Procurement for Departmental

Stores
- A study on Shoppers’ Stop & Akbarallys’
 Objectives
• To understand Procurement pattern of shoppers stop
 One of the fastest growing departmental stores
 One of the only stores to implement ERP and Supply chain
management
• To Understand the Procurement pattern of Akbarally’s –the oldest
departmental store in Mumbai
• To compare and contrast the 2 models and identify problem areas
• Give suggestions to Akbarally’s by benchmarking Shoppers’ Stop

Methodology
• Interview were conducted of approximately 70 minutes each with the
following designated individuals
 Purchase Manager
 Merchandise manager
 Logistics Manager
• References
 Mr.Devdas- Logistics Head – Shoppers’ Stop
 Mr.Gopal – Head Men’s Division – Shoppers’ Stop
 Mr.Yunus – Purchase Manager – Akbarally’s
Shoppers’ Stop
I. Shoppers Stop Profile
Setting up shop in 1991 with its flagship store in Andheri, Mumbai, and
Shoppers’ Stop is a member of the K. Raheja Corp. of Companies. Shoppers'
Stop is the first retail venture by the K. Raheja Corp. Promoted by Mr. Chandru
L. Raheja, Mr. Ravi C. Raheja and Mr. Neel C. Raheja, the K. Raheja Corp. have
been leaders in the construction business for over 48 years.

With its wide range of merchandise, exclusive shop-in-shop counters of

international brands and world class customer service, Shoppers' Stop brought
international standards of shopping to the Indian consumer providing them
with a complete shopping experience.

India - 2000 & Beyond:

Expanding its operations to Bangalore, Hyderabad, Jaipur, Delhi, Chennai,
Ghatkopar, Pune (Mumbai) and most recently Calcutta, Shoppers' Stop is today
recognised as India's premier shopping destination. It was awarded the "Most
Admired Apparel Retailer" at the Images Fashion Awards 2000. With a
customer entry of about 20,000 customers a day, a national presence with over
3,00,000 square feet of retail space and stocking over 450 brands of garments
and accessories, Shoppers' Stop has clearly become a one stop shop for all
customers.

Customer Profile
Shoppers' Stop's core customers represent a strong SEC A and B+ skew. They
fall between the age group of 16 to 40, the majority of them being families and
young couples with a monthly household income above Rs. 10,000.

Range of the Merchandise

The stores offer a complete range of apparel and lifestyle accessories for the
entire family. From apparel brands like Provogue, Colour Plus, Arrow, Levi's,
Scullers, Zodiac to cosmetic brands like Lakme, Chambor, Le Teint Ricci etc.,
Shoppers' Stop caters to every lifestyle need. Shoppers' Stop has also
introduced its own line of clothing in the classic, value classic and value fashion
segments. These are LIFE, STOP, KARROT and KASHISH that are available
across different categories. The merchandise at Shoppers' Stop is sold at a
quality and price assurance backed by its guarantee stamp on every bill.

Shoppers’ Stop has 4 division the Men’s apparels, ladies apparels, kids wear
and the Non-apparels. Following is their contribution to the turnover.
Men’s 43% of sales
Women’s 18% of sales
Kids 8% of sales
Non-Apparels 31% of sales
It operates with 90 departments handling around 450 brands managing a
combined footfall of over 20,000 customers each day.

Shoppers’ Stop Motto: "We are responsible for the goods we sell".

Top Management
Shoppers' Stop is headed by Mr. B.S. Nagesh, Customer Care Associate,
Managing Director & CEO. The company has recruited top line professionals
with hardcore retail experience from the leading companies in India and the UK.

Hierarchy in the logistics department

Director Buying and Merchandising

Supply chain management head

Manager logistics and distribution

Distribution Coordinator (link between SS and DC’s)

Four Distribution Centres

Operating costs
The logistics cost equals to 1% of the total turnover and includes the follow
expenses Warehousing (OH, rents, staff, facilities), Transportation, Handling
charges, Allocated Expenses, Re-packaging.

SWOT Analysis of Supply Chain

o Strengths – Suppliers, Efficient logistics, partners
o Weakness – Less control over inbound logistics
o Opportunities – Floor ready, Ready to sell garments
o Threats – Competitors, rapidly changing systems

II. Buying Channel

 Manufacturer

Mumbai DC Delhi DC Bangalore DC Calcutta DC

6 stores 3 stores 3 stores 1 store

Shoppers stop has 4 regional distribution centres. Previously each store had its
warehouse(DC) but that turned out to be a wrong strategy as the flexibility was
being affected and costs were building up. There was also a lot of inventory pile
up in each of these stores and hence added to cost in inventory and
transportation from one store to another to transfer excess inventory.

III. Procurement Strategy

Shoppers Stop has Centralized Procurement and no regional buying, the
following are the benefits of centralized procurement:
• Target profile same across the country
• Better Cost Controls
• Better Bargaining Power
• Better inventory management
• 100% inventory control
• 100% tracking of inventory – (what’s selling what’s not?)

IV. Buying Process

Purchase Order Sent to the manufacturer

Delivery Authorization

Manufacturer Dispatches merchandise to the DC

DC’s check the merchandise and confirms through its systems

Accounts Department receives the confirmation DC transports weekly requirements to the store

Payment to the manufacturer Stocks updated in-store

Pre-retailing team displays the merchandise

Illustration

Purchase order for 5000 shirts of Arrow

Purchase order is a guarantee from shoppers stop that they will buy but
supplier cannot dispatch goods on PO. PO helps is reducing inventory cost as
the goods are ready and stocked at the manufacturers place, so no inventory
pile up at the DC’s or stores. 4 purchase orders are sent by the buying and
merchandising manager for 4 DC’s.
For eg Vendor ABC gets 4 Purchase orders from shoppers stop, for four DC’s
Mumbai DC 2500 shirts catering to 6 stores
Banglore DC 1000 Shirts catering to 3 stores
Delhi DC 1000 shirts catering to 3 stores
Calcutta DC 500 shirts catering to 1 store

Delivery Authorisation for 500 Shirts

Delivery Authorization is an international system followed by all major retailers.
DA is prepared on the projected sales for that week. So if the PO (6monthly for 2
seasons) for all 13 stores is 5000 and for a particular week shoppers stop sells
500 shirts, it will send a DA for 500 shirts. Thus with delivery authorization
system Shoppers Stop can place order according to the demand assessment
with the condition that it would pick up a fixed amt every week. Thus it doesn’t
have to stock goods at his place and block money in inventory. It also helps in
better inventory management as it is based on weekly projections. It is an
assurance for both the Shoppers Stop as well as the manufacturer.

Manufacturer dispatches the weekly requirements to the 4 DC’s according to

the DA’s

DC’s check the details (date, number) of the product and match it with the
invoice. Anything not matching even if it is one piece is rejected. If accepted it
causes a mis-match between the Purchase Order and Delivery Authorisation.
Hence the PO has to match with the Invoice carried by the Manufacturer.

Accounts department receives confirmation in the system for the pieces

physically accepted. The accounts department can make payment that very
second, in which they receive confirmation. This process is so stable and fast
because of being connected and fully integrated.

Once the confirmation is sent by the DC, the stocks are transported to the
stores. Dispatches are always made early morning. There is a PRE-RETAILING
Team that receives the stocks and their duty is to put them on display before
10.30 when the store opens, so that when the customer enters everything is on
display.

Stocks are updated in the store

V. Warehousing
o Regional Warehouses
o No in-store warehouses
o Number of warehouses - 4
o Location – Metros (Mumbai, Delhi, Banglore, Calcutta)
o Floor Area – 20,000 to 22,000 sq.ft
o Transportation from warehouse to Store – Done by the DC’s

Distribution centers
Distribution centers for S.S are 100% outsourced to another company. Each of
the distributions centers has a floor area of around 22000 sq.ft.. The DC is
divided in to zones and1000 based on the brands or vendors. When a delivery
comes in the person in-charge feeds in the details like merchandise type, brand
name, size, color, batch number, date, etc. the system give him a ticket
describing where the merchandise has to be kept. It gives a detailed description
of the pile and rack number. Thus, even if the person is unacquainted with the
slots of the DC, the system will tell him where to keep the merchandise. The
systems are thus not dependant on any person and can work independently.
This whole activity is outsourced to another company who acts as a internal
supplier for SS. The delivery transportation from the DC to the stores is the
DC’s task.

Advantages of having outsourced the activities

• Cost benefit
• No Labor problems – handling labor unions
• No liability for pilferage by own staff and damages
• Specialized expertise of the company
• Dictate terms to the outsourced company – 24 hours delivery, etc

VI. Inventory Management

SS has a system of checking stocks on a continuous basis. There are 90
departments at SS each day one department is frozen after closing hours and
the staff is made to scan the tags and feed in the stock levels in the system. The
staff is completely unaware of the stock levels according to the system. The
system then compares the actual to the customary and gives a variance reports.
Thus there is stock matching done everyday and the entire store completes a
cycle in 3 months. That means SS conducts 4 cycles of stock taking each year.
This has helped them get the pilferage to its minimum. As each day is
accounted for and there is a complete match on a constant basis.
In the day inventory levels get collated store wise. While in the night this
information gets polled in the server and is integrated at the national level.
Thus, each day the information on stocks available for that day and at which
store is made accessible to each and every store.

Every day Auto Replenishment:

Shoppers’ Stop has determined its minimum stock keeping units and as soon
as the stocks in the store touch that level, the DC is triggered to send the
replenishment. Thus the system automatically checks for stock out and
replenishes it. The lead time for replenishment is 1 day. Every night data is
collated and a store-wise list of merchandise is generated. During the day the
dispatched is made ready and the next day morning 6.00am the truck leaves
reaching the store in an hours time. The Pre-retailing team display’s the stock
and by 11am when the store opens their work has to be complete.

Stock keeping Units

Stock keeping units are determined on the basis of moving averages. The
system generates averages of the required quantities for the last two weeks. As
the process is concurrent to the market conditions they go up with the demand
and fall with the slump. The minimum units are fixed which are based on the
past lows and highs.

How does the organization handle product discrepancies?

Saturdays and Sunday’s account for 40% of the week’s business hence most
fluctuations are expected on these two days. Inventory is stocked up on Friday
based on the weekly forecast. But demand is never really unpredictable at
shoppers stop. product discrepancies takes place very rarely.

VII. Sales Forecasting

Sales forecasting is done for each brand then built up to the category then
the division then store and then the entire organization. For example the
men’s division head decides how much business Arrow can do this year and
thus similarly for its other brand similarly the other division heads build up
the figures for each brand and then each division arriving at a common
figure at the top. After further deliberation and discussion with the CEO and
Division head the company finalises its sales forecast.

Sales forecast for the spring summer season (1st April to 30th September) is
done on 1st October, six months in advance. This sales if broken down
division wise and further brand wise.

For Example:
 Shoppers’ Stop has targeted a business of 1crore with Arrow for its Andheri
branch for the year 2003-04.
For its spring summer business it targets a sale of 50,00,000
• Season – 50lakhs
• Monthly - 8.33 lakhs
• Weekly – 2.08 lakhs
They keep a cover of 7 weeks hence need a stock of 14.56lakhs.

On an average a Arrow shirts Costs Rs.1000/- and a Arrow trouser costs

Rs.1200/-. And the ratio of shirts to trousers is 70:30
That means it needs to stock shirts worth 1.46lakhs and trousers worth
0.62lakhs of trousers for a week. This is equivalent to 146 shirts and 52
trousers. Shirts are in the ratio of 1:2:3:1 for sizes 38:40:42:44.

At the store Arrow shirts are kept at their average required units, that is 2 of
size 38, 3 of 40, 4 of 42 and 2 of 44, and trousers too in their respective
ratio. As soon as one shirt of arrow of size 38 is sold, the system alerts the
DC to send one shirt of size 38 of arrow for the specific style and option.
Thus the stocks are automatically replenished.

The DC also follows the same system. The DC stocks with a cover of 7 weeks
so as soon as its stocks are at its minimum levels it sends a DA to the
manufacturer to dispatch the order already kept ready for them. Shoppers
stop give a 10 days delivery time to the manufacturer. If the good don’t reach
in 10 days the order is cancelled. Thus they are very stern on the execution
of their policies.

VIII. Payment Models

Payment Systems: Shoppers stop uses 3 models for payments.
1. Outright Model:
In this model the company picks up the total merchandise on the payment of
cash or on credit terms depending on the terms decided in the contract. They
buy on outright 100% payment depending on the normal credit terms of 10 to
15 days. The main advantage in this model is they can avail discounts but if the
stocks are unsold they incur losses as the last stage is that they have to be sent
to charity!

2. Consignment Model- In this case the company pays only for the number of
products they sell & the unsold are given back to the vendor. Pay only for Sale.
They have this model with Arrow Shirts, wherein they put arrow shirts on
display but pay only for the ones that are sold and the rest are returned. The
benefit here is, no inventory cost and no risks, but the margins are very low in
this model.

3. Concession Model- In this case space is given to another co. for opening a
store within S.S something like shop in shop. EG: Nali saree. The advantages
are Fixed rentals and commission but it suffers from low margins.
IX. Systems
o Secondary (Update Records) – ERP – JD Edwards
o Merchandise Management system and front end
o Warehouse Management system
o B2B website - S.S has around 400 vendors supplying around 450
brands. Most of the vendors are connected to S.S B2B site. Each
vendor can check the stocks and movement of his merchandise.
They can track which product is selling best in which city and
which one is not. The vendor need not call SS for information
when all that he wants is available by click of a mouse
Realizing the role of IT way back in 1991, Shoppers' Stop was among the first
few retailers to use scanners and barcodes and completely computerized its
operations. Today it is one of the few stores in India to have retail ERP in place
which has now been integrated with Oracle Financials and the Arthur Planning
System, the best retail planning system in the world. With the help of the ERP,
they are able to replicate stores, open new stores faster and get information
about merchandise and customers online, which reduces the turnaround time
in taking quick decision. Shoppers' Stop has also set up a WAN system to link
all units and distribution centers and facilitating seamless operations across all
the outlets.

Supply Chain Management

Realizing the importance of distribution and logistics in ensuring the availability
of merchandise on the shop floor, Shoppers' Stop has streamlined its supply
chain. The company has developed process manuals for each part of the
logistics chain. These modules include vendor management, purchase order
management, stock receiving systems, purchase verification and inventory
build up, generation and fixing of price and store tags, despatch of stocks to the
retail floor and forwarding of bills for payment. The Company now has an off
location warehouse and has also streamlined the layout of its Distribution
Centre. Shoppers' Stop has also tied up with Sembcorp Logistics (P) Ltd. as its
logistics partner.

X. Transportation
o Manufacture to DC – Manufacturer handles
o DC to Store – DC handles
o DC to Vendor (Reverse Logistics) – AFL
o DC to DC – AFL
o Internal transfers between Stores - AFL
o Modes of Transportation - Tempos

Reverse Logistics
Reverse logistics comes in to action for 3 reason return due to
• Manufacturing defects
• Laying defects
• Consignment stocks – Stocks purchased on consignement basis need to
be sent back if they are unsold
 • Line defect- Here the no. of complaints are more & the problem is also
same across all the sections so the product line itself is withdrawn from
the stores across the country. For eg. There is a constant complaint for
arrow’s blue checks shirt. The entire stock for blue checks in all the sizes
is removed from the store and sent back to the manufacturer.

Process for Reverse logistics:

1. Physical transfer of goods from stores to DC’s
2. DC makes RTV(return to vendor)
3. System Debits the vendor

XI. Future plans

Shoppers' Stop aims to position itself as a global retailer. The company intends
to bring the world's best retail technology, retail practices and sales to India.
Their goal is to increase sales and cross the Rs 800 cr. mark by the year 2005-
06. To achieve the set target, they plan to expand their family by opening 4 new
stores every year. The latest addition to their family is the Calcutta store.

Internalize in-bound logistics to exercise more control and efficient planning.

Today the manufacturer takes 1% as cost for transport which may or may not
be the actually cost. Shoppers Stop ran a pilot and concluded that there are
definite cost advantages and the cost can be lowered to as low as .80% if done
internally.

IT system for reading manufacturers tags: Shoppers stop has to re-tag all the
merchandise because their systems cannot accept manufacturer’s codes. This
involves re-packing expenses, expenses for tags and plastic holders, labor cost,
etc. All these cost could be completely done away with if the system could
understand the manufacturer’s codes. SS is in the process of buying a system
which reads these codes.

The Reasons for Sales and Markdowns

Sale is the best method to increase sales volume or to get rid of the excess stock
piled up. But the reasons for Shopper’s stop’s sale are different.

Wrong predictions of fashion:

Fashion is highly unpredictable! Knowing what a SEC A customer of 25 years of
age would want to buy six months from now is rather a difficult task. And this
task lies in the hands of the Buyer and the Merchandiser at Shoppers Stop.
They are together responsible for the bad performance of a certain style or
option. Sales at Shoppers are usually to get rid of this failed merchandise or
out of fashion styles.

High sale forecasting:

Sales forecast is rather aggressive than conservative. Sales forecast are
purposely kept higher than achievable to push sales and keep the pressure on
the employees. Thus it is not realistic and the deviation is expected. Shoppers
stop needs to have a more realistic sales forecast and it their aggressive selling
strategy should not be only based on stocking up the stores but by concurrent
promotions and programs to make customer buy more and have a higher rate
of conversion.
 I. Akbarally’s Profile
One of India's oldest retailers –more than 100 years old company. Akbarallys
has been a part of the retail landscape for a long time, with the Khorakiwala
family at the helm. The management style has been conservative all along and
the core principle on which it reaches out to its customers is trust. The format
so far: a department store that has evolved as a family store over decades, with
only three stores in Mumbai spread across 35,000 sq. ft. with each store on an
average attracting 2,500 customers a day.

• Number of stores: 3

• No. of departments : 13

• SKUs: Around 12000 in each of the stores.

• No. of employees: 150

• Average footfalls:
o 400-600(weekdays)
o 1000-2000(weekends)

Akbarallys operational structure

They have a corporate office, which takes care of purchase, finance and human
resources. For day-to-day management, they have store managers. They also
have between 10,000 and 12,000 stock-keeping units in each of our stores.

Hierarchy in the logistics department

CEO (Mr.Khorakhiwala)

Purchase Manager

Merchandise Manager

Store Manager

Department Manager

Akbarallys positioning
Positioning is the key to communication. Akbarallys is a family store, where
they can satisfy the needs of the entire family. They have everything, from
apparels and gifts to cosmetics, appliances, electronics, homeware,
kitchenware, etc.

Akbarallys customer profile

Their departmental stores cater to the upwardly mobile socio-economic class
(A1/A2/B1) of society.

II. Buying Channel

Manufacturer/Distributor

Godown Godown
Godown (Chembur)
(Fort) (Crawford arket)

Akbarally’s (Chembur) Akbarally’s Akbarallys

(Fort) (Crawford Market)

Akbarally’s Purchase manager is approached by the manufacturer or

distributor who wishes to stock his product at the store. The Purchase Manager
and the Merchandise Manager collectively take the decision of purchasing or
not purchasing the product.

Once they take the decision of purchasing the goods, the manufacturer
transports the goods to the store warehouse. Payment is made only after the
goods reach the store.

III. Procurement Strategy

Akbarally’s follow decentralized procurement. Merchandise is purchased as and
when it’s required. Most of the store procurement is from local players hence
they procure just in time. Merchandise is transported to the store warehouse by
the manufacturer or distributor following which the merchandise I relabeled
and stocked. The required quantity for sale is stocked at the display counters

Akbarally’s does not believe in bulk buying. They buy as per their need. Thereby
saving on capital blocked in inventory and lower warehousing costs. They buy
as per their requirements and hence avoid over stocking.

Cost Benefit:
• Lesser space required to store inventory
• Lower storage costs
• Low investment in a warehouse
• Low capital investments in stocks
• No over stocking
• Inventory management works on a kind of JIT system
Dis-advantages
 • Loss of sale due to stock out
• No benefits of bulk buying – no discounts and credit period advantages
IV. Buying Process
Manufacturer Approaches Purchase Manager

Purchase Manager & Merchandise Manager’s collective decision

Merchandise Supplied to the store warehouse

Warehouse Checks and confirms

Payment to the Manufacturer

V. Warehousing
Akbarally’s follows a decentralized warehousing strategy. Each store has its in-
store warehouse and they do not follow the hub system of warehousing.

Benefits of in-store warehouse

• Easy access
• No internal transportation cost between warehouse and store
• Low levels of stock at the display counter, providing more area for
different merchandise

Disadvantages
• High warehousing costs
• Weak logistics systems
• High cost of internal transfers incase of discrepancies

VI. Inventory Management

• The Economic Order Quantity is normally based on the past trends and
experience.
• When to replenish is decided by the Department head in the store.
• This decision about when and how much to replenish taken by the
department head after consultation with the individual counter sales
persons who after working at the same counter for some period become
aware of the usual momentum of a particular merchandise.
• For e.g. if it is observed that 6 units of betel fixed line phone brand sell in
a month the stock levels for betel fixed line phones are maintained at 6
units and accordingly the replenishment is done.
 • In peak seasons like festival time, the stock replenishment is higher as
compared to other times. That is also decided on the basis of past trends
of festival seasons.

Replenishment Process

Counter Staff reports requirement

Store Manager prepares a memo

Purchase Manager checks

PM places order with the Manufacturer or Distributor

Distributor sends merchandise to the store

VII. Payment Models

• Outright Model:
In this model the company picks up the merchandise on cash payment
basis. The credit period given by the manufacturers and distributors
varies from product to product. Akbarally’s enjoys as high as 60day
credit also. But the normal terms are 30 days or 60 days, depending
upon the merchandise and the relations with the distributor. The main
advantage in this model is they can avail low prices and discounts but if
the stocks are unsold they incurr losses as the last stage is that they
have to be sent to charity.

VIII. Systems
Systems at Akbarally’s are primary level record keeping systems. Records of
each transaction are maintained and inventory check is done when the
management asks for it. Systems are not use efficiently to know the sales
trends and the bottlenecks. Hence we can say that IT is not used very efficiently
in the procurement process.

IX. Transportation
• Manufacturer/distributor to the Akbarally’s Warehouse –
Manufacturer/distributor’s responsibility
 • Warehouse to Store – In store warehouse so no transportation
costs
• Inter Store Transfers – Courier

Communication between suppliers and the stores:

The communication is through:
• Phone
• Fax
• Email

X. Future Plans
By 2004 they will be opening another 20 mini supermarkets and three additional
departmental stores.

At the store level, Akbarally’s is becoming more fashion oriented to attune itself
to the changing customer profile and to attract the younger generation which
has a relatively higher propensity to spend. Thus, cosmetics and health-related
products are being given more importance. The format itself is being revamped,
as Akbarally’s perceived the need to give people more reason to step into its
stores. If Pyramid decided that it wanted to have a supermarket in its store to
offer convenience to customers, then Akbarally’s, too, has done that. In fact, it
has gone one step ahead and added a medicine corner, too, at the flagship store
at Fort. Ironically enough, Akbarally’s, years ago, had both these formats in its
store but decided to discontinue them in 1992, because they were not
considered appropriate in the mix.

Left to itself, probably Akbarally’s would prefer to remain the same. The
company has been facing the issue of expansion and the reason why it has not
expanded beyond the three stores it has till now is the cost, when doing it
alone. Going with someone else has been an option and it has been getting
offers, especially from outside parties to set up a store in partnership. It has
been cautious on this front as it is quite wary about something going wrong and
affecting its trusted image. But a changing market means that Akbarally’s has
to remodel its strategy so that in the next five years, it can hold its own in what
is certain to be a vastly different retail landscape.
Problem Identification
• No bulk buying benefits
• Akbarallys’ buying from distributors:
• Loss of sale due to stock out
• Pilferage in the warehouse due to bad handling, shoplifting
• All of Akbarally’s warehouses are at Prime Location, thus blocking
premium area and lowering per.sq.feet sales. The area allocated for
warehouse can be made available for merchandise display. Thus
increasing the sku’s and options for customer, leading to more foot
falls.
• The warehouses being at the prime location demand high rentals
and capital investments.
• Akbarally’s has 2 warehouses in a area of 10 kms.
• Once the merchandise reaches the in-store warehouse, the
merchandise is labeled and stocked. There are people appointed for
labeling and there is a cost attached to this re-labeling.

Suggestions
• Buying Channel: An improvement in the buying channel is the
need of the hour. Akbarallys needs to have better systems to
forecast its sales and thus avail bulk buying. They need to buy
directly from the manufacturer to avail better prices and no
channel costs.

Manufacturer

Central
Warehouse

Chembur Fort VT

• Centralized Warehousing: in the form of hub system would lower

real estate cost and instill better efficiency. The combined stock
levels maintained will be lower to what is being stored in each store
currently. Low stock levels mean low inventory cost and low
 pilferage thus making warehousing more efficient. If the
organization plans to grow, they can outsource the warehouse
operations once its operations are stable.
• Outsource Logistics: Akbarally’s can outsource the logistics
between the warehouse and the store to ensure higher logistics
efficiency level. At any point deviating from its core business of
retailing would lead to opportunity loss. Outsourcing also instills a
commanding position thus making sure that there is 99%
efficiency level. Damages in transit and carrying cost would now
become the logistics partners look out.
• Buying from Manufacturer: as explained earlier, Akbarally’s
needs to buy from the manufacturers rather than the distributor to
avail better pricing and bulk buying benefits. Akarally’s can also
ask its manufacturers to do the labeling thus saving the time and
cost of labeling each and every sku.
• Inventory Management system: Better inventory management
systems are the need of the hour. Simple need based buying and
first level record keeping systems are not growth oriented.
Akbarally’s needs to develop a second level system which helps
them in better inventory management. One of the major benefits
will be tracking merchandise and knowing what’s selling and what’
not. The other being prompt re-order level, thus avoiding stock
outs and loss of sale.