Acknowledgement

Summer Internship Project

Inventory Planning & Managementfor Grasim stores

Submitted in partial fulfillment of PGDM program2009-11

Submitted byOjaswita Shrivastava

17/095

Company Guide Faculty GuideMr.Rahul Jhamb Mrs Neetu SardanaHead Retail Business, Grasim Bhiwani Textiles Ltd.

Apeejay School of ManagementNew Delhi

July 2010

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CERTIFICATE

This is to certify that the project work done on “Inventory Planning and Management for Grasim Store” submitted to Apeejay School of Management, Dwarka by Ojaswita Shrivastava in partial fulfillment of the requirement for the award of PG Diploma in Business Management, is a bonafide work carried out by him/her under my supervision and guidance. This work has not been submitted anywhere else for any other degree/diploma. The original work was carried during 10-05-10 to 18-06-10 in Grasim Bhiwani Textiles Ltd

Date: Seal/Stamp of the Organization Name of the guide

Address:

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DECLARATION

I hereby declare that the project work entitled “Inventory Planning and

management for Grasim stores” is submitted to Apeejay School of

Management, Dwarka is a record of original work done by me under the

guidance of Mrs. Neetu Sardana, faculty member, Apeejay School of

Management, Dwarka and this project work has not been performed the

basis for the award of any degree or diploma and similar project if any.

Ojaswita Shrivastava

Roll number: 17/095

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ACKNOWLEDGEMENT

I take this opportunity to extend my sincere thanks to Grasim Industries Limited

for offering me a unique platform to earn exposure and garner knowledge in the

field of retail management.

I wish to extend my sincere and heartfelt gratitude to my mentor Mr. Rahul

Jhamb, Head Retail Business, who guided supported and encouraged me during

the entire tenure of the project. I also thank Mr. Suneet Kashyap regional head

manager, for their co-operation and valuable advice through the course of my

project. I am able to say with conviction that I have immensely benefited from

auspicious and prestigious association as a summer intern with Grasim Industries

Ltd.

I express my sincere thanks to my college mentor Ms Neetu Sardana, who has

been guiding me throughout my project.

I also wish to thank each and every employee of the organization who contributed

in their own ways in successful completion of this project.

Ojaswita Shrivastava

Apeejay School of Management

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TABLE OF CONTENT

1. Executive Summary……………………………………8

2. Company Brief…………………………………………8

3. Need of the project……………………………………..9

4. Overview of the Grasim industry……………………...13

5. Vision, Mission and values……………………………14

6. Distribution channel…………………………………...15

7. Grasim retail identity………………………………….15

8. Management Team……………………………………17

9. The Brand……………………………………………..19

10. Product line…………………………………………...22

11. Strategies of BTM…………………………………....30

12. Competitors Analysis………………………………...33

13. SWOT Analysis of BTM…………………………….34

14. HR policies…………………………………………..36

PART-B

1. About the project……………………………………...38

2. Literature review……………………………………...40

3. Research methodology………………………………..42

4. Problem identification………………………………...42

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5. Approach to problem…………………………………....43

6. Basic fixed order quantity model and reorder Behavior..48

7. Primary research………………………………………...50

8. Secondary research……………………………………...51

9. Sample size……………………………………………...52

10. Data Collection…………………………………………..52

11. Data Analysis……………………………………………53

12. Synopsis…………………………………………………60

13. DFD of Inventory management process………………...61

PART –C

1. Key learning and conclusion……………………………66

2. Recommendations………………………………………70

3. Annexure – Questionnaire……………………………...71

4. Annexure – Layout and elevation plans of stores………74

5. Bibliography…………………………………………….78

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EXECUTIVE SUMMARY

Inventory management is primarily about specifying the size and placement of

stocked goods. Inventory management is required at different locations within

a facility or within multiple locations of a supply network to protect the regular

and planned course of production against the random disturbance of running out

of materials or goods. The scope of inventory management also concerns the

fine lines between replenishment lead time, carrying costs of inventory, asset

management, inventory forecasting, inventory valuation, inventory visibility,

future inventory price forecasting, physical inventory, available physical space

for inventory, quality management, replenishment, returns and defective goods

and demand forecasting. Balancing these competing requirements leads to

optimal inventory levels, which is an on-going process as the business needs

shift and react to the wider environment.

COMPANY BRIEF: Grasim has a strong presence in fabrics and synthetic

yarns through its subsidiary, Grasim Bhiwani Textiles Limited, and is well

known for its branded suitings, Grasim and Graviera, mainly in the polyester -

cellulosic branded menswear. Its textile plants are located at Bhiwani

(Haryana) and Malanpur (Madhya Pradesh). Fabric operations are centralised

at Bhiwani with a processing capacity of 17.0 million metres a year, while the

Malanpur unit manufactures worsted dyed yarn spun from 100 per cent merino

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wool along with polyester and other blends.

Grasim's strong nationwide retail network includes 50 exclusive showrooms as

well as 200 wholesalers and 25,000 multi-brand outlets through which it reaches its

customers. Grasim caters to international fashion houses in the USA and UK

supplying fabric to them for manufacturing of garments, which are available in

some of the largest retail chain stores.

NEED OF THE PROJECT: In this competitive market, it is must for any

business to have the best plan for its inventory. The best planned and managed

inventory serves as a ground work for the marketing.

There are three basic reasons for keeping an inventory:

Time : The time lags present in the supply chain, from supplier to user at every

stage, requires that you maintain certain amount of inventory to use in this "lead

time".

Uncertainty : Inventories are maintained as buffers to meet uncertainties in

demand, supply and movements of goods.

Economies of scale : Ideal condition of "one unit at a time at a place where user

needs it, when he needs it" principle tends to incur lots of costs in terms of

logistics. So bulk buying, movement and storing brings in economies of scale,

thus inventory.

Thus inventory planning and management is required for the efficient on going of

the business.

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OVERVIEW OF THE GRASIM INDUSTRY

The Aditya Birla Group is a multinational corporation based in Mumbai, India

with operations in 25 countries.

A US$ 28 billion conglomerate, with a market capitalization of US$ 31.5 billion,

over 50 per cent of its revenues flow from its operations across the world. The

group is a major player in all the industry sectors it operates in. The Group has

been adjudged the best employer in India and among the top 20 in Asia by the

Hewitt-Economic Times and Wall Street Journal Study 2007. The origins of the

group lie in the conglomerate once held by one of India’s foremost industrialists

Mr. Ghanshyam Das Birla. He bequeathed most of these companies to his

grandson, Mr. Aditya Vikram Birla – the father of the current chairman of the

group, Mr. Kumar Manglam Birla.

Grasim Industries Limited, a flagship company of the Aditya Birla Group, ranks

among India's largest private sector companies, with consolidated net turnover of

Rs.184 billion and a consolidated net profit of Rs.22 billion (FY2009).

Starting as a textiles manufacturer in 1948, today Grasim's businesses comprise

viscose staple fibre (VSF), cement, chemicals and textiles. Its core businesses are

VSF and cement, which contribute to over 90 per cent of its revenues and

operating profits.

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The Aditya Birla Group is the world’s largest producer of VSF, commanding a 23

per cent global market share. Grasim, with an aggregate capacity of 333,975 tpa

has a global market share of 12 per cent. It is also the second largest producer of

caustic soda (which is used in the production of VSF) in India.

In cement, Grasim along with its subsidiary UltraTech Cement Ltd. has a capacity

of 45.7 million tpa as on 30 June 2009 and is a leading cement player in India. In

July 2004, Grasim acquired a majority stake and management control in UltraTech

Cement Limited. One of the largest of its kind in the cement sector, this

acquisition catapulted the Aditya Birla Group to the top of the league in India.

VISCOSE STAPLE FIBRE

Grasim is India's pioneer in Viscose Staple Fibre (VSF), a man-made,

biodegradable fibre with characteristics akin to cotton. As an extremely versatile

and easily blendable fibre, VSF is widely used in apparels, home textiles, dress

material, knitted wear and non-woven applications.

Grasim's VSF plants are located at Nagda in Madhya Pradesh, Kharach in Gujarat

and Harihar in Karnataka, with an aggregate capacity of 333,975 tpa.

CEMENT

Grasim ventured into cement production in the mid 1980s, setting up its first

cement plant at Jawad in Madhya Pradesh and since then it has grown to become a

leading cement player in India.

Grasim’s cement operations today span the length and breadth of India, with 11

composite plants, 11 split grinding units, four bulk terminals and 64 ready-mix

concrete plants as on 30 June 2009.

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Leveraging the strong equity and goodwill of the house mark, the company has a

strong national brand UltraTech cement under the Aditya Birla Group logo.

Grasim is also nurturing some regional brands like Vikram Cement and Rajashree

Cement.

Grasim is one of the largest ready mix concrete (RMC) players in India. RMC

business is in a rapid growth phase. The company has consolidated capacity of

11.31 million cubic meters with the network of 64 plants as on 30 June 2009.

Grasim is also the largest producer of white cement in India, with a capacity of

560,000 tpa as on 30 June 2009. Branded as "Birla White",

white cement division manufactures world-class white cement

in a variety of textures and finishes. It has applications in

floorings and exterior wall finishes, apart from other innovative

uses. The division also manufactures value added products like putty, GRC etc.

which are used in wall finishing and various architectural applications.

CHEMICALS

Rayon grade caustic soda is an important raw material in VSF production. To

achieve a reliable and economical supply of this chemical, Grasim set up a rayon

grade caustic soda unit at Nagda in 1972, with an initial capacity of 33,000 tpa.

This has since grown to 258,000 tpa, making it the country's second largest caustic

soda unit.

TEXTILES

Rayon grade caustic soda is an important raw material in VSF production. To

achieve a reliable and economical supply of this chemical, Grasim set up a rayon

grade caustic soda unit at Nagda in 1972, with an initial capacity of 33,000 tpa.

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This has since grown to 258,000 tpa, making it the country's second largest caustic

soda unit.

It uses cost-effective membrane cell technology and is 100 per cent self-sufficient

in power. For gainful utilisation of chlorine, the unit has expanded its operations

with the production of stable bleaching powder (SBP) used in water purification,

sanitation and as a bleaching agent; poly aluminium chloride (PAC) used in water

treatment, paper sizing and effluent treatment; and chloro sulphonic acid, used in

vinyl sulphate, the raw material for dyes and intermediates, saccharin, drugs and

pharmaceuticals, etc.

Grasim Bhiwani Textiles Ltd. (GBTL) is a subsidiary of GIL, AB group. It has

strong nation wide presence in fabrics and is well known for its branded suitings,

shirtings and ready made garments.

The brand has grown at 10-15% consistently over the last 3 years. It commands a

market share of 22% in a PV branded menswear fabric market.

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VISION

"To actively contribute to the social and economic development of the

communities in which we operate. In so doing, build a better, sustainable

way of life for the weaker sections of society and raise the country's

human development index."

— Mrs. Rajashree Birla, Chairperson,

The Aditya Birla Centre for Community Initiatives and Rural Development

MISSION

To deliver superior value to our customers, shareholders, employees and

society at large.

VALUES

Integrity

Commitment

Passion

Seamlessness

Speed

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DISTRIBUTION CHANNEL

Brand Grasim reaches out to the consumers through a robust distribution

channel of around 100 dealers, 15000 MBO’S and 70 Exclusive showrooms.

Brand Grasim’s retail foray has been lined up along with it’s commitment to

bring innovative products, international styles and designs at very affordable

prices to customers. Brand Grasim already enjoys huge acceptance and

popularity across the country due to its innovative and customer oriented

offerings.

A WORLD OF OPPORTUNITY

The showrooms will offer products in various blends like PV/PC/CVC/100%

Cotton/PW/PMW. Also on offer would be speciality products for the

exclusive showrooms like Lenin, Tweeds and Corduroy Suitings, Designer

Shirting with Prints & Embroidery etc. and exclusive range of shirting and

ready-mades to complement the entire line of menswear.

GRASIM RETAIL IDENTITY

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The retail identity of GRASIM EXCLUSIVE SHOWROOM aims to establish

a “formal menswear wardrobe destination” for a 30+ urban customer of tier

2/3/4 town, who is :

A careful spender

One who affordable fashion

Strong on middle-class value system

High on self-worth and self-esteem

Keen to make a mark for himself

A SELF MADE MAN

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MANAGEMENT TEAM

BOARD OF DIRECTORS

:: Mr. Kumar Mangalam Birla, Chairman

:: Mrs. Rajashree Birla

:: Mr. M. L. Apte

:: Mr. B. V. Bhargava

:: Mr. R. C. Bhargava

:: Mr. Y. P. Gupta

:: Ms. Cyril Shroff

:: Mr. S. G. Subhrahmanyan

:: Mr. Shailendra K. Jain (Whole-time Director)

:: Mr. D. D. Rathi (Whole-time Director)

:: Mr. S. B. Mathur (w.e.f. 28 January 2005)

BUSINESS HEAD

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:: Mr. Shailendra K. Jain, viscose staple fibre

:: Mr. Saurabh Misra, cement

:: Mr. Ravi Kastia, sponge iron

:: Mr. S. K. Saboo, textiles, spinning

:: Mr. Vikram Rao, textiles, fabrics

:: Mr. K. K. Maheshwari, chemicals

WHOLE-TIME DIRECTOR AND CHIEF FINANCIAL OFFICER

:: Mr. D. D. Rathi

COMPANY SECREATORY

:: Mr. Ashok Malu

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THE BRAND LOGO

A MARQUE OF EXCELLENCE

The name "Aditya Birla" evokes all that is positive in business and in life. It

typifies integrity, quality, performance, perfection, and above all, character.

Our corporate logo, 'The Rising Sun', symbolizes these traits. ('Aditya' is the

Sanskrit word for sun).

The logo consists of an inner circle, symbolizing the internal universe of the

Aditya Birla Group, an outer circle, symbolizing the external universe, and a

dynamic meeting of rays converging and diverging between the two.

Grasim is a major brand in the Rs 2500 crore Ready to Stitch market. The

brand which had its existence since 1957 .Grasim is a major player in the Rs

2500 crore Ready to Stitch textile segment.

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Grasim has repositioned itself. The brand was earlier positioned as a Modern

Fashion Brand. The positioning was reinforced by a series of new fiber

launches. The collections like Aqua Soft, Ice Touch etc kept the brand in the

limelight. The brand used the tagline "Power of Fashion" to convey the

positioning. Now the brand has changed its positioning. Grasim has roped in

the Bollywood Super hero Akshay Kumar as the brand ambassador. The

tagline has been changed to "For the Self Made". The TVC featuring the

actor is now on air.

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THE GRASIM BRAND AMBASSADOR

The Grasim brand already enjoys huge acceptance and popularity across the

country due to its innovative and customer-oriented offerings. To bolster its

brand presence, the company has roped in bollywood actor Akshay Kumar.

Akshay Kumar is not only the bollywood superstar but he is the self made

man. His personality matches with the brand as the Grasim has also raised

itself on its own.

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PRODUCT LINE

Grasim's products include viscose staple fibre (VSF), grey cement,

white cement, chemicals, sponge iron and textiles.

:: VSF

:: CEMENT

:: CHEMICALS

:: TEXTILES

Product

Installed capacity (as on 30 June 2009)

Viscose staple fibre 333,975 tpa

VSF, joint venture — Birla Jingwei Fibres Company

Limited35,000 tpa

Grey cement (Incl. UTCL) 45.65 million tpa

White cement 560,000 tpa

Ready-mix concrete plants (64) (Incl. UTCL) 11.31 million cubic metres

Chemicals 258,000 tpa

Textiles (Yarn) 8832 spindles

Textiles, subsidiaries — Grasim Bhiwani Textiles

Ltd. (Fabric)148 looms

Textiles, subsidiaries — Grasim Bhiwani Textiles

Ltd. (Yarn)35,808 spindles

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1. VISCOSE STAPLE FIBRE:-

The Aditya Birla Group is the world's largest producer of VSF,

commanding a 24 per cent global market share. The company

meets over 98 per cent of India's domestic VSF requirements.

2. CEMENT:-

The Aditya Birla Group is the 11th largest cement producer in

the world and the seventh largest in Asia.

3. SPONGE IRON:-

It is the largest merchant producer of sponge iron in India.

4. CHEMICALS:-

Grasim has India's second largest caustic soda unit.

5. TEXTILES:-

Its premium brands, the 'Grasim' and 'Graviera' range of

fabrics, have distinctively positioned themselves as 'the

power of fashion'.

All of Grasim's units have earned ISO 9002 and 14001

certifications.

Product quality, innovation and eco-friendliness are a

hallmark of all the company's divisions.

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PREMIUM BRAND OF GRASIM SUITINGS

UNCRUSHABLES

PURISTA

CLEANFAB

ICETOUCH

FINESSEE

STRETCH

FREEDOM

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GRASIM SUITINGS AND GRAVIERA SUITINGS

ICE TOUCH

One of the most successful innovations of Grasim in the past couple of years

is ‘ICETOUCH’. Ice Touch is a pioneer and continues to hold its preeminent

position in moisture management based products in India. This product is well

accepted all over India continues to be the market leader.

This product is based on Japanese technology. Grasim have collaborated to

and innovated its use on Polyester Viscose blended fabrics to adapt this

product to the Indian conditions and the Indian consumer.

The unique properties of ‘ICE TOUCH’ are its instantaneous absorption of

water, spreading of the same over a large surface area and its quick

evaporation. When you sweat the liquid is quickly absorbed by the fabric and

evaporated. When this liquid evaporates it takes heat from the inside of the

fabric and thereby giving the wearer a very cool feeling.

Ice Touch is a specially engineered product produced from selected fabric

constructions using innovative processing routines along with the aforesaid

technology to get a wonderful handle and feel coupled with the above

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properties. Ice Touch provides cotton like comfort and PV like drape and

wears properties.

In short ICE TOUCH is a unique range of fabrics possessing excellent handle,

feel and drape along with extraordinary moisture absorption and evaporation

giving a very cool and icy feeling.

CLEANFAB:-

CLEAN FAB is one of the most recent in-house innovations of Grasim

Industries. This is a functional Polyester Viscose blended fabric in which for

the first time dust free and soil free concept has been introduced. This fabric is

ideally suited for the dusty atmosphere and environment prevalent in most

parts of the country for most of the year.

Generally soiling and soil release is a serious problem when hydrophobic

fibers (like polyester) are blended with cellulosic fibers (like cotton , viscose

etc.) since these hydrophobic fibers attract soil to a greater extent and release

the soil less readily during laundering.

In short CLENFAB is the ultimate product in terms of giving good comfort

along with the soil prevention and easy soil release properties.

UNCRUSHABLES:-

Uncrushables is a low crush fabric, first winter poly-wool fabric with anti-

wrinkling quality to be launched in the industry.

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While no fabric is ever 100% wrinkle free, Uncrushables is far superior to

other competitive products with better crease recovery. The fabric is easy to

wash and care of. Meant for the hard and rugged life indoors or outdoors, it is

available in 15 colors.

FINESSE:–Fine Fabric for Fine People

One of the most comfortable trousers made out of fine yarn. The fabric has a

finer count which lends itself to luxurious feel and handle. It is ideal for night

wear, party wear and outdoors.

Finesse is very easy to maintain and can be washed easily and carries a very

elegant shape and drape all day long.

The fabric provides greater comfort like cotton and comes in some of the most

exotic colors blue, black, beige, limestone, graphite and grey.

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MAIN UNITS OF GRASIM INDUSTRIES

Viscose Staple Fibre

Nagda(M.P.)

Rayon Grade Pulp

Mavoor (Kerela)

Hariar Poly Fibres

Karnataka

Rayon Grade Caustic Soda

Nagda (M.P.)

Vikram Cement

Jawad (M.P.)

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Vikram Iron &Steel (Sponge Iron)

Maharashtra

Grasim cement

Raipur (M.P.)

Graviera & Grasim Suiting

Bhiwani (Hry.)

Elegant Spinners

Bhiwani (Hry.)

Vikram Ispat

Raigarh (M.P.)

Aditya Cement

Shambhupura

Birla Telecom Ltd. & Birla Communication Ltd.

Mumbai

Ultra Tech Cement

South Hydrabad

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STRATEGIES OF BTM

(BHIWANI TEXTILES MILL)

Strategies are key to achieve objective. Every company must

have set strategies through which it achieves its objective.

B.T.M. has also its well defined strategies which is

Implemented in all the three levels. The strategies are:-

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World Class Manufacturing

Birla Management Centre

Quality Circles

5-S ( a house keeping practice )

Total Quality Management (TQM)

Participative Management

1. WORLD CLASS MANUFACTURING(WCM)

In order to delight customers, employees, stakeholders and to

become a

successful competitor in global market, Aditya Birla Group has

evolved and

promoted this top rank methodology of W.C.M. to sustain

excellence in

company wise performance. This is multidimensional viz.

waste elimination,

5-S, JIT, TPM System & Cash Flows.

2. BIRLA MANAGEMENT CENTER (BMC)

Philosophy behind its logo: The philosophy of BMC is

beautifully capture in its symbol.

The logo has been designee to reflect concept of group dynamics and group

Synergy, six symbolic person, one is dark blue and five is light blue denote

one group, all fusing their energies and knowledge to form a strong nucleus.

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3. QUALITY CIRCLES

Quality is match word of the unit. It is not imposed by checks

and counters

Checks. It is a part of total manufacturing system. Quality is

first parameter.

Again in order to maintain a superior quality of the product

various

Management practices and being carries out by top

management. Quality

Circles meetings have been formed by the top management

with a view to

Increase the involvement and responsibility in their individual

work areas.

After completion of the Project, award by way of recognition

are given to all

The quality circles team members.

4 .5-S (A HOUSE-KEEPING MANAGEMENT)

Good quality management producers can prosper only in clean and serene

Atmosphere an so the top management at BTM have implemented the 5-S

Technique(related to the wok environment).

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Seiri Sorting out unnecessary

items.

Seiton Systematizing necessary

items.

Seison Sweeping of work place

and machines.

Seiketsu Sanitizing.

Shitsuke Self disciplining

5. TOTAL QUALITY MANAGEMENT (TQM)

Today’s executive view the task of improving product and service quality as

their top priority. Most customers, whether they are internal or external will

no longer accept average quality performance. If company wants to stay in

they have no choice but to adopt TQM.

Because of this strong quality consciousness of BTM, in 1994 Graviera

was

awarded the prestigious ISO 9002 so certification. Each

process from buying the fiber to the finished fabric monitored

by the computerized machines, highly observant workers and

technicians.

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COMPETITORS ANALYSIS

Which brand comes into your mind when you go for buying a

fabric.

raymond

wills life style

van hussain

wrangler

allen solly

allen cooper

john player

arrow

levis

dockers

peter england

flying machine

reid & taylor

koutons

louis philips

provogue

raymond

wills life style

van hussain

wrangler

allen solly

allen cooper

john player

arrow

levis

dockers

peter england

flying machine

reid & taylor

koutons

louis philips

provogue

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The graph conveys that Grasim lags behind many brands in the brand recall.

36% consumers prefer Raymond & their sub brands like Parx, Park Avenue

over other brand. It shows that brand of the Raymond are very strong over

the other brands. Levis, Van husain, Peter England, John players are the other

brands which consumer prefer while buying fabric or garment.

SWOT ANALYSIS OF BTM

STRENGTHS:-

1. BTM is a composite firm in Haryana.

2. BTM is a financially sound firm.

3. Working environment is peacefully (Union is strength

principle

is followed)

4. Facilities given to employees & employers on time and upto

date.

5. Viable stand with wholesellers.

6. Developed our own niche in market.

WEAKNESS:-

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1. The distribution of Grasim is not much strong.

2. Retailers have developed reluctance for Grasim because

of rucks created by wholesalers in their variegated

discounting schemes.

3. Grasim lacks a merchandiser to look after the product

mix and pricing.

4. Marketing and visibility needs inertia of motion.

5. It needs more promotional strategies for RMG section..

OPPORTUNITIES:-

1. Given chance to Grasim to make & sale its product

providing them manpower, machine, money, market,

material.

2. In near future Grasim will start with accessories.

3. Diversification in attention required from wholesalers to

retailers.

4. Grasim can be more rigorous in introducing the sub-

brands with whole new quality and designs.

THREATS:-

1. BTM face threats from its competitors like Vimal , ocm ,

Siyaram , Raymonds

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2. BTM face in overseas market like Phillipines , Malaysia ,

Canada , Mexico

HR POLICIES

1.Basic HR Policies

2.Compensation and benefits policies

3.General HR policies

4.Job analysis and Evaluation

5.Learning and development

6.Organizational effectiveness

7.Talent management

8.Talent staffing (policies related to recruitment)

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Part -B38

ABOUT THE PROJECT

Good inventory control is critical to ensuring an adequate level of stock on

hand for the amount of sales being generated. Having too much inventory (or

the wrong type) during certain periods can slow the cash flow and reduce

profits with too many markdowns i.e, there can be planned reduction in the

selling price of an item, usually to take effect either within a certain number of

days after seasonal merchandise is received or at a specific date.

On the other hand, if you under buy and miss sales opportunities then you are

not making your potential profit. So the proper planning for the inventory is

inevitable.

The present project is to identify the optimum stock level by taking into

consideration the sales and demand per year, present stock quantity available

and the storage capacity for all the forty consignment stores of Grasim in

India.

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For every store maximum stock level, minimum stock level and optimum

stock level has to be maintained. Maximum stock level is the stock that needs

to be maintained to ensure cost effectiveness. Minimum stock level refers to

the point below which the stock level may not go. Optimum level is the level

which is sufficient for a store to maintain its working capital.

Optimum level is required to avoid the working capital blockage. The

working capital blockage came through deadstock.

Dead stock is the old store item that is unused and never sold. Sometimes

referred to as NOS (never off shelf). Often come with original packaging,

tags, etc. These items may further be called "new old stock".

When such stock is created than company takes the stock correction plan in

which it redefine the stock quantity and stock value.

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LITERATURE REVIEW

A retailer utilizes inventory management to acquire and maintain a proper

merchandise assortment while ordering, shipping, handling, storing,

displaying and selling costs are kept in check. First a retailer places an order

based on a sales forecast or actual customer behavior. Both the number of

items and their variety are requested in ordering. Order size and frequency

depend on quantity discounts and inventory costs. Second, a supplier fills the

order and sends merchandiser to a warehouse or directly to the store(s).

Third, the retailer receives products, makes items available for sale, and

completes customer transactions. The cycle starts a new when a retailer

places another order.

Techniques to plan inventory levels are the basic stock, percentage variation,

quarter’s supply, and stock to sales methods.

With the basic stock method, a retailer carries more items than it expects to

sell over a specified period. There is a cushion if sales are more than

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anticipated, shipments are delayed, or customers wants to select from a variety

of items.

Basic stock (at retail) = Average monthly stock at retail- Average monthly

sales.

Beginning of month planned inventory level = Planned inventory sales + basic

stock

In the percentage variation method, beginning of month planned inventory

during any month differs from planned average monthly stock by one half of

that month’s variation from estimated average monthly sales. This method is

recommended if stock turnover is more than six times a year or relatively

stable, since it results in planned inventories closer to the monthly average

than other techniques.

Beginning of month planned inventory level= Planned average monthly stock

at retail * 1/2[1 + (estimated monthly sales/ estimated average monthly sales)]

The week’s supply method forecasts average sales weekly, so beginning

inventory equals several week’s expected sales. It assumes inventory is in

proportion to sales. Too much merchandise may be stocked in peak periods

and too little during slow periods:

Beginning of month planned inventory level = Average estimated weekly

sales * Number of weeks to be stocked

With the stock to sales method, a retailer wants to maintain a specified ratio

of goods on hand to sales.

42

RESEARCH METHODOLOGY

PROBLEM RECOGNISED:

1. Creation of dead stock and lack of optimization of stock at various

stores.

2. The designs which are in demand in the market are not supplied to the

store on time.

43

APPROACH TO THE PROBLEM:

Techniques to plan inventory levels are the basic stock, percentage variation,

quarter’s supply, and stock to sales methods.

With the basic stock method, a retailer carries more items than it expects to

sell over a specified period. There is a cushion if sales are more than

anticipated, shipments are delayed, or customers wants to select from a variety

of items.

Basic stock (at retail) = Average monthly stock at retail- Average monthly

sales.

The process of inventory planning is a step-by-step process. The various

processes which are related to inventory are as:

PROCESS OF TAKING PURCHASE ORDERS AT STORE END

44

These purchase orders are taken at the store end. Now the store managers send these orders to Bhiwani, the manufacturing plant.

Sampling is done. Square sample of different types of fabrics are cut from inner side of thans and code number and rate per meter is written.

The party selects the sample as per their requirements and send the order.

45

These samples are sent to the different parties (trade partners).

The purchase order has to be taken from the party.

PROCESS OF TAKING BOOKING ORDERS AND

SHIPMENT AT BHIWANI

Sampling in conference is done. First it is decided which samples are to be shown to the trade partners.

Selected samples that is called LE (latest estimation) are then taken.

Then booking orders of the same is taken.

46

Then compilation of the order is done in national label.

The order is passed away to the production team. Example 1000 meter in this particular quality(fabric) is needed.

This is how whole process of taking orders and booking and dispatching of

stock takes place at Bhiwani.

Before showing to the trade partners sampling in conference is done in which

it is decided which samples are to be shown to the clients. Then selected

samples called latest estimation are taken. The booking orders of the same is

then taken and compilation of the order in national label is done. After this

order is passed away to the production team according to the demand. The

production team take 30-45 days to deliver the order. Then it is sended to

folding department for grading like 12 meter than, 12.5 meter than. After this

47

The production team takes 30-45 days to deliver the ordered quantity.

Then it is sended to folding department for grading like 12 meter than, 12.50 than

After grading it is sent to warehouse. The warehouse is at Bhiwani.

Then for selling the stock is dispatched to different stores through transport.

The company takes quarter wise booking or three months advance booking.

all the stock is sent to warehouse at Bhiwani and from there it is dispatched to

different stores through transport. The transport takes 15 days and through

courier it takes 5 days. The company takes quarter wise booking or three

months booking in advance.

INVENTORY PLANNING FOR THE NEW STORES

For the new stores following steps are taken:

1. The focus is on the area where the store has to be open.

2. If it is not the tear 1 town, then retail space of 300-400 square feet is to

be found out.

3. Then franchisees are asked that at what price point they can sell in this

market. They give the better idea of pricing.

4. Then company sends 170-200 thans accordingly.

5. The focus is to display all the varieties and all available collection.

6. The company sends the replenishment quarterly.

48

BASIC FIXED ORDER QUANTITY MODEL AND

REORDER POINT BEHAVIOR

This model sometimes called Production Order Quantity Model. In the basic

model we have assumed that the entire inventory, which is ordered, arrives

R = Reorder pointQ = Economic order quantityL = Lead time

L L

Q QQ

R

Time

Numberof unitson hand

49

simultaneously. However, this is not a valid assumption, because the vendor

delivers the order in partial shipment or portions over a period of time. In the

case of GBTL, the replenishment is done quarterly, the whole stock is sent at

once.

In such cases inventory is being used while new inventory is still being

received and the inventory does not build up immediately to its maximum

point. Instead, it builds up gradually when inventory is received faster than it

is being used; then it declines to its lowest level as incoming shipments stop

and the use of inventory continues. This version of the EOQ model is also

referred to as the “Gradual Usage Model ” and “Production Lot Size Model”.

In this, noninstantaneous receipt model, the order quantity is received

gradually over time, and the inventory level is depleted at the same time it is

being replenished.

GBTL uses fixed order quantity model as it replenishes the stock quarterly in

a certain fixed ratio. But for the stores where the stock value is high and

already the problem of over stocking is existing, the company avoids the

replenishment. If the replenishment of the stock is required in such stores

than the old stock is sell out through discount schemes. And then the stock

correction is done.

GBTL also follows the Just-in-time plan as the stock is also dispatched

according to the demand created. If certain store requires certain quantity in

particular shade and variety and if its available in the warehouse than it is

courier to that store and hence just-in-time process is also followed.

50

PRIMARY RESEARCH:

Primary research is the basic market research which helps to know the current

trends. It helps to get the real picture of the sector we are reaching for.

For our primary research we had the tools as:-

Questionnaire (affixed in the annexture)

Brainstorming with store managers.

The primary research helped to know the existing problems in the stores.

Through brainstorming with the store managers the reasons for the dead stock

and the reasons for the lack of variants which are in demand in the market

came out. These problems affects the sales of the store and hence the profit of

the company. The survey which is conducted is a telephonic survey. The

company maintains the stock and sales data through a software called shopper

9.

51

SECONDARY RESEARCH:

The secondary research is basically getting important information from a lot

of data stored in the books and different sites. Secondary research enabled me

to get a view about the textile and garment industry and the inventory

management processes. It gives the idea about how to maximize control over

operations and inventory in order to better service customers.

There are various processes or models that our followed while maintaining

and planning the inventory called inventory model. For eg. Fixed order

quantity model, Fixed time period model, Just in time model.

Different industries uses different software and the models that suits their

business.

52

SAMPLE SIZE:

The sample size for this is the focus group of 40 respondents. These 40

respondents include the store managers of the various Grasim stores exclusive

and franchisee across the country.

DATA COLLECTION:

The data was collected through the telephonic survey. The questions were

open ended so as to get the better insight of the store issues. A study was

conducted in which all the stores were covered to know the present stock data

and sales data and compared to the storage capacity available.

53

DATA ANALYSIS

There are three sections in every store, these are suiting section, shirting

section and RMG section. The layout and elevation plans of all the stores

are provided. Layout plan is the map of the store when seen from the roof

or top. Elevation plan is the front view of any section. Each plan is divided

into three section AA’, BB’ and CC’ depicting the suiting, shirting and

RMG section respectively (shown in annexure).

These maps help to find out the storage capacity in a store. There are two

kinds of shelves available for suiting racks, these are upper vertical shelves

and lower horizontal shelves. The upper vertical shelves are visible to the

customers but the lower horizontal shelves are hidden due to the counters

and the seating arrangements.

For every store the maximum stock level, minimum stock level and

optimum stock level has to be maintained. The maximum stock level is

achieved when the entire shelves are required to be filled i.e, the entire

storage capacity is fulfilled. The minimum stock level is the stock that is

filled only to those shelves which are displayed and visible to customers.

In the vertical big shelves the thaan patties are kept vertically or

54

standing rolls are kept while in the lower shelves the thaan patties are

placed horizontally. The optimum level is also needed to be defined.

Optimum level is the level which is sufficient for that store to maintain its

working capital. There should be no working capital blockage. The

working capital blockage comes through deadstock.

55

1. ALLAHABAD STORE

0

10

20

30

40

50

60

70

suitingstock

sellthrough

shirtingstock

sellthrough

rmgstock

sellthrough

allahabad stock and sales analysis

Series1

Inferences:

Out of total stock suiting stock is 52.59% and sales is 48.34%

The ratio of sales to stock value that is sell through is 49.60%

This shows that sales of suiting are half of the total sales and also the

sales value is half of the stock value of suiting section.

Out of the total stock the shirting stock is one fourth and sales is

27.12% but the sales value is 60% of stock value.

RMG stock is 20% and sales is one-fourth but the sales value is 60%

of the RMG stock value.

56

2. BELGAUM STORE

0

20

40

60

80

100

120

140

160

suitingstock

sellthrough

shirtingstock

sellthrough

rmgstock

sellthrough

Series1

INFERENCES:

The suiting stock is 58% of the total stock and sales is 54% of the

total sales and the sales value in ratio to stock value of suiting is

78%.

The shirting stock is only 13% and its sales out of total is one-fourth

that is 25% but the sales value to stock value ratio is 155%

RMG stock is 27% and sales is 21% and the sell through that is sales

value to stock value of RMG is 65%.

57

3. BHILWARA STORE

0

10

20

30

40

50

60

70

suitingstock

sellthrough

shirtingstock

sellthrough

rmgstock

sellthrough

Series1

INFERENCES:

The suiting stock is 63.24% and sales is 39% but the sales value in

relation to stock value is only 11.45%

The shirting stock and sales is one-fourth of total stock and sales and

the sales value to stock value is 19%.

The RMG stock is only 9% of total stock and sales is 30% but the

ratio of sales value to stock value is 66%.

58

4. GHAZIABAD STORE

0

10

20

30

40

50

60

70

80

90

100

suitingstock

sellthrough

shirtingstock

sellthrough

rmgstock

sellthrough

Series1

INFERENCES:

The suiting stock is 71% of total stock and sales is 57% and the ratio

of stock value to sales value is 35%

The shirting section contains stock of only 17% of total stock and

sales of 18.26% but sell through is of 45.88%

RMG is 11.46% of total stock and sales is 24.71% of total sales

59

5. GORAKHPUR STORE:

0

10

20

30

40

50

60

70

80

suitin

g stock

suitin

g sales

sell t

hroug

h

shirt

ing sto

cksh

irting

sales

sell t

hroug

h

RMG st

ock

RMG sa

lesse

ll thr

ough

Series1

INFERENCES:

The suiting stock is 63.72% of total stock and sales is 51% of total

sales

The ratio of stock to sales value of suiting section is 34%

The shirting stock is 17% of total stock and sales is 30.46% of total

sales

The ratio of stock to sales value of shirting section 75.70%

RMG stock is 19.34% of total stock and sales is 17.8% of total sales

The ratio of stock to sales value of RMG section is 39%

60

SYNOPSIS:

1. The stock and sales analysis of any store or the asset turnover which is the

performance measure based on retailer’s net sales and a total asset reveals

the current status of assortment.

2. The average stock division in any of the store is suiting is 60%, shirting is

25% and RMG is 15%.

3. In suiting section the product mix includes 100% cotton-C, Synthetic PM,

Synthetic PV, Worsted PM, Worsted PV, Worsted PW.

4. The highest stock and sales is of Synthetic PV in most of the stores.

5. The sales of suiting section of the stores like C.P. is 80% while that of

Barabanki, Bhilwara is around 35%

6. There is great variation in asset turnover in suiting section. In stores like

ahemdabad 2 the sales to stock ratio is 0.72 %, likewise in Barabanki and

Kolkata garia the asset turnover is below 10%.

7. While in certain showrooms like that of Bhiwani, Bhubneshwar, Pune,

C.P.1, Shahdara the turnover for suiting section is above 100%.

8. The shirting stock at certain stores is below 15% like that of belgaum,

c.p.1, jabalpur, lajpat nagar.

9. The sales at these stores is also low below 30% of total sales

10. For RMG the stock% is less than 10% for Bhilwara, Ganganagar,

Mumbai.

11. The asset turnover in RMG is 0.82% ahemdabad while 94.32% in

Ghaziabad.

61

DIAGRAMATIC REPRESENTATION OF INVENTORY

MANAGEMENT PROCESS

62

Inventory Model data flow diagram is shown above.

This basically helps us to precisely understand the flow of information in a

system and point out the exact stage/personnel/department responsible for a

particular process at any given time.

Some common symbols used are:

Circles represent processes

Cylinders represent information data stores

Rectangles show a resource

Rhombus is used to show a gate process

Arrows show the direction of data flow.

As shown in the above diagram, the process is initiated when the customer

places an order. Here the data would consist of details like number of items,

delivery dates, shipment details etc. Then the inventory is checked where

again data is fed from a data store. This data store (1) keeps a record of the

historical data. The data store (1) also has input from data store (2) which

keeps the warehouse records like inventory levels, location etc.

The inventory is checked for availability, which is a gate process. If there is

availability, then the item is retrieved and the shipment is scheduled. The

customer receives the item and provides feedback, which again goes into data

store (1). If enough inventory is not available then Reorder placement is

done. A lot of factors are to be considered for the reorder placement.

63

Looking at the bottom of the diagram, it can be seen how the model is

determined. Input from data store (5) goes into the SKU classification

process. The key factors that are considered are volume flow rate, size etc.

This SKU classification influences the type of model that is to be used for that

SKU. The demand patterns are also considered and are fed into data store (6),

which also determines the model to be selected. After the model is

determined, the EOQ and reorder points are set. Various factors like lead-

time and back order costs are considered and then the reorder placement is

done.

This DFD shows the exact information flow in the system, which can help

recognize the individual processes and the data transfer associated with it.

64

SUITING SECTION

RMG SECTION

65

Part -c

66

KEY LEARNING’S / CONCLUSION

All the Grasim Showrooms caters the middle class customers.

The fabrics are available in the form of thaan patties of 12 meter or

12.5 meter grading, rolls, bookfolds and combo packs.

In certain showrooms bookfolds are not in much demand as the

customers perceives that they are not the fresh pieces as it get the

dirt and dust stuck on the folds and thus creates marks and creases.

The company use to send the stock on the quarter basis in certain

fixed ratio.

This is to display and make available all the qualities and range of

fabrics of Grasim to the customers.

But this some time create deadstock as all the varities or range are

not in demand and as the stock replenishment is on the quarter basis

so it sometimes creates understocking.

Customer demand is on the basis of quality and range(pricing) and

hence the fabric is arranged on the shelves on the basis of quality

and range.

The assortment display plays very important role in capturing the

interest of the customers.

The higher priced range fabric are in the starting shelves of the store

and the lower priced range are towards the end of the store. This

give ease to the seller to show the customer their product.

67

Empty shelves gives the negative effect to the customers. So the

stock replenishment or the supply of demanded fabric should be

done on time. The distribution channel plays an important role in

this.

The process of sending the order to the production house starts from

taking the purchase order from the clients or trade partners.

The samples are sent along with the code number and rate per meter

to the party and then they select the samples which are in demand or

required.

The purchase order is made for the required samples.

The P.O. is then sent to the company where compilation of the latest

estimation (booking order) is done and then it is sent to the

production house.

The production team takes 30-45 days to deliver the order and then

it is sent to folding department for grading.

After grading the stock is sent to the warehouse at bhiwani, from

where it is distributed to the different stores.

Through transport it takes 15 days to dispatch the order.

The delivery is done to the respective client against cheque or cash

payment.

For every store the maximum, minimum and optimum stock level is

maintained.

Maximum stock is when entire shelf is required to be filled,

minimum stock is the stock required to fill those shelves which are

visible to the customers and are required for running the smooth

business.

68

In the front and big shelves the stock is placed vertically while in the

lower horizontal shelves the stock is places horizpntally. These

horizontal shelves are not visible to the customers.

The optimum level is that level which is required for that store to

maintain its working capital.

The working capital blockage comes through deadstock.

To minimize or optimize the stock the thaans of 12 meter can be cut

short to 6 meter so that the range is also available to the customers

and also the cost is reduced.

To attract the customers, visual merchandising is must. For this the

appropriate placing of digitals (brand logo and brand ambassadors

posters) is done.

In most of the store one Brand logo is at the back of the cash counter

and two or three in the front towards the side of the entrance

depending on the space and size of the showroom.

All the sales and stock data is maintained on the company software

called shopper 9.

The key issue in inventory planning is the designs which are in

demand in the market are not supplied to the store on time and the

company send the stock accord to its own percent criteria.

The store managers’ view is that the company should have a proper

catalogue and they should show the sample to the store manager or

merchandiser so that he can select the samples from that which are

required.

The level of inventory and sales for each item in every store branch

should be revealed. This improves the transfer of goods between

69

branches and alerts salespeople as to which branches have desired

products. Also less stock can be held in individual stores, reducing

costs.

70

RECOMMENDATION

To know the stock quantity and stock division there should be a

merchandiser who can look after the product mix, color palette and

price range.

There should be balance between the basic fixed order quantity

model and just-in-time model which is followed in the company. So

that the stock which is in demand should reach the store on time.

Grasim is suffering from weak distribution channel. The main

problem with the Grasim brand is that Grasim is not easily available

to customer. Customer wear that brand which are easily available to

them. So Grasim should increase their stores, showrooms in semi

urban areas.

Grasim is now in readymade garments also so Grasim need to open

their showrooms in the mall.

People do not know about the Grasim RMG so there is need to

increase the awareness about Grasim RMG.

Grasim enjoys the loyalty of the customers. Customers are satisfied

with Grasim in terms of quality but they are highly dissatisfied with

Grasim in terms of location of store, promotion, advertising.

71

ANNEXTURE-QUESTIONNAIRE

(To know the problems regarding the inventory planning and management

these questions were asked to the store managers telephonically)

NAME:

STORE NAME:

LOCATION:

CARPET AREA:

1. Software used to maintain stock and sales data________

2. For the suiting section how many shelves are available

i) Vertically________ ii) horizontally___________

3. What is the total number of thaans in suiting section is available in the

store?

____________________

4. In each shelf how many thaan pattis can be kept?

___________________

5. In what forms the fabric is available in suiting section?

i) thaan patties_______ ii) bookfolds_______ iii) rolls_______

6. In shirting section how many racks or shelves are available?

_________________

7. How many number of rolls in shirting section are available?________

72

8. Number of rolls in 58 inches _______ and in 36 inches _____________

9. Number of racks in RMG section ________________

10.Number of racks available for shirts _______________

11.Number of racks available for trousers ______________

12. Number of racks for suits and jackets ______________

13. Number of display hangers for RMG ______________

14. Number of central display unit( CDU) for RMG_____________

13. Total number of shirts available ____________

14. Total number of trousers available____________

15. Number of jackets available _________

16. Number of suit lengths available ___________

17. Number of combo packs available ___________

18. The sales of suiting section ________%

19. The sales of shirting section _______%

20. The sales of RMG section ________%

21. The time of replenishment of stock ________days/weeks/months

22. What is the lead time for the stock ________

23. What is the reorder point for suiting section _______

24. What is the reorder point for shirting section _______

25. What is the reorder point for RMG section _______

26. Customers demand is on the basis of

i) quality______ ii) price range______ iii) quantity range______

73

27. How much you are satisfied with the current inventory management?

i) satisfied_______ ii) neutral________ iii) unsatisfied__________

28. What are the key problems existing regarding the inventory management

in the store?

i)______________________________________________

ii)______________________________________________

iii)_____________________________________________

29. What are the probable solution to the problems listed above according to

you?

i)_______________________________________________

ii)_______________________________________________

iii)_______________________________________________

74

LAYOUT PLAN OF THE GRASIM SHOWROOM

75

ELEVATION PLAN FOR THE SUITING SECTION

76

ELEVATION PLAN FOR SHIRITING SECTION

77

ELEVATION PLAN FOR RMG

78

BIBLIOGRAPHY

WEBSITES:

www.adityabirla.com

www.udel.com

www.emeraldinsight.com

www.inventory-management.de/inventory management-354.htm

JOURNAL: Journal of business and retail management research

BOOKS:

Retail management: A strategic approach by Berman Barry and Evans.R. Joe

Integrated retail management by Wrice mark

79