WAREHOUSE

MANAGEMENT AT

By SARANG S. WADYALKAR
PGDM OPERATIONS(2008-10)
BITM
ROLL NO. TM-08164
INTRODUCTION TO RETAIL

T h e w o rd 're ta il'is d e rive d fro m th e Fre n ch w o rd

'retaillier' meaning 'to cut a piece off' or 'to
break bulk'. In simple terms it involves
activities whereby product or services are sold to
final consumers in small quantities. Although
retailing in its various formats has been around
our country for many decades, it has been confined
for a long time to family owned corner shops.
Englishmen are great soccer enthusiasts, and they
strongly think that one should never give Indians
a corner. It stems from the belief that, if you
give an Indian a corner he would end up setting a
shop. That is how great Indians retail management
skill is considered.

01/15/10 Project Presentation by Sarang Wadyalkar 2
 ANALYSIS OF THE INDIAN RETAIL
SECTOR
P R E S E N T IN D IA N S C E N A R IO  
 * Unorganized market : Rs . 583 , 000 cr
* Organized market : Rs . 5 , 000 cr
* 6X growth in organized retailing between 2000 - 2008 
* Over 4 , 000 new modern Outlets in the last 3 years
* Over 5 , 000 , 000 sq . ft . of mall space under development
* The top 3 modern retailers control over 750 , 000 sq . ft .
of retail space 
* Over 400 , 000 shoppers walk through their doors every week 
* Growth in organized retailing on par with expectations and
projections of the last 5 Years : on course to touch Rs . 35 , 000
cr ( US$ 7 Billion ) or more by 2009 - 11 .  
 Investments into the sector are estimated at over INR 20 , 000 Cr by end of
2011 .

01/15/10 Project Presentation by Sarang Wadyalkar 3

ANALYSIS OF THE INDIAN RETAIL
SECTOR
Segment wise share in organized retail:

01/15/10 Project Presentation by Sarang Wadyalkar 4

COMPANY AND PRODUCT PROFILE
Pa re n t C o m p a n y --- K R a h e ja C o rp
Specialties
 Retail, Hypermarkets, Department Stores, Bookstore, Airport
retailing
Subsidiaries-


01/15/10 Project Presentation by Sarang Wadyalkar 5

Profile of HyperCITY Retail ( India ) Ltd


 Headquarters - Bombay Area , India

 Industry - Retail
 Type - Public Company
 Company Size - 500 employees
Vision
 'To be an integral part of customer lives , by
offering them a high quality shopping experience
through great products at ever better prices . '

01/15/10 Project Presentation by Sarang Wadyalkar 6

Specialty Areas
Exclusive imported food from Waitrose , UK
24 hr Pharmacy - for round - the - clock medical
supplies
Gaming Zone - with latest gaming equipment
Cricket Net - where you can select & test your
cricket gear
Demo Kitchen - get product demos , taste recipes
created by master chefs
Home Theatre Demo Room - for sound - proof audio
testing
Features & Facilities

ATM facility - convenient cash withdrawal

Consumer finance - enables easy purchase of
consumer durables
Trial rooms - enables you try before you buy
Free gift wrapping - makes gifting convenient &
hassle - freeProject Presentation by Sarang Wadyalkar
01/15/10 7
Let us see how warehouse and
inventory is managed at HyperCITY,
Vashi-
 Warehouse Area -

 About 10000 sq ft storage area

 Height - 15ft

 + 2500 sq ft at receiving bay

 Height - 18ft

 + 1500 sq ft for Frozen items , Veg / Non - Veg preparation area

 Height - 10 - 12 ft

 Handles approximately 10000 SKUs




 


 Goods Receiving Process

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
It is very important
Project inbyaSarang
Presentation hyperWadyalkar
retail business where 8


The receiving process is of three types



 1 Transfer of stock from DC / RC ( STM )

 2 Direct Store Delivery – All perishables
(Veg and Non- veg) are received only through an
Order Form and purchase order made thereafter is
called Direct Store Delivery (DSD).
 3 General receiving - All products received
from Distribution Centre through Stock Transfer
Memo is raised by the Buyer and from the vendors
through the Purchase order raised by the Buyers


01/15/10 Project Presentation by Sarang Wadyalkar 9

STM-STOCK TRANSFER MEMO
These are Transfer of stock from DC/RC.


 Enter the details of stocks received in the Goods Inward Register (GIR)
 Once the vehicle is offloaded, tally the shipping manifest or STM, RECEIVING
BAY to acknowledge the Gate Pass confirming the total Number of
Cartons/crates received.
 Ensure that cartons/crates marked as Fragile, Handle with Care, should be
offloaded separately and carefully, if there are any. 
 In case any item is found to be broken / damaged, write a remark on both
Shipping Manifest/STM copies clearly mentioning the total number of
pieces received in damaged condition
 Take signature of DC representative on the Shipping Manifest/STM, as a proof
of pieces received in damaged condition
 Put the Store receipt stamp clearly mentioning the date of receipt at Store. 
 In case of discrepancies found between SHIPPING MANIFEST quantity and
Physical quantity received clearly mention the number of pieces received
short / excess on the SHIPPING MANIFEST copy. 
 Hand over one SHIPPING MANIFEST copy to DC representative, as an
acknowledgement of receipt of stocks. 
 Update stocks in MMS on the same day of receipt of the stocks. 
 Incase of short receipt, RECEIVING BAY receives only those Quantities, which
are physically received.  
 Excess stock or wrong stock received can either be returned or accepted
based on fresh transfer
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to be generated by DC, as a result of interaction 10
Project Presentation by Sarang Wadyalkar
between Receiving Bay and DC.
Direct Store Deliveries (DSD)

 Applicable for items that are delivered directly to the store. Mainly
to Perishables like F&V, Milk, Soft Drinks, Eggs, Bread, and Ice-
creams etc.
 The vendor will come to the Receiving Bay with stocks as informed
by the Buyer
 The Receiving Bay enters in the Goods Inwards Register basis the
Vendor’s Invoice.
 Piece count to ascertain correctness of the Invoice. 
 All damages and reject ITEMS will be removed from the lot and not
accepted into MMS.  
 The Service Manager will take stocks on the floor. He would replace
expired/old stocks from the floor with fresh stocks while ensuring
that the MODEL STOCK qty is not exceeded. 
 The Floor Manager will fill up the DELIVERY NOTE and mention the
qty of incoming and outgoing stocks in duplicate. 
 On the basis of the Delivery Note Receiving Bay will follow the Batch
creation process for receiving of differential stocks (Incoming
stocks minus Outgoing stocks) 
 A Receivers Confirmation Report will be printed and a copy given to
the vendor
01/15/10 Project Presentation by Sarang Wadyalkar 11
 GENERAL RECEIVING
Where Vendor does Direct Deliveries based on Purchase Order
 Receive the stocks directly from Vendor or through transporter along with
invoice and Packing slip.
 Check for PO No. on invoice and one invoice carries only one PO reference.
 Enter into Store GOODS INWARD REGISTER and accept the delivery.
 A piece count to ensure correctness and remove damages.
 Take a print out of PO, if required and check for PO location, items and
quantity ordered.
 RECEIVING dept is provided with serially numbered QDN (Quantity difference
Note) book in quadruplicate, Original copy of QDN has to be given to
vendor, Second copy to DC, and third copy to HO Accounts and Fourth copy
to be kept at Store for future reference in the QDN FILE at Receiving Bay.
 Collect the Vendor acknowledgement on the QDNs made for Local Vendors.  
 Make QDN giving reason for differences and pack and return the goods back
to vendor with one copy of QDN clearly giving reason for QDN.
 For Damaged Stocks, send a letter to the Vendor along with QDN Copy within
48hrs. The vendor will be required to take away this stocks within 2 days
To speed up the Receiving process, ensure the following:-

 To check PO No. is clearly mentioned on the Invoice

 To check the Purchase order copy thoroughly, while receiving the stocks.
 To check QDN is attached with the Invoice.
 To check the Security entry with Stamp and Seal.
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 Project Presentation by Sarang Wadyalkar 12
Flowdiagram of General
receiving

01/15/10 Project Presentation by Sarang Wadyalkar 13

SWOT ANALYSIS

STRENGTH:

1. Large store area 80000 sq.ft

2. Huge variety of products, app. 10000
SKUs (required breadth & depth for
consumers)
3. As a consequence of high volumes,
procurement will be direct from the
Manufacturer.

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Hence,Project
merchandise can be offered at lower14
Presentation by Sarang Wadyalkar
WEAKNESS:


1. Warehouse has limited scope for future

expansion
2. No dedicated team for receiving key products
3. The staff is less-educated to handle urgencies
4. Stock-Pickers waste time in searching and
accessing the required items
5. Vendors of key products have to wait long for
the receipt of their deliveries

01/15/10 Project Presentation by Sarang Wadyalkar 15

OPPORTUNITIES:
1. HyperCity is going to set up malls across all
major cities in India in next 2 yrs, so they have
enough time and new ideas to improve in their
warehousing procedures and develop
infrastructure
2. Chance to serve and earn revenue-The
Indian middle class is already 35 Cr & is projected
to grow more making India one of the largest
consumer markets of the world. The IMAGES-KSA
projections indicate that by 2015, India will have
over 55 Cr people under the age of 20 - reflecting
the enormous opportunities possible in the kids
and teens retailing segment.
3. Organized retail is only 5% of the total
retailing market in India. It is estimated to grow
at the rate Project
01/15/10 of 25-30%
Presentation byp.a.
Sarang and reach INR 1,00,000
Wadyalkar 16
 THREATS:
1. Growing prices of land all over the country
2. If the unorganized retailers are put together,
they are parallel to a large supermarket with no
or little overheads, high degree of flexibility in
merchandise, display, prices and turnover.
3. Entry of Wal-Mart in Indian market, they are
known to be masters of cross-docking, which is
hardly practiced in HyperCity
4. Ever-increasing expectations of customer
service levels due to intense competition putting
pressure on SCM
5. Fear of vendors, suppliers coming together
and setting
 up their own stores

01/15/10 Project Presentation by Sarang Wadyalkar 17

CONCLUSION
 The store handles more than 10000 SKUs and the number is growing every
day, with it comes huge bundle of supporting activities to manage the
supply chain effectively. Although it seems that the JDA has been able to
give solutions to this warehouse’s activities; it is quite clear that the
company must find a more wider solution provider in near future to match
its efforts to be successful in this foray of retail boom.


 By having a look into these findings throughout the project tenure at

HyperCITY and considering the fact that it has to grow in number of outlets
across all major metros in India it is of utmost importance for shoppers
Stop Ltd to find ways to improve its warehouse design and supply chain
activities as early as possible. It should go for a superior IT solution
provider as JDA is mostly suited to match the needs of a supermarket which
has less than 8000 SKUs to handle.


 Therefore to replicate its well thought mission in retail sector into reality, the
company must go ahead with the bigger plans to cater the needs of huge
consumer base by partnering with the best suitable supply chain & logistics
solution provider keeping in mind that it’s DC has to distribute the
products to all it’s stores across all major cities in India.
 Looking at its current warehouse space (about 10000 sq ft+2500sqft at
receiving bay+1200sqft for frozen items) here at Vashi store, it seems that
the warehouse is doing a herculean task as it is fulfilling the needs of the
store in terms of moving the inventory to the floor but the warehouse may
fall short in keeping up with the future demands as it can be seen that it
lacks flexibility to grow in size to accommodate more products in future.
 The retail industry needs
01/15/10 to get organized
Project Presentation by Sarang and drive its own destiny. The
Wadyalkar 18
government needs to be lobbied with, to help create a conducive
RECOMMENDATIONS &
SUGGESTIONS
 WAREHOUSE- CROSS DOCKING
MAKING THE RIGHT CHOICES
 Under the right conditions, cross dock or direct shipping merchandise to retail
outlets can save space in your warehouse, and reduce inventory investment. It can also
reduce traditional inventory methods.
 Cross dock shipping refers to immediately shipping the products you receive at
your warehouse without putting them away or storing them.


 THE BENEFITS


 No storage space is required for products that are cross docked. The only
warehouse space they require is a staging area.
 Since no inventory is required, it is possible to eliminate all inventory costs for
these items.
 However, it is sometimes helpful to carry a small inventory in case of unforeseen
emergencies. Usually, this should not be more than one week's requirements -
considerably less than inventory in storage for most operations.


 THE RISKS
 The dangers of these systems are that they can make it more difficult to
maintain consistent and reliable customer service, and they can increase costs if they are
not carefully planned.
e.g. if you distribute to your own stores, it is important to avoid trading warehouse
space for more costly retail space by over-ordering to assure item availability. The staging
area for a poorly planned cross dock operation may take more warehouse space than a
picking area for the same items.
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You also need to weigh theProject Presentation
savings by Sarang Wadyalkar
in the warehouse against the increased costs of ordering19
RECOMMENDATIONS contd…..
 PRODUCT CONSIDERATION
 Cross dock and direct ship operations usually work best when there
is a consistent demand for the item. Demand for the item should
be easily predictable, either to the retail manager, or to a central
ordering specialist.
 The more erratic the movement of an item, the more likely that
forecasting errors will be made and stock outs will occur.
 Some important item characteristics are special handling
requirements, size, and perishability. Costs of handling the
specific items should be compared for each of the systems.


You need to make similar comparisons for---

 Inbound and outbound freight costs for the item;
 Warehouse labor required to handle the item;
 The inventory cost of the item;
 And the opportunity cost of the warehouse space needed to handle
or store the item.
 

01/15/10 Project Presentation by Sarang Wadyalkar 20

RECOMMENDATIONS contd…..
How to do it?
 The following are some guidelines to get started:


Step 1. Product and Supplier Selection

 












01/15/10 Project Presentation by Sarang Wadyalkar 21
 RECOMMENDATIONS contd …..
Which products should be cross docked?
Highly perishable items (Vegetables & Fruits)

Frozen items (Meat, Ice-Creams, Milk Products)
High profit margin items

 Toys
 CD Rom Games
High Tech appliances
 High value-high pilferage items
 Mobile phones
 IPods

Watches
 Low value-high pilferage items
 Grocery
 Chocolates
 Dry Fruits
 Perfumes
 All the fastest moving items in this category

01/15/10 Project Presentation by Sarang Wadyalkar 22
Further compression of selected items for cross-
docking…
HIGH LEVELS OF POPULARITY CUBE MOVEMENT
PREDICTABILITY

Vegetables & Vegetables & Vegetables &

Fruits Fruits Fruits
Meat, Meat, Milk Products
Ice-Creams Ice-Creams Toys
Milk Products Milk Products High Tech appliances
Grocery Toys Grocery
Staples CD Rom Games Staples
Chocolates Grocery Chocolates
Dry Fruits Staples Dry Fruit
Chocolates
Dry Fruits

01/15/10 Project Presentation by Sarang Wadyalkar 23

 RECOMMENDATIONS contd…..
SUPPLIER SELECTION



Choose suppliers that consistently
provide the correct quantity of the correct
product at the precise time. Prerequisites :
 Configure products for efficient handling
through the next point in the supply chain;
 Consistently comply with customer
mandates for labeling, ticketing, packaging,
and product quality;
 Effectively and efficiently share information
with their customers.

01/15/10 Project Presentation by Sarang Wadyalkar 24

 RECOMMENDATIONS contd …..
S te p 2 . P la n n in g a n d D e sig n in g th e O p e ra tio n
It is im p o rta n t to first a sse ss yo u r cu rre n t fa cility ’ s
ca p a b ilitie s. H o w m u ch ch a n g e w ill b e n e ce ssa ry w illd e p e n d o n
th e vo lu m e a n d h a n d lin g re q u ire m e n ts o f th e p ro d u cts yo u
se le cte d . T h e typ e o f h a n d lin g u n it in vo lve d a lso h a s a
sig n ifica n t in flu e n ce o n yo u r se tu p . A sim p le , fu ll-p a lle t tra n sfe r
fro m re ce ivin g to sto re , te n d s to b e e a sie r to im p le m e n t th a n
a n e la b o ra te ca rto n cro ss d o ck th a t m a y re q u ire co m p lica te d
co n ve yo r so rtin g syste m s.
S p e cific co n sid e ra tio n s to ke e p in m in d in clu d e :
D o ck - a re a la y o u t a n d ca p a city .
B e ca u se m o st cro ss-d o ckin g a ctivity is co n ce n tra te d a t
re ce ivin g a n d lo a d in g d o cks, e n su re th a t yo u h a ve a n a d e q u a te
n u m b e r o f d o ck d o o rs a s w e ll a s e n o u g h ca p a city in th o se
a re a s. W h e re p o ssib le , e lim in a te ra cks to cre a te m o re d o ck
sp a ce

01/15/10 Project Presentation by Sarang Wadyalkar 25

 RECOMMENDATIONS contd…..
Material handling equipment


 When cross docking, it’s important to move large volumes of

product in a short time. Using double pallet jacks to
transport pallets can double throughput. Conveyors that
are installed on the floor of truck trailers and connect to
inbound and outbound pallet conveyors within your facility
can significantly speed up pallet transfer (see Figure).


01/15/10 Project Presentation by Sarang Wadyalkar 26

 RECOMMENDATIONS contd …..
Personnel
When it’s time to choose managers for a new cross-
docking operation, remember that forward thinking is
a critical success factor. Cross docking cannot fully
achieve its objectives without a good core of
receiving/shipping supervisors and logistical planners
who can identify product that needs to be cross
docked.
Supervisors must be able to recognize opportunities for
pre-receiving or pre-allocating receipts before the
actual product arrives.
You may need additional personnel to accommodate
cross docking’s requirements, but that doesn’t
necessarily mean hiring more employees. Some
companies outsource their labor requirements to a
third-party provider.
In fo rm a tio n sy ste m s

A real-time, paperless information flow among trading

partners is strongly
01/15/10
preferred. So educate the
Project Presentation by Sarang Wadyalkar 27
RECOMMENDATIONS contd…..
 Step 3. Cost Justification and Sharing
 How much will it cost to implement cross docking at your company?

 Startup costs for their cross-dock initiatives are insignificant, but the
savings and benefits are considerable. It can improve inventory
turns up to two times.
 For a complex, capital-intensive cross dock, it’s best to evaluate the
effect on each SKU’s profitability. Where suppliers must take on
additional responsibilities, gain-sharing—the practice of sharing
projected savings—can be initiated with suppliers that could
make cross docking in your facility possible.

01/15/10 Project Presentation by Sarang Wadyalkar 28

RECOMMENDATIONS contd…..
Step 4. Implementation and Maintenance
Once your cross-docking operation is up and
running smoothly, don’t sit back and assume that
your job is done. Cross docking should be an
ongoing, continuous-improvement project.
Instead, look for ways to get even more benefit
from this increasingly popular strategy.
E.g. supply and demand conditions change
constantly, so periodically monitor cross-docked
products to determine their sustainability in your
program.
Another option: For increased benefits, gradually add

new products to the cross-docking mix once you’ve

mastered the system

01/15/10 Project Presentation by Sarang Wadyalkar 29
 RECOMMENDATIONS contd…..
 Besides Cross docking,
 Use the cube
Generally occupancy (cost of space and utilities) ranges from 25 percent
to 35 percent of the cost per order.
 One of the single biggest culprits in optimization of your warehouse asset
is not adequately using available cubic space. Your first look as you walk through
the facility should be up.
 Inefficient use of the available cube can translate into increased costs for
additional warehouse space that you may not actually need. Typically, receiving,
picking, packing and shipping generally use 40 percent to 50 percent of your
space; product storage the remainder.
 Ensure that sufficient product is available when a picker
needs it
Use a combination of scheduled replenishment of the
primary pick slot utilizing the min-max and demand-replenishment
concepts. It is assumed that the pick face has been restocked and
product is available, but in case its not; the picker’s productivity
decreases.
 Develop appropriate pick locations
As much as 70 percent of a picker’s work hours may be
spent walking. Consider product velocity (sales movement) and
size (cube) when selecting the picking slots sizes and location. Set
up a system inProject
01/15/10
which you can store at least one week’s average 30
Presentation by Sarang Wadyalkar
unit movement in the pick slot and a hot pick area for extremely
RECOMMENDATIONS contd…..
 Plan for flexibility and scalability
Any warehouse facility or system should be designed
to maximize flexibility and be as scalable as possible.
 Devise a vendor-compliance program
Everything starts at your warehouse’s receiving door.
Moreover, every function, from put-away to shipping, is
impacted in some way by your vendors. That’s why it’s a
good to devise and enforce a vendor-compliance program
that defines the detailed expectations and specifications
required of every vendor.
 e.g.
If a vendor fails to comply with acceptable and agreed upon

packaging specifications, the following situations may occur:

 Products designated as ship-alones (i.e. items
reshipped in the original packaging) may have to be
repacked, creating increased labor costs for you..
 You could incur actual damage to your warehouse
from products arriving improperly packaged.

01/15/10 Project Presentation by Sarang Wadyalkar 31

 RECOMMENDATIONS contd…..
 Measure and report performance metrics to your
workers:


The old axiom, “You can’t improve what you don’t measure”, still is true in
warehouse operations. The simple act of measuring operating metrics and reporting the
results to your employees will result in an improvement .
 Why?
 Most employees just want to know how they’re doing. By setting expectations
and then telling everyone how they’re measuring up, you can improve overall productivity.


 Vendor Managed Inventory (VMI):

 VMI is a process where the supplier maintains and replenishes the Inventory of
the customer based on demand information sent by the customer. During this process the
supplier is required to fulfill to mutually agreed objectives for inventory levels, transaction
costs and product price.  
 Vendor Managed Inventory (VMI) is designed to facilitate the replenishment of
goods such that it provides cost saving benefits to both suppliers and retailers and their
customers and thereby reduce costs, inventory levels and increase profits.
 Using VMI, it is assumed that retailer supplies the vendor with the information
necessary to maintain just enough merchandise to meet customer demand and to do so a
mechanism in the system is provided to create the purchase order from the system for the
items reaching the ROL (Re-Order Level) for an order of quantity as per the ABC analysis or
equal to ROQ (Re-Order Quantity) and then the PO is automatically mailed to supplier to
arrange for the delivery.
 This can further be extended to the manufacturer to provide him of the
demand/data to enable him to plan for production planning & logistics.
 

01/15/10 Project Presentation by Sarang Wadyalkar 32
 Learning

When we are planning for huge business like

hyper retail, we should make sure that our
warehouse has a strategic location which
would cater the needs of all of our stores.
We should study the goods flow in the system
and then choose method to load/unload the
goods.
The warehouse should be flexible enough to
meet the future changes and expansion.
Focus should be on improving SCM which
would eventually help us to sell products at
lower rates
01/15/10 toPresentation
Project the customer and in quick
by Sarang Wadyalkar 33
Thank You!

01/15/10 Project Presentation by Sarang Wadyalkar 34