INTRODUCTION

The retail industry stands as a cornerstone of modern economies, serving as a pivotal

link between producers and consumers. In this dynamic sector, efficient logistics

management emerges as a critical determinant of success, influencing everything

from inventory control to customer satisfaction. This study delves into the logistics

management practices within the retail domain, with a focused analysis on V-Mart

Retail Limited, a prominent player in the Indian retail landscape, particularly in the

Delhi region.

Supply chain management addresses the management of materials and information

across the entire chain from suppliers to producers, distributors, retailers, and

customers. Traditionally, each company performs purchasing, production and

marketing activities independently, so that it is difficult to make an optimal plan for

the whole chain. In recent years, it has been realized that actions taken by one

member of the chain can influence all others in the chain. More and more companies

have gradually recognized that each of them serves as part of a supply chain against

other supply chains in terms of competition, rather than as a single firm against other

individual firms. Since 1990, as the information technology has continuously

developed, it is possible to coordinate all organizations and all functions involved in

the whole chain. Consequently, supply chain management has been increasingly

receiving attention from both academic researchers and practitioners. A supply chain

is a network of suppliers, manufacturing plants, warehouses, and distribution

channels organized to acquire raw materials, convert these raw materials to finished

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products, and distribute these products to customers. The efficient design and

operation of supply chains is one of the important components of planning activities

in a manufacturing firm. The strategic level supply chain planning involves deciding

the configuration of the network, i.e., the number, location, capacity, and technology

of the facilities. The tactical level planning of supply chain operations involves

deciding the aggregate quantities and material flows for purchasing, processing, and

distribution of products. The strategic configuration of the supply chain is a key

factor influencing efficient tactical operations, and therefore has a long lasting impact

on the firm. Furthermore, the fact that the supply chain configuration involves the

commitment of substantial capital resources over long periods of time makes the

supply chain network design problem an extremely important one. (Tjendera, et al.,

2005)

SCM is a network of the logistics systems and related activities of all of the individual

companies/organizations that are a part of a particular supply chain. It can be traced

to the 1980s and it was not until the 1990s that this term captured the attention of

senior level management in organizations. A supply chain has been recognized as an

important approach to make organizations more globally competitive and help to

increase their market share with consequent improvements in shareholder value.

(Coyle, 2003) It benefits from a variety of concepts that were developed in several

different disciplines, such as marketing, information systems, economics, system

dynamics, logistics, operations management, and operations research. There are

many concepts and strategies applied in designing and managing supply chains.

[2]
The expanding importance of supply chain integration presents a challenge to

research to focus more attention on supply chain modeling (Tayur, et al., 1999).

Based on the emerging distinction between SCM and logistics, in October 1998 the

Council of Logistics Management announced a modified definition of logistics. The

modified definition declares the Council’s position that logistics management is only

a part of SCM. (Lambert and Cooper, 2000) Ayers (2001) shows that there is much

cost saving in logistic processes and one of the potential moves is to consider logistics

as part of the Supply Chain. The next definition can be easily learned: logistics is that

part of the supply chain process that plans, implements, and controls the efficient,

effective flow and storage of goods, services, and related information from the point

of origin to the point of consumption in order to meet customers‟ requirements.

Logistics means the integration of two or more activities for the purpose of planning,

implementing and controlling the efficient flow of materials and products from the

point of origin to the point of consumption. Logistics involves the integration of

information, transportation, inventory, warehouse, material handling, and packaging.

Depending upon its origins, logistics is often seen as begin synonymous with

distribution activities, either the physical distribution of product, SCM, pipeline

management, or supply and transport. Whichever description is used, the basic

definition of logistics is the same; namely, getting the right goods to the correct place

at the time and in the condition required by the customers (Attwood, Peter and Nigel

Attwood, 1992). Generally speaking, the most common form of logistics has

traditionally been based on moving large shipments of items in bulks to select

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strategic customers in a few geographic locations. Shipments have also traditionally

been tracked by container, pallet, or other unit of bulk measurement, not by individual

item or parcel. (Bayles, 2001)

Logistics performance may be conceptually viewed as a subset of the larger notion

of IRM or organizational performance. Essentially, logistics performance is

composed of three key components: the first, logistics productivity, that is used to

create the meaningful productivity standards to measure the ability of track and

managing logistics costs; the second, logistics service performance, is concerned with

tracking metrics associated with the ability of logistics functions to meet customer

service goals; the final component, logistics performance measurement systems,

focus on what and how performance is to be tracked (Ross, 2003). Managers

today increasingly face the challenge of improving logistical performance within

their organizations. When a firm confronts this challenge and undertakes the risk of

improvement, its managers must grasp leadership of the change process. The logistics

excellence provides managers and others the motivation for and means of becoming

thoroughly committed agents of logistical change. Logistics Excellence is about

change management, the focus is on how to go about changing an organization’s

commitment and culture to support revitalization of its logistics process. (Bowersox,

et al., 1992). In today’s challenging competition in the consumer goods, the

manufacturers strive for their products to reach final customers before they turn their

heads to the rival’s ones. This challenge is influenced by for example globalization,

deregulation, new business comers and convergence of the industries.

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Retailing is a significant part of economic activities of both developed and developing

countries‟ economies, with wholesaling and retailing value-added. The major goal of

the retail industry or retail merchandising system is to influence possible consumers

to purchase a particular products assortment at a particular retail store. Retail

activities turn out to be one of the significant themes playing the role in supply chain

management and logistics.

Convenience store is also one part of the store format in retailing business and the

word convenience means the least amount level of the financial, physical, and mental

expenditure required to conquer the friction of time, space and pecuniary loss inherent

in any retail transaction. The product assortment consists mainly of goods for daily

use and it is offered to customer on a relatively small sale area. Convenience

stores need a flexible system with the ability to deliver products rapidly with small

volume to diverse locations in an efficient manner.

In the late 1990s with the boom in the economy and at that India became the fastest-

growing economy in the world as well the next major developments in Indian

retailing with the arrival of both convenience stores and discount superstores.

Nevertheless, the mixture of more investment, economic growth, greater lifestyle of

Westernization and most remarkably the timely arrival of V-Mart has made 24-hour

convenience stores ubiquitous near bus stops, in service stations and on many street

corners.

The researcher has used a case study of chain convenience store, the company,

namely V- Mart, Delhi s it resembles a good example of establishing logistical

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activities to conquer the hindrances for the success of the business as mentioned

before. Compared to other convenience store brands, Family Mart and Vishal mega

mart, V-Mart in India has ranked number one in convenience store industry where

India has a relatively inferior infrastructure and supply chain coordination.

STATEMENT OF THE PROBLEM

This study focuses on only retailing industry and retailing convenience stores‟

perspective in India. The subject will be` studied by using of V-Mart as a reference.

Retailing and distribution are concerned with product availability and retailers must

be concerned with the flows of product and information into and through their

companies in order to make products available to consumers. According to Fernie

and Sparks (1998), it had been revolutionary in the 1980s in the history of logistics

support to retail stores. The first step changed in managing the logistics function;

retailers moved from direct store deliveries (DSD) to centralization of stock at

regional distribution centers (RDCs). Fernie and Spark (1998) state that technologies

and IT were developed to facilitate logistical efficiencies in the distribution network

and those technologies were either material handling (composite distribution,

unitization) or of and IT nature which can improve the flow of information through

the supply chain . Therefore technology and IT are important. The concern in retail

and distribution are with the structure and management logistics channels . The

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management task is concerned with the element of distribution mix (for example

storage facilities and communication, etc), which have to be integrated for successful

retail distribution (Sparks, 1998). The researcher will study and focus on the

mentioned information which surely affects retail business (in this research which is

retail convenience business) in one way or another.

RATIONALE BEHIND THE STUDY

India has a relatively inferior infrastructure and supply chain coordination in the retail

business. Retailing and distribution are concerned with product availability and

retailers must be concerned with the flows of product and information into and

through their companies in order to make products available to consumers. Logistics

support to retail stores was the first step that changed t h e m a n a g e m e n t of the

logistics function; retailers moved from direct store deliveries (DSD) to

centralization of stock at regional distribution centers.

Latest technologies and IT have developed and facilitated logistical efficiencies in

the distribution network. IT improved the flow of information through the supply

chain. The concern in retail and distribution are with the structure and management

logistics channels. The management task is concerned with the element of

distribution mix (for example storage facilities and communication, etc), which have

to be integrated for successful retail distribution. Thus, to analyze various processes

in the supply chain management in the light of latest technological developments and

IT revolution in the country makes a good sense.

[7]
 This study focused on only retailing industry and retailing convenience stores‟

perspective in India. The subject was studied by using V-Mart in Delhi as a reference.

The purpose of this research is to, from retailing industry and retailing convenience

store’s perspective, identifies and describe how V-Mart manages and operates its

retail convenience business focusing on several aspects; strategic fits, distribution and

IT, which support the logistics activities. It explored the competitive advantage that

originates from those actions.

OBJECTIVES OF THE STUDY

Following objectives are formulated for the proposed study:

• To identify and describe how V-Mart manage and operate its retail convenience

business in Delhi.

• To analyze the strategies, distribution and IT support in V-Mart stores in Delhi.

• To explore the competitive advantage of V-Mart products in the market.

• To find out how supply chain management is done at V-Mart stores in Delhi.

• From retailing industry and retailing convenience store’s perspective analyze the

operations of V-Mart store in Delhi.

• To examine how logistics activities are handled and in what essence have they

been regarded to in V-Mart.

V-MART RETAIL OVERVIEW

V-Mart Retail is an Indian retail brand that runs chains of consumer retail department

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stores. The brand is wholly owned by V- Mart Retail Limited and is operated by its

subsidiary, V-Mart Retail, which is headquartered in India. V-Mart is a complete

family fashion store that provides its customers true value for their money. V-Mart

offers fashion garments at down-to-earth prices and over a period of time has

emerged as the destination of choice for bargain hunters and the fashionable alike.

First incorporated as Varin Commercial Private Limited under the Companies Act in

2002 in West Bengal. Then in 2003, we opened our maiden store in Ahmedabad

(Gujarat). In the Year 2004 we have opened our first store in capital city, Delhi.

Further in 2006 we have crossed 1 lac sq.ft. retail space and subsequently renamed to

V- Mart Retail Private Limited. In the year of 2008, we hit the base by registering V-

Mart Retail as a public limited entity and also crossed the turnover of 1,000 million

Rs. As the time passes by we took the shape of a renowned family brand that caters

the needs of whole family by offering high quality retail products. Along with

growing customers, we achieved a turnover of over Rs 2,000 million in 2011-12 In

the Year 2012 we have crossed the retail space of 5 lac Sq. Ft.

2013 -V-Mart Retail Ltd has opened a new store located at F.D.R.A Plaza, Opp.

Sanjay Cinema, Malipur Road, Shahzadpur, Akbarpur, Uttar Pradesh. -V Mart Retail

has opened 86th Store at Jhansi, Uttar Pradesh. -V Mart Retail has opened 65th Store

at Varansi, Uttar Pradesh. -V Mart Retail Opening its 84th Store at Fatehpur, Uttar

Pradesh. 2014 -V Mart Retail has Opened 92nd Store at Patna City, Bihar. -V Mart

Retail has Opened 97th Store at Ranchi, Jharkhand.

BACKGROUND OF RETAIL INDUSTRY IN INDIA

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Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent

of its GDP. The Indian retail market is estimated to be US$ 500 billion and one of the

top five retail markets in the world by economic value. India is one of the fastest

growing retail markets in the world, with 1.2 billion people. As of 2013, India's

retailing industry was essentially owner manned small shops In 2010, larger format

convenience stores and supermarkets accounted for about 4 percent of the industry,

and these were present only in large urban centers. India's retail and logistics industry

employs about 40 million Indians (3.3% of Indian population).

Until 2011, Indian central government denied foreign direct investment (FDI) in

multi- brand retail, forbidding foreign groups from any ownership in supermarkets,

convenience stores or any retail outlets. Even single-brand retail was limited to 51%

ownership and a bureaucratic process.

In November 2011, India's central government announced retail reforms for both

multi- brand stores and single-brand stores. These market reforms paved the way for

retail innovation and competition with multi-brand retailers such as Walmart,

Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple.

The announcement sparked intense activism, both in opposition and in support of the

reforms. In December 2011, under pressure from the opposition, Indian government

placed the retail reforms on hold till it reaches a consensus.

In January 2012, India approved reforms for single-brand stores welcoming anyone

in the world to innovate in Indian retail market with 100% ownership, but

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imposed the requirement that the single brand retailer source 30 percent of its goods

from India. Indian government continues the hold on retail reforms for multi-brand

stores. In June 2012, IKEA announced it had applied for permission to invest $1.9

billion in India and set up 25 retail stores. An analyst from Fitch Group stated that

the 30 percent requirement was likely to significantly delay if not prevent most single

brand majors from Europe, USA and Japan from opening stores and creating

associated jobs in India.

On 14 September 2012, the government of India announced the opening of FDI in

multi- brand retail, subject to approvals by individual states. This decision was

welcomed by economists and the markets, but caused protests and an upheaval in

India's central government's political coalition structure. On 20 September 2012, the

Government of India formally notified the FDI reforms for single and multi-brand

retail, thereby making it effective under Indian law. On 7 December 2012, the Federal

Government of India allowed 51% FDI in multi-brand retail in India. The government

managed to get the approval of multi-brand retail in the parliament despite heavy

uproar from the opposition (the NDA and leftist parties). Some states will allow

foreign supermarkets like Walmart, Tesco and Carrefour to open while other states

will not.

MAJOR PLAYERS IN THE INDUSTRY

The booming Indian retail industry had transformed greatly from 1996 to 2013,

particularly with the emergence of organized retailers from previously small,

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unorganized family-owned retail formats. From real estate companies to venture

capitalists, many businesses were investing in retail infrastructure. As a

consequence, the Indian retail sector was undergoing a huge revamping exercise. It

was estimated that an annual US$3 billion in capital expenditure would finance the

growth of organized retail. Traditional markets were increasingly being replaced by

new formats (specialty stores, supermarkets, hypermarkets and departmental stores).

This resulted in the development of a mall culture and the rapid emergence of malls

that offered food, entertainment and shopping in one place. With 325 departmental

stores, 1,500 supermarkets and 300 malls under construction, the sector was going

through a phase of spectacular growth. By the end of 2008, it was expected that

approximately 9.29 million square meters of quality shopping centers would have

been built. Major local retailers planned massive Pantaloon planned to have 30

million square feet by 2015; Reliance planned to invest US$5.8 billion on multiple

retail formats by 2015; and Lifestyle intended to invest more than US$87.6 million

over a five-year period to further develop its Home & Lifestyle Centers and Max

Hypermarkets. Other important players that announced aggressive plans in retailing

were RPG Group, Aditya Birla Group and Tata Group. Most of these domestic

companies‟ operations were quite different from those of Wal-Mart.

Spencer’s Retail, owned and operated by R.P. Goenka (chairman of RPG Group),

was one of the oldest multi-brand retail players in the country. In 2007, Spencer’s

Retail invested about US$194 million in its flagship retail venture. RPG Group

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announced further investments of over US$58.3 million to expand its smaller retail

chains operating under the brand names RPG Cellucom, Book and Beyond, and

Music World. Spencer’s Retail was one of the country’s fastest-growing retailers

dealing in books, lifestyle products, electronics, fashion, apparel and food. Under

four formats (Spencer’s Express, Spencer’s Daily, Spencer’s Super and Spencer’s

Hyper), the company operated 290 stores in 32 cities across the country and occupied

a retail space of over 55,740 square meters. Women were the main target customers

for Spencer’s Retail. The new small- format businesses offered Indian and

international food in pre-cooked, semi-cooked and ready-to-eat styles.

Another important Indian retailer that had big plans for the country was Reliance

Industries Limited (“RIL”). It intended to have a pan-India presence with different

formats, including discount stores, malls, supermarkets, hypermarkets and specialty

stores. The company wanted to open stores in more than 700 large cities by 2011,

stocking products ranging from food and groceries to consumer durables, and also

providing financial and travel-related services. One of its focuses was on selling

luxury brands to the growing number of rich Indians. In addition, the company was

building a robust supply chain infrastructure spanning the entire country. Out of the

total capital expenditure of US$4.86 billion set aside for the venture, RIL planned to

spend US$1.94 billion on its supply chain, indicating the growing importance of a

stable back end for retail operations. To support this, the company had its own fleet

of both trucks and cargo planes. Reliance Retail Limited (“RRL”), a subsidiary of

RIL, was targeting a sales turnover of US$17.5 billion by 2010. The company already

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 had 30,000 people on its payroll, of which some had previously worked at Wal-Mart,

Carrefour or Tesco. Senior executives from Electrolux Kelvinator, Unilever,

Spencer’s, Coca-Cola, Pantaloon Retail, Indus League and McDonald’s were said to

have also joined RRL. Intensifying competition, rising salaries and poaching of key

executives were likely to inflate costs at Pantaloon Retail, Shoppers Stop and other

organized retailers. Meanwhile, Tesco and Carrefour were waiting patiently while

proactively targeting local companies to become partners. It was believed that

Carrefour planned to invest US$100 million initially and that it wanted to start

operations in Delhi. Some others, such as South Africa’s Shop Rite and Metro AG

from Germany, had already arrived in India to set up cash-and-carry businesses that

supplied caterers, restaurants, retailers and other businesses.

LIMITATIONS OF THE STUDY

• The selected case study is a convenience store chain, V-Mart in Delhi; therefore, it

may mainly reflect norms and practices considerably within the firm’s environment.

• The convenience store management policies on certain areas normally differ at each

location since they are tightly tied to local customer needs. It could then give a

deviated data from the retail convenience store in other firms or in other states. Hence,

the results cannot be generalized.

• The time frame of the study is limited.

• The data collected may have the biased opinion of the respondents.

• The V-Mart management may not reveal the whole information due to secrecy

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considerations.

CHAPTER 2

RETAILING AND LOGISTICS

Retailing and logistics are concerned with product availability. Many have described

this as „getting the right products to the right place at the right time. Unfortunately

however that description does not do justice to the amount of effort that has to go

into a logistics supply system and the multitude of ways that supply systems can

go wrong. The very simplicity of the statement suggests logistics is an easy process.

As the boxed example shows, problems and mistakes can be all too apparent. The

real management trick‟ is in making logistics look easy, day in and day out, whilst

reacting to quite volatile consumer demand.

For example, if the temperature rises and the sun comes out in an atypical Jammu

summer, then demand for ice-cream, soft drinks and even salad items rises

dramatically. How does a retailer make sure they remain in stock and satisfy this

transient demand? Or we might think about Valentine’s Day, when demand for

certain products in the days before increases exponentially. If a retailer stocks

Valentine’s cards and demand does not materialize, then the retailer has stock that

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will not sell. There is little demand for Valentine’s cards on 15 February. While over-

stocks in this case will not perish, the cost of their storage and handling for the

intervening year can be considerable.

The examples above demonstrate that retailers must be concerned with the flows of

product and information both within the business and in the wider supply chain. In

order to make products available retailers have to manage their logistics in terms

of product movement and demand management. They need to know what is selling

in the stores and both anticipate and react quickly to changes in this demand. At the

same time they need to be able to move less demand-volatile products in an efficient

and cost-effective manner.

The logistics management task is therefore initially concerned with managing the

components of the „logistics mix‟. We can identify five components:

• Storage facilities: these might be warehouses or distribution centers or simply the

stock rooms of retail stores. Retailers manage these facilities to enable them to keep

stock in anticipation of or to react to, demand for products.

• Inventory: all retailers hold stock to some extent. The question for retailers is

the amount of stock or inventory (finished products and/or component parts) that has

to be held for each product, and the location of this stock to meet demand changes.

• Transportation: most products have to be transported in some way at some stage

of their journey from production to consumption. Retailers therefore have to manage

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 a transport operation that might involve different forms of transport, different sizes

of containers and vehicles and the scheduling and availability of drivers and vehicles.

• Unitization and packaging: consumers generally buy products in small quantities.

They sometimes make purchase decisions based on product presentation and

packaging. Retailers are concerned to develop products that are easy to handle in

logistics terms, do not cost too much to package or handle, yet retain their selling

ability on the shelves.

• Communications: to get products to where retailers need them, it is necessary to

have information, not only about demand and supply, but also about volumes, stock,

prices and movements. Retailers have thus become increasingly concerned with

being able to capture data at appropriate points in the system and to use that

information to have a more efficient and effective logistics operation.

It should be clear that all of these elements are interlinked. In the past they were often

managed as functional areas or „silos‟, and while potentially optimal within each

function, the business as a whole was sub-optimal in logistics terms. More recently

the management approach has been to integrate these logistics tasks and reduce the

functional barriers. So, if a retailer gets good sales data from the checkout system,

this can be used in scheduling transport and deciding levels and locations of stock

holding. If the level of inventory can be reduced, perhaps fewer warehouses are

needed. If communications and transport can be linked effectively, a retailer can

move from keeping stock in a warehouse to running a distribution centre which sorts

products for immediate store delivery: that is, approaching a „Just-In-Time‟ system.

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Internal integration has therefore been a major concern.

It should also be clear, however, that retailers are but one part of the supply system.

Retailers are involved in the selling of goods and services to the consumer. For this

they draw upon manufacturers to provide the necessary products. They may

outsource certain functions such as transport and warehousing to specialist logistics

services providers. Retailers therefore have a direct interest in the logistics systems

of their suppliers and other intermediaries. If a retailer is effective, but its

suppliers are not, errors and delays in supply from the manufacturer or logistics

services provider will impact the retailer and the retailer’s consumers, in terms of

either higher prices or stock-outs (no products available on the store shelves). If a

retailer can integrate effectively its logistics system with that of its suppliers, such

problems may be minimized. Much more importantly, however, the entire supply

chain can then be optimized and managed as a single entity. This brings potential

advantages of cost reduction and service enhancement, not only for the retailer, but

also for the supplier. It should also mean that products reach the stores more rapidly,

thus better meeting sometimes transient customer demand. In some instances it may

mean the production of products in merchandisable ready units, which flow through

the distribution systems from production to the shop floor without the need for

assembly or disassembly. Such developments clearly require supply chain co-

operation and coordination.

We may be describing highly complex and advanced operations here. Retail

suppliers are increasingly spread across the world. A retailer may have thousands of

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stores in a number of countries, with tens of thousands of individual product lines.

They may make millions of individual sales per day. Utilizing data to ensure

effective operation amongst retailers, manufacturers, suppliers, logistics services

providers, head office, shops and distribution centers is not straightforward. There

is thus always a tension between overall complexity and the desire for the simplest

possible process.

Summarizing the discussion above, the logistics task therefore can be described as:

The process of strategically managing the procurement, movement and storage

of materials, parts and finished inventory (and the related information flows)
through the organization and its marketing channels in such a way that current and
future profitability are maximized through the cost effective fulfillment of
orders.(Christopher, 1998).

Managing the logistics mix in an integrated retail supply chain, while aiming to

balance cost and service requirements, is the essential element of logistics

management (Figure 1). As retailers have begun to embrace this logistics approach

and examine their wider supply chains, many have realized that to carry out logistics

properly, there has to be a transformation of approach and operations (Sparks, 1998).

RETAIL LOGISTICS AND SUPPLY CHAIN

TRANSFORMATION

Retailers were once effectively the passive recipients of products, allocated to

stores by manufacturers in anticipation of demand. Today, retailers are the active

designers and controllers of product supply in reaction to known customer demand.

They control, organize and manage the supply chain from production to

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consumption. This is the essence of the retail logistics and supply chain

transformation that has taken place.

Times have changed and retail logistics has changed also. Retailers are the channel

captains and set the pace in logistics. Having extended their channel control and

focused on efficiency and effectiveness, retailers are now attempting to engender a

more co- operative and collaborative stance in many aspects of logistics. They are

recognizing that there are still gains to be made on standards and efficiency, but that

these are probably

Figure 1: The Management Task in Logistics

Only obtained as channel gains (that is, in association with manufacturers and

logistics services providers) rather than at the single firm level.

In 1996 Alan McKinnon reviewed and summarized the key components of this retail

logistics transformation. He identified six closely related and mutually reinforcing

trends:

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 1 INCREASED CONTROL OVER SECONDARY DISTRIBUTION

Retailers have increased their control over secondary distribution (ware- house to

shop) by channeling an increasing proportion of their supplies through distribution

centers (DCs). In some sectors such as food this process is now virtually complete.

British retailers exert much tighter control over the supply chain than their

counterparts in most other countries. Their logistical operations are heavily

dependent on information technology (IT), particularly the large integrated stock

replenishment systems that control the movement and storage of an enormous

number of separate products.

2 RESTRUCTURED LOGISTICAL SYSTEMS

Retailers have reduced inventory and generally improved efficiency through for

example the development of „composite distribution‟ (the distribution of mixed

temperature items through the same distribution centre and on the same vehicle)

and centralization in specialist ware- houses of slower moving stock. In the case of

mixed retail businesses common stock rooms have been developed, where stock is

shared across a number of stores, with demand deciding to which store it is allocated.

3 ADOPTION OF “QUICK RESPONSE” (QR):

The aim has been to cut inventory levels and improve the speed of product flow.

This has involved reducing order lead-time and moving to a more frequent delivery

of smaller consignments both internally (between DC and shop) and externally

(between supplier and DC). This has greatly increased both the rate of stock-turn

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 and the amount of product being cross-docked, rather than stored at DCs.

QR (Lawson, King and Hunter, 1999) was made possible by the development of

EDI (Electronic Data Interchange) and EPOS (Electronic Point of Sale), the latter

driving the Sales Based Ordering (SBO) systems that most of the larger retailers have

installed. In other words, as an item is sold and scanned in a shop, this data is used

to inform replenishment and reordering systems and thus react quickly to demand.

Sharing such data with key suppliers further integrates production with the

supply function. Major British retailers have been faster to adopt these technologies

than their counterparts in other European countries, although they still have to diffuse

to many small retail businesses.

4 RATIONALIZATION OF PRIMARY DISTRIBUTION

(FACTORY TO WAREHOUSE)

Partly as a result of QR pressures and partly as a result of intensifying competition,

retailers have extended their control upstream of the DC (that is, from the DC to the

manufacturer). In an effort to improve the utilization of their logistical assets, many

have integrated their secondary and primary distribution operations and run them

as a single „network system‟. This reduces waste and improves efficiency.

5 INCREASED RETURN FLOW OF PACKAGED MATERIAL AND

HANDLING EQUIPMENT FOR RECYCLING/REUSE

Retailers have become much more heavily involved in this „reverse logistics‟

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 operation. This trend has been reinforced by the introduction of the EU packaging

directive. Although the United Kingdom currently lags behind other European

countries, particularly Germany, in this field, there remain opportunities to develop

new forms of reusable container and new reverse logistics systems to manage their

circulation.

6 INTRODUCTION OF SUPPLY CHAIN MANAGEMENT (SCM)

AND EFFICIENT CONSUMER RESPONSE (ECR)

Having improved the efficiency of their own logistics operations, many retailers

have begun to collaborate closely with suppliers to maximize the efficiency of

the retail supply chain as a whole. SCM (and within this, ECR) provides a

management framework within which retailers and suppliers can more effectively

coordinate their activities. The under- pinning technologies for SCM and ECR have

been well established in the United Kingdom, so conditions have been ripe for such

developments.

It is clear that many of these trends identified in McKinnon (1996) have been the

focus for retailers in the intervening years. Issues such as primary distribution and

factory gate pricing, consolidation centers and stockless depots and Collaborative

Planning Forecasting and Replenishment (CPFR) have occupied much attention.

The overall focus in retail logistics has been altered from an emphasis on the

functional aspects of moving products to an integrative approach that attempts to

develop end-to-end supply chains. This outcome is normally referred to as supply

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 chain management.

SUPPLY CHAIN MANAGEMENT

The roots of supply chain management are often attributed to Peter Drucker and his

seminal 1962 article. At this time, he was discussing distribution as one of the key

areas of business where major efficiency gains could be achieved and costs saved.

Then, and through the next two decades, the supply chain was still viewed as a

series of disparate functions. Once the functions began to be integrated and

considered as a supply chain rather than separately, several key themes emerged:

• A shift from a push to a pull: that is, a demand-driven supply chain;

• Customers gaining more power in the marketing channel;

• An enhanced role of information systems to gain better control of the supply chain;

• The elimination of unnecessary inventory in the supply chain;

• A focus upon core capabilities and increased outsourcing of non-core

activities to specialists.

To achieve maximum effectiveness of supply chains, it became clear that

integration, or
the linking together of previously separated activities within a single system (Slack

et al, 1998) was required. Companies have had therefore to review their internal

organization to eliminate duplication and ensure that total costs can be reduced,

rather than allow separate functions to control their costs in a sub-optimal manner.

[24]
Similarly, supply chain integration can be achieved by establishing ongoing

relationships with trading partners throughout the supply chain.

In industrial markets supply chain integration focused upon the changes promulgated

by the processes involved in improving efficiencies in manufacturing. Total quality

management, business process re-engineering and continuous improvement brought

Japanese business thinking to western manufacturing operations. The

implementation of these practices was popularized by Womack, Jones and Roos’s

(1990) book The Machine that Changed the World, which focused on supply systems

and buyer–seller relationships in car manufacturing. In a retail context it is claimed

that food retailers such as Tesco are increasingly embracing such lean principles for

parts of their business (Jones 2002).

During the 1990s this focus on so-called lean production„ was challenged in the

United States and the UK, because of an over-reliance on efficiency measures (lean)

rather than innovative (agile) responses. Table 1.1 shows how lean and agile supply

chains differ. Agility as a concept was developed in the United States in response to

the Japanese success in lean production. Agility plays to US strengths of

entrepreneurship and information systems technology. An agile supply chain (Figure

2) is highly responsive to market demand. Harrison et al (1999) argue that the

improvements in the use of information technology to capture „real time‟ data mean

less reliance on forecasts and create a virtual supply chain between trading

partners. When information is shared, process integration takes place between

[25]
partners who focus on their core competencies. The final link in the agile supply

chain is the network where a confederation of partners structure, coordinate and

manage relationships to meet customer needs (Aldridge and Harrison, 2000).

Both approaches of course have their proponents. There is however no reason why

supply systems may not be a combination of both lean and agile approaches, with

each used when most appropriate (the so-called leagile approach: Naylor, Naim

and Berry, 2002; Mason-Jones, Naylor and Towill, 2000). In either case, emphasis

is placed on the demands of supply chain management.

It can be suggested that the key concepts within Supply Chain Management (SCM)

include the value chain, resource-based theory (RBT) of the firm, transaction cost

economics and network theory. The thrust of all these concepts is the obtaining

of competitive advantage through managing the supply chain (within and beyond the

single firm) more effectively.

Table 1.1 Alt er nativ e Supply Chain Processes

Efficient/function (lean) Innovative/responsive (agile)

Respond quickly to
unpredictable demand in order
Supply predictable demand to minimize stockouts, forced
Primary purpose efficiently at lowest cost mark-downs, and obsolete
inventory
Manufacturing Maintain high average Deploy excess buffer capacity
focus utilization rate

[26]
 Generate high turns and Deploy significant buffer
Inventory strategy minimize inventory stock of parts
Shorten lead time as long as it Invest aggressively in ways to
Lead time focus doesn’t increase cost reduce lead time
Approach to Select primarily for speed,
supplier selection Select primarily for cost and flexibility and quality
quality
Source: adapted from Harrison, Christopher and Van Hoek, 1999

[27]
 Figure 2 T h e Agile Supply Chain

They all explore possible benefits of a pan-firm orientation. Figure 2 is a supply

chain model showing how value may be added to the product through

manufacturing, branding, packaging, display at the store and so on. At the same

time, at each stage cost is added in terms of production costs, branding costs and

overall logistics costs. The aim for retailers (and their supply partners) is to

manage this chain to create value for the customer at an acceptable cost. The

managing of this so-called pipeline has been a key challenge for logistics

professionals, especially with the realization that the reduction of time not only

reduced costs, but also gave competitive advantage.

[28]
 According to Christopher (1997) there are three dimensions to time-based

competition that must be managed effectively if an organization is going to be

responsive to market changes. These are:

• Time to market: the speed at bringing a business opportunity to market;

• Time to serve: the speed at meeting a customer’s order.

• Time to react: the speed at adjusting output to volatile responses in demand.

Christopher (1997) uses these principles to develop strategies for strategic lead-

time management. If the lead times of the integrated web of suppliers necessary

to manufacture a product are understood, he argues that a pipeline map can be

drawn to represent each stage in the supply chain process from raw materials to

customer. In these maps it is useful to differentiate between „horizontal‟ and

vertical time. Horizontal time is time spent on processes such as manufacture,

assembly, in-transit or order processing. Vertical time is the time when nothing

is happening, no value is added but only cost and products/materials are standing

as inventory.

It was in fashion markets that the notion of time-based competition‟ had most

significance, in view of the short time window for changing styles. In addition,

the prominent trend in the last 20 years has been to source products globally,

[29]
often in low-cost Pacific Rim nations, which lengthened the physical supply

chain pipeline. These factors combined to illustrate the trade-offs that have to

be made in supply chain management, and suggested an imperative to develop

closer working relationships with supply chain partners.

This consideration of the changes and challenges in retail logistics allows us to

summarize the key issues in retail logistics and supply chains.

First, it should be clear by now that the modern logistics and supply systems

are heavily dependent on the use of information technology. Logistics now is as

much about information movement as it is about product movement. Anyone

who believes that retail logistics is all about boxes and lorries needs to rethink.

Of course, it remains true that products have to be distributed. Vehicles and boxes

are still involved. But increasingly it is the control of data and information that

remains the key to a successful logistics system.

Second, the discussion above should have indicated that modern retail logistics is

no longer a separate or functionally based activity. Within a company,

warehousing and transport cannot exist as separate operations. Instead, logistics is

all about integration, not only within a company, but also increasingly outside the

business with suppliers, logistics service providers and customers. Partnership is

a strong component of modern retail logistics, and an ability to work with other

[30]
individuals and other companies is fundamental to success.

Third, it should have become apparent that the reach of retail logistics has

expanded enormously. Companies used to manage local suppliers and products

to and from local warehouses. Nowadays, retailers are much more global in their

outlook. Products are sourced from around the world and so the interactions and

movements involved in logistics are now equally international.

Finally, however, we must not forget that logistics is about the movement of

product, and much work is undertaken on improving the mechanics of this

task. For example, a modern supermarket contains good examples of packaging

and standardization, the best of which make handling easier. Vehicle fleets may

be equipped with GPS (Global Positioning Satellite) systems and advanced

tachograph and communications equipment, allowing real-time driver and vehicle

performance monitoring. Such detailed analysis remains a key component of

supply chain integration.

With the pressure on to enhance service and reduce costs in supply chains,

together with their enhanced complexity, there can be little doubt that retailers

will be subjected to considerable logistical challenges in the years to come.

The current study has attempted to assess the logistics management of V-Mart in

Delhi city of Delhi state, using the above information as a base although the

infrastructure in the state is still not well developed and the retailing is still in its

[31]
infancy state as most of the market share is controlled by the local Kirana shops

and there is a long way for the retail sector to go.

[32]
 CHAPTER 3

RESEARCH METHODOLOGY

METHODOLOGY OF THE STUDY:

Research methodology is a way to systematically investigate the research

problem. It gives various steps in conducting the research in a systematic and a

logical way. It is essential to define the problem, state objectives and hypothesis

clearly. The research design provides the details regarding what, where, when,

how much and by what means enquiry is initiated. Every piece of research must

be planned and designed carefully so that the researcher precedes a head without

getting confused at the subsequent steps of research. The researcher must have an

objective understanding of what is to be done, what data is needed, what data

collecting tools are to be employed and how the data is to be statistically analyzed

and interpreted. There are a number of approaches to the design of studies and

research projects all of which may be equally valid. Research is a systematic

attempt to obtain answers to meaningful questions about phenomenon or events

through the application of scientific procedures. It an objective, impartial,

empirical and logical analysis and recording of controlled observation that may

led to the development of generalizations, principles or theories, resulting to some

extent in prediction and control of events that may be consequences or causes of

specific phenomenon. Research is a systematic and refined technique of thinking,

[33]
employing specialized tools, instruments and procedures in order to obtain a more

adequate solution of a problem than would be possible under ordinary mean. Thus,

research always starts from question. There are three objectives of research

factual, practical and theoretical, which gives rise to three types of research:

historical, experimental and descriptive.

Research design has been defined by different social scientists in a number of

ways. All these definitions emphasize systematic methodology in collecting
accurate information
or interpretation. Selltize et al. (1962) expressed their views as, “Research designs

are closely linked to investigator’s objectives. They specify that research designs

are either descriptive or experimental in nature.” Research design tells us how to

plan various phases and procedures related to the formulation of research effort

(Ackoff Russell, 1961). Miller (1989) has defined research design, “as the planned

sequence of the entire process involved in conducting a research study.”

Kothari (1990) observes, “Research design stands for advance planning of the

method to be adapted for collecting the relevant data and the techniques to be used

in their research and availability of staff, time and money.” In this way, selecting

a particular design is based on the purpose of the piece of the research to be

conducted. The design deals with selection of subjects, selection of data gathering

devices, the procedure of making observations and the type of statistical analysis

to be employed in interpreting data relationship”.

[34]
The study is qualitative research aimed at identifying how V-Mart manages and

operate its retail convenience business focusing on several aspects; strategic fits,

distribution and IT, which support its logistics activities. It leads to the exploration

of the competitive advantage that originates from those perspectives.

POPULATION OF THE STUDY

The population of the study comprised of all the staff members in the management

involved in managing the supply chain. Furthermore, the managers of distribution

centers and transport providers also formed the part of the population of the study.

SAMPLE OF THE STUDY

20 interviews were conducted with the respondents from various V-Mart

stores functional in the Delhi city

RESEARCH PURPOSE

Enquiries can be classified in terms of their purpose as well as by the research

strategy used (Robson, 2002). There are three different classifications,

exploratory, descriptive and explanatory. In the same way as you may employ

more than one strategy in your research project, so you may have more than one

purpose. Indeed, as Robson (2002) points out, the purpose of your enquiry may

change over time.

[35]
 Exploratory Study is a study investigating an entirely new area of research. Unlike

replications and exploratory study does not follow directly from an existing study.

Robson defined those exploratory studies are a valuable means of finding out what

is happening to seek new insight; to ask questions and to assess phenomena in a

new light (Robson, 2002).

There are three principal ways of conducting exploratory research:

• A search of the literature;

• Talking to experts in the subject;

• Conducting focus group interviews.

Exploratory research can be likened to the activities of the traveler or explorer

(Adam and Schvaneveldt, 1991). Its great advantage is that it is flexible and

adaptable to change. If you are conducting exploratory research, you must be

willing to change your direction as a result of new data that appears and new

insights that occur to you (Saunders and et al., 2003).

Adams and Schvaneveldt (1991) reinforce this point by arguing that the flexibility

inherent in exploratory research does not mean absence of direction to the enquiry.

What is does mean is that the focus is initially broad and becomes progressively

narrower as the research progresses.

[36]
The object of descriptive research is to portray an accurate profile of persons,

events or situations (Robson, 2002). This may be an extension of, or a forerunner

to, a piece of exploratory research. It is necessary to have a clear picture of the

phenomena on which you wish to collect data prior to the collection of the data

(Saunders and et al., 2003). The authors also claim that in a research work, you

need to go further and draw conclusion from your data. You should develop the

skills of evaluating data and synthesizing ideas.

These are higher-order skills than those of accurate description. Description in

management and business research has a very clear place. However, it should be

thought of as a means to an end rather than an end in itself.

Studies that establish causal relationships between variables may be termed

explanatory studies. The emphasis here is on studying a situation or a problem in

order to explain the relationships between variables. You may find, for example,

that a cursory analysis of quantitative data on manufacturing scrap rates shows a

relationship between scrap rates and the age of the machine being operated. You

could go ahead and subject the data to statistical tests such as correlation in order

to get a clearer view of the relationship (Saunders and et al., 2003).

Based on our objectives, our research purpose is exploratory partly since we want

to gain a better understanding of how Supply Chain is managed in V-Mart. We

[37]
conducted exploratory studies by searching the literature in the library, database

and the company’s internal documents and talking with the experts in this area.

And we are descriptive since we want to we portray the process, the system, the

value and the influencing factors of the e-Logistics system. We are also partly

explanatory since we try to draw conclusions by answering our research questions

by our findings. Generally speaking, since our research problem is to portray an

accurate profile of e-Logistics system and the value creation so our research

purpose is primarily descriptive.

RESEARCH DESIGN

There are various methodologies for research and methodology refer to the

choices researcher make about cases to study, method of data gathering, and from

of data analysis etc (Sliverman ,2007). In this research the researcher used a

qualitative study as a methodology. The nature of qualitative research allows

flexibility between gathering data and interpreting them within framed theories.

Qualitative researchers usually work with small samples of people, nested in their

context and studied in-depth, very different from quantitative researchers, who

aim for larger numbers of cases and seek statistical significance (Miles &

Huberman, 1994).

In this study, researcher constructed a research strategy which is customized to

[38]
study purpose. Researcher used qualitative research method following with

comparative research. A case study of V-Mart Delhi was chosen as a

representative of an observation in logistics and retailing business in this research.

The multi-data collection methods were employed from various sources of data

to ensure the validity and reliability of the research. The sources of data included

the chosen firm’s representatives, including the staff in distribution center of

Delhi. Additionally, research was conducted and the interview with other supply

chain members such as V-Mart’s supplier and company that provide transportation

services to V-Mart. The interview with business analyst (financial analyst) was

conducted to gain more market environment and trend of the industry. The

researcher also included both primary and secondary data throughout the data

collection and analysis part.

QUALITATIVE RESEARCH

Qualitative research seeks out the why and the how of its topic through the analysis

of unstructured information (Yin, 1994) – things like interview transcripts and

recordings, emails, notes, feedback forms, photos and videos. The qualitative

research does not only rely on statistics or numbers, which are the domain of

quantitative researchers. Yin (1994) also depicts that the qualitative method is

used to gain insight into attitudes, behavior, motivation culture or lifestyles. Focus

[39]
groups, in-depth interviews, content analysis and semiotics are among the many

formal approaches that are used.

The purpose of this study casts the main interests on how logistics activities are

handled and in what essence have them been regarded to. In this research, the

researcher employed naturalism and ethnomethodology which the researcher

found to be the most suitable method. The researcher corrected information

through observation and interviews by using tools such as phone, audio record,

email and internet. Furthermore, the researcher used interviews with several

parties involved in the process of distribution in the selected case study.

CASE STUDY

A case study is an extensive examination of a single instance of a phenomenon of

interest. It involves gathering detailed information about the unit of analysis with

a view to obtaining in- depth knowledge (Collis & Hussey, 2003). According to

Yin (1994), characteristics of a case study research tend to explore a certain

phenomenon and offer the understandings in a particular context. The multiple

methods can be used in the collection of data which encourage the researcher

to gain more opportunities in searching up the data to provide a sound analysis.

Researcher used a case study of V- Mart in Delhi as it poses as number one in

[40]
chain convenience store in the state of J&K.

The proposed study utilized a mixed methodology approach to collect the data

from the respondents. The purpose of this project casts the main interests on how

logistics activities are handled and in what essence have they been regarded to.

The researcher collected information through observation and interviews by using

tools such as phone, audio record, email and internet. Furthermore, the researcher

used interviews with several parties involved in the process of distribution in the

selected case study.

A case study of V-Mart Delhi is chosen as a representative of an observation in

logistics and retailing business in this research. The main interest of the study was

to identify and describe how V-Mart manage and operates its retail convenience

business focusing on several aspects; strategic fits, distribution and IT, which

support V-Mart’s activities. It leads to the exploration of the competitive

advantage that originates from those perspectives.

COLLECTION OF DATA

The researcher used two main data collection. First, the primary data is from the

interviews. The secondary data gives supporting data in to fulfill the gap from the

interviews in this research study. Both data collection methods are explained

below.

[41]
PRIMARY DATA

The researcher used interviews as a primary source of data. Why interview? This

question may seem surprising, however the majority of published qualitative

research articles use interviews and moreover compared to other methods,

interviews are relatively economical in terms of time and resources (Silverman,

2007). Saunders, Lewis and Thornhill (2007), present the definitions of three

types of interviews as;

Structured interview: Data collection technique in which an interviewer

physically meets the respondent, reads them the same set of questions in a

predetermined order, and records his or her response to each.

Semi-structured interview: Wide-ranging category of interview in which the

interviewer commences with a set of interview themes but is prepared to vary the

order in which questions are asked and to ask new questions in the context of the

research situation.

Unstructured interview: Loosely structured and informally conducted interview

that may commence with one or more themes to explore with participants but

without a predetermined list of questions to work through.

The researcher applied a semi-structured interview and an in-depth interview in

retrieving primary data. The interviewees are involved V-Mart’s personal, the

[42]
financial analyst in commerce industry, transportation firm, and supplier of V-

Mart in Delhi. The interviews with V-Mart’s personal, transportation firm, and

the suppliers are intended to describing the functions at DCs and how each actors

process these activities accordingly to others chain members.

Due to the limitation of time, resources as well as the well-round data can flaw the

research quality; the researcher fulfill these slacks with secondary data described

in a next section.

SECONDARY DATA

The researcher used “Desk research” approach on secondary data. Desk research

is the term that is used loosely, and it generally refers to secondary data or that

which can be collected without fieldwork. (Hague et al., 2004) Desk research

use the existing information from the website, company data and sources,

directories, magazine or other published sources (Yadin, 2002).

The researcher gathered data from company annual report, quarterly report and

from its website. The data can be trusted from these resources since the company

selected in the case study is a listed company in India which is obligated to provide

financial and operations performance, and future plans to investors.

Journals, magazines as well as the newspapers interviews with V-Mart was used

as data in this study. They provided the researcher with the reflections on firm’s

[43]
perspectives, especially in the interviews with management level of the firm. The

data was compared and cross checked before including in the study.

According to Kent (2007), secondary data entails the proactive seeking of existing

data in both qualitative and quantitative research. It can also help to interpret the

primary data.

DATA ANALYSIS

Researcher can increase the quality of the analysis by dividing data into three

phases: data deduction, data display and conclusion drawing, and verification

from the presented material (Miles & Huberman, 1994). In this study, our data

evaluation followed these three phases. According to Miles and Huberman (1994),

the reduction of collected data in first phase, data will be noted and recorded,

shortened, simplified and compiled. The researcher writes down all interviews

from the respondents in order to prevent the loss of information. Moreover, they

gave the researcher an opportunity to review the respondents again. All interviews

were transcribed into written text after finishing of the interviews.

The data reduction was made before the collection starts, questions are selected in

the interview and they were given to the participants only relating to the research

purpose and objectives. Furthermore, in the second phase, the use of displays is

not separate from analysis, formats can be as various as the imagination of the

[44]
analyst, and different analytical activities can be used such as rows and columns

of a matrix for qualitative data and deciding which data, in which form, should be

entered in the cells. In our analysis part, related data was compiled together to

provide readers a complete picture of respondents‟ opinions. Lastly, in the final

part of analysis section, the modified material was analyzed and then conclusions

were drawn.

VALIDITY AND RELIABILITY

Validity addresses the problem of whether a measure measures what it is

supposed to measure. According to Theater (2001), the main concerns with the

validity are whether the measured data is relevant and precise, and the second is

the extent to which we can generalize from those results. In this research, it

brought up the question of whether the interview has measured in the right way

and also all the interviewed questions has been proper and go well with the

research’s objective and purpose.

Reliability concerns the consistency and accuracy of the results obtained and it is

achieved if research results can be repeated (Collis & Hussey, 2003). Reliability

means dependability or consistency. Neuman (2006) suggests that the same result

can be achieved under the identical or very similar conditions. This researcher

used many sources of data and all were cross-checked before including in the

[45]
study. The interviews were made with several parties to gain insightful data. The

interview data and data from secondary sources were compared to confirm the

reliability of the data. To obtain higher reliability, the researcher rechecked the

transcripts from the interviews to the interviewees to let them confirm their answer

again. Therefore, this research is valid and reliable.

[46]
 CHAPTER 4

ANALYSIS OF THE SAMPLE SURVEY OF EMPLOYEES

DATA ANALYSIS AND INTERPRETATIONS

V-Mart stores are wholly owned by Bharti Retail. The first B2B wholesale cash-

and- carry store in northern India. A typical cash-and-carry store stands between

50,000 and 100,000 square feet and sell a wide range of products from 6000 to

10000 and is providing a one stop and shop experience.

The data was collected from the V-Mart’s operational managers in Delhi. The

analysis and interpretation of the data is made as under:

Q1. WHAT HAS MADE V-MART LEADER IN SUPPLY CHAIN

MANAGEMENT?
V-Mart became a leader in supply chain management because they took a direct,
regional approach. They cut out the middleman, and became their own distributor.
Also, a main leading factor to their success was their implementation of the bar
code system, which was later adapted to have RFID microchips to eliminate
physical inventory counting, making it much more efficient. Not only could they
tell what they were selling, how much, now they could tell where it was in their
regional distribution centers, making them able to restock their inventory in 48
hours, much faster than any of their competitors. These distribution centers were
important because V-Mart retail stores were strategically placed within a boundary
of a delivery zone of their distribution centers to cut transportation costs, and
consumer costs. Another key factor into their success was their intense competitor
research weekly. This meant the V-Mart was able to beat competitors by 4% to
sometimes 10% by discounting 4 rolling key items for approximately 75 days
each. The increase in volume sales allowed for a price drop and edge over their
competitors, these promotions brought in revenue.

[47]
 Q 2. EXPLAIN V-MART’S USE OF INNOVATIVE IT TOOLS AND
IT- ENABLED PROCESSES TO BENEFIT SUPPLY CHAIN

Information technologies such as the bar code, electronic data interchange (EDI),

and radio frequency identification (RFID) have allowed V-Mart to maintain its

position as leader in supply chain management. V-Mart first used the barcode

paired with scanners for inventory. This point-of-sale system was able to identify

items sold, locate the price for the item, create a receipt for the customer, and store

the transaction for later sales and inventory analysis. The barcode helped speedup

the checkout process but on a larger scale unlocked the door to information

management. V-Mart was now able to control its inventory and avoid

overstocking its selves with merchandise that was not selling well. This helped to

make the supply chain become more efficient and cost effective. Soon after, the

universal product code (UPC) was introduced and became the standard for

identifying and labeling products in the retail industry. Electronic data interchange

(EDI) had become a valuable technological tool that helped to strengthen the

relationship between V-Mart and its suppliers. Through the company-developed

application Retail Link, suppliers are now able to access V-Mart database and

view up-to-date, store-by- store, sales and inventory information for their

products. Suppliers could then coordinate to forecast, plan, produce, and ship

products as needed. With the use of its privately owned satellite communication

system, V-Mart is now able to coordinate its supply chain activities between all

[48]
store locations and distribution centers. V-Mart went to a whole new level when

it required its suppliers to equip its products with microchips that could be used

for radio-frequency identification (RFID). These microchips were an enhanced

form of the barcode, storing more information. Similar to what is used on the

highway for toll collection, the technology requires the RFID tags to be in close

proximity to the RFID reader. Once scanned, the item or goods could be tracked

throughout the whole supply chain. In-store, managers could determine how many

products it had and where they could be located. V-Mart’s use of innovative IT

tools and processes has set the standard for supply chain management. Its ability

to exploit information and use it to better the supply chain process has enabled it

to keep inventories low, increase turnover, and create cost savings, which in turn

can be passed on to the consumers.

Q3. ANALYZE T H E RETAIL INDUSTRY THROUGH PORTER’S

FIVE FORCES

Retail market (Organized and unorganized) is estimated by the India Retail Report

to be around Rs. 12,00,000 crore ($270 billion) with annual growth rate is 5.7

percent. Currently unorganized/traditional retailing is contributing 95% of the

industry with over 15 million small and medium outlets (mom-and-pop corner

stores also called Kirana stores).Organized formats are only in the initial stages of

[49]
 adoption in the country.However with the change of tastes and preferences of the

consumers, the industry is getting more popular these days and getting organized

as well. With growing market demand, the organized retail industry is expected to

grow at a pace of 25-30% annually (CII-AT Kearney Retail Study). Retailing is

growing rapidly with consumer spending increasing by unprecedented rates.

Because of these factors global players like Wal-Mart, Tesco, and Carrefour are

interested in this sector.

1. New foreign trends

2. Low switching cost

More availability of options Considering these the threat to substitute in Indian

retail market varies from moderate to low as the organized retail market is very

less and the outcomes are currently favorable for the industry. The substitutes are

mainly available in the unorganized sector as they have the cheaper version of the

products which attract the customers from lower income group.

3. Bargaining power of supplier: (Low)

The price at which the product is available to the retailer is very important. If the

supplier has a high bargaining power, then in theory it makes the industry less

attractive.

If we consider the retail market it is very attractive due to the low bargaining power

of the supplier as the number of buyers in existence as compared to the suppliers

[50]
 is very few. However, it varies from product to product and the availability of

undefined highly valued products can be seen as a threat as the bargaining power

of the supplier would increase in this case.

4. Bargaining power of buyer: (moderate to high)

The bargaining power of buyer in India is increasing fast as the customer is

becoming more and more informed and aware about the various brands, products

and foreign trends. This is also characterized due to the high number of

alternatives available in the market and the due to increase in the available

disposable incomes as well as the price range of the products.

5. Degree of Rivalry: (moderate)

The structure of industry cost, degree of differentiation and switching cost

determine the intensity of rivalry. The intensity of rivalry is not very high due to

few levels in the market and low differentiation. However this is changing due to

the new entries in the market.

Q4. WHY IS IT LUCRATIVE FOR V-MART TO OFFER CASH-AND

CARRY SERVICES WITH ITS PARTNERS?

Entry into Emerging market:

Saturation in western markets has shifted the attention of investors to India’s

emerging market. India has a growing middle class, an expanding economy and a

growing brand- conscious consumer. It has a $450 billion retail industry.

However, there are high barriers against foreign direct investment (FDI). India’s

[51]
strict regulations have made it difficult for multi-brand foreign retailers, such as

Wal-Mart, to sell directly to the public. Thus, the joint venture between V-Mart

and Bharti has provided a means to enter the emerging Indian market through this

partnership.

First mover’s advantage:

This partnership provides the first movers advantage to V-Mart as the other

competitors like Tesco have not established themselves yet into the country. This

also provides an opportunity to grab the market share due to lack of the organized

retailing in the country. This would also be an added advantage in future when the

government would open FDI. However, this may also pose a drawback since there

will be a lot of investing needed to improve the supply infrastructure. Those

positioned as second-mover and third-mover may be able to learn from the

mistakes of the first.

Combination of the experience and expertise:

Bharti’s knowledge and experience in Indian consumer markets matched
with Wal- Mart’s logistics, supply chain management, and sourcing
experience make them an unstoppable force. Technical collaboration
between Bharti Retail and Wal-Mart:

In this joint venture the two firms have also entered into an agreement according

to which V-Mart provides critical technical and backend support to Bharti Retail.

Supply Chain Management:

The joint venture works with the existing supply chain Infrastructure to help make

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it more efficient which helps in the development of the Indian retail and increases

the efficiency.

Helping growth of Indian economy:

1. Support to farmers: The firm has removed the middle man and is directly

dealing with the farmer which helps them to improve the quality and production

and also plays important role in the development of the farmers as they also

provide them with educating programs to improve the efficiency of farmers.2.

Creating job opportunities: The firm makes use of 90% of local produce creating

job opportunities for the locals. This joint venture is looking forward to establish

across the country which would create job opportunities to the local people.

Low prices every day:

Their organized cash-and-carry strategy will benefit local retailers and merchants

act as a one-stop-shop, offering over 6,000 items at competitively low prices. A

large array of quality goods are readily accessible helping the small and mid-sized

business to get the products at a cheaper price.

Q 5 HOW DO YOU DESCRIBE SUPPLY CHAIN MANAGEMENT AT V-

MART?

Supply Chain Management at V-Mart

Supply chain management at V-Mart can be described in 3 sections.

Procurement and Distribution

V-Mart process of procurement involves reducing its purchasing costs as far as

[53]
possible so that it can offer best price to its customers. The company procures

goods directly from the manufacturers, bypassing all intermediaries.

V-Mart has distribution centers in different geographical places in Delhi, own

warehouses supply about 80% of the inventory. Each distribution center is divided

in different groups depending on the quantity of goods received. The inventory

turnover rate is very high, about once every week for most of the items.

The distribution centers ensure steady flow & consistent flow of products.

Managing the center is economical with the large-scale use of sophisticated

technology such as Bar code, hand held computer systems (Magic Wand) and

now, RFID. Every employee has access to the required information regarding the

inventory levels of all the products in the center. They make 2 scans- one for

identifying the pallet, and other to identify the location from where the stock had

to be picked up. Bar codes & RFID are used to label different products, shelves &

bins in the center. The hand-held computers guide employee to the location of the

specific product. The quantity of the product required from the center is entered

in the hand-held computer, which updates the information on the main central

server. The computers also enabled the packaging department to get accurate

information such as storage, packaging & shipping, thus saving time in

unnecessary paperwork. It also enables supervisors to monitor their employees

closely in order to guide them & give directions.

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This enables V-Mart to satisfy customer needs quickly & improve level of

efficiency of distribution center management operations.

Logistics Management

This involves fast & responsive transportation system. More than 70 company

owned trucks services the distribution centers in Delhi. These dedicated truck

fleets enable shipping of goods from distribution centers to the stores within 2

days and replenish the store shelves twice a week. The drivers hired are all very

experienced & their activities are tracked regularly through “Private Fleet Driver

handbook”. For more efficiency, V- Mart uses a logistics technique called “Cross

Docking”. In this system, finished goods are directly picked up from the

manufacturing site of supplier, sorted out and directly supplied to the customers.

This system reduces handling & storage of finished goods, virtually eliminating

role of distribution centers & stores. Because of “cross-docking” the system

shifted from “supply chain” to “demand chain” which meant, instead of retailers

pushing the products into the system, the customers could pull the products, when

& where they required.

Inventory Management

Considering the rapid expansion of the stores, it was essential to have a very good

communication system. They have their own communication system. This allows

the management to monitor each and every activity going on in a particular store

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at any point of the day and analyze the course of action taken depending on how

the things went.

V-Mart ensures that unproductive inventory is as less as possible, by allowing the

stores to manage their own stocks, thereby reducing pack sizes across many

categories and timely price markdowns. V-Mart makes full use of its IT

infrastructure to make more inventories available in case of items that customers

wanted most, while reducing overall inventory. By making use of Bar-coding &

RFID technologies, different processes like efficient picking, receiving & proper

inventory control of the products along with easy packing and counting of the

inventories was ensured.

It has the most sophisticated computer system in private sector, which enables it

to easily track movement of goods & stock levels across all distribution centers

and stores. For emergency backup, it has an extensive contingency plan in place

as well.

Employees use “Magic Wand”, which is linked to in-store terminals through a

Radio frequency network, to keep track of the inventory in stores, deliveries and

backup merchandise in stock at the distribution centers. The order management

and store replenishment of goods is entirely executed with the help of computers

through Point of Sale (POS) system. V-Mart also makes use of sophisticated

algorithm to forecast the quantities of each item to be delivered, based on

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inventories in the store. A Centralized inventory database allows the personnel at

the store to find out the level of inventories and location of each product at a given

time. It also shows the location of the product like distribution center or transit on

the truck. When the goods are unloaded at the store, the inventory system is

immediately updated.

Q6 WHEN DID YOU INITIATE PLANS TO EMPLOY RFID

TECHNOLOGY IN THE SUPPLY CHAIN?

Easy had initiated its plan to employ RFID technology in its supply chain in June

2012 at Delhi. The specification of the following RFID components was laid out

in June 2012.

EPC (Electronic Product Code) specification Type of Chip that would be installed

The Distribution centers that will accept RFID tagged products.

After the defining phase, V-Mart specified the RFID requirements to its

suppliers that they should comply with:

EPC: 96-bit with a Global Trade Identification number

TAGS: Should operate in UHF spectrum (868 MHz to 956 MHz)

The TAG will carry the 96-bit serial number and will be field-programmable, that

will allow the suppliers to write serial numbers to the tags while being applied to

the products. EPC –compliant tags in UHF band consists of two main parts:

EPC data format on the chip

Class 0 or Class1 communication protocol Class0 is a factory programmable tag

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Class1 provides the capability to the end users to write serial number on it

V-Mart planned to implement Class1 Version2, a globally accepted protocol that

incorporates both specification of Class0 and Class1

In addition, V-Mart is planning to enhance mobility to its existing RFID tag

readers by implementing RFID-enabled forklift. These readers will have the

capability to read the

tags on the pallets and transmit data through the RFID network, which would

help the users to be better informed about the supply-chain data.

Q.7 HOW EFFICIENT IS SUPPLY CHAIN WITH RFID?

The various components of Supply Chain are: Procurement, Distribution,

Logistics and

Inventory Management.

Since the core of V-Mart business is perpetual improvement in its Supply Chain

implementation, it believes in “no-compromise” on implementing an innovative

IT infrastructure and strong communication system as they are they the important

links in the chain for a smooth functioning of the complete system.

V-Mart tapped RFID technology with an aim to increase the efficiency of its

supply chain. This is because RFID implementation will enhance transparency of

their supply chain and hence will help them minimize cost and labor and will

strengthen inventory control. According to Venture Development Corporation,

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“With V-Mart selling over $45 billion worth of goods in fiscal year 2013, a 1%

improvement in the out-of-stock issue could generate nearly $2.5 billion in very

profitable sales”. In addition, a study by Cohen at Wharton chalks out the

difference between the existing inventory management and the RFID enabled

supply chain.

“In current systems, you may know there are 10 items on the shelf, and that

information is compiled in an enterprise planning software system. With RFID,

you know there are 10 items, their age, lot number, and expiration date and

warehouse origin. "It's like knowing there are 1,000 people in a city," says Cohen.

"With RFID, you know their names."

From the above studies it indicates that employing RFID technology will help in

implementing a seamless supply chain and hence yield profits.

“V-Mart has been able to restock RFID-tagged items three times as fast as non-

tagged items.” In addition to improving the availability of in-stock merchandise,

V-Mart aims to reduce the practice of manually placing the order and has achieved

10% reduction in the case.

Q 8 WHO ARE THE SUPPLIERS FOR THE V-MART?

Some of the major suppliers of V-Mart are:

Gillette, Hewlett-Packard, Johnson & Johnson, Nestle, Purina Pet Care Company,

Procter & Gamble and Hindustan Unilever etc.

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Q 9 WHAT ARE THE CHALLENGES FOR THE SUPPLY CHAIN
MANAGEMENT?

Supply Chain Management Challenges

V-Mart plans to bring its global supply chain capabilities and expertise to Delhi

while customizing them to the unique requirements of the market. Another area

that it intends to focus on is local sourcing of goods in addition to sourcing

globally through its international operations. V-Mart’s fully owned logistics arm,

would look after the V-Mart retail venture. In order to build a supply chain

adaptable to the local market, it closely studies the various logistics providers. A

solid supply chain is imperative to facilitating the growth and success of retailers.

The fact that J&K‟s underdeveloped physical infrastructure put significant

limitations on the supply chain and is one of the key challenges of entering market.

Overall, the quality of roadway infrastructure, the quality of trucking and the

adoption of modern technology throughout the supply chain to the producer

continues to pose significant challenges to the development of supply chain

capabilities in J&K. Furthermore, the prominence of middlemen in the retail and

wholesale industries had been a key characteristic of India’s retail sector. V-Mart’s

proposition is to cut out the middlemen and connect producers directly with the

retailer. It wants to work closely with suppliers to significantly enhance

productivity, packaging and quality management. Linking the producer with the

retailer is also expected to eliminate several stages in the supply chain, thereby

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reducing the inefficiency of the industry’s traditional supply chain. This will be

aligned through the partnership between V-Mart and local suppliers.

[61]
 CHAPTER 5

SUMMARY AND CONCLUSIONS

At present, V-Mart is at a nascent state of implementing RFID. In addition to

strengthening the Supply Chain, the largest retailer is also looking into different

dimensions where RFID can be helpful. As a pilot test, V-Mart is working on the

data collected by RFID to analyze the consumer behavior.

According to Venture Development Corporation, the major implementation

milestones of RFID at V-Mart are to expand Regional and domestic

implementation of RFID throughout 2014. These include Regional Distribution

Centers, Grocery Distribution in India. And, by 2015, V-Mart aims to mandate

RFID implementation for all its suppliers. V-Mart is looking forward to expand

all over the country using the expertise of its partners and plans to open 15 outlets

in its wholesale format by end-2014 . The Company currently operates many cash

and carry stores in the country at Amritsar, Ludhiana and Jalandhar and is catering

to the small and mid-sized business with the wholesale cash and carry service.

This partnership also sees the opportunity for growth hoping that India‟s

government will lift restrictions on FDI so that it can open more and more stores

in India and be able to cater to the public directly. V-Mart not only benefits the

firms but is also working towards the improvement of the retail industry by

improving the supply chain management and is helping in the economic

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development of the country by helping the farmers and small business. V-Mart

can bring in revolutionary changes to the Indian Retail Industry.

In their strategy the logistics platform is a driver for growth, where acquisitions

that have logistics synergies are prioritized. From a pure logistics viewpoint

logistics are not optimal because of a very large, broad, and overlapping

assortment of driving costs in warehousing and also costs that are tied up capital

and administration. The logistics practice is thus not aimed at minimizing the

wholesaler cost but in providing the company with a strategic leverage.

This is supported from a centralized and very flexible logistics platform that

makes it possible to replenish individual stores in a country as well as countries or

cities with multiple stores.

In the study of V-Mart, this picture is confirmed with functional costs, mainly

wholesaling costs, in terms of the logistics network. SCM and logistics are tools

to reduce costs in wholesaler warehouses, for example, and t o reduce logistics

costs in the interface between the wholesaling function and retail stores.

The results of the study suggest V-Mart’s process of procurement involves

reducing its purchasing costs as far as possible so that it can offer best price to its

customers. The company procures goods directly from the manufacturers,

bypassing all intermediaries. The fast & responsive transportation system and

the distribution centers in Delhi are well coordinated. The truck fleets enable

[63]
shipping of goods from distribution centers to the stores within 2 days and

replenish the store shelves twice a week. This indicates a prompt and quick

response to the logistics management of the V-Mart stores in Delhi.

It is clear from the data that V-Mart ensures that unproductive inventory is as less

as possible, by allowing the stores to manage their own stocks, thereby reducing

pack sizes across many categories and timely price markdowns. V-Mart makes

full use of its IT infrastructure to make more inventories available in case of items

that customers wanted most, while reducing overall inventory. By making use of

Bar-coding & RFID technologies, different processes like efficient picking,

receiving & proper inventory control of the products along with easy packing

and counting of the inventories is ensured.

Focus and limitation

The study scope is limited by focusing on a single case which is V-Mart

Convenience Stores in Delhi. Furthermore, this study, mostly focused on the

process from V-Mart distribution centers to its stores. Moreover, the researcher

specifically framed the research between Distribution Center (DC) and the store.

The selected case study is a convenience store chain, V-Mart in Delhi; therefore,

it may mainly reflect norms and practices considerably within the firm’s

environment. On top of that, the convenience store management policies on

certain areas normally differ at each location since they are tightly tied to local

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customer needs. It could then give a deviated data from the retail convenience

store in other firms or in other states.

EXPECTED CONTRIBUTION OF THE STUDY

Retailing is a significant part of economic activity with wholesaling and retailing

value- added. The major goal of the retail industry or retail merchandising system

is to influence possible consumers to purchase a particular products assortment at

a particular retail store. Retail activities turn out to be one of the significant themes

playing the role in supply chain management and logistics.

The management task is concerned with the element of distribution mix (for

example storage facilities and communication, etc.), which have to be integrated

for successful retail distribution. This research focus on the mentioned

information will surely affect retail business in one way or another as it will be

able to highlight the day-to-day problems faced by the staff and the management

in supply chain and logistics. The study

will also contribute towards suggesting various measures for improving the

present supply chain and logistics management scenario in Delhi stores in

particular.

DIRECTIONS FOR FUTURE RESEARCH

Moving on to the next research topic, the researcher see the connection between

supply chain management, enabling IT, and retail management tightly tied

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together. To be able to generate sales in retail industry, knowing to response to the

market is crucial. Moreover, the succession in retail also depends on the sales per

slip which is helped through the category management perspective.

Efficient Consumer Response or ECR puts forth those mentioned criteria believed

to be the key success factors to retail business. However, pursuing ECR would

need a help in logistics and distribution systems. Again, the connections to the

supply chain management also have implication to the application of ECR.

However, the evidence of success case of ECR is controversial. Some firms can

achieve and benefits enormously, while some are failed. While retail industry

welcomes ECR techniques, self-estimation of firm’s capabilities should be

identified before embracing ECR to be implemented. The further research on the

key success factors of bringing up as well as the failure case of implementing this

program will be worthy to investigate.

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 Chapter 6
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 Chapter 7

INTERVIEW QUESTIONS ON

“LOGISTICS MANAGEMENT IN RETAIL INDUSTRY: A CASE STUDY

V- MART RETAIL LIMITED IN DELHI”

Q-1 What has made V-Mart Leader in Supply Chain Management?

Q- 2 Explain V-Mart’s use of innovative IT tools and IT-enabled processes

supply chain.

Q-3 Analyze the retail industry through Porter’s Five Forces.

Q-4 Why is it lucrative for V-Mart to offer Cash-and Carry services with its

partners? Q 5 How do you describe Supply Chain Management at V-Mart?

Q-6 When did you initiate plans to employ RFID technology in the supply chain?

Q-7 How efficient is supply chain with RFID?

Q-8 Who are the suppliers for the V-Mart?

Q-9 What is the challenges for the supply chain management in V-Mart?

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[71]