Business Process Management

OPTIMIZING THE PROCESS IN KIRANA STORES

Submitted By: Syndicate-9 Name Anand Pikle Aseem Jain Priya Negi Rohith Raju Sunil Kumar PRN (11020541082) (11020541085) (11020541110) (11020541143) (11020541130)

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TABLE OF CONTENTS

Topic 1. Introduction 2. Case built up 3. Objectives of the project 4. Clients Study 5. Process Identification 6. Our Methodology 7. Processes involved 8. Process flow chart 9. BPMN DIAGRAM As is process 10. Proposed Changes 11. Benefits Incurred 11. BPMN for the to be process 12. Worksheets 14. Conclusion 15. References

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Introduction
Process is a sequence of interdependent and linked procedures which, at every stage, consume one or more resources (employee time, energy, machines, money) to convert inputs (data, material, parts, etc.) into outputs. These outputs then serve as inputs for the next stage until a known goal or end result is reached.

Case built up
The Retail scenario in India The Future of retail sector in India is swerving- on one side organized retail is marching into life of urban consumers, while on the other our own neighborhood kirana stores are resisting fiercely with their existing strong foothold. India today is at the crossroads with regard to the retail sector. A shift between organized and unorganized retail sector is evident, which has led to a number of speculations on the fate of Indian retail sector. While the role of organized retail sector in growth of economy cannot be denied, but one thing is also of extreme importance that unorganized retail format is a support to a large chunk of population- providing direct employment to a large population. With the change in the dynamics of Indian consumer it is imperative for unorganized retail sector to restructure itself in order to withstand the increasing competition and to meet consumer expectations by moving with trends. About the Kirana stores Kirana stores are owned and operated on a small scale, usually in a space of 500sq.ft. or less. These places are easily available within residential localities. Kirana stores are operated by the owners themselves and thus provide the benefit of low operational costs. They also give customized service and also have good relations with the customers. They have better understanding of the customer preferences. They also provide services like the free home delivery and since they maintain good emotional relationship with the customers they sometimes give the goods on credit. The customertrust ratio is very high. The billing is also very fast when compared to the supermarket since there are large Queues in the supermarkets. Growth of Organized retail sector Organized retails stores coming up like Big Baazar, Vishal Mega mart, Reliance fresh and many others. Customers find it convenient since all is available under one roof. Supermarkets have the benefit of economies of scale over kirana stores. These benefits can be transferred over to the customers and hence the price of goods is reduced. They also eliminate the wholesalers from the chain and can provide benefits of saved margins. Supermarkets often offer more variety to customers. Moreover, it is likely to receive the newly launched products earlier than kirana stores. Also organized
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retail have experts from the company explain the usage and care of a particular product to its potential buyers. Also large promotion is done by the big retail stores like the BigBaazar, Reliance Fresh, Vishal Mega mart and also have many promotional offers like Sabse sasta din and Maha Bachat scheme. Also with plans of FDI investments in Retail sectors and the entry of major players like the Walmart and the Carrefour in India it would severely affect the local kiranas.

Objectives of the project

The objective of the project is to empower the Kirana stores (unorganized retail stores) to compete with the threat of increasing organized retail space. Thus to compete with the well organized and flourishing retail mega stores it is necessary for the local Kirana stores to adapt and change according to the customers requirements. They need to be agile and flexible and this requires changes in the processes. This involves, Automation of the process (Inventory management and Supply chain management) Online ordering Cartel formation CRM

Clients Study
Thus it is necessary to find the process adopted by the Kirana stores, analyze them and find out solutions in order to improve the processes. To find out the problems faced and the processes we visited the Kirana stores in the Pune area OM SUPERMARKET In om supermarket which is located near takshzila coaching centre at model colony near SB road is one of the most busiest store around that place and there is no another kirana store competing around that place. It has a lot of co llege students of Symbiosis going there for their snacks and other goods. They have a very good rapo along with the residents around that place

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and they even have an account which they maintain there so it would be convenient to take groceries when they do not have cash at that moment and they can pay later. They offer wide range of varieties all the way from stationary to all the food products and even toiletries, when we spoke to the owner of the shop he said the main reason they make a good business around the place are: However he said that with the growing organized retail sector he is losing on customers and also that the amount for which people shop has reduced (e.g Customers used to buy goods for Rs 500 and now they shop for only day to day items and it reduced to Rs. 100). Thus he was very much worried about losing customers and decreasing sales and profit Jhamwer Groceries This location of jhamwer groceries is at hanuman nagar which is near symbiosis law college SB road, there they get their products from a whole sale Market directly using a middleman, the middleman takes care of all the groceries around that place providing them the same products from different dealers. Basically the place where he buys it from is budhwar peth. He doesnt have any sort of issue from the big supermarkets but has a problem with the neighboring shops around him which gives him competition. Some of the problems he face are: Since there are two other groceries around the competition is tough, so the only way is to have a good customer relation with everyone. He cannot support a lot of goods as he doesnt have place to keep the raw materials, so some of the goods are even laying in his house. Students dont pay their monthly amount on time and also it happens that they forget the credit given. Sometimes the dealers dont come on time to provide them the products so he loses some of the customers in the morning which in turn they go to his competitors.

Process Identification
A step-by-step breakdown of the phases of a process, used to convey the inputs, outputs, and operations that take place during each phase. A process analysis can be used to improve understanding of how the process operates, and to determine potential targets for process improvement through removing waste and increasing efficiency.

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Our Methodology
We visited the Kirana stores and found out their processes We also visited the Organized retail stores and found out their processes and tried mapping them with the process of Kiranas We suggested change in process and automation which will overcome all the identified problem areas and help in growth.

Processes involved
We found the various processes involved in the Kirana store and to mention some of them are Customer management and selling Inventory and Stock management Ordering CRM

Now we would elaborate more on the processes we identified as is Customer management and selling : With increasing competition and organized retail it is imperative for the Kirana store to maintain good relation with the customers. Hence Customer management and selling is necessary The customer orders for goods in two ways Personally The customer personally visits the store and purchases the required goods which they carry or is delivered by the Kirana store people.

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Using a telephone The customer orders on the phone and then the goods are delivered to the home. However sometimes the phone line is busy and hence the order cannot be made.

Inventory and Stock management When we visited the Kirana stores we found out that most of them have space crunch and hence inventory and stock management is very important. However due to space crunch they could not keep excess of goods in the shop. He keeps a track of the stock in following ways

Stock update

Manual accounts

Observations

Customer informs

Manual accounts: The Kirana store owner keeps a track of the entire inventory in a register and updates accordingly at the end of the day. If he find stock near over he orders for fresh stock. However the problem is that the owner checks the account once in a week and hence comes to know about the stock getting over then. Observation: The shopkeeper will have the track of the goods based on observation and when he observes that the good is getting over, he then orders for the same. However it happens that he sometimes fails to observe if a good is over or not on the shelf. Customer informs: Sometimes the customer themselves inform the shopkeeper that the good is over or that it is not there and then the shopkeeper orders for the good. However this results in customer going without the good and this results in goodwill loss.

Ordering
The shopkeeper orders for the fresh stock of goods when the stock of the good is getting over or when it comes near the expiry date. They also are not able to track the expiry date and sometimes the customer complains about the same. This affects the image and might lose the customer. The ordering is done to the following

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Companies : The order is made to the companies and the company then sends the goods. Also the company has a record of when they provided the previous order and they have their salesman visiting the shop after a certain period to take new orders. Wholesellers : The Kirana shops have contacts with the wholesalers and they get goods from them at a discounted rate (economies of scale) Own production : The Kirana stores also have their own production like grains, pulses etc. This helps them minimize the procurement costs and maximize the profits. CRM It is very important for the Kirana shop owner to maintain good relationship with the customers. In this process he sometimes has to give on credit to the customers and sometimes it happens that he loses track of the credit given. Also he is loosing some of his loyal customers to organized retail which give discounts to the customers and hence people visit those. The Kirana store owner also gives discounts to the customers when they visit the store.

Process flow chart : Macro level processes are as follows

Ordering

Stock management

Customer management and selling

PROCESS FLOW CHART FOR AS IS PROCESS

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BPMN DIAGRAM As is process (Using Bonita Studio)

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PROPOSED CHANGES
There were certain areas we found were to be worked upon so as to improve the entire Kirana store process. Few of such areas which required attention have been listed below: S.no Problem definition Inventory maintenance Delivery time of the product/commodity Segregation items of Analyses of problem Stock Expiry Orders Search time Old stock Ungrouping Orders Publicity promotion Risk measure High High Low 5. CRM & credit Regular customers Shortage space of Very high Aaramshop.com Website Just dial Customer database birthdays, SMS, discounts Database Packaging Solution

1. 2. 3.

4.

Public presence

&

High

6.

Storage

Low

Not working on this problem as of now

Since all of these could not be catered to at the same time, we tried concentrating on the few of these: 1. Inventory maintenance 2. CRM & credit 3. Public presence 1. Inventory maintenance: There are 3 basic problems as far as the inventory maintenance is concerned namely stock, expiry and orders. In terms of stock, automation of the entire inventory process is the solution.

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Firstly whenever new stock is received an entry is made in the inventory software. Secondly, whenever a customer asks for a particular product, the same is referred to in the software the software thereby would automatically deduct that particular item from stock. Also when the inventory is out of stock, the same is highlighted and when you click on it, it will take you to the supplier details who can be called on for delivery of more of that item. Flowchart showing automation of inventory process.

The software would also highlight whenever the expiry date of the exiting stock is about to reach, thereby swaying the shop owner/ user to the contact details of the supplier. 2. CRM & credit: CRM PROCESS FOW FOR THE TO BE PROCESS:

Proper database for regular customers would be kept so that loyalty discounts could be given basis the frequency of visit and the amount bought from the store. Also
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personalized birthday messages can be sent out to each regular customer in order to maintain relationship with the customer. This software would also help track the credit details of individual customers. Also it is very important to see that the Kirana store personal who is handling the software is properly trained. Hence we plan to have training sessions for a 3 days with the Kirana stores and also have our personal visiting the store for live demos. We would also look in to the maintenance and up gradation of the software. 3. Public Presence: Collaboration to be done with websites like aaramshop.com, who collaborate with several local kirana stores and whenever an online order is received, they would forward the order to the nearest kirana store. Secondly cartelization can be done between various kirana stores that are present at different locations so that there is a broader reach out to the end customer at large. Also this will help in procurement of goods at discounted rates due to economies of scale.

Benefits Incurred
The automation of Kirana stores will result in to following advantages Inventory o Stocks will be up to date o Automatic measurement of inflow-outflow o Proactively informs about expiry of stock and hence helps constant refilling of the shelf on expiry. o Optimized stock handling CRM o o o o

Create a customer database Customer credit management Prolonged Relationship built-up with Customer Promotional offer communicated using SMS and website

Order o Increase the visibility with help of website development o Tie-up with available online ordering portals like aaramshop.com o Forming an Cartel with Kirana stores in other areas will help reduce the procurement costs and build synergy.

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BPMN for the to be process

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Worksheets
As Is Process:
Personal Customer order Taking order Telephone

Manual check Kirana store Automation Supply chain Management Customer informs

Checks availability

Checks for expiry

Order for goods Give discounts on goods when customer visits

CRM

To Be Process:
Personal

Taking order Checking customer database Updating database

Telephone

Customer order

Online ordering

Checks availability Kirana store Automation Supply chain Management Inventory management tool Updating of goods database Providing loyalty discounts Checks for expiry

Order for goods

CRM

Promotion

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Business Process Worksheet

Form: Business Process

General Business Process Name Definition Automation of Kirana store Complete automation of processes in the Kirana store from Inventry management to building database CRM Subject of the business process is automation of the processes in the Kirana store. Various departments like product development, Technical planning and development teams work together to launch new product for the Kirana store automation. Also the product is tested and deployed and training is provided to the Kirana store owner. Product Development, Technical Planning, Deployment team None Product Development The requirement of the process and sub process as defined Development of automation software that would help the Kirana store in Supply chain management and CRM Software development and Customer requirements Deployment of Automation software and give training to the Kirana store salesforce. None

Description Participants Stakeholder Reference Start/End Characteristics Pre-condition Post-condition Begins When Ends When Exceptions

Conclusion
Thus in the current scenario where the Kirana stores are facing the threat from the Organized retail, They can use the technology for to improve the processes and hence reducing time required and cost which helps increase profits. Also technology will help in CRM and hence improve relationship with the customers.

References
BPM for Dummies BPM Concepts and cases Jaya Krishnan www.ibm.com www.bonitasoft.com www.aaramshop.com

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