classification

(kg) Consumption value of annual
Rs./year consumption
1. Sour green 15600 134004 134004 C
2. Cawliflower 21600 737360 197400 C
3. Pumpkin 14400 403200 335400 C
4. Bitter guard 1080 399600 357000 C
5. Angular guard 4800 301920 400200 C

40
 INVENTORY TURNOVER RATIO:

This ratio indicates the efficiency of the firm of selling its products. It is
calculated by dividing the cost of goods sold by the average inventory.

If the cost goods sold is known then inventory turnover ratio can be computed
by dividing sales by average inventory of the year-end inventory.

COST OF GOODS SOLD

INVENTORY TURNOVER = ----------------------------------

RATIO AVERAGE INVENTORY

In accounting, the Inventory turnover is a measure of the number of times inventory is sold or
used in a time period such as a year. The equation for inventory turnover equals the cost of
goods sold or net sales divided by the average inventory.

RAW MATERIAL INVENTORY TURNOVER TATIO:

The ratio indicates the efficiency of firms raw material consumed. It is calculated by
material consumed dividing by average material inventory.

MATERIAL CONSUMED

RAW MATERIAL INVENTORY TURNOVER TATIO = ---------------------------------

INVENTORY

41
WORK IN PROGRESS TURNOVER RATIO:

Work in progress turnover ratio unable to company in establishing the time gape
between different stages in a production cycle and the efficiency with the production cycle
gets completed.

It is calculated from cost of production divided by average work in progress

inventory.

COST OF PRODUCTION

WORK IN PROGRESS TURNOVER RATIO = --------------------------------------

AVG WORK IN PROGRESS

TABLE1 – TOTAL INVENTORY

S.NO YEAR TOTAL INVENTORY

(In Crores)
1. 2014 9548.2
2. 2015 10771.7
3. 2016 12132.55
4. 2017 14114.65
5. 2018 16403.12

42
 18000

16000

14000

12000

10000 YEAR

8000
TOTAL INVENTORY
6000 (In Crores)

4000

2000

0
1 2 3 4 5

TABLE2 – INVENTORY TURN OVER RATIO OF BIGBAZAAR

YEAR COST OF GOODS Average Inventory ITOR

SOLD(In Crores) (In Crores) (In Crores)
2014 6548.2 5040.52 2.36
2015 10774.1 4596.72 2.34
2016 1245.55 6523.24 2.66
2017 1475.36 5248.17 2.68
2018 16.403.12 5637.83 2.91

43
 Chart Title
Average Inventory (In Crores) ITOR (In Crores)
6523.24
5637.83
5040.52 5248.17
4596.72

2.36 2.34 2.66 2.68 2.91

6548.2 10774.1 1245.55 1475.36 16.403.12

2014 2015 2016 2017 2018

3 YEARS FINANCIAL SUMMARY

Key Highlights of Financial Position:

(In Crores)

Particulars Mar- 18” Mar–17” Mar -16”

Share Capital 100.40 94.36 8.70
Reserves & 2995.87 2459.30 1779.92
Surplus
Net Worth 3096.27 2553.66 1874.19
Total Borrowings 1286.41 1244.13 1122.40
Capital Employed 1382.68 3797.79 2996.59
Net Block 1018.56 553.78 260.93
Investments 0.01 0.00
Inventory 4417.41 3735.16 3297.24

44
 5000
4500
4000
3500
3000
2500
Mar- 18”
2000
1500
1000 Mar–17”
500
0 Mar -16”

Key Highlights of Financial results:

(In Crores)

Particulars Mar- 18” Mar–17” Mar -16”

12 Months 12 Months 12 Months
Sales and 18477.97 17075.09 6844.96
operating Income
Total Income 18489.64 17098.89 6860.47
COGS 13740.68 12834.35 5065.12
EBITDA 843.99 605.09 101.06
Interest 175.38 204.23 49.75
Depreciation 53.43 32.58 36.76
Profit before Tax 615.18 368.28 14.55
Profit After Tax 11.31 368.28 14.55

45
 20000
18000
16000
14000
12000
10000
8000
6000
4000 Mar- 18” 12 Months
2000 Mar–17” 12 Months
0
Mar -16” 12 Months

Key Financial Ratios:

Particulars Mar- 18” Mar–17” Mar -16”

COGS/ Sales & 74.36% 75.16% 74.00%
Operating
income(%)
Interest/ Total 0.395% 1.019% 0.76%
Income(%)
EBITDA/Interest 4.81 2.96 2.03
(Debt-Service
Ratio)
EBITDA/Total 4.56% 3.54% 1.48%
Income(%)
PBT 3.33% 2.15% 0.21%
PAT 0.06% 2.15% 0.21%
Basics EPS 0.23 7.18 0.66
Debt Equity Ratio 0.42 0.49 0.60

46
800.00%
700.00%
600.00%
500.00%
400.00%
300.00%
200.00% Mar- 18”
100.00%
Mar–17”
0.00%
Mar -16”

47
48
Range of Products Available at Big Bazaar

49
Places at which Big Bazaar is Located

50
Future Strategies of Big Bazaar

51
 Life Cycle of Big Bazaar

Supply Chain Process Supplier

Procurement cycle

Manufacturer

Manufacturing Cycle
52
Distributor

Replenishment cycle

Retailer

Customer order cycle

53
What is ERP?
ERP is an acronym for Enterprise Resource Planning which is software used for business
process management that allows any organization to use an information system of integrated
applications to do many back office functions related to information technology and manages
the business.
Function of Enterprise Resource Planning in Big Bazaar
 Product ordering
 Merchandising buying
 Inventory Management
 Stock Transfer
Process of MIS in Big Bazaar
a.) SOD (Start of the Day)
Procedure:
 Start the web Portal
 Enter provided login ID and password
 Open webapp basics
 Click SOD status
 Click Start SOD
b.) EOD (End of the Day)
Procedure:
 Start the web Portal
 Enter provided login ID and password
 Open webapp basics
 Click EOD status
 Enter Login ID and Password again
Press Enter

Management Information System (MIS) in Big Bazaar

Big Bazaar has strong MIS capability that helps them to improve their operations, as well as
enhancing their speed of execution in response to what the customer want. They are thus able
to monitor their speed of response on daily basis across stores, departments and also for
category of products. This really helps them to take correct action on a timely basis and
optimize their stock accordingly.

Big Bazaar uses JDA ERP and SAP ERP software. JDA ERP is an enterprise resource
planning software developed by an American software and consultancy company while
SAP ERP is an enterprise resource planning software developed by a German company
SAP (System, Application and products) SE to manage the inventory system of
different business and improve customer relationship

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Functioning of Management Information System (MIS) in Big Bazaar

Main Server

Backup Server

Transaction Transaction Transaction Transaction

Counter Counter Counter Counter ---at least 15

 There are 2 servers used by the MIS: Main Server and Backup Survey
SOD/EOD SOD/EOD SOD/EOD SOD/EOD
 Each of the servers has its own storage system (15 hard disks to store the same
information)

 The information is backed up daily at the EOD (End of Day).

 There are generally 15 counters for transaction in Big Bazaar. The recording at
the transaction at each of these counters is done.

 The average no. of transactions made per day varies from 3500-4500 and all
transaction data is recorded at each terminal and stored at the database.

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 Age group that visit Big Bazaar Everyday are:-

Age Total

Below 18 30

18-40 45

40-60 15

60 above 10

Total 100

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 no. of customers age wise

10%
30%
15%
Below 18
18-40
40-60
Above 60

45%

 Gender of respondents in Big Bazaar

Gender Total
Male 65
Female 35
Total 100

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 No. of customers gender wise

35%

Male
Female

65%

CHAPTER 6: CONCLUSION

 It was found that Big Bazaar’s inventory is well equipped and

their cost is under their control due to the short cycle time of ordering and
buffering.
 Their inventory cost is very high because of their stocking of
various products.
 Their product range varying from mere Rs.5 to Rs.50,000. Hence
their range satisfies one and all.
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 Their inventory is well equipped if it sees any fundamental changes
on the demand of the products, be it desired or undesired.
 Their inventory is quickly refilled which is one of their strengths
and also they take less than a day to fully make their inventory a
wide spectrum.
 The inventories maintained in the outlet, are of different product category.
 Mainly Cycle inventory is maintained for FMCG product category & Food
 Category, Safety level of inventory for FMCG Products, and for Apparel,
 Seasonal inventory is maintained, because of fluctuation in demand.
 Most of the employees are satisfied with the uniforms provided.
 Most of the employees are satisfied with their hygienic conditions
 I visited big bazaar store in mulund and found great support their.
 Their inventory is quickly refilled which is one of their strengths and also they
take less than a day to fully make their inventory a wide spectrum.

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 BIBLIOGRAPHY

www.investopedia.com
www.managementstudyguide.com
www.futureretail.in

ANNEXURE

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 QUESTIONARRIE

1. Do you have any centralized location of storage?

2. What is your storage capacity of various products?

3. Which technique do you use for inventory management?

4. Have you ever faced any loss or damage of inventory?

5. Do you use any software for inventory management?

6. What is your inventory management process for perishable good?

7. How do you manage inventory in case of bumper sales in discounts or festival

sales?

8. How do you manage shortfall in inventory?

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