SAVEMART

By Group 2:-

Ashish Bansal 180201061

Mayank Gaur 180201076
Abhishek Saraogi 180201103
Ishan Goel 180201115
Pulak Gupta 180201133
Sanchay Tyagi 180201137
 CASE SUMMARY

It has 10 warehouses across the

country that service between 10-
The first Savemart 20 hypermarkets.
store was opened in
Bangalore in 2004 Each handle multiple product
categories ranging from fmcg,
Between 2000-2008 The company had 154 plastics, kitchenware etc.
India’s GPD grew at a hypermarkets in the
rate of 7%. Consumer year 2014 The warehouses are a huge cost
demanded a better centre and face several issues
shopping experience, self
service. Electronic
Modern retailing
checkouts etc fuelled by
began in the year
their rising income and
2000. Until then it
quality consciousness
was largely
unorganised and
fragmented
 ISSUES AT WAREHOUSE
• Digestion problem – Warehouses took long time to inward the goods and even longer time to dispatch them.
• Unable to match demand – Stores experienced frequent stock outs despite goods being available at the warehouses. Problem even
more rampant during festive seasons.
• Late delivery by Vendors – Warehouses accepted even delayed consignments which was against the company’s stated policy.
• Planning issues – Since the vendors sent multiple shipments against single purchase orders, that too without any advance intimation,
warehouse could not plan its receiving process well.
• GRN process not followed – GRNs sometimes took 3-4 days which was against the company policy. Conformance to the company
policy was not very high.
• Consignment issues – Warehouses sometimes used to file wrong timing of receiving consignments which led to lack of clarity on
conformance to policies. Some consignments also had problems of wrong barcodes.
• Inventory issues – Actual inventory in the warehouses exceeded the target by 50 to 100%. Focus was to avoid stock outs rather
than avoiding excess inventory.
• Space Management – Company could not maintain keeping the items in their earmarked places. There was inventory in every
available spot in the warehouse.
• Inefficient picking process – Pickers spent a lot of time in completing the pick list because of the inventory being scattered at
different places.
• Error in system inventory – System would show item in stock despite no physical stock and vice versa.
• Low throughput – Company followed a piece-in and piece-out model because of which they had low throughput.
• High Packaging costs – Warehouses bought new cartons to send the goods to the stores which reduced the already thin margins of
the stores.
 INITIATIVES

Receiving Issues Excess Inventory Throughput Issues

External • Introduce penalty schemes for category • Eliminate the lag in the system i.e. the delay
• Move to Supply chain orientation managers in case of stock out and excess between the physical movement of inventory
inventory and the ERP update.
• Weed out incompetent vendors and maintain
close relationships with trusted vendors. • Close internal working relationship and • Reorganise the floor plan in order to allocate
communication with warehouses and stores in space to goods according to their demand and
• Empower vendors with technology such as order to avoid excess inventory when store clustering frequently ordered items together.
GPRS tracking system to monitor incoming openings are delayed.
consignments. • This combined with case in and case out will
• Stock out significantly improve the throughput.
• Internal
• Sharing STO(Stock transfer order) data with
• The last delivery date should be fixed and the the receiving centre can help better manage
security staff should be responsible for inventory and avoid stock outs
updating incoming truck data
• One day conformance to GRN can be
achieved by following case in and case out
model.
 AFFECT OF INVENTORY DISCREPANCY ON
WAREHOUSE PERFORMANCE

Wrong forecasting and over

stocking lead to
overcrowding of goods.

Space management
becomes messy -
damaged goods, returns
Delays in GRNs
from the stores, apparels
processing which will lead
that belonged to the
to delays in fulfilling STOs
earlier seasons, discipline
of storing the items in
different locations etc.

Mismanagement in
Delay in STOs and
inventory system can lead
inefficiency in picking
to inaccurate estimation
process.
of inventory cost.
WAYS TO OVERCOME INVENTORY DISCREPANCY

In warehouse strict rules should be

implemented and be regularly monitored
by a dedicated management team.

Training staff to the lowest pyramid level

to better manage inventory.

RFIDs should be used instead of

Barcodes- faster and better technology.

Video supervision and random manual

checks can be implemented.

Store managers and warehouse

management team should have periodic
meetings to overcome the inventory
discrepancy.
 CASE-IN & CASE-OUT

INCREASED
THROUGHPUT
NO NEED FOR
PURCHASING
ADDITIONAL 01 REDUCED NO. OF
CARTONS PICKERS
06 02
Benefits
05 03
HIGHER PICKS PER FASTER ORDER
SKU 04
PROCESSING TIME

COST REDUCTION
 CASE-IN & CASE-OUT
Implementation

Educating the vendors Lot sizes for every

and providing them SKUs need to revised
with standardized as per the store
packaging material requirements

4 1

Change in the number and 3 2 Changes in the

frequency of orders by the ERP
stores
 CURRENT ANNUAL COST OF BUYING THE
CARTONS FOR REPACKAGING

• Cost of one carton = Rs 55

• Usage = 1 time

• Cartons procured across the warehouses = 15,000 per month

• Total annual cost = Rs 55*15,000*12= Rs 99,00,000 (99 Lacs)

 NUMBER OF CRATES REQUIRED TO COMPLETELY
ELIMINATE THE USE OF CARTONS

Assumption - Capacity of crate is equal to carton

• Total cartons required per year = 15,000*12 =1,80,000

• Total cartons required in 3 years = 1,80,000*3 = 5,40,000

• Crate usage per month per crate = 15 times

• Crate usage per year per crate = 15*12 = 180

• Crate usage per year per crate per life time = 180 *3 =540 (Lifetime for crate is 3 years)

• Total number of crates = 5,40,000/540 =1000 crates

 PAYBACK PERIOD OF BUYING THE
RECYCLABLE PLASTIC CRATE
Assumption – Capacity of crate is equal to cartons

• Cost of one plastic crate = Rs 500

• Total crates for 3 years = 1000

• Total cost of crates = Rs 1000*500 = Rs 5,00,000

• Total cost of cartons for 3 years = Rs 99,00,000*3 = Rs 297,00,000

• Cost saving with respect to cartons per year = Rs (297,00,000 – 5,00,000)/3 = Rs 97,33,333

• Payback period = (5,00,000/97,33,333)*365 = 18.75 or 19 days

 COST SAVING OVER 3 YEARS IF THEY ONLY USE
RECYCLABLE CRATES AND STOP BUYING CARTONS

• Total cost of cartons for 3 years = Rs 99,00,000*3 = Rs 297,00,000

• Total cost of crates = Rs 1000*500 = Rs 5,00,000

• Cost saving over 3 years = 297,00,000-5,00,000 = Rs 292,00,000 (292 Lacs)

THANK
Y OU