Reliance retail limited ; jigisha

A

SUMMER PROJECT REPORT

ON

A STUDY OF SUPPLIER RELATED PAYMENTS SYSTEM AND PROCESS

INVOVLED IN SUPPLY CHAIN AT RELIANCE RETAIL, AHMEDABAD

Project study carried out in partial fulfillment for requirement for MBA Degree

Programme

(2006-2008 BATCH)

Submitted To:

Ahmedabad Education Society Post Graduate Institute of Business Management

Ahmedabad

Submitteed By:

Jigisha P Aagja

Roll No: 01

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ACKNOWLEDGEMENT

I would like to thank Mr. Subir Sinha, AVP & Head (Human Resource), Mr.

Rahul Devi VP (Commercial), Mr. Prakash Somany, In-charge , Distribution

Centre, Mr. Sushil Shinde (CPC Manager) and all employees at Reliance Retail,

Ahmedabad for all that I learned from them about processes involved in

Payments system and supply chain management.

I thank Dr A H Kalro, Director Ahmedabad Education Society Post graduate

Institute of Business Management, for giving me opportunity to work for summer

project. I also thank Ms. Jinal Parikh, Faculty Member (Summer Project In-

charge) for supporting me throughout my summer project. I thank Dr. Mayank

Joshipura for tirelessly anaswering my querries relating to concepts involved in

my project.

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EXECUTIVE SUMMARY

Organised food retailing is a relatively new phenomenon in India, with small Western-

style supermarkets only starting to appear since the 1990s. Most food is still sold through

local ‘wet’ market vendors, roadside pushcart sellers or tiny kirana (grocery) stores.

Although less than one per cent of food is estimated to be sold through supermarkets, this

share is growing rapidly. In this light, Reliance Retail has rolled out stores in different

parts of India. A study is undertaken to understand the supplier related payment system

and process invovled in supply chain at Reliance Retail, Ahmedabad. A mix of analysis

of internal records at Reliance Retail, Ahmedabad, unstructured informal interviews and

observation methods was employed for undertaking the study. There is strong internal

control system existing at Reliance Retail, Ahmedabad. Reliance Retail, Ahmedabad has

finely customised SAP to suit its business processes.

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TABLE OF CONTENTS

Certificate i

Acknowledgement ii

Executive summary iii

Table of contents iv

Retailing trends in the world 1

Retailing in India 12

Food Retailing in India 13

Reliance Retail 16

My study 28

Observations/Findings 29

----- Distribution center for Reliance Retail Stores 29

------ Supply Chain Process for fruits & Vegetables 31

------ Procurement Planning / Sourcing 42

------- Problems faced at different levels 65

------- Activities undertaken by commercial Team At CPC 66

------- Warehouse Management System 71

------- Document Management System 77

------- Significance of SAP Enabled Invoice Verification & DMS 83

-------- SAP Enabled Payment System and Internal Control 86

-------- Invoice Verification For SKUs At DRY DC 94

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Suggestions 99

References 100

Appendices 101

Retailing Trends in the World:

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Retailing includes all the activities involved in selling goods or services directly to final

consumers for personal, nonbusiness use. A retailer or retail store is any business

enterprise whose sales volume comes primarily from retailing.

As retailers shift from mass marketing to targeting specific groups of consumers, they're

becoming increasingly innovative. Leveraging demographic segmentation has become

quite common, so retailers are taking it a step further and identifying ever-more specific

markets to better position their strategies.

The growing trend in retailing is to move away from a centralized organizational

structure that manages all marketing, assortment, and distribution channels to a

decentralized approach. Thanks to distribution channels like the Web, consumers are now

accustomed to retailers that market directly to them. Retailers are responding to consumer

expectations with what's been called "mass customization."

Amazon.com has set the standard for customized retailing. Once you purchase a product

from Amazon's Web site, the site not only recognizes you as a customer when you return,

but it also recommends products based on your sales history. Essentially, Amazon's

"store" tailors itself to meet your personal needs.

Consumers are now demanding the same level of service from other retailers, including

brick-and-mortar stores.

The essential premise of localized retailing is about creating "my kind of store" – an

environment where customers can feel completely at home, relate with ease to the

shopping experience, and see themselves reflected in the marketing. Appealing directly

and individually to customers, though, requires a strong awareness of the local customer

base and a firm grasp of what will catch customers' attention.

A good example of this principle in action is the "Urban Theater" that Home Depot

created in its recently opened store in Manhattan. In this "virtual apartment" setting,

Home Depot showcases its most urban-relevant products while actors complete home

projects in a mock loft apartment – a setting that many of the borough's residents can

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relate to. "The [retail] chains that are always successful in the city are the chains that

come in and change for the city and react to New York," said Jeffrey Roseman, a real

estate broker in the city, in Women's Wear Daily.

Localised retailing has also spawned "pop-up" events in which marketers or retailers set

up shop briefly to target a specific market segment. These retailers may have traditional

brick-and-mortar locations, but they use this type of marketing event to identify and

communicate with a particular audience. Some retailers say that these local events can

add more value to their marketing campaigns than traditional advertising or marketing.

Target Corporation has enjoyed success with pop-up retailing events such as its "Target

Bullseye Inn." Target took over the Bull's Head Inn in Bridgehampton, New York, for

five weeks, creating what the company called "a one-stop resource for all things

summer." This special event featured exclusive items – from tableware to bed linens to

outdoor decorating items – from Target designers. The goal of the event was to "surprise

and delight our guests by bringing everything they need for summer fun directly to them

at a favorite summer spot, the Hamptons," said John Remington, vice president, events

marketing and communications for Target. Target has also created special marketing

events in Manhattan, launching designer Isaac Mizrahi's apparel during a fashion show in

2004 and promoting holiday sales with a pop-up event on a boat in 2002.

Customer-centricity

Retailers are continuing to focus on local customers by making their marketing or

products more customer-centric: They're creating modified versions of their brand by

targeting smaller and more specific market segments.

Best Buy has been a pioneer in this approach. The retail chain has launched very specific

store concepts that speak directly to a soccer mom, a tech guru, or that urban guy who

wants his entire home entertainment system built and installed for him. While the product

assortment may be similar, its presentation varies in these customer-centric locations.

Stores designed to appeal to soccer moms may offer a kids' play area, educational toys,

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and products like appliances in addition to Best Buy's traditional consumer electronics

mix. Other stores may feature home theater displays as well as high-end and cutting-edge

electronics to attract that urban guy.

These stores first determine the demographics of their local market and choose two

customer profiles. Then, they stock merchandise accordingly. The approach seems to be

succeeding. Brad Anderson, Best Buy's chairman and CEO, recently said that "customer

centricity lab stores collectively outperform other U.S. Best Buy stores in terms of comp

store sales gains and gross profit."

These small variations offer great rewards. This type of focused positioning creates a

unique message for customers; they truly feel that this is "my kind of store." While it also

offers challenges – it creates extra processes and structure in the corporate office, for

example – its potential to evolve and expand brand offerings seems limitless.

Another way to target specific segments is through in-store media, which has evolved as

a main vehicle to individualise a retailer's message. Eddie Bauer was an early pioneer in

testing in-store video media. By placing flat-screen televisions in store windows,

individual stores were able to change their advertising messages at any point in the day.

This gave Eddie Bauer the ability to appeal to morning shoppers who might be motivated

by a different marketing message than people shopping in the evening.

Changing climates

A customised approach can also help retailers adjust their product offerings to the local

climate. Though retailers understand the need to carry shorts in markets where it's hot

year-round, their systems have not always allowed them to do so. In the past, shoppers

may have found only a small selection of shorts for sale in Miami in the winter, during

that city's peak tourism time. Now, retailers have fine-tuned their marketing tactics and

carry shorts year-round in warm climates. They're also creating exclusive product lines

that are climate-sensitive: A retailer may carry a long-sleeved shirt in cooler markets, for

example, but offer a short-sleeved version in warmer markets.

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As consumers learn that they can purchase products through more channels, retailers are

reacting; their goal is to get the customer what they want when they want it. If a retailer

fails to stock items that are in demand in a particular climate-driven market, the customer

can easily find it elsewhere, whether that's online or down the street. As customised

retailing expands and consumer expectations rise, retailers must exploit every opportunity

to create unique product offerings that speak directly to their local customers.

Pricing is another key aspect of localisation. Many retailers now localise pricing to adjust

to local market conditions; they can grow their profit margins or cater to a local

marketplace's pricing tolerance. Essentially, they can charge what a particular market will

bear.

"Retailers whose stores/outlets span locations that have different customer segments in

terms of buying power and interests need to be able to price appropriately for each of

these customer segments to maximise profit for each segment," says Sanjay Chopra, co-

founder of Calance, a global professional services firm. "Retailers need to be able to plot

the demand curve of each segment, then price and promote appropriately to maximise

profit, clear inventory, or meet revenue targets."

Customised retailing has evolved beyond breaking a retailer's store base into a few store

types. As distribution channels continue to diversify, retailers must find ways to appeal to

specific market segments. Their product mix must be relevant to the local climate and

culture, and their pricing must reflect what the marketplace will bear. While mass

marketing may be on the decline, mass customisation is evolving -- and as it evolves, so

do the demands that each market places on retailers

Store of the Future

Today, customer-centric retailers worldwide are increasingly banking on technology, not

people, to gain an advantage in the marketplace, and with many companies in various

fields in retail introducing Radio Frequency Identification technology (RFID), the chase

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is on to make it happen.

In a relentlessly competitive retail environment, particularly in the US and Europe, the

goal is to identify key customers, what these customers want, and to have what they want

in stock and on store shelves as soon as it is made. Cutting the down time between the

product selling from the shelves and the time taken to replenish it and also to get a new

product on to the shelves as soon as possible, is heavily dependent on technology today.

For some, the implementation is on now, but for others, it may be decades away. But

Indian chains will have to adapt quickly as prototype technologies reshape retail in the

next five to ten years. Though there are a few people in India who have already started

implementing the technologies that are new. A case in point is the Adora jewellery brand

– one of the fastest growing diamond jewellery brands in India. They already have 160

outlets and are projected to grow to over 300 in the next 18 months. Not only have they

successfully implemented a very extensive ERP technology covering manufacturing,

supply chain management, but also to a great extent have been successful in installing

customer-friendly touch screen terminals with wireless internet at many of their shop-in-

shops. Prabir Chatterjee Managing Director, Adora Jwellery is of the view that the

technology is being used for the first time by a jewellery brand in the retail industry and

will cut down the time between selection of a product by a customer and delivery to him

from the current three weeks to 72 hours.

The customer can access from any of the 5,000-odd designs available in ready stock at

any of the outlets in India. Upon confirmation of the order, the piece will be shipped to

the ordering outlet within 24 hours, thereby making over 5,000 products available to the

customer at the touch of a button even though the stocking at each outlet may not be

more than 300 pieces.

The concept is based upon the use of RFID along the entire retail supply chain. "An

intelligent tag" that utilises a miniature computer chip and antenna is attached to the

product and transport package. It is similar to more conventional barcodes. In fact, it is

expected that it will eventually replace barcodes. Right now, it is expensive for some

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applications, but it provides the manufacturer and retailer with important product

information.

For retailers, the technology optimises tracking of merchandise, minimising losses and

maximising product management. For consumers, it means fewer out-of-stock situations

on shelves and quicker checks of a product's expiry date.

In the Store of the Future, RFID wireless technology is being tested mainly for supply

chain management. It can track the movement of goods to the warehouse, to the store,

and replenishment of goods on "intelligent shelves" in the store. RFID technology is also

the key to other applications in the Store of the Future.

For the moment, only individual, stand-alone applications of innovative technologies

have been implemented at retail. In the future, the plan is to link a variety of these

technologies to provide a more sophisticated package.

There are several basic interactive areas in the Store of the Future. For instance, when the

customer checks in using a card that is issued to regular customers, a user-friendly

computer on the shopping cart greets the customer by name and becomes the shopper's

Personal Shopping Assistant (PSA).

The computer displays information and prices when customers scan the product barcode

over the built-in reading device. It also provides information about special promotions,

directs customers to products they usually buy, keeps a running total of the shopping bill,

and facilitates checkout (since customers have already scanned purchases). The card,

which is also a loyalty card, automatically enters customers into the store's bonus system.

Information terminals are also set up for various merchandise groups to offer details

about the products. In food stores, it might offer recipes. An "intelligent scale" not only

identifies the product, but also weighs it and emits a price slip. Electronic advertising

displays are placed near the merchandise to which they apply. And "smart shelves"

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stocked with RFID-tagged products communicate with store personnel so that they are

rarely empty.

Virtual sales could enable customers to feel the silk of a new dress or smell the aroma of

freshly ground coffee when they are sitting in front of their TVs or computers at home,

areas where retailers see sales increasingly being made.

Check Out

Every retail experience ends with some version of checkout. The Store of the Future

checkout requires no unloading of the cart (because everything in the cart has already

been scanned). Customers check themselves out (passing a RFID security check and a

RFID deactivator to ease exit).

Behind the technology, inventory management is the basic building block from the

retailer's perspective. A mobile assistant/personal digital assistant helps employees help

customers. An inventory count is available by just pushing a button. And smart shelves

prevent out-of-stock situations or misplaced items. There is also the promise of future

supply chains that interact, that can track shipments from the producer to stores equipped

with this new technology. Once in the store, it can track the flow of merchandise from

stockroom to store shelf to customer checkout.

Not so far into the future, it may be possible to customise products that are, today, mass

produced, and to have those products delivered when and where customers need them.

The exponential growth of the Internet makes this vision more realistic than it was a few

years ago. About 71 million people born between 1979 and 2002 are coming of shopping

age and are very comfortable with technology, in many cases more so than members of

immediately preceding generations.

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According to John Davies, vice president of Intel's solutions’ market development group

there will be great efficiency and visibility across the retail supply chain and also

enhanced customer experience.

Cart-level and pilot-level applications will be visible in five years; significant use of

wireless tagging will take seven years or more, according to David Hogan, CIO, National

Retail Federation. If the price of the RFID technology comes down there will be

widespread adoption by retailers of RFID technology.

Tags now cost about Rs.12 to Rs.15 each but time and widespread use should bring the

cost down to a few paisa.

Technology has been used extensively in retail banking, servicing the needs of the

consumers across the nation. Imagine not having the online banking system – you could

only withdraw money from your branch via a cheque instead of the smart ATM card that

enables you to do multiple transactions at any point in the world even though your

account may be in a small branch in New Delhi!

This has also changed the face of the stock trading, retail trading in stocks and shares and

the financial and equity markets by making so much available. Can the retailers afford

therefore to stay away from technology in retail?

It is after all the point where the customer actually touches and feels the heart of the final

usage of technology and makes life so much simpler.

Future IT Trends and Benefits for Retailers

The hardware and software tools that have now become almost essential for retailing can

be classified into three broad categories.

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1) Systems that affect the customer directly

• Bar coding and scanners

Point of sale systems use scanners and bar coding to identify an item, use pre-stored data

to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new

concept where the consumer pushes the full shopping cart through an electronic gate to

the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and

scanned. All that the consumer has to do is to pay for the goods.

• Payment

Payment through credit cards has become quite widespread and this enables a fast and

easy payment process. Electronic cheque conversion, a recent development in this area,

processes a cheque electronically by transmitting transaction information to the retailer

and consumer's bank. Rather than manually process a cheque, the retailer voids it and

hands it back to the consumer along with a receipt, having digitally captured and stored

and image of the cheque, which makes the process very fast.

• Internet

Internet is also rapidly evolving as a customer interface, removing the need of a

consumer physically visiting the store.

2) Retail Operation Control Systems

• Retail exchanges

Various retail exchanges have been set up in the US and in Europe. One of them is the

World Wide Retail Exchange, which enables retailers to interact with vendors and with

other retailers for B2B transactions. Such exchanges help in reducing transaction costs.

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They need to be set up in India, too.

• ERP Systems

Various ERP vendors have developed retail-specific systems which help in integrating all

the functions from warehousing to distribution, front and back office store systems and

merchandising. An integrated supply chain helps the retailer in maintaining his stocks,

getting his supplies on time, preventing stock-outs and thus reducing his costs, while

servicing the customer better.

3) Retail ERP packages

In the future there would be a need to evaluate if retail ERP packages like JDA, SAP, and

Retek are suitable for Indian retailers. These products have an integrated solution for

demand forecasting, merchandising, replenishments, supply chain, etc. Most of these

packages have built-in CRM, OLAP tools, collaborative planning and supply chain

systems that are tightly integrated with the merchandising and forecasting functionality.

Though the flip side is that these packages are costly, the return on investment takes

longer and expertise to implement the systems is gradually being developed in India.

Hence, it would be a good idea to evaluate these packages, determine the cost-benefit

analysis, and wherever possible, source the software from one vendor organisation that

would provide all the functional requirements of the retailer from an information

technology perspective.

The Indian experience in implementing Retail ERPs has been difficult due to the lack of

trained ERP package implementers in India. Hence, the cost of implementation has gone

up, as package experts have to be brought in from abroad. But this is true for all ERP

implementation in India, whether in the retail sector or in the manufacturing sector. In the

past, manufacturing industries also faced difficulties in implementing ERP packages

specifically meant for the industry, but over time, with expertise in the packages and in

their implementation building up within India, the success rates of such implementations

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have increased. Hence, over the next two to three years, Retail ERP expertise will grow

and will be able to support the needs of Indian retailers, who in that timeframe would

have progressed up the learning curve on the benefits of information technology.

But one has to learn where to draw the line and cannot go on with adapting new

technologies which sometimes may not be cost effective solutions.

At the same time, growth is rapidly evolving and change is the only thing that is constant.

If we in Indian retail business don't adapt ourselves with the changing times we will be

left way behind in another day and age.

Introduction to Retailing in India: Organised food retailing is a relatively new phenomenon in India, with small Western-

style supermarkets only starting to appear since the 1990s.

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Most food is still sold through local ‘wet’ market vendors, roadside pushcart sellers or

tiny kirana (grocery) stores. Although less than one per cent of food is estimated to be

sold through supermarkets, this share is growing rapidly.

Most supermarkets resemble the small independent operations that existed in Australian

cities and towns about 20 years ago, typically occupying from 275-750 square metres and

carrying about 6000 stock-keeping units.

Most of the supermarket development has occurred in the south of the country in the

major cities of Bangalore, Chennai and Hyderabad, as well as New Delhi and Mumbai in

the north.

According to the Images-KSA Technopak India Retail Report 2005 an estimated 500

shopping malls are expected to be built by 2010 from a near-zero base in 2000, in a trend

that can benefit Australian producers by providing greater visibility and shelf space.

Convenience stores are also taking off in major cities, usually in the form of Shell shops

or Food Stops attached to petrol station outlets.

The format and product range is surprisingly similar to those in Australia, and they often

include chilled and refrigerated sections. Market analysts estimate the organised retail

sector has been growing by nearly 30 per cent a year since 2000 with similar growth

likely in the short-to-medium term.

The sector is expected to undergo further change with prospective new domestic and

global foreign entrants, and the takeover or exit of some existing participants. Global

players such as Wal-Mart (US) and Carrefour (France) have indicated their plans to enter

India once Indian foreign investment regulations permit.

Food retailing in India

Traditional local markets and small-scale retailing continue to dominate India’s food

retail sector. There are an estimated 12 million retail outlets, of which almost seven

million sell food and grocery products. The vast majority of these are small kiosks (17

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per cent), general provision stores (14 per cent) and grocery stores (called kirana; 56 per

cent of all rural retail outlets) run by a single trader and his family With more than 71 per

cent of the population living in small villages and engaged in agriculture, most of India

still does its food shopping at small-scale vendors in the local village, or at larger-scale

weekly markets often serving several villages in one area, where small individual vendors

trade.

In the towns and cities, most consumers do their food shopping at the local

neighbourhood independent small retailers, kiosks and street hawkers. Servants in high

income households usually undertake this task. Most cities and towns also have one (or

more) large central fresh produce market where wholesalers and retailers (plus some

consumers) procure their supplies for the day from individual traders. The Food

Corporation of India (FCI) has an extensive nationwide network of about 478,000 fair

price shops and sells subsidised food grains and certain other staples, but since the

retargeting of the Public Distribution System (PDS) in 1997 to focus on the poor, these

are only available for those below the poverty line set by the government.

There are also a few other chains of government-operated provisions stores, such as the

Kendriya Bhandar (about 120 stores nationwide) run by the Ministry of Personnel,

Grievances and Pensions, and the canteen stores (about 34 plus 3400 canteens) run by the

Ministry of Defence, which are exclusively for Defence personnel. Thus the majority of

food and beverage retailing in India is categorised as belonging to the unorganised sector.

There is no firm data for the total value of India’s annual food and beverage expenditure,

however there are various calculations and estimates, such as about US$90 billion by

2000 based on the Indian government’s estimates of average urban and rural household

expenditure on food and beverages3, and about US$135 billion by 2004 and growing at

4-5 per cent a year, based on industry estimates cited by the USDA.

However it is commonly believed that less than one per cent of food and beverage retail

sales take place through the organised retail sector, though this share is estimated to be

growing rapidly. An early form of ‘supermarket’ has been around in India for some time:

the single-unit, smarter familyowned grocery and provisions store, now calling itself a

supermarket (while others may call it a ‘super-kirana’), of which there are at least five to

20 in each city.

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Another form is a specific food and grocery section contained in some department stores,

such as the Sahkari Bhandar department store chain, which has about 16 stores in

Mumbai. But it is only in the past decade or so that a form of supermarket akin to a

Western-style supermarket, albeit on a smaller scale, has started to appear in India,

mainly in certain cities of southern India plus in New Delhi and Mumbai.

One of the pioneer supermarket chains was created in 1995 through a technical

agreement (and from 1999 by a 51/49 joint venture) between India’s Calcutta-based RPG

Group and the UK’s Jardine Matheson Group’s Hong Kong-based subsidiary Dairy Farm

International. The joint venture converted the loss-making old Spencer department store

chain owned by the RPG Group into the Foodworld supermarket chain, with about 94

stores in several southern cities, including Chennai, Bangalore, Hyderabad and Pune, by

2005. While Dairy Farm aims to continue expanding the Foodworld chain, the RPG

Group decided in 2005 to sell its 51 per cent share in the Foodworld joint venture, though

possibly retaining half the supermarkets rebranded as Spencer’s. RPG Group plans to

focus on developing its other retail businesses including the Spencer hypermarket chain,

which had three stores opened by 2005 (in Hyderabad, Visakhapatnam and Mumbai), and

a plan for 20 stores across India by 2007 in existing cities plus others such as Chennai,

Bangalore, Delhi, Calcutta, Ahmedabad, and Chandigarh. Several other Indian-owned

companies have developed chains of supermarkets, hypermarkets or convenience stores,

mostly in major cities in the southern states plus in Mumbai and Hyderabad.

Another pioneer, the Nilgiri supermarket chain, opened its first supermarket in Bangalore

in 1971 and by 2005 had built a network of 30 stores, both company-owned and

franchised, in the states of Tamil Nadu, Andhra Pradesh,Maharashtra and Karnataka.

The Hyderabad-based Trinethra Group opened its first supermarket in 1986, expanded to

68 stores by 2004, then acquired the 12-store Fabmall chain in Bangalore, in partnership

with a new 50 per cent equity investor, Bangalore-based GW Capital, to enable further

expansion into more states. Fabmall now has a total of 28 stores in Bangalore and

Chennai. Other significant chains include the Subhiksha discount supermarket chain, with

72 stores in Tamil Nadu, and Pantaloon Group’s 42 Food Bazaar supermarkets and Big

Bazaar hypermarkets in major metropolitan centres.

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The Indian government has taken a cautious approach to allowing foreign direct

investment (FDI) in food retailing (and retailing generally), with majority foreign

ownership in food retail chains not allowed, and approvals generally given on a case-by-

case basis. (In February 2006 the government made a small concession on FDI in

retailing, by announcing that up to 51 per cent in retailing of “single brand” products

would be allowed.) Since the joint venture of the RPG Group and Dairy Farm

International was approved in 1999, only Germany’s Metro Group (with two Metro Cash

& Carry wholesale stores opened in Bangalore so far since 2002), and the South African-

owned Shoprite Group in partnership with a local investor (with one Shoprite

hypermarket opened in Mumbai in late 2004) have been permitted to set up operations.

Local foodservice group Radhakrishna has also gained a licence for food wholesaling in

partnership with France’s Intermarché Group, whereby independent food retailers can

sign up for use of the Spar store brand. Several major multinational corporations, in

particular Wal-Mart, have been lobbying the Indian government to allow majority foreign

ownership in retailing. Wal-Mart has indicated that it would significantly increase its

sourcing from Indian suppliers from its current level of US$1.5 billion a year

(so far mainly non-food products, but likely to soon include some food products, such as

basmati rice, tea, spices, seafood), if it were allowed to set up retailing operations.

Major Indian retail groups, such as the RPG Group and the Pantaloon Group, have

expressed their strong opposition to allowing more foreign direct investment into Indian

retailing, especially majority foreign ownership. They argue that the sector is still at a

very early stage of development and multinationals such as Wal-Mart would swamp local

players, especially the kirana-wallahs. However the Indian government appears to be

considering some degree of liberalisation, in the interests of improving efficiency in

retailing and supply chains and so strengthening the integration of the Indian agrifood

market, plus opening possible new avenues for Indian exports via multinational

retailers.

RELIANCE RETAIL

A targeted sales turnover of Rs. 90,000 crore by 2010 of Rs. 30,000 crore over the next

five years – that's the retail vision of Mukesh Ambani and his RIL retail team. RIL's retail

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venture seems all set to achieve the status of being the flag-bearer of India Retail Inc, and

that too in record time!

Culling information from all possible sources, Images F&R Research attempts to put the

Reliance Retail jigsaw in order and see how the concept and strategy differentiates from

the existing competition, how it impacts the intermediaries and consumers, and more

interestingly, how will it stand up to the real competition from global retail powerhouses

like Wal-Mart, Carrefour, Target, Metro, Sears and Tesco that are eager to enter the

Indian retail arena once the FDI barrier is lifted. Read on for the full story…

It's been in the news for quite some time now. Earlier, about a year ago, it was only

whispered in close industry circles. Slowly the whispers become louder, and the word

gained ground that India's largest private sector company, Reliance Industries Limited

(RIL), is entering the Indian retail sector in a real big way.

But with virtually nothing coming from anyone in the know inside RIL about their retail

plans, this has to be one of the most closely guarded secrets of India's corporate story.

Blueprint for 800-odd Towns/Cities: Initial Investment Rs 3,350 Crore

Amidst all sorts of speculations in the media circles about RIL's intended retail foray, the

word finally came out on January 23, 2006, when the Mukesh Ambani-controlled

Reliance Industries Limited presented the mega retail initiative plans to its board of

directors who subsequently gave their consent to pursue the retail business through a

wholly-owned subsidiary of the company – likely to be christened Reliance Retail

Limited.

The Reliance Retail blueprint envisages nation-wide chains of hypermarkets,

supermarkets, discount stores, department stores, convenience stores and specialty stores,

in about 800-odd cities and towns across the length and breadth of India. The RIL board

of directors approved the initial phase of the retail foray at an estimated cost of Rs 3,350

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crore (US$ 750 million).

That was big news for both the national and international media, which went all agog

again with intense speculation. Giving full respect to the importance of this

announcement, more than one leading international daily – chiefly, The Financial Times

– gave this news a front-page treatment, speculating (like many others) that this

investment could just be an initial tranche of a much larger commitment from Reliance

Industries towards the retail project.

Just how big and grand this investment is for the Indian retail sector can be gauged by the

simple fact that the entire Indian retail sector is estimated to be at Rs 1050,000 crore

(US$ 233 billion) – growing at five per cent annually – and the estimated share of

organised retail is only Rs 36,000 crore (US$ 8 billion), at present, albeit growing at over

30 per cent every year.

That makes Reliance Retail's proposed investments equivalent to about 10 per cent of

India's organised retail market – such a level of investment in the Indian retail arena has

been unprecedented in the country's most promising sunrise industry – retail.

So much so, projections by the Images-KSA India Retail Report 2005 of an organised

retail market of Rs 100,000 crore (US$ 22 billion) by 2010 now appears conservative,

likely to be achieved much earlier than 2010.

If Indian retail was lacking a whole-hearted and full-blooded thrust from a big and large

corporate house (apart from the lukewarm investments made by the Tatas and ITC), it is

now all set to change. Mukesh Ambani, who has been nourishing retail ambitions for

quite some time now, has clearly positioned himself in to the role of redefining the entire

landscape of Indian retail.

RIL Set To Become World's Largest Real Estate Property Owner

22

What is even more interesting is that Reliance Industries Limited will far out-surpass the

Catholic Church in becoming the world's largest owner of real-estate property by virtue

of its mega Retail and Satellite Township plans, in the next two to three years!

Now what exactly does this mega retail plan portend for the Indian retail sector? In fact,

what exactly are RIL's plans, in terms of retail strategy? How will RIL differentiate its

stores and concept from existing players who have already moved into the retail space

earlier, and have already established a good foothold? How will this impact the existing

retail majors – the likes of Pantaloon Retail, Trent India, Shoppers' Stop, RPG, etc? How

will the consumer benefit from RIL's venture and how will intermediaries like traders,

suppliers and farmers all along the supply chain network benefit? What will be the USP

of Reliance Retail?

And, more significantly, how will this impact the major international retailers who plan

to enter the Indian retail market? Reliance Retail is in fact giving India for the first time a

real feel of the scale at which these global retail powerhouses actually operate, it is

preparing India to stand up to the ensuing competition and in the process, allow

consumers the full benefits of modern retail.

Retail Will Become Core Business of RIL

Reliance Industries Limited is the largest and one of the fastest growing private sector

companies in India, with business activities encompassing almost all major growth

sectors of the Indian economy. The company manufactures and markets a wide range of

products with market leadership in almost all its businesses.

All of Reliance Group production and services ventures have one common feature –

global scale operations employing state-of-the-art technology in all fields. The company

is truly emerging as a well diversified conglomerate with global competence in

technology, management and financial capabilities to meet the needs of a rapidly growing

Indian market.

23

With domestic market shares ranging from 40-80 per cent, RIL is also ranked among the

top 10 producers globally, for all its major product segments. It is one of India's largest

business conglomerates with total revenues of Rs 1,00,650 crore (US$ 22.6 billion).

It is being speculated within the industry that the ROIs made by RIL in the retail space

will far out-shadow its existing core flagship businesses – and very soon retail will

become the core business for the Mukesh Ambani-controlled Reliance empire.

Factors contributing to Interest in Retail sector For Reliance:

For a long time, organised retail in India remained the attraction of only a few

enterprising Indian entrepreneurs, who took the plunge into the deep sea of a hitherto

uncharted territory.

It is only in the last 10-15 years that the retail sector's inherent attractiveness started

catching the attention of large corporate houses in India, like the Raheja Group, RPG

Enterprises, the Piramal Group etc. But with due respect to all of them, their vision has

remained conservative and they have been modest in scaling up their retail business

models to take it to the next level of operations with a pan-India presence.

What clearly lacked was the level of investments; the slow pace of consolidation and

indecisiveness in experimenting and migrating between multiple formats, categories and

channels. This has prevented them from reaping the true benefits of modern retailing.

The compelling drivers of new retail thrust in India with a large corporate house like

Reliance Industries announcing big, not to mention international retail giants who are

getting impatient to enter India are as follows:

• The first driver is a self-sustaining buoyant Indian economy that is growing at eight per

24

cent a year.

• The second is that as the economy grows and expands, the consumption habits and

patterns of people also change – and it is changing real fast in India.

• The third important driver of organised retail is the country's demography – India is

home to the largest and the youngest population in the world.

India's 300 million-odd middle-class, the real consumers, is catching the attention of the

world.

Going by its past track record of business acumen and foresight, Reliance Industries

could not afford to miss out on this great potential that organised retail offers. The

opportunity has all along been there for all Indian businesses to grab, and indeed some

have made a serious attempt. But, it is RIL's announcement of entering the retail sector in

this big and grand manner that has really provided the needed thrust for take-off, it has

shaken up not only the entire Indian retail fraternity and key stakeholders therein, but has

also evinced the interest of other business groups to look up to retail and consider

sizeable greenfield investments in retail ventures as also in building up the supply chain

from farm/manufacturer to retail stores.

It was at the India Retail Forum 2005, organised by the IMAGES Group, when Hital

Meswani, Executive Director, Reliance Industries Limited, highlighted the changing

dynamics of retailing in key areas such as demand, supply, technology, supply chain

management and on how the industry expects government to foster and facilitate a more

proactive retail trade policy.

Hital Meswani remarked, at the IRF '05, that change in demand patterns have provided a

huge opportunity to organised retail, as it realigns itself with global trends in value-

oriented shopping experiences. He opined that change in supply trends provides the

greatest challenge to retailers as price points grow competitive and new formats emerge

25

on a large scale, and to provide all of that to the ever-demanding customer without

compromising on assured supply and highest quality. These remarks were an indication

of the seriousness with which RIL was working towards its retail venture – and the

leaflets of the blueprint started unfurling thereafter, albeit cautiously.

RETAIL PLANS & STRATEGIES

Manoj Modi and Hital Meswani, flanked by a core team of trusted lieutenants and

business aides, constitute the top hierarchy in Reliance Retail. They have access to close

supervision from Mukesh Ambani himself. The retail plans are humungous and Reliance

insiders claim that the objective is to 'do a Wal-Mart' in India.

Targets 90,000 Crore Turnover by 2010

RIL has set a revenue target of Rs 90,000 crore (US$ 20 billion) from its retail operations

by year 2010, almost 10 per cent the size of the current organised retail business in the

country. It dwarfs India's current numero uno in organised retail chain, Pantaloon Retail,

which currently has an annual turnover of US$ 240 million from its 84 outlets spread

over 30 cities and has projected revenues of US$ 2 billion by 2009.

RIL's plans include a pan-India footprint of its stores, across multiple formats and

categories, in more than 800 cities and towns, and in record time.

Multiple Formats with Investment of Rs 30,000 Crore

The brains behind the mega retail venture have been able to ideate and develop a low cost

pan-India supply-chain model that will involve massive economies of scale.

The strategy is to set up a chain of hypermarkets, supermarkets, discount stores,

speciality stores, and convenience store formats in 800-odd cities and towns across the

length and breadth of the country at an investment of around Rs 30,000 crore (US$ 8

26

billion).

The retail foray will have almost all the leading Indian and international brands, and

possibly a sizeable presence of private labels as well, and would clearly try and build a

loyal customer base with tens of millions of consumers from across the country.

While the sheer scale of operations will ensure Reliance's retail business a 20 per cent

return on investment over a span of five years, its rural low cost-high return investment

will ensure sufficient competitive edge vis-à-vis purely urban retail operators.

The first phase was expected to see around 1,575 retail outlets coming up in just three

months – between December 2006 and March 2007. The first of these outlets were

expected to open up around September this year, either in Mumbai or Ahmedabad.*

Reliable sources say that the retail business would start with 20 destination points in A-

class cities in India, and soon expand to over 100 destinations in a very short span of

time. On an average, each of these retail centres could be spread over 100 acres of land

that would house leisure and entertainment facilities, small hospital complex, eateries and

a big mall. RIL insiders are, of course, tight-lipped about everything.

Further, it has been reported in the media circles that initially the company has targeted

the five states of Maharashtra, Gujarat, Punjab, West Bengal and Andhra Pradesh for the

first phase of retail rollout.

Gradually, in the next two to three years, Reliance Retail plans to establish a pan-India

presence of all its formats, targeting not only the major metros and cities, but also the

second-tier towns and semi-urban and even rural centres. Quite clearly then, the number

– 800 towns and cities – has been very strategically and meticulously worked upon.

F&B to Generate 40% Sales Revenue, Direct Employment to Over 5 Lakh

It is internally estimated that the food and beverages category will account for as much as

40 per cent of the total revenue generated from the Reliance Retail venture and that the

27

company plans to give direct employment to more than five lakh people. About 23 CEOs

across multiple functions and categories will oversee the retail operations.

The popular format in towns and rural settings will be hypermarkets, which will be

warehouse-style stores spread over 150,000 sq.ft and will be selling products ranging

from consumer electronics and groceries to fresh food and clothes. There will also be

smaller 75,000 sq.ft supermarkets.

RIL has roped in leading retail consulting firm, Technopak Advisors, and management

consulting firm AT Kearney to provide specific and specialised strategic inputs, and

advise the top management of Reliance Retail during the entire planning, design and

implementation, and execution stages of the massive retail foray, reports say.

Evaluation of Category Mix & Formats

Reliance Retail has studied the potential of all possible categories of products and

services retailing. In fact, it is keen on capturing market leadership in every possible retail

category, once it has rolled out and consolidated its retail operations.

The market insights and intelligence derived from this effort has helped Reliance to

evaluate each category on its market-size, growth rate and potential as being one of the

main determinants for its retail rollout operations. This can clearly be taken as a precursor

to Reliance's understanding of the retail market in India, in terms of clear understanding

of:

• The primary sources of procurement of products

• Average inventory (retail and warehouse) that is normally maintained at retail stores

across various categories

• Seasonal sales variation in categories across different regions in the country

• Shrinkage and wastage of products and percentage of returns thereon

• The number of SKUs across brands and categories

• The credit details (in terms of the number of days and cash) that retailers normally get

28

from their supplier across various product categories; and

• The average gross margin (percentage of MRP) that the retailer generally gets on its

products.

Apart from food and grocery, which will contribute 40 percent to total sales, the company

is strongly looking at apparel, lifestyle, consumer durables, and leisure and entertainment

operations as its major drivers of business. It is considering the establishment of both

multi-brand as well as exclusive brand outlets for certain categories of operations.

While most of outlets will be company-owned, the convenience-store format could

possibly be the only exception to be operated through a franchisee route in collaboration

with mom-and-pop kirana shop-owners, which in itself is a novel concept that could work

very well in the Indian context.

RELIANCE RETAIL LIMITED & ROLL OUT OF ITS STORES IN INDIA

RESEARCH

29

Before plunging into the retail sector, reliance had undertaken an extensive market

research.It had undertaken a comprehensive study of the retail market.It took more than

two long years of hard research work, which gave it a base for taking a sound decision of

whether or not to plunge into the retail industry.The hard research work also helped it to

have a better approach of entering the market.

It had undertook different types of research.It had used questionnaires,surveys.

Where Questionnaires were not sufficient, other methods had to be used This was

required as questionnaires do no always provide the right answers. They do not always

reveal the truth.

Actually research team members had to make obserations, the consumption patterns

and buying behaviors were monitored and analysed.This involved a huge cost.Hiring the

best and the talented is a costly exercise, but also an intelligent one.

STORE LAUNCH IN INDIA

Reliance retail limited has rolled out a chain of its ‘Reliance Fresh’ stores in India.

It gave birth to it’s first ever‘Reliance Fresh’ retail store at Hyderabad, in Andhara

pradesh.

It began with the it’s first ever ‘Reliance Fresh store’ at ‘Hyderabad’in Andhara Pradesh.

Not confining itself to the state of origin of it’s store, it walked further and set up it’s

store at Tamil nadu.Thereafter, it gave the people of ‘Rajasthan’ the taste of it’s new

concept of retailing,through it’s stores,where the fruits and vegetables are arranged on the

shelves of the store along with other food products.

It made a flight from Rajasthan to ‘Delhi’.And tempted the time driven consumers

there by giving them the an option of relishing the experience of ‘convienence

shopping’.It did this by offering varieties of fruits and vegetables beautifully arranged on

the store shelves along with the other FMCG (Fast Moving Consumer Goods), all under

the same roof.

30

Then it came to the native state of it’s founder and set up ‘Reliance Fresh’ stores at

Ahmedabad.It rolled out nine stores in the first phase of it’s store launch at ahmedabad.

In gujarat..It has been adding up more of it’s ‘Reliance Fresh’ stores at different regions

of ahmedabad.

‘Reliance Fresh Stores’ in the first phase of launch, at Ahmedabad are :

NAME OF STORE STORE LOCATION

R K VILLE ISANPUR

SUKUN ARCADE MITHAKALI

HARVY GURUKUL

SHALVIK NARANPURA

ORNET VASTRAPUR

RAJSHREE AMBAVADI

KALADARSHAN JODHPUR TEKRA

GANGA RACHANA RTO CIRCLE

ADITYA PLAZA SATELLITE

After the roll out of the above nine stores in the first phase of its store launch in

ahmedabad, it has launched some more of the ‘Reliance fresh’ stores.

They are

31

Reliance retail is planning to have in all sixty such stores in ahmedabad alone.It has plans

to launch its stores in different cities like baroda,surat,rajkot of gujarat.

At present, in total for all the states together it has twohundred ‘Reliance Fresh’ stores.

It has plans to come out with some existing as well as new types of shopping source.

Reliance Retail limited has it’s head office at bombay,Maharashtra.The gujarat state

Office is located at ‘Asha Arcade’, opposite gandhigram railway station,ahmedabad.

RELIANCE RETAIL AND CUSTOMISATION OF SAP

Today, technology is the driving force for business organisations.RelianceRetail limited

is well aware of this and hence it has cusomised SAP to provide real time solutions to its

business problems.

The entire company is system driven.It chiefly relies on SAP.It also makes use of retailix

especially for its chain of stores.

MY STUDY

Objective:

32

1) To understand the supplier related payments system at Reliance Retail,

Ahmedabad

2) To study the processes involved in the supply chain at Reliance Retail,

Ahmedabad

Research Method: Data was collected by three methods. They are

1) Examination of internal records at Reliance Retail, Ahmedabad

2) Semi-structured Informal Interviews of Key Executives involved in process of

supply chain at Reliance Retail, Ahmedabad

3) Observation of employees at work at Reliance Retail, Ahmedabad

OBSERVATIONS/ FINDINGS

33

DISTRIBUTION CENTRE FOR RELIANCE RETAIL STORES

Reliance Retail limited offers more than 4600 SKUs at its “Reliance Fresh Stores”.

These SKUs can be divided chiefly into :

1) Food Category

2) Non-food Category

1)The ‘Food category’ includes the following :

Fruits and Vegetables

Staples

Dairy Products

Bakery Products

Processed Food

2)The ‘Non-food Category’ includes :

Articles of daily usage (ADU)

Other Non-food (items)

Reliance Retail limited has its distribution center at 103 /106 GIDC, Naroda.The

‘reliance retail distribution center’ is divided into two parts. They are:

Dry Distribution Centre (Dry DC)

Wet Distribution Centre (Wet DC)

The dry DC is meant for the SKUs belonging to the FMCG section and falling under the

following categories:

Staples

Processed Food

Articles of daily Usage (ADU)

Other Non-food items

The Wet DC is meant for distribution of the SKUs belonging to the following categories :

Fruits and Vegetables (F&V)

Dairy Products as Milk, Paneer, butter

THE SUPPLY CHAIN PROCESS

34

The supply chain process for all the above sub-categories is not the same. On basis of the

supply chain process, the above sub-categories are divided as below for the purpose of

Study of the supply chain :

Fruits and vegetable (F&V)

Bakery Products and Ice creams

All the other FMCG (Fast moving consumer goods)

SUPPLY CHAIN PROCESS FOR FRUITS AND VEGETABLES

35

Introduction :

The fruits and vegetable section is classified as CPC and wetDC.

City processing Centre (CPC)

The City Processing Centre (CPC) is also located at 103/106 GIDC, naroda.But, its chief

purpose is not that of a distribution centre. It is ideally meant for carrying out certain

processes on the fruits and vegetables. And so it is termed as the ‘City processing

centre’(CPC).At the same time it partly serves the purpose of providing storage area for

the fruits and vegetables which are procured for the purpose of processing them and than

handing over to the wet DC. This processes are as follows:

Sorting and grading through different methods.

Crates Washing

Ripening

Cold Storage processing

Wet Distribution Centre(DC)

It is meant for storage and distribution of milk, paneer and ditribution of the fruits and

vegetables to the stores.

THE PROCESS – F & V (FRUITS & VEGETABLES) CATEGORY

STEP 1

STO ( STOCK TRANSFER ORDER ) / INDENT BY ‘RELIANCE FRESH’ CHAIN

OF STORES

Daily, at each of the stores, the ‘store franchisee’ / ‘store FDM’ (franchisee development

manager) will raise a STO (stock transfer order) / an indent. An indent / a STO is an

estimate of the store’s requirement of sku’s( here of F & V section ), based on the sku

wise sales.An indent / a STO is divided into morning STO / indent and evening STO /

indent. The morning STO / indent is an estimate of the store’s morning requirement of F

& V sku’s and the evening indent / STO is an estimate of the store’s evening requirement

36

of F & V sku’s.The morning indent /STO is based on the morning sales trend and the

evening STO is based on the evening sales trend.

In the initial phase when the first nine ‘Reliance Fresh’ stores where launched,

the STOs were prepared by ‘F&V – category’.But now the franchisees being trained anf

the FDM’s being famaliarised, now STO preparation has been assigned to them.

At present, a STO is raised by the franchisee / FDM by 11:00 AM.This STO

is meant for a delivery to be made after two days.This two day / 48 hours time-gap is

provided for the following operations :

1) Procurement Planning - Ascertaining the requirement

- Communicating & Conforming

2) Procurement - Target Allocation

- Price Band

- Harvesting

- Bringing to the CC

3) Sorting and Grading

4) Packing (in some of the cases)

5)Weighing and Barcoding

6) Outbound Operations - Allocation to stores

- Transportation Planing

7) Store Setting

STEP 2

F & V ( FRUITS AND VEGETABLES) CATEGORY RAISING P.O.

The F&V category in simple terms means purchase department for fruits and

vegetables. Each store’s F& V STO is accessible by the F & V category through

SAP. And through it, the F& V category will consolidate the morning STOs of all the

Reliance Fresh Stores, which will give the morning P.O. And similarly by consolidation

37

of the STOs of all the Reliance Fresh stores an evening P.O. will be generated. Such

consolidation will be SKU wise.

For example, If there are fourteen stores, then from the STO of these stores the total

demand for french beans will be determined. Similarly, for each SKU belonging to the F

& V section the total demand will be determined.

This will be done by Two P.M. every day.

The morning P.O. and evening P.O. each will have a SAP generated unique number, for

its identification.

Modifications in the storewise morning and evening P.O.:

The F & V category will make the necessary modifications in the morning and evening

STO prepared by the franchisees / FDM at the store level.Such modifications will be

based upon the following :

1) Opening stock of the Fruits and Vegetables at each store.

2) Sales trend of each SKU

3) City Area of store location

4) Day – Weekday / weekend

STEP 3

R-GRN (ROUGH GOODS RECEIVED NOTE)

The ‘city processing center’ (CPC) incharge will prepare a rough goods received note,

termed as ‘R-GRN’as given in appendix table 1..

‘R-GRN’ is an estimate against the PO, of the quantity ( kgs / eaches ) of the SKUs

which the CPC will be able hand over to the outbound team after sorting, grading and

weighing and barcoding it, within the CPC cutoff time.

Cutoff Time is the maximum time limit for completion of a / more task/s.

The morning R-GRN is an estimate of the quantity of the SKUs which will be handed

over for the morning PO and the evening R-GRN is an estimate of the quantity of the

SKUs to be handed over for the evening PO.

R-GRN is prepared on basis of :

1) Stock of F & V on hand with the CPC

38

2) Estimate of the quantity of the PO which can be procured to bridge the gap between

the PO and the stock on hand.

If on basis above study if the results suggest that the entire PO quantity will not be

procured well in time, than the R-GRN will be for the SKUwise quantity which the CPC

incharge is cent percent sure.If the CPC incharge feels that only 70 % of the morning PO

can be delivered to the outbound team by the CPC cut off time than R-GRN will be

prepared only for the 70 % of the PO.And it will be handed over to the outbound team. If

the rest 30 % is procured than again R-GRN will be prepared by the CPC incharge and

given to the outbound team for‘ Planning allocation to stores’.

Significance of R-GRN

Both the morning and the evening R-GRN has a unique number, which are given to the

outbound team.On basis of this R-GRN numbers, copies of R-GRN will be generated,

which will have SKUwise list of the quantity in kgs which will be delivered by the CPC

to the wet DC.

It will help the outbound team and the transport department for planning out their

operations as per the SKU wise quantity to be delivered.

R-GRN is important as it helps in planning out the following activities:

1) Sorting and Grading :It enables simultaneuos planning for sorting and grading of the

material on hand and in the PO so as to hand over the sorted, graded , weighed and

barcoded material within the CPCcut off time.

2) Outbound Team : Morning and Evening R-GRN numbers are used for planning out

allocation of the fruits and vegetables to the stores.

3) Transportation Department : R-GRN will provide an estimate about the number of

crates that will have to be dispatched to each store, based on storewise allocation of the

fruits and vegetables.

39

CUTOFF TIMINGS TABLE

Cut off time : It is the time within which a task assigned,has to completed

Cut off Timings for giving R-GRN :

Morning R-GRN cutoff time is 5:00 PM for partial R-GRN.The morning R-GRN is

meant for the nextday’s morning PO for which the CPC cutoff time is 2:30 AM and

outbound cutoff time is 5:00AM for ambient vehicle and 6:30 for refer vehicle.This R-

GRN is given by the CPC incharge daily by 5:00 PM.for 70% of the morning PO and

rest 30%, by 8:00 PM, if at all to be given.

Evening R-GRN has to be prepared in total,latest by 8:00PM.It is meant for the next

day’s evening PO for which the CPC cutoff time is 11:00 AM and the outbound cutoff

time is 4:00 PM for ambient vehicle.There is no refer delivery for evening PO.

Cut off for

RGRN

Day 1

Cutoff for

CPC

Day 2

Cut off for

Outbound

Day 2

Morning

Ambient

Vehicle

5 :00 PM 2:30 AM 5:00 AM

Morning

Reference

Vehicle

5 :00 PM 4:30 AM 6:30 AM

Evening

Ambient

Vehicle

8:00 PM 11:00AM 4:00 PM

Evening

Ambient

Vehicle

8:00 PM 12:00AM _

40

STEP 4

PROCUREMENT PLANNING TEAM At City Processing Centre (CPC) :

The consolidated morning and evening PO numbers will be mailed by the F & V

Category to the procurement planning team at CPC, Naroda, Ahmedabad. On the basis of

these PO numbers the procurement planning team will have an access to the morning &

evening PO on the excel sheet.

STEP 4 (A) Physical Stock Determination for RR (Reliance Retail) material

SKU code SKU

Descrip. RR RR RR

RR RR RR RR RR RR

NRR DUMP

Outside

area

Cold

storage

Repening

chamber

Total

crates

Kgs

per

crate

Out

Side

Ripen-

ing

Chamber

Cold

Strg

Tota

kgs

590000092 Tomato

Economy 280 - - 280 10 280 - - 2800 -` -

RR – Fruits / Vegetables which are fresh and of good quality, and approved by the

quality department. They are meant for Reliance retail and hence termed as RR

NRR – Fruits / Vegetables which have some defects / cuts etc. Generally these are sold

back to the mandis.If the RR grade fruits / vegetables are converted to NRR state after

reaching the store, then such F & V are sold at mark down prices at the store.

Dump - The fruits or vegetables which are totally damaged / deteriorated,

have poor quality, and have serious defects as cuts, rotten state.Such material is disposed

off daily, twice as waste.

41

Method adopted for stock taking

Two types of crates are kept at CPC, naroda, Ahmedabad.They are ‘Black crates’ and

‘Grey crates’.The black crate is for RR material and it weighs 1.7 kgs and the grey crate

is for the NRR material and it weighs 2.2 kgs.Each crate has a standard weight carrying

capacity determined on basis of the F / V SKU it carries. This weight is arrived at on

basis of trial and error.

Physically weighing each SKU would be a tedious task and time consuming task if to be

carried daily.So, for each SKU the number of filled crates are counted.This is done for

Outside area, cold storages and the ripening chambers.

Cold Storages :

There are five cold storages in all.Of these currently three are in use.

Two are for CPC (for F & V) and one under the wet DC(for dairy products as milk,

paneer)

Cold storageNo.1 has 3 degree centrigade temparature.And it is used for

imported fruits like lichis, dates fresh and vegetables as green peas.

Cold storageNo.2 has 11 degree centegrade temparature.And it is used

for leafy vegetables, french beans, bottle gourd, bitter gourd, pointed gourd.

Ripening chamber : It is a chamber meant for ripening some of the fruits.It is use for

banana, chiku, papaya and mango.The fruits are kept under ethelene gas for 24 hours at

18 degrees and then the chamber is ventilated for 2 hours.Then the fruits are kept for 3

days at 20 degees temparature.there are six such ripening chambers, of which currently

three are in use.

Outside area : The area at CPC other than the cold storages and the ripening chambers is

termed as the outside area where the fruits and vegetables received are sorted and graded.

42

This area is divided into following parts :

1) Material Receiving Area

2) Sorting and Grading area- Belt

- Vegetable trimming Line

- Table

3) RR stacking area

4) NRR stacking area

5) Dump Material stacking area.

6) Packing area

7) Weighing and Barcoding Area

8) Crates washing area

9) Palette storage area

The number of crates of each SKU is multiplied by the set skuwise standard weight for a

crate.as in appendix table 9. This gives the quantity of physical stock on hand in kgs lying

in each storage area – outside area, cold storages and ripening chambers. The skuwise

figure in the total column givesRR component of the sku’s in kgs, on basis of previous

day’s physical stock taking carried on taday by 12:00 A.M.

This total kgs of RR fruits and vegetables are entered in today’s opening stock in

‘Arrivals and Stock report’ to find the procurement quantity for today.

43

STEP 4(B) DETERMINING THE QUANTITY TO BE PROCURED

Arrival & Stock Table:

SKU code

(1)

SKU

desc

ription

(2)

No. of

Crates

(3)

Qty

(kg)

(4)

Opening

Bal

(5)

Arrivals

(6)

Tentative

arrival

(7)

Morning

PO

(8)

+ /-

v/s

Mg

PO

(9)

UOM

(kg)

(10)

Eve

PO

(11)

+/-

v/s

Eve

PO

(12)

UOM

(kg)

(13)

590000092 Tomato

Economy 280 10 2800 200 1000 5000

-

1000 Kg 500

-

1500 kgs

SKU Code: The code assigned to fruits or vegetables

SKU Description: A brief description about the fruit or vegetable stock keeping unit.

No. Of crates: The number of crates filled with Tomoto economy.

Quantity : Quantity of tomoto economy occupied in each crate is ten kg. It is the standard

weight of tomoto economy which can be carried by a black crate (Meant for Reliance

Retail (RR) graded fruit or vegetable) of 1.7 kg.

Opening stock: The previous day closing stock of tomoto economy.It is the stock of

tomoto economy available on hand with the CPC.

Arrivals: They are the incoming fruits or vegetables to CPC from CC/ Mandi, direct

supply or national centres. Daily physical stock taking is carried out by the procurement

planning team by 12.00 A.M. The arrivals are the fruits & vegetables arriving at CPC

from any of the above-mentioned sources after previous day’s stock is completed and

recorded till 2.00 PM today.

Tentative Arrivals: They are the F/V which are going to be delivered at CPC but at

present this F/V have not yet reached the CPC. The suppliers /CC in charge or national

centres or mandi in charge officers have communicatwd about the quantity of F/V which

will be despatched to the CPC but has not yet arrived. The tentative arrivals are

confirmed on phone whether they will arrive or not.

44

Morning Po: It shows SKU wise total demand of the stores for F/V to be despatched early

morning.

+/- v/s Morning PO: It shows addition of opening stock, arrivals , tentative arrivals and

from the resultant figure thew morning PO is deducted for each SKU. If the resultant

figure is negative, it means that the sku is in shortfall by that quantity (kg) and hence that

much kgs of that particular sku needs top be procured for fulfilling the morning PO.

Example:

Opening stock of tomato Economy – 2800 kgs

+ Arrivals - 200 kgs

+ Tentative arrivals - 1000 kgs

______________

Total 4000 kgs

(-) Morning P.O. 5000 kgs

_______________

+ / - versus Morning P.O. – 1000 kgs

UOM : It is means the ‘ Unit of Measurement’. It shows measurement in kilograms or

eaches.An each means a single fruit or vegetable. It is used to measure fruit like coconuts.

Evening P.O. : It is the SKU wise consolidated demand of all the stores together.

+ / - versus Evening P.O. : It is the difference between the ninth and the eleventh

column.It shows the SKU wise shortfall / excess quantity (kgs) in order to meet the

requirements of the evening P.O.It is calculated by deducting SKU wise, the figures of

the evening P.O. (in kgs ) from the figure of the excess / shortfall shown in the ninth

column.This gives the excess / shortfall quantity( in kgs) for each SKU.it enables the

procurement planning team to undertake the procurement planning for the figures arrived

at in this column, as it gives the final shortage / surplus of the evening P.O.It is calculated

by deducting SKU wise, the figures of the evening P.O. (in kgs ) from the figure of the

excess / shortfall shown in the ninth column.This gives the excess / shortfall quantity( in

45

kgs) for each SKU.it enables the procurement planning team to undertake the

procurement planning for the figures arrived at in this column, as it gives the final

shortage / surplus.

Having determined the quantity to be procured, the next step is to find the right source

from which to procure each F & V SKU and accordingly plan its procurement.

STEP 4 (C ) :

Pivot table for procurement planning :

Sr

No.

SKU

Code

SKU

description

Opening

Stock

PO

Total

Uom

(kgs)

Procure

Ment

Uom

(kgs)

Source

CPC

CC

National

centers

Regular

vendors

Mandis

On basis of the above table,against the stock at CPC the PO quantity will be compared

and for the shortfall the the procurement centres will be used.The system will generate a

pivots which will show the different centers from where and in what amount (kgs) a

particular vegetable / fruit can be procured.This will facilitate the procurement planning

work. And accordingly, the procurement planning team will carry out its work by

Communicating and conforming with the concrened procurement center.

PROCUREMENT PLANNING / SOURCING

46

Sources for procurement :

1) COLLECTION CENTRES (CCs)In all there are four collection centres in gujarat. They are located at the following places:

Prantij

Padra

Chaklasi

Chiloda

A Collection centre is set up to procure vegetables from the farmers.

As per the legal framework, each CC is either already registered or has applied for

registration at the APMC, so as to buy vegetables from the farmers.A Collection centre is

set up to procure vegetables from the farmers.

CC Officer

At each CC, a reliance employee is appointed as CC officer.He has the responsibility of

procuring the vegetables from the farmers

These farmers face two routine problems :

1) To travel all the way from their villages and come to the mandi to sell their vegetables.

Daily, the farmers come at the local mandis of prantij, padra, chiloda and chaklasi.

2) The concern about selling their entire lot of vegetables.

3) In order to sell at the mandis, the farmers are required to pay commission to the agents

at the mandis.

Reliance needs vegetables in a large amount. So, it procures the entire lot of the

vegetables from the farmers and at times even goes to their doorstep if needed.

At each CC, sorting and grading is done by workers on payroll of third party logistics.

Receipt Cum Weighment Slip :

When vegetables are purchased from the farmers at the CC, a ‘Receipt cum weighment

Slip’ is issued to them by the CC officer as given in appendix table 2.

In it the fruit / vegetable unique code is written under the skucodecolumn, the fruit /

Vegetable name is mentioned under the sku description column,the grading is mentioned

under RR/NRR column,and then the per kg rate and toal amount in rupees is mentioned.

It is signed by the ccofficer and has the name of the seller and the date of sale on it.

47

Stock Transfer note (STN) :

When the vegetables procured from the farmers are send to CPC, a stock transfer note

(STN) is prepared for it as in appendix table 3.It has detailed description of the vegetables

being sent from CC to CPC.It is signed by the CC officer.It means that the vegetables

purchased by reliance retail at CC are transferred to CPC, and STN authorises such

transfer.STN is meant for internl transfer of goods.It does not involve reduction in

monetary resouces, as in case of a purchase.

Daily Procurement Slip :

At end of the day, at each CC, the CC officer will prepare a ‘Daily Procurement

Slip’ and sent it with the last lot of vegetables. It will have columns for sku code,

sku description, its quantity (in kgs), rate per kg, amount ( in Rs ), computed as

the product of rate and quantity.The total of the amount column will give the

actual total amount ( in Rs.) for all the vegetables purchased from the farmers

during a day.

At the bottom of the‘Daily Procurement Slip’, there are columns for opening

balance, deposits, payments and closing balance.The CC officer will fill in the

columns of opening balance, payments made during the day to the farmers against

the vegetables purchased and the balance amount will be the amount left after

payment to the farmers.The ‘deposits ’ column is meant for the amount which is

deposited daily from Reliance Retail’s bank account to the CC officer’s bank

account at the CC bank.This column is not filled in by the CC officer as he

himself is not informed about the exact amount deposited.This practise is meant

for control purposes.

2) Direct vendors : Fruit and Vegetable wholesalers who provide qulaity products at

wholesale prices have become regular suppliers for Reliance.Large farmers within

gujarat also sell their vegetables to Reliance Retail.They have entered into

agreement with Reliance Retail, as per which the vendors will supply the fruits /

48

vegetables in vehicles arranged by them at their expense.

3) National procurement centres : There are certain fruits and vegetables which are

not grown and hence not readily available in large quantities within gujarat state.

Such fruits and vegetables are procured from those different states of India,

where they are available in the best quality.This is especially a practise for fruits

like leechis and oranges(procured from pune in maharashtra), apples (procured

from himachal pradesh),pear,grapes and vegetables like onions.Reliance fresh

stores offer certain exotic fruits and vegetables, all of which are not readily

available within gujarat.So it also depends on the following sources :

( a ) Reliance based National procurement centers –

In certain states of India like Andhara pradesh, Rajasthan and Tamil Nadu

where Reliance retail ltd. is already in opertion. In such states there are Reliance

retail’scollection centres.

These centres also supply certain items which are a speciality of that particular

region. to the other states.

( b ) Vendor based National procurement centers :

The procurement demand for the fruits and vegetables not available within gujarat

and which cannot be fulfilled from the national procurement centers of Reliance

Retail, are purchased directly from the the vendors in states other than gujarat.

( c ) Imported Fruits and vegetables

Such fruits and vegetables are purchased either directly from the vendors,

who import such items.Or these items are procured via collection centres in other states

besides gujarat.Examples of such skus are imported oranges, grapes,etc

49

4 ) Local Mandis : These are the fruits and vegetable markets of Ahmedabad.They are

the ‘Jamalpur vegetable Mandi’ , ‘Vasna Vegetable Mandi’ and the ‘Naroda fruit Mandi’.

When the quantity of the fruit and vegetable procured from the procurement centers as

the CCs, regular vendorsas well as from all available supply sources is not sufficient to

meet the PO quantities then for the shortfall, procurement is made from the local mandis

mentioned above.

At each of the local mandis a reliance employee called ‘mandi officer’ has been

appointed. This person is responsible for all the mandi related procurement work.

The mandi officer has to take a morning round at the mandi under his responsibility.

And find out the prevailing mandi rates for each vegetable / fruit. The mandi officer is

resposible for finding this rate every hour and reporting it to the CC head at the state

office, asha arcade, ahmedabad.He also informs the procurement team at the CPC, about

the daily mandi rates, by 2:00 PM.

STN (Stock Transfer Note) :

When fruits / vegetables purchased from the local mandis are sent to the CPC,a STN is

prepared as this merley involves a transfer of goods from one to another place.The

Mandi officer prepares the STN whenever F & V material is send from mandis to CPC.

STEP 4 ( D) :

Daily price table

Skucode

Sku

description

Local mrkt

price

Rangefor

20 kgs

Local mrkt

max traded

price

Range for 20

kgs

Price

per kg

Name of

Sources all

over india

590001160

Potato

160.00

170.00

157.80

164.60

8.00

8.00

8.50

7.89

8.23

50

The third column shows the local market rates. These are the rates prevailing at the

ahmedabad mandis like the ‘Jamalpur mandi’, ‘vasana Mandi’ and ‘Naroda fruit Market’.

Daily monitoring of the mandi prices is carried on to find daily price ranges and to

determine most traded price(Price at which maximum sales took place).The last column

gives the options for sourcing the material.

This table helps in knowing the price ranges and the source for each of the sku’s.

Price Band :

On basis of the monitored mandi prices the daily price bands are fixed.The mandi prices

are conveyed to the procurement team for fruits and vegetables.The daily skuwise

variation in prices that takes place is tracked through the following table.And accordingly

prices are forcasted for each sku.

Earlier during the first few days of the Reliance Freshstore launch,the prices of the

competitors asOrganised retail as Big bazaar, sstar bazaar, subhiksha, and unorganised

retail like the kirana shops were monitored to work backwards and determine the price at

which vegetables and fruits can be procured from farmers.And accordingly pay to the

farmers against the vegetables procured.

Once having determined the price bands and the procurement quantity target,the

procurement planning team will undertake the following steps :

1) Communiction & coordination : Determine the stock that can be procured from

the four CCs, by conforming through phonecalls by 3:00 PM daily..If the RR

quality material is available from CC, same will be procured from there within the

given price band.

Accordingly the CC Officers will convey the message to the farmers about the

quantity of the vegetables to be harvested, collected and brought to the CC.This

message will be given to them by 4 :30 to 5:00 PM evening daily

2) For the material in the P.O., but not available through the CCs, arrangements have

to be made for it .through direct vendors or other national level centres.

On basis of pros and cons, the material is to be procured from either the vendor

national centers or locally.

51

3) For tentative arrivals a thorough follow up is needed.

The procurement team cannot rest untill all the indented material is received.

Having determined from which source the good quality RR grade fruits /

vegetables can be sourced and preparing the procurement plan, the same is sent to

the F &V procurement team.

The procurement planning team will determine the quantity that can be procured

from each of the sources and accordingly, mail the same to the F & Vcategory,

CC head, F & V procurement incharge.

3) Transport Requisition : It is the requsition to be made by the to the transport

Department, for arranging a vehicle to the CCs and Mandis. In case of thedirect

vendors such a practise is not required as they supply the material in there own /

arranged vehicals .

Accordingly,as per the described quanity, the right vehicals will be arranged

And sent to the specific location .

Push POs – store’s viewpoint & CPC viewpoint

At time of emergency situations, when suddenly the stock of certain SKUs falls down

a push PO is generated by the stores.

It is also generated, sometimes via the Procurement planning team.

Daily reports sent to Gurgoan, Delhi (Agriculture Head office)

Price forecasting table :

Sku

Code

SKU

Description

Supply

Location

Previous

Day

Price/kg

Today’s

Price/kg

%

Changein

price

590000092 Tomato

Economy

X Y Z 30 33 10

52

On basis of such reports, the agriculture team at HO is able to monitor the price

movements and make price forecasts to support the procurement planning.

STEP 5 PROCUREMENT

Collection Centers :

The CC head will give the procurement targets to each CC, on basis of the procurement

planning undertaken.

Moving Average Prices (MAV) : Procurement Price

The prices of the vegetables procured from the CC are generally within the priceband.The

weighted average price is calculated for each vegetable procured.

The sysem has such a mechanism that it automatically picks up the last few prices, so as

to reflect the most current scenario.Hence this resultant Price is termed as ‘Moving

average price’.The procurement price is determined in this way.

Price band determination :

The price bands are determined on the basis of the prevailing prices.Daily reports are sent

to the agriculture department’s head office gurgaon, delhi.The price bands for F & V skus

are determined by the F & V procurement team.

There the top level executives ascertain the price bands to be assigned for the national

level procurement centers.

The procurement teams will work to attain the given targets, both in terms of

Quantity and price as well as quality.

The CC and Mandi Officer and the Imprest amounts :

The CC and the mandi officers are given a sum of money as an advance amount

Given and deposited in the banks. When,the payment are to be made early morning, the

sum of money which is required for it iswithdrawn from the bank.This helps in doing

away with the management of excess funds not neeeded at the moment and at the same

time it enaables to make timely payments.

53

F &V CATEGORY AND TRANSFER PRICE FOR STORES :

The transfer price :

It is the price which will be charged for a sku.at Reliance fresh stores. It is calculated by

the F & V category.It is obtained by summing the following :

Procured cost (MAV) *

+ mandi tax *

+ mandi commission *

+ transport cost *

+ Sorting & grading *

+ Weighing charges *

+ Loading & unloading *

+ wastages *

________

Total Price ***

+ Margin **

Profit **

At the CCs and mandis the vegetables will be purchased within the price bands as far as

possible.The last lot will arrive latset by late night, for the morning PO for which the

cutoff time is 2:30 AM (next day).

Sorting & grading : It is done by the workers at the CCs / mandis.

Weighing : The vegetables will be weighed and aReceipt cum weighment slip(RWS)

will be prepared.This RW will give the procured quantity, and rate per kg for each day.

At the CCs /mandis the STNs will be prepared for the material to be sent to the stores

Set of documents to be handed over to the CPC commerce department.

1) Invioce /delivery challan ( direct vendors and mandi purchase)

2) STN

3) Receipt Cum weighment slip

54

STEP 6

1) ARRIVAL AT CPC

The fruits and vegetable loaded vehicle will arrive at the CPC.

Gate :The driver informs the security guard at the reliance DC (distribution Center)

About the delivery lot and the source.

Gate Inward register :

On asis of these information, the security men will record the details of the delivered lot.

And will assign an unique gate pass entry number.On basis of this number the details of

the lot can be traced.

CPC

The CPC is the processing center for fruits and vegetables.,for ahmedabad.

The F & V section is divided into two main parts :

1)CPC – It is divided into inbound and processing.

2)Wet DC – It is divided into outbound and transportation.

Doors

The CPC has 4 doors at inbound. The door 1 is for receving the empty crates.

Door 2 iand door 3 are for reeiving the fruit amd vegetables.

Door 4 is for dump material to be discaded.

On arrival of a lot, the documents will be handed to the inbound supervisor.

The documents are for mandi purhase are as follows :

1) Invoice

2) STN ( two copies )

3) weighment slips

For CC, the documents are:

1) weighment slips

2) Two copies of STN

In case of direct vendors the document are as follows :

1) Invoice

2) Octroi fees receipt

3) Form 403 (if outside gujarat)

55

The inbound supervisor will check the documents and get the vehicle arranged at the

receiving door 2 /3 and get it unloaded with the help of workers.

On arrival there is a quality check undertaken by the quality department.On spot sorting

and grading will take place.

Electronic Weighing Machines and daily slip :

The fruits / vegetables will be taken in grey crates, these crates will be loaded on a

pallette and then the fruit / vegetable weight will be ascertained as follows :

Weight of a pallette – 17.6 kgs

Weight of a grey crate meant for Non Reliance material – 2.2 kgs

Weight of a black crate meant for Reliance retail material – 1.7 kgs

When a pallette floaded with grey crates is weighed, the screen of the electronic machine

will show the following :

weights of the pallette + weight of the grey crate + weight of the fruit / vegetable

From this sum the weight of the pallette and crates is deducted to arrive at the weight of

the f ruit / vegetable.

For example,

A pallette loaded with 30 grey crates of tomatoe economy is 2280 kgs then the weight of

tomatoe economy will be,

Total weight as shown by the machine 2363.6 kgs

(-) weight of the pallette 17.6 kgs

(-) weight of 30 grey crates 66 .0 kgs

(30 X 2.2) _____________

Net weight of tomatoes 2280 kgs

After weighing the material a day wise slip is placed on the pallett, showing the weight

( in kgs )of the sku, its description, it’s lot no.which helps in distinguishing that particular

lot.

Inward Register Entry :

In actual paper register

The weighed material is entered in the stock register as in appendix table 4.

The difference between the invoiced quantity and the actual received on shows shortage /

surplus, as shown in the table of the inbound register.

56

The entry is also made on the excel sheet, by the data entry operator.This sheet is send by

the inbound DEO to the commercial team andalso the procurement planning team.The

commercial team uses the excel sheet for GRN preparation.

The inbound team at the CPC hands over the documents to the commercial team.

Activities performed by commercial team

These are discussed under the I/ V.

STEP 7

SORTING AND GRADING

Sorting : It is the process of separating the fresh and quality material from the total

material arrived.

Grading : It means assigning a grade to the sorted material depending on the quality

and condition.

Three Grades of Material :

As a result of sorting and grading, three grades of material are obtained. They are as

follows:

1) Reliance Retail (RR) Material :

RR material means, the material that is meant for ‘Reliance retail’.

At the CPC the fruits and vegetables received are sorted and graded.Of the received

material, the material which is fresh and of good quality is sorted and graded as ‘RR’

Material.

2) Dump :

From the remaining material, the material which has become out of use either due to

being rotten, or driedup ( corriander,spinach etc) or due to large cuts formation will be

sorted and graded as ‘dump’.

3) Non Reliance Retail ( NRR) Material :

NRR material is the material that is no meant for Reliance retail.

57

And the rest which as either minor cuts or is not fresh as RR material will be sorted and

termed as ‘NRR’(Not for Reliance Retail).

R-GRG means that much quantity of the SKUs will have to be handed over to the

outbound team. Every day on basis of the R-GRN, the sorting and grading work will

be planned out.A little more than the R-GRN quantity, will allow to provide for the

‘NRR’ or ‘Dump’ material.So, it serves to guide the sorting and grading department

of the CPC,which chiefly consist of the supervisors and workers and is meant to plan

out the sorting snd grading activities within the time limit.

The sorting and grading supervisors are given a copy of theR-GRN. On basis

of this copy they get the required material sorted and graded by the workers.

The R-GRN given by the CPC incharge today is meant for the next day’s PO.

The morning R-GRN is meant for the morning PO to be delivered by 2:30 AM,

And atleast 70% of the morning R-GRN is given by 5:00PM daily, for the next day

morning PO. So, the workers responsible for the sorting and grading the fruits and

vegetables have time between 5:00 PM to 1:30 AM( excluding one hour,considering

the time that will be needed for weighing and barcoding)Similarly daily the evening

R-GRN isgiven latest, by 8:00PM for the evening PO of the next day.And this

provides the time needed by the workers for sorting, grading, weighing and

barcoding..

Daily first priority is given to the material which is in stock and is also enlisted in the

PO.The material which is there in the PO, but has not reached the CPC can be sorted

only when once it reaches the CPC.So procurement at the right time is of utmost

importance for the performance of the CPC.Sorting & grading continues as a cycle.

As the lots are received at the inbound area of the CPC,those SKUs enlisted in the

R- GRN are picked up first and are sorted and graded.

Fruits / vegetables which are yet to arrive, should reach the CPC latest by late

night for the morning PO. The morning cutoff time for CPC is 2:30.

58

Equipments used for sorting & grading :

1) Vegetable trimming Line

It is electrically operated rolling sorting and grading device.There are two such

lines.

They are used for vegetables as tomatoes,leafy and green vegtables as cabbage,

cauliflower, capsicum.To operate they need 8 to 9 workers per line.It is more

advisable to be used when sorting and grading is to be done for large quantity.

When sorting & grading of different SKUs is to be done then the workers need to be

distributed. So, in such cases,sorting-grading is better done on tables.

2) Vegetable Belt:

It is electrically operated rolling sorting and grading device.CPC has one such belt for

sorting and grading.It requires 9 workers.It is

Meant for sorting and grading of vegetables like,green chillies, capsicum,mint

leaves,corrainder.

Drawbacks of using vegetable line and vegetable belt :

* Not practical when manpower is less than seven or eight workers.

* More time cosuming, if workers are less. Because when workers are less, the speed of

the belt will be kept low. So time consumed will rise.It invoves electric cosumption, so

the costs will rise.

3 ) Table :

It needs 4 workers. It is used for the remaining types of the vegetables as beans,cow peas,

Green peas,cluster beans,etc.

Sorting & Grading report:

On the basis of suh sorting and grading , a sorting and grading report is prepared as

given in appendix tables 5 to8. The SKU will be described under the and against it in

59

He code column, the sku code will be mentioned. Under sorting particulars, the weight in

kgs of RR, NRR and dump is specified.This report is transferred from the paper to excel

sheet by the data entry operator, which is used for management information systems

STEP 8

PACKING

Some of the fruits and vegetables like apples, onions,( netted )and vegetables like

tomatoes (transparent plastic) are packed.

STEP 9

WEIGHING & BARCODING

The SKU wise standard crate weight is used for weighing as given in appendix table 9.

The fruits and vegetables graded as RR are kept in black crates.This list of the skuwise

standard weight is given to the weight takers and bar coders.

There are in all 12 rolling conveyors,attached to the electronic weighing machines and

the bar-coders. The electronic weighing machines have screen which displays the weight.

And the bar-coding devices have printers, which generate printed ‘bar coded

labels’.When a black filled crate is placed on one side of the conveyor, it rolls down to

the center where the weighing machine and bar coding device is attached.The standard

weight for the SKU on the black crate is entered in the weighing machine with negative

sign, and the eaches of the Sku are added or removed to bring down the weight to zero

kg.With the weight of the SKU being ascertained, the attached barcoding device

generates a barcoded label as given in appendix table 10.

This label describes the SKU - mango kesar, has its code on it,just below the bar

code the no. 590000724 is the sku code,G2C is the CPC code,0031037258 are the

number of crates that has passed on the conveyor,and 15 kgs is the weight of the

SKU.This procedure is followed for all the SKU’s to be dispatched to the stores.

All the crates carrying the SKU’s to be dispatched are handed over by the CPC to the

outbound team by 2:30AM for the morning PO and 11:00AM for the evening PO,

for ambient vehicles.

60

STEP 10

OUTBOUND

STEP 10(a) ALLOCATION TO STORES :

On basis of R-GRN no., the outbound assitant manager will generates a copy of the

R-GRN. The receiving supervisors of the outbound department take a copy of these

R-GRN and on its basis, tally the RR graded black filled crates being delivered by the

CPC after sorting, grading,weighing and barcoding them.All the SKUs received are cross

checked with the R-GRN to ensure that no SKU is left out to be received or no SKU is

received in part as compared to the R-GRN amount.All these crates are stacked in the

‘receiving reserve area’ of outbound.In emergencies or when there is less time gap

between the receiveng of material and their dispatch as in case of the evening PO, the

crates are directly placed at the dispatch locations, by tallying them with the R-GRN..

The R-GRN is a useful tool for allocating the bulk of the fruits and vegetables to the

stores. It provides the SKU wise list showing the kgs of each SKU that will be handed

over, as against the PO, by the CPC to the outbound team so that same is dispatched to

the stores.The outbound team needs time to allocate these fruits and vegetables amongst

the stores, specially when the entire PO quantity cannot be fulfilled.In case of Reliance

retail,the SAP enabled system will allocate each SKU in the R-GRN to the stores.

Such allocation will be based on sales trends of each of the SKUin the past three to five

days.Such an allocation is termed as ‘soft allocation’ and is possible due to SAP.

So, though the store might have indented a particular quantity of a SKU, but on the basis

of the total availability SAP will allocate on basis of each store’s individual sales

performance for each SKU. If ‘x’ store is selling more french beans than ‘y’ store,than

out of the total quantity between the two, ‘x’ store will be allocated more quantity of

french beans than ‘y’ store, even if the indented quantity of ‘y’ store is more than that of

‘x’ store.This work of soft allocation is not visible.

On basis of the SAP system enabled allocation to the stores,a number is generated by

the system.This number is called ‘Allocation Number’.On entering the allocation no.,

delivery date and giving a command the system generates two lists.They are ‘Article

Wise Pick List’ and ‘STO wise Pick list’.

61

Article Wise Pick list :

It is as shown in the appendix table 11.As shown in the table, it enlists the different stores

to which, different quantities of an article are allocated.On basis of the ‘Article wise pick

list’which is for an article ( here SKU ) for example , ‘Grapes thoms SDLS’, the total

quantity of which is179 kgs.On basis of this list, the entire pallette loaded with black

barcoded, scanned crates filled with ‘grapes thoms’will be carried to the physical store

shipping area. The DEO ( Data entry operator)and the loading supervisor will take this

pick list and see the crates to be allocated to the first store. And accordingly they will

count the crates and allocate them to each store specified in the list.

The DEO will repeat this for all the stores listed in the pick list.

STO wise Pick List :

This list given in appendix table 12 has a STO no., a store wise bar code and shipping

point bar code.The Store Wise bar code is scanned and the store’s shipping point is

scanned,and then the barcoded labels( generated and placed while weighing the crates) on

each crate are scanned. As these labels are scanned,the crates on which they are placed

will be assigned to the store whose barcode and shipping point were scanned. If these

scanning is done for ‘shalvik store’, than all the crates scanned after scanning shalvik’s

bar code and.shipping point will be assigned to ‘shalvik store’. So all the crates to be

dispatched to a particular store, here ‘shalvik’, will be assigned to shalvik’s shipping

point in SAP.

As soon as the crate scanning takes place, the Sap enabled system generates auto GRN

and an auto Article wise STN (stock transfer note).And thus the stock is received by, and

transferred from wet DC ( distribution center), to shalvik’s shipping point.As the crates

are scanned, an articlewise GRN is generated automatically. And simultenously, the stock

is transferred from the wet DC ‘s site to the store’s site in the SAP system.Thus, in SAP,

through scanning,first GRN and then STN preparation takes place for each article.

For each store the procedure for scanning barcoded labels on the crates to assign them to

the store, and autoGRN preparation and STN generation is same as explained above.

Print out of STN

By putting in the relevant details as the DC code,means of transport,transport Id

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will give the four STN copies.

STEP 10(B)

TRANSPORTATION & VEHICLE PLANNING :

Types of Delivery Vans as given in appendix table 13.

(a) On basis of temparature in the van, the transport department chiefly has two types of

delivery vans.

They are :

1) Ambient Vehicles

These vehicles are owned by the 3PLG service providers(‘Third Party Logistics

service providers’).A fixed amount is given to the 3PLG, which includes the

following :

salary of the driver

cost of running the vehicle

maintainence expenses are totally reimbursed by RIL retail ltd to the 3PLG

service provider.company..

2) Reefer Vehicles

These vehicles are called ‘reefer vehicles’ as a short form for ‘Refridgerating

Vehicles’These vehicles have an arrangement, by which the temparature can

be setup to 0 degree. These vehicles have airconditioning facility.

Its has a PUF mechanismin its body container. PUF stands for ‘polyuratine foam’.

It has an arrangement under which it can sustain a temparature loss upto2 degrees

Per hour.This means that if there is a rise in the temparature by 2 degrees , then it

can withstand such a rise for an hour.

The high cost which would have been suffered, has been avoided due to the PUF

mechanism in the reefer vehicles.

The reefer vehicles are company owned.They are however given to the 3PLG.

The drivers are provided trainning.The 3PLG drivers are provided mobiles and

mobile chargers, so that if there arises any emergency need to contact the driver it

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can be done easily.Reliance retail has entered into a contract with 3PLG service

providers to provide a mobile and a mobile charger to the drivers.

(b) On basis of the pay load of the delivery vans, they can be classified as follows :

* For Ambient Vehicles

1)Tata 407 model

It has net capacity of 2.5 metric tonne.It can carry 225 crates.

2)Tata 709 model

It has net capacity of 3.5 to 4.0 metric tonnes.It can carry 300 crates.

3)Tata 909 model

It has net capacity of 6 tonnes.It can carry 350-360 crates.

* For Reefer delivery vans

1)Tata 407 model

It has 180 crates capacity.It ‘s weight carrying capacity is 2.5 meteric tonne.

2)Tata709 model

It has 255-260 crates capacity.

It ‘s weight carrying capacity is 4 meteric tonne

* To select a vehicle the following steps are to be followed:

1) Type of the SKU : Certain SKUs are to be carried to the stores in cool

environment so as to avoid moisture loss,which exists in case of leafy vegetables

like spinach, corrainder, mint and milk, fruits like imported oranges, grapes etc

So, such SKUs should be transported by ‘refer’ delivery vans(aircooled).

If the SKU is such that it can be safely carried without any adverse impact on its

quality, than it can be transported by ambient (normal / non aircooled) delivery

Van.

2) Number of crates which are to be delivered at a store

The R-GRN copy is generated daily by the outbound assistant manager.

It has a list of all the SKUs which are to be delivered to the stores.Against

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each SKU, the standard weight that can be carried by the black crate is

mentioned.

On basis of the R-GRN copy, the outbound department gets allocation of the

SKUs to each store.This enables the outbound team in determining the total

number of crates which will be required to be dispatched to each reliance fresh

store.

On basis of the number of the crates to be delivered at a store, the size and hence

the type of the delivery van can be determined.

3) Number of kilometers the Vehicle has run untill now

As per the targets set, each vehicle should travelon an average 3000 kms per

month.At present, as all the stores have not been set up,there are more vehicles

than the requirement, and hence none of the vehicle travels 3000 kms per

month.This is because Reliance retail had commenced it’s first nine stores, just

three moths back.At present the transport department ensures that each vehicle

travels more or less equal number of kilometers.

If for the first and second points two or more vans are similar,then of the two /

more the one which has comparatively travelled less or least will be selected for

the trip to store.

Load plan & Trip sheet :

Load plan and trip sheet are prepared by the transport department are given in

appendix tables 14 and 15 respectively.

A trip means the distance covered from the DC location to the store location.

So, in total the vehicle makes two trips when it goes at a store.

A trip sheet is prepared to record the trip related details, when a vehicle is sent to

a trip.As shown in the table, it has a trip number,trip date,shipping point which is

the DC code, a desription of the location from where the trip commences, the type

of shipment ,which means the type of the material carried to the destination, here

it is fruits and vegetables,the vehicle and model numbers for a record of the

kilometers run by each vehicle,the no. of pick ups means whether the vehicle is

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suppose to collect anything as empty crates from stores or not,number of drops

means the number of stores at which the vehicle will halt.

At the right side of the trip sheet, there is the detailed recording of the timings as

the start and end time of loading the vevicle,which gives the time taken to load a

vehicle.It also provides meter reading, to track the kilometers travelled.iIt has the

delivery details as the sequence of the halt at store, at which store the first halt

will be made,It also has the DC seal no., the return timr record to ascertain time

taken in total for two trips.

The trip sheet has details as the vehicle’s store reach time and its time of getting

released from the store.

Load Plan

Load plan is meant to carry out the vehicle loading related planning.it has a

diagrammatic representation of the F & V crate loading in the vehicle.It has the

details as the date, the vehicle no.,the departure whether evening or morning,the

details about laod start and end time.It is useful especially for distribution of a

vehicle between two to three store’s material as shown in the load plan in the

Appendix table .

When the delivery is for more than a single store, the load plan for the vehicle

becomes all the more important.

STEP10 (C )

LOADING

The fruits and vegetables are loaded by stacking them on a pallette and then load these

crates with the help of pallette loading device.Earlier the crates were being loaded

manually one by one.But,it was time consuming.So, now the loading is done through the

help of pallette.The pallette occupies more space in the vehicle, but it saves time.

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Seal

A unique seal is used for sealing the vehicle.Each seal is unique as it has a number on

it.This seal cannot be reused.before putting the seal on the door, the number on the seal is

recorded on the documents to be sent to the store.The store

Security guard and supervisor will examine the seal number and only thereafter open it .

STEP11

REACHING THE STORE

1)On reaching the store the driver will submit the following documents:

3 copies of STN

Delivery note

These documents will be examined and will be stamped by the security guard as

‘Received’ which is meant for acknowledgement that the goods that where dispatched

from DC have been received at the destination. One copy of the STN as given in

appendix table 16 will be kept along with the delivery note and the rest of the two copies

of the STN will be returned back to the driver.Of these two copies of the STN, one will

be retained by the driver, hired by the 3PLG service providing company.

2)Unloading at the store :

a)Seal number

The seal number mentioned on the seal will be checked and if matches with the number

conveyed on phone by the outbound team to the store unloading supervisor,only then the

seal will be opened At the store the vehicle seal will be removed in the presence of the

store security guard.And on basis of the delivery note given in appendix table 17 the

number of the crates will be counted.

If both match only then the vehicle will be unloaded.If there is a mismatch between the

two, the vehicle will be unloaded.

b)Entry in the store Inward Register :

All the relevant details of the delevery lot as the delivery date, vehicle no,delivery time,

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Unloading time,number of crates unloaded, description of material- F&V or other, will be

entered in the register by the store supervisor.

3) Milk run & seals

If the vehicle is planned for milk run, which means delivery at more than one store,than

the driver will be given as many seals as the number of store destinations.In such, cases

the unloading at the first store will take place as explained above.Once the crates are

unloaded, the unloading suprevisor will seal the vehicle with another seal (carried by the

driver and given from the wet DC).This will be done in the presence of the store

franchisee / FDM and the store security guard.The replaced seal’s number will be

recorded in the store register.The seal numbers are conveyed by the transport department

to the store as soon as the vehicle is dispatched.

4) Empty crates

If there are empty crates with the store, due to the material delivered earlier they will be

send back to the we DC.

5) GRN Preparation at the store

After the material received is unloaded, the store franchisee / FDM will prepare a goods

received note(GRN), for the material which has been received from DC to the store.For

relaince fresh stores, the GRN will be made in SAPenabled system.This results into

transfer of stock from wet DC to the specific store’s location in the system.

6) Inter-store transfer

In cases where one store has an excess of stock of some of the F&V SKUs, then an

internal transfer of such frits / vegetables is done.

For updating the stock levels of those F & V sku’s that have been transffered to other

store STN will be prepared. This will reduce the stock of the stock transfering store

by the SKU wise STN quantity.

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7) Fruits and vegetables at mark down prices

The fruits and vegetables are perishable in nature, and hence their freshness is shortlived.

Once the F & V skus received but not sold during their ‘fresh life period’, they will no

fetch their regular shelf price.

So such material is sorted and graded at the stores, and sold at marked down prices.

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PROBLEMS FACED AT DIFFERENT LEVELS

CPC(CITY PROCESSING CENTRE) RELATED

1) Procurement of the right material (F / V), in the required quantity and of the

reliance’s required quality.

2) Weighing huge stock of fruits and vegetables, which keep on changing rapidly,

both quantitywise as well as SKUwise. It is practically no possible to daily

physically weigh each SKU.

3) Fill rate related problems

Fill rateIt is the SKUwise percentage of the quantity handed over by the CPC to the

outbound department.It depends on

Procurement Strength

Sorting and Grading Effeciency

Quality level maintainence

The CPC faces these problems due to many reasons.

It is the target of the CPC to have cent percent fill rate.And it works hard for it.

But, due to problem in either procuring, or because of time shortage due to limited

manpower.It is not easy to get large volume of material at reasonable price if it has to

be of top quality.

OUTBOUND RELATED PROBLEMS FACED

When the actual quantity handed over by the CPC is not as per the R-GRN,the problem

of allocation to the stores is to be solved by manually.

PROBLEMS FACED IN MANAGING STORE

1) Pilferage is a routine problem.

2) Getting change in denominations of one,two,five rupees.

3) Indented quantity not received.

4) Fill rate not cent percent for some of the SKUs.

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ACTIVITIES UNDERTAKEN BY COMMERCIAL TEAM AT CPC

ARRIVAL OF F / V ( FRUIT OR VEGETABLE LOT ) & GRN PREPARATION

As soon as a lot of fruit /vegetable arrives at CPC dock, the inbound supervisor will

complete the inbound related acitivities and hand over all the documents to the

commercial team.

Entry in the Material Inward excel sheet

The commercial team will examine the document and will prepare a goods received

note(GRN) for the lot received. The inbound DEO (Data Entry Operator) will enter the

details about the lot received as the serial no., gate entry pass no.,lot no.,STO no.,STO

date,SKU code and SKU description, invoice details as RR/NRR, no of crates, quantity in

kgs,receiving qty details as no. of crates/boxes and kgs, difference between the invoice

and receiving qty termed as excess / shortage.

This excel sheet is forwarded to the CPC commercial team. The shortage / surplus is

helpful in tracking the losses suffered. Once this is known the reasons can be analysed

and steps can be taken to remove or at least reduce them

GRN Upload

On basis of the forwarded excel sheet, the CPC commercial team will copy the excel

sheet data to text and then through it the copied data on the text will be uploaded into

SAP and thus GRN will be prepared.Each GRN will have its unique system generated

number, which is noted on the reverse side of the invoice (in case of direct purchase

from vendor) / STN (procurement from mandior CC).

GRN for CC’s(Collection Centres)

As the collection centers have not been allocated a P.C.,all the CC related work in SAP

is done by the CPC commercial team.This is because ‘Reliance retail’ is in the initial

phase of activities.Only three months have passed since the launch of itsfirst nine

‘Reliance Fresh stores’.So when any F/V lot arrives at CPC, the CPC commercial team

will prepare a GRN for CC, by uploading on SAP as mentioned above.

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STN (Stock Transfer Note) for CC’s

After GRN – for CC is prepared, a STN,on behalf of the CC will be prepared by the CPC

commercial team. This is because the stock has arrived from the CC to CPC.So,for the

transfer of stock from the specific CC to CPC, the effect in SAP enabled system is

required to be given.Only after giving this effect the CPC commercial team can prepare

the GRN for CPC.

It will enable the system to pick up the stock from CC location and bring it to the CPC

location.

GRN for CPC

It is prepared by uploading the copied text into SAP, as explained above.

GRN AND AUTO P. O. GENERATION

As soon as the GRN (CPC) is uploaded to SAP, the system will automatically generate a

P.O. equal to the amount for which the GRN was made.Such a P.O.is termed as ‘Auto

P.O.’Each such auto P.O.will have its unique system generated number.As the GRN

no.is recorded, this P.O. no. will also be recorded on the reverse side of the actual invoice

or STN.This GRN no. and PO no. are used for future reference and I /V.

The logic behind this is that in case of F & V it is practically not possible to raise a

PO to the farmers .

GRN AND SKU WISE STOCK LEVELS IN SAP ENABLED SYSTEM

As soon as the GRN(CPC) is uploaded the stock levels for the SKU’s which have arrived

at the CPC and for which the GRN was uploaded, will rise up by the quantity for which

the GRN (CPC) was made.So this results into automatically raising of the stocklevels

with the prepartion of GRN.

For example,

If a lot has arrived at CPC.It has 200 kgs of lemon and 300 kgs of french beans.

As soon as the GRN is prepared for CPC, the stock levels(as per SAP enabled system)

Of lemon and french beans will rise up by 200 kgs and 300 kgs respectively.

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DEGRADING

At the CPC the fruits and vegetables received are sorted and graded.Of the received

material, the material which is fresh and of good quality is sorted and graded as ‘RR’

(For Reliance retail).

From the remaining material, the material which has become out of use either due to

being rotten, or driedup ( corriander,spinach etc) or due to large cuts formation will be

sorted and graded as ‘dump’.

And the rest which as either minor cuts or is not fresh as RR material will be sorted and

termed as ‘NRR’(Not for Reliance Retail).

When F / V lot arrives at CPC the stock level is automatically updated on preparation of

GRN.

The CPC commercial team will record the NRR graded material under ‘degrading’

by the following procedure:

Daily sorting and grading reports are generated on basis of the sorting and grading

activities undertaken by the sorting & grading team.This report is given in appendix

table. It shows that of the material taken (input particulars) for sorting & grading,

the quantity of material (in kgs) which has been graded as NRR, RR and dump.

Such reports are prepared separately for the vegetable trimming belt, vegetable line.and

table.A separate report is made for the SKUs in the cold storage.

The commercial team keeps on updating the sorting & grading report in SAP.It will

select the relevant option in the menu and record the details of the report.The quantity

figures in kgs, for the SKUs which are graded as NRR are recorded under ‘degrading’

option in menu and then ‘execute’ is clicked.The moment this is done,the system will

reduce the RR stock( which keeps on updating on GRN preparation) by the quantity

recorded as NRR under ‘degrading’.Thus in SAP the a specific quantity of the NRR

graded SKUs will be transffered from the RR stock to the NRR stock, which is shown as

‘Degrading’ in SAP menu.

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WASTAGE

The material sorted and graded as ‘dump’ is booked as a loss under the head ‘wastage’.

Daily, entry is made for wastage, twice, in SA.P enabled system, on basis of the sorting

grading report submitted by the sorting grading supervisors.

This is done in the same manner as done for NRR graded SKUs.And so the material

graded as ‘dump’ will be shown under ‘Wastage’in SAP .And the RR stock level for such

material will be shifted to the ‘wastage’ location in SAPThus the effects of the sorting 7

grading reports will be given in the system..

GRN REVERSAL

If an error has been commited in preparation of the GRN, the same cannot be deleted

from the system and hence it has to be reversed by giving revers effect for it.

For example,

If 200 kgs of cluster beans have been received but by mistake the DEO has recorded it as

2000kgs.In such a case, the GRN if prepared needs to be reversed by giving the opposite

effect for the excess quantity of 1800 kgs.

Similarly if an error is commited relating to the rate or amount in rupees, it can be

rectified in the similar manner.

TRANSIST LOSS

On arrival of fruits / vegetables at CPC from anyof the sources, a record is maintained for

the difference between the invoiced and the actual received quantity.If the received

quantity is less than the invoiced quantity, the difference is termed as ‘shortage’

And if the received quantity exceeds the invoiced one,the difference is termed as

‘surplus’.he loss due to shortage is booked under ‘Transist Loss’ as here the loss arises

while the goods are in transist.

REGRADING

At times after sorting certain F & V SKU’s require to be regraded.

For example,

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If 900 kgs of potatoes are received, and after sorting and grading of these 250 kgs are

Very small sized potatoes having diameter of 25-35mm, then such potatoes are termed as

‘baby potatoes’.

Such regrading is done for potato,capsicum etc.

STN ( STOCK TRANSFER NOTE )

A STN is prepared by the CPC in two cases :

* When the NRR material is sent for sale at the local mandis.

* When the F & V SKU’s are to be handed over to the outbound team for dispatch to

stores.

When a STN is prepared in the system, the stock levels of the SKU’s for which the STN

is prepared will drop down by the quantity against each SKU in the STN.

The implication of STN in SAP is simply SKU wise transfer of the F & V from one to

another location.In this case, from CPC to mandi in the first case and from CPC to

outbound department in the second case.

SHORTAGE / SHRINKAGE

Shortage

Daily the physical stock is counted.This is done by summing up the weight of all the

crates carrying the same SKU.This weight is calculated on basis of daywise slips placed

on a pallete filled up with crates when the fruits or vegetables arrive at the CPC door.

Any difference between the stock as per SAP and physical stock is recorded as

‘shortage’.

shrinkage

In summer when the temparature is very high, there occurs moisture loss from the fruits

and vegetables.So, the differnce between both the stocks – the physical stock and the

SAP stock is taken as the ‘shrinkage’.

Such shrinkage is common in case of certain vegetables and fruits as spinach, corrainder,

Grapes,oranges, etc

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WAREHOUSE MANAGEMENT SYSTEM

For products other than fruits and vegetables, bakery products and ice-creams all the rest

of the products are stocked at the reliance’s distribution centre at GIDC, Naroda, gujarat.

Reliance fresh stores offers different SKUs under the following categories :

Processed food

Staples

Non-food

Articles of daily usage

The strength of Reliance retail does not lie in a single particular area.It derieves it’s

Over its competitors by being strong in all the areas. It has managed to acquire the best of

the talent.With the combination of the big brains and the highly sophisticated technology,

it is going to have an edge over it’s competitors.

WAREHOUSE MANAGEMENT SYSTEMS (WMS)

FOR THE SKUs AT DRY DISTRIBUTION CENTRE

DEMAND FORECASTING

Before plunging into the retail sector, reliance had undertaken an extensive market

research.It had undertaken a comprehensive study of the retail market.It took more than

two long years of hard research work, which gave it a base for taking a sound decision of

whether or not to plunge into the retail industry.The hard research work also helped it to

have a better approach of entering the market.

It monitored the sales of a variety of products.It studied and analysed different brands.

And their sales trend were closely observed.The rich talent which it has helped it in this

research study.

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Which items to stock at warehouse?

Before the launch of reliance fresh stores and even after the launch,sales trends for

different stock keeping units were monitored and analysed.It is not possible to have all

the products on earth, which a consumer may demand. But by sales trend analysis it

becomes possible to cut down the list to a limited number.This is what reliance did.

AUTO PO (AUTOMATICALLY RAISED PURCHASE ORDERS)

At reliance retail, the purchase orders for all the stock keeping units falling under the

following categories have an automatically generated purchase order mechanism.

Staples as wheat, rice etcetra,Processed food ,Articles of daily usage as toothbrush, tooth

paste, soaps and non-food items( items belonging to the non-food category and which are

not for daily use),have an auto PO meghanism.

For above products the stock levels to be kept at the stores are set on basis of researched

and monitored sales trend.And accordingly the reordering levels are determined on basis

of sales.

Reorder level / Minimum Bin Quantity (MBQ) and Purchase Order :

The MBQ is set for all the different stock keeping units (SKUs) falling under the above

mentioned categories.This MBQ is determined for the all the above mentioned SKUs

at stores.

CATEGORY (PURCHASE DEPARTMENT)

At reliance retail,the traditional purchase department is segregated into teams and this

categorisation of the purchase department. is as per the different categories of the

products being offered at the store shelf.

Each category of products is assigned to such a team of the purchase department called

‘category’.

For example, the staples assigned to a specific team,and this team responsible for the

purchase of staples is called category for staples.Normally, the category is responsible for

the purchase of the product.The category gives an order to the supplier for the purchase

of the product.This is called ‘raising a purchase order’.

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But in case of the SKUs falling under the above categories, the moment the stock of a

stock keeping unit falls to the MBQ level,the system automatically generates a purchase

orderAt the storelevel, a purchase order will be generated and for the warehouse a

transfer order will be generated. The category though does not raise a purchase order,but

it monitors the sales trend.

INBOUND TEAM

ADVANCE SHIPPING NOTE (ASN)

1. Appointment taken by supplier

The supplier takes an appointment before dispatching goods to the warehouse.The

appointment is taken through phonecall to one of the ASN team member,responsible for

appointment related work.

The purpose of the appointment is to undertake the related planning of manpower,

equipments as computers and HHTs, to unload the vehicle at the dock door.

Appointment taking removes the possibility of a long quque and thus avoids waste of

time.

2. Best fit

When ever a stock keeping unit arrives at the DC for the first time , ‘best fit’ is done for

it.Best fit means the maximum number of eaches that can be kept in pick up areas as on a

pick up pallete location and pick upshevelling racks.

Only if the best fit is done ,the system accepts the stock.The number of the eaches that

will be placed on a piking area will be determiined by the cartoon size.

* Supplier will come with the PO

* The PO and the Invoice will be matched for the rates in both.The PO details will be

entered.Then by a command the the Asn will be prepered.

3. label printing of Transfer orders

After ASN is made, the code for transfer orders are generataed and printout are

generasated.They are pasted on the cartoons.

4. GRN

The GRN (goods received note) is prepared through the HHT.

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5. Bar Code Printing (For Normal Cases)

By ‘zskulabel’ command the bar code will be printed and pasted on the goods for which

GRN is made.

6. GRN for EAN / MRP mismatch (European article Number/Maximum retail price)

The HHT Message will signify mismatch. In case of MRP mismatch movement of stock

will be through 103 movement type on HHT, but in case of EAN mismatch GRN will be

prepared through desktop only.

7..Put Away from HHT

This is done for transfering order. It is allocation of SKU at proper location in computer

warehouse space and alos physically. The transfer orders are scanned. Then the

destination on pallet racks are scanned. If they match the SKU will be placed at that

location.

8. All the documents handed over to the Commercial team

9. The normal GRN cases are recorded under movement type 100. The Ean or MRP

mismatch cases are recorded under movement type 103. Through a command and

appropriate measures including contacting the concern category, this mismatch is

removed and this cases are recorded under movement type 105.

WAREHOUSE MANAGEMENT SYSTEM & SAP

The warehouse of reliance retail is totally SAP driven.It provides the storage space to

different stock keeping units (SKU) of the warehouse on the basis of the worth of the

SKU in rupees.Thus it follows the ABC system of inventory management.

But in addition to that,it makes the use of the sophisticated tools and techniques

to provide a cent percent system driven warehouse. Reliace retail employs the use of

sophisticates systems which determine the exact location for each sku. In the traditional

abc system where the storage is as per the given sales trends through manual intervention

in determining the storage area.But in case of the warehouse management systems the

warehouses are managed as per the locations assigned by customised SAP systems to

each Sku, on basis of its sales trends.

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OUTBOUND TEAM

It monitors the store stock levels for each stock keeping unit.The minimum bin

quantity(MBQ) is set up for each SKU on the store shelf.As soon as the SKU wise stock

level drops to its MBQ level, the SAP enabled system automatically generates a purchase

Order(PO).

Store wise pick list

The outbound team at the naroda distirbution centre has which has an access to the store

SKU wise sales and SKUwise purchase orders, will get a print out of the Storewise

purchase order by entering the shipping point, stores code,and executing it.

On basis of the store wise pick list for all the stores, the picker will pick up the items

listed in it, and collect them on a pallette and carry it to the out bound area.

Transfer orders

With help of a command, thr transfer orders for the stock keeping units are generated.

These transfer orders are for transfer of stock from the internal stock area to the outbound

area.

Store wise transfer Orders

With the help of a command, the outbound team, will generate store wise transfer orders.

By entering the relevant details as the shipping point code ,clicking on the relevant details

the storewise transfer orders are generated.These transfer orders will have unique

numbers. This will transfer the stock in SAP from the warehouse shipping point to the

store’s shipping point.Three copies of storewise transfer orders are sent to store. One is

retianed by the dry DC. One copy is retained by the driver and two copies are sent to the

store.

The store will keep one and return the fourth copy,after stamping ‘received’ on it.

Packing List & Delivery:

Through relevant commands packing list will be generated.

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Transportation: (Stock Transfer):

Stock transfer notes will be prepared and loading sheet will be prepared. As per the

loading sheet, loading will be undertaken. The vehicle will be sealed carefully, and seal

number will be noted in the document.

Gate :

The security will check seal number , vehicle number with STN and release the vehicle.

The details will be recorded in the outbound register at the gate.

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DOCUMENTS MANAGEMENT SYSTEM

INVOICE VERIFICATION ( I/V ) FOR BAKERY PRODUCTS AND ICE-CREAMS

The bakery products and ice-creams are directly delivered by the vendor at the ‘Reliance

fresh store’. At the store, the store franchisee/ store F.D.M.(Franchisee development

Manager) prepares a ‘goods receipt note’ (GRN) through SAP enabled system.As soon as

GRN is prepared,a GRN number is issued which is unique for the particular lot received

against a specific P.O. and the store stock level as per SAP will immediately rise up.

The following documents will be handed over to the commercial department at the

gujarat state office, Asha Arcade,Ahmedabad.

1) Bill / Invoice raised by the vendor

2) Printout copy of the GRN prepared at store or GRN number

3) Printout copy of Purchase Order or Purchase order number

Invoice Verification process

This task is performed by a team called the ‘Invoice Verification team’

The following are the steps to be followed for invoice verification:

1) Checking whether all the required documents for I/V are submitted by the store.

2) Check the following

Security stamp by the security guard at the store

P.O. rate should match with invoice rate. Invoice rate should not exceed

the P.O. rate.If in case, the invoice rate is lower than the P.O. rate , it is

permissible and in such cases the invoice rate is considered.

Invoice quantity should match with the GRN quantity.GRN is ideally

prepared for the actual quantity received irrespective of the P.O. quantity

or the invoice quantity.But it should not exceed the quantity stated in the

P.O.* For example, if P.O. quantity is 20 ,500 gms packs of jumbo sliced

kalory bread, but the actual received quantity is 15 packs only. So, GRN

will be prepared for the received quantit which is 15 packs.If by mistake,

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invoice is prepared for the P.O. quantity of 20 packs, even than GRN will

be only for the 15 packs received.

GRN reversed for Excess Quantity : If GRN is prepared for quantity

higher than actaully received then for the excess quantity GRN will be

reversed. This is because a GRN once prepared in the SAP enabled system

cannot be erased.So to rectify the error a reverse effect will be given for

the specific quantity and amount by preparing ‘goods rejection note’.* In

above example,if at store GRN is prepared for the invoice quantity of 20

packs, than the commercial team will get the same rectified by the store

FDM / franchisee and than process the invoice for verification. This is to

avoid a bulk of excess GRN’s at the specific store’s location in SAP and

sort out the matters on daily basis.When the GRN is reversed at the

store,the stock level at the store will reduce by that amount,

which in this case is 5 packs.And the commercial department employee

responsible for I/V will be able to check whether the correction has been

made or not.

GRN reversed for excess / damaged goods : In this case the good will be

returned back to the vendor.And the GRN, if prepared for such goods on

their receipt , will be reversed as explained above.

If material is rejected or short received, I/V will be only for the residual amount

after deducting the proportionate amount.

4) Invoice verification process (in SAP system) :

Enterirng the data relating to the invoice by entering YSCM command.

Scroll : The purpose of scroll is to input the data of the invoice in the DMS

System.

Scroll Entry :

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The document is then scrolled by selecting ‘scroll entry’and entering the location

code, company code and,the invoice details as the vendor code.P.O. no.,challan

no.,bill no.,invoice amount, invoice date the user department etc and saving it.

This will give scroll number, which is to be noted on the reverse side of the

invoice.

*Process for DMS(Document Management System)

Scannig

The invoice will be scanned and it will be attached inform of a file.

Then the option ‘create document’ will be selected.In it ‘new’ will be selected.

The file name will be given as ‘specific scroll number – 2007’ (here the scroll no

will be the one generated when the document is scrolled and ‘2007’ for invoices

verified in the year 2007)and then saved.

The relevant details as the bill number, invoice date, currency,etc will be entered

in records. This would generate a DMS no.unique for the particular invoice being

scanned

Scroll process :

The location code, company code,scroll no.(generated on scroll entry and

recorded on reverse side the bill) to be entered in.

A field will be displayed, in which relevant data will be entered in for the basic

data as location code , company code, payment mode – ‘c’ for cheque and ‘ bank

code’, P.O. no,payment period are entered .

On entering the scroll no. the system will link up the specific scroll number with

the relevant P.O. and GRN details.On basis of the payment period and invoice

date, it will calculate the due date for payment.

When these numbers are given the system will link up with the P.O. no. and pick

up the details of the P.O. items and display it on the screen. These sku’s will be

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tallied with the bill (in case of direct purchase from vendor) or STN (in case of

purchase from mandi or CC’s) to ensure that no sku is left out .

In case of commission, click on ‘withholding tax’, so the T.D.S. will be deducted

from the commission.And the amount will ne the net amount payable towards

commission.

Simulate :

Click on ‘simulate’and then on ‘post’. This will give theD.M.S.(Document

Management System ) number, which is also recorded on the reverse side of the

invoice. On clicking ‘enter’, the invoice verification no.(I/V no.) will be generated

The document management system will also provide the document

number(accounting no.) The I/V no. is usefull for reversing the I/V if need

arises.It also helps in knowing the invoices which are verified through SAP,but

their payments are pending. Both the numbers will be recorded on back side of

the invoice.

A print out of the invoice verified is taken as given in appendix table 18. It is

attached with the vendor documents. It will be signed by the person carrying out

this invoice verification work.It will be apporved and signed by the head of the

commercial department,and forwarded for ‘payment block’ removal.

And all the document (hard copy) will be filed as a set.

6) Payment Block :

A single executive is responsible for the block removal.

The invoices after being verified through SAP,the existing payment blocks

which hinders payments need to be removed.Even though the invoices are

verified the system will block payments. These blocks are kept to ensure

that payments are made only after thorough checking.

Only when these blocks are released,the payments can be made.

Even if the ‘payment block’ is released, and then because of some reason there

arises a need to hold the payment, then it can be done through SAP enabled

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DMS.

7) Payment Proposal :A team is assigned the task of payment related work.

It is not required except for e-payments.It is made giving details as the due date

for payment and the amount,to facilitate the arrangements required to be made

for thesame.

For example, if a payment worth rupees 25 lacs is to be made through e-payment

then that much or higher than that amount should be there in the bank account. A

payment proposal facilitates this.

8) Payments :

The payments are made chiefly through any of the following modes.In the order

of their priority they are as under :

1) E-payments

When an e-payment is made the amount is directly credited to the vendor’s

account.And an e-mail is sent to the vendor, informing the details of the bills

for which payment has been made.E-payment is an immediate mode of

payment,in which the amount gets deposited to the vendor’s account within

a few seconds.

Those suppliers who have a bank account in either HDFC Bank/ ICICI bank

or SBI, only those suppliers can receive their dues through e-payments.

For it, the vendor should have IFSC(Indian Financial System Code), issued

by the RBI.

E-payment is the mode of payment which needs the minimum time.But due

to the time which is required for the internal process wthin the organisaiton,it

normally takes a day for such payments.So for the payments which become

due on a particular day, the internal process is undertaken a day ahead.

2) RTGS(Real time gross settlement system) / NEFT (National electronic fund

transfer)

These are types of electronic payments itself.These are bank neutral

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e-payments system.A cheque when issued is deposited by the receiver in his

bank account and it is routed through the RBI before it reaches the issuer’s

bank.

Under the above sytems, the functioning of the banks take place through

giving and receiving electronic instructions via RBI.

At reliance Retail, RTGS and NEFT both can be used by getting their print

outs, and having it signed and approved by the authorised person.And

payment is made by depositing it with the bank.It is like a cheque in this

aspect.But, the payment is faster through RTGS / NEFT, as compared to a

cheque.RTGS enables to make payment in half an hour whereas through

NEFT it takes 3 to 4 hours.

RTGS is used for payments exceeding one lac.And NEFT is used for

payment below one lac.

RTGS is performed untill 1.oo P.M.

In order to take benefit of this system, the bank branch of the vendor should

enabled for receiving electronic credit.And the vendor should have IFSC

(Indian Financial System Code) issued by the RBI..IFSC is the RBI

certification that a supplier has a bank account in a particular bank.

Banks, generally charge a fee for receiving RTGS/NEFT credits to be

received by its customer.

3) Cheques

Cheques are sent through courier daily by 6.00 P. M..

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SIGNIFICANCE OF SAP ENABLED INVOICE VERIFICATION AND DMS

SCROLL

It enables to feed all the relevant data of the vendor invoice into the system.

SCROLL NUMBER

It is a unique number for all the data entered into the DMS for a particular vendor

invoice.

SCANNIG VENDOR INVOICE

The invoice verification process is carried on at Naroda DC and payments are made from

the state office at Asha Arcade, Ahmedabad.Scanning the invoice at DC enables the

authorised person at state office to see and check it.In absence of scanning it, this would

be practicaly not possible.

Similarly, for payments made at ahmedabad against the invoices, the scanned invoices

and supporting documents enable the headoffice at bombay to check it if needed.The

H.O. can crosscheck the I/V through the scanned invoice.

DOCUMENT NUMBER

It is the number which distinguishes the accounting details for a particular vendor

invoice.

I/V document has vendor name,his/her Pan, Lot no,document no,scroll details, bill

details, GRN details, TDS details and Bank details.

INVOICE VERIFICATION NUMBER(I/V no.)

It is meant to distinguish each invoice that is verified.

1)Accounting Entry

When the GRN is prepared in SAP, the entry passed is

Inventory of Traded goods a/c Dr.

To Provisional liability for traded goods

(at this stage, goods are received so stock level rise, and a provision is made towards

Future liability which will arise towards the traded goods on due date)

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When invoice verification is done, the entry will be,

Provisional liability for traded goods a/c Dr.

To vendor’s a/c

(At this stage the provisional liability is cancelled and the vendor is acknowleded as a

creditor)

When payment is made by bank

Vendor’s a/c Dr.

To Bank a/c

(At this stage that is when the payment is due, the payment is made through bank.)

On basis of these entries, posting will be made to the ledger accounts.

2)Category Follow-up

On basis of an I/V no.it is possible to trace an invoice right upto the P.O.

For example, if an I/V is completed, and the invoice is for a delivery lot received by

courier.The lot of goods is worth Rs 5 lacs and has damaged goods worth Rs 50,000.

So, the I/V is for Rs. 4.5 lacs.If the purchase category needs to be informed as to against

which particular P.O., the received lot had damaged goods, than with the I/v no. the

GRN no. can be ascertained and with the GRN no the P.O. no can be tracked.It is also

possible to have the P.O.no. directly from the I/V no.

3)Payments

Similarly if the category (purchase department) inquires about payment to a specific party

Which though due has not been made as yet and gives the reference of the P.O. number,

then the I/V team of commerce department will check whether for that particular P.O.no.

the vendor bill is through with verification or not.If the I/V is completed, the MIS will

reveal the same.But if not then it means that the problem is either at ‘payment block’

stage or the payment is in process.And this can be traced from the I/V number generated

at the end of I/V process.With this I/V no. it can be traced whether the block is removed

or not If removed,it means that the payment is in the process.and the payment delay must

be due to either delay in getting the documents or block related problem.

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I/V no. also enables to know whether payment has been made to the vendor or is

pending.

4)Ease in Managing the documents

The DMS helps in having the documentation so as minimum time and energy is

expended for locating it.Whereas, in case of the paper files a lot of space for storing files

and time as well as effort is needed.

It also facilitates auditing.

LINKAGES

The SAP software enabled DMS(Document Management System) helps in linking up

one document to many different documents pertaining to a transaction.

It helps in tracking a document on either sides. An I/V document no. can track

documents right from the stage of I/V to P.O.stage and it can go forward from I/V to

accountig details.

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SAP ENABLED PAYMENT SYSTEM AND INTERNAL CONTROL

Reliance Retail has a very strong internal control as far the commercial activities

Chiefly relating to payments are concerned.

The entire work right from the invoice checking and verification to the final payment and

handling of cheques and e-payment is distributed amongst the employees of the

commercial department.

An employee / executive can only perform the tasks, for which he/she has the

authorisation.

One who is responsible for I/V cannot make payments and vice-versa.

An employee responsible for I/V will not be given the task of making payment as it may

result into misappropriation of funds or fraud.Similarly, responsibility and authorisation

for block removal and payments or block removal and I/V will not be assigned to the

same person.

One who is responsible for block removal, only that person will be able to release the

payment blocks, as only he has the authorisation for that.

INVOICE VERIFICATION FOR FRUITS AND VEGETABLES

After GRN is prepared on basis of the documents handed over by the CPC – inbound

supervisor, invoice verification process is carried out through SAP.

Invoice Verification Process

It is performed by the commercial team at CPC (City Processing Centre)

The following are the steps for invoice verification :

1) Invoice are in the required format.

In case of procurement from mandis, the seller’s registration number

2) All the supporting documents as challan (when rate per kg not conveyed),octroi

charges receipt,etc should be submitted.

In case of purchase from any other state than gujarat ‘Form 403’ should be

attached with the invoice.

3) Getting the invoice approved and signed by the CPC head.And in his absence, it

will be approved and signed by the CPC incharge.

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4) Finding and correcting errors or manipulations, if any

(a) Direct supply by Vendor : Verify the total amount of the invoice(in rupees) by

summing up the product of the quantity (in kgs) and rate per kilogram for each of

the stock keeping units which are directly supplied by vendors and for invoices

are prepared by the vendor.

(b) Supply through Collection Centres CC’s : In such cases, the ‘stock transfer

note’ and a copy of the ‘Receipt cum weighment slip’ are sent along with each lot

of vegetables shipped from the CC’s to CPC.

Daily Procurement Slip :

At end of the day, at each CC, the CC officer will prepare a ‘Daily Procurement Slip’

and sent it with the last lot of vegetables. It will have columns for sku code, sku

description, its quantity (in kgs), rate per kg, amount ( in Rs ) – computed as the product

of rate and quantity.The total of the amount column will give the actual total amount ( in

Rs.) for all the vegetables purchased from the farmers during a day.

At the bottom of the‘Daily Procurement Slip’, there are columns for opening balance,

deposits, payments and closing balance.The CC-officer will fill in the columns of

opening balance, payments made during the day to the farmers against the vegetables

purchased and the balance amount will be the amount left after payment to the

farmers.The ‘deposits ’ column is meant for the amount which is deposited daily from

Reliance Retail’s bank account to the CC-officer’s bank account at the CC bank.

The commercial team at CPC will check the figures in the amount column of the slip

(computing the product of rate and quantity and the sum of all figures so arrived)so as to

dectect any errors committed.This amount should match with the amount in the payments

column at the bottom of the slip.The significance of this Slip is to keep a record of the

daily total procurement and daily total payments made to the farmers.It is used by the

commercial team for procurement to determine the amount which needs to be deposited

to each CC-procurement officer’s bank account.Daily evening report through phone call

is given by the procurement officer to the commercial team for procurement, conveying

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the payments made and balance amount on hand.This balance figure is cross checked

with the daily slip figure to monitor and control the CC-officer’s actions.

(c) Supply from Mandis :In such cases copies of STN , weighment slip, invoice

prepared by the vendor and / or delivery challan are sent along with

the fruits and / vegetables delivered at CPC.The figures in the amount column are

checked, as in the above two cases.The total amount figure (in Rs.) of the

invoice should match with the total amount figure (in Rs.) in the STN.

(d) Supply from National centres :

The fruits and vegetables which are not available from within gujarat state are

procured either through the national procurement centres or from vendors

all over India.

National level procurement

There are certain fruits and vegetables which are not grown and hence not

readily available in large quantities within gujarat state. Such fruits and

vegetables are procured from those different states of India, where they are

available in the best quality.This is especially a practise for fruits like leechis,

apples,pear,grapes and vegetables like onions.

National Procurement Centres

In certain states of India like andhara pradesh where Reliance retail ltd. is already in

opertion. In such states there are Reliance retail’s collection centres.These centres

also supply

certain items which are a speciality of that particular region. to the other states.

Vendors operating at national level

The procurement demand for the fruits and vegetables not available within gujarat

and which cannot be fulfilled from the national procurement centers of Reliance

Retail, are purchased directly from the the vendors in states other than gujarat.

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(e)Imported Fruits and vegetables

Such fruits and vegetables are purchased either directly from the vendors, who

import such items.Or these items are procured via collection centres in other states

besides gujarat.

In both the cases there will be no change in the document needed for invoice

verification.in case of direct purchase from vendor there will be bill,form 403

Whereas in case of procurement from CC’s of states besides gujarat there will be STN.

Amount to be considered for Invoice – verification for the followig cases:

* Direct purchases made from vendor :

Transist Loss

On arrival of the lot, the fruits /vegetables are weighed at the CPC inbound door. The

difference in the weight in kgs as per invoice and weight on arrival is calculated and

termed as ‘variance’.Such variance is termed as transist loss.There are two types of

transist loss. They are normal and abnormal transit loss.

Depending on the features like water content, life of each s.k.u.,distance from the

procurement source and hence transist time for the lot are considered for ascertainig

whether the variance arising in transist is normal or abnormal.

Normal Transist Loss

In case of certain sku’s like corriander,mint leaves,spinach transit loss is bounnd to

arise.And such loss is termed as normal transist loss.

In cases of normal transist loss the invoice verification will be undertaken for the

actual amount stated in the invoice which is sent along with the delivery lot. In case

of certain sku’s like corriander,mint leaves,spinach transit loss is bounnd to arise.

Abnormal Transit Loss and reduction in payable amount

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In case of certain sku’s like corriander,mint leaves,spinach transit loss is bounnd to

arise.But for sku’s as potatoes a huge transit loss of 25-30 kgs for a lot of 100kgs is

abnormal. So in such cases, the CPC head will reduce amount equal to the abnormal

transit loss.And invoice verification will be for the balance amount only.So in such

cases, the payment will be made to the vendor for the net amount only.

* Procuerment from mandis / CC’s :

The documents in such cases will be approved and signed by the CPC incharge.

In such cases though a variance arises between the procurement weight and the

weight on arrival at CPC, the invoice verification will be for the actual amount paid at the

time of procurement. This is because, the amount paid for the purchase of

fruits/vegetables is a cost for Reliance Retail Ltd.

5) Invoice verification process (in SAP system)

Enter the data relating to the invoice by entering YSCM command.

Scroll : The purpose of scroll is to input the data of the invoice in the DMS

System.

Scroll Entry :

The document is then scrolled by selecting ‘scroll entry’and entering the location

code, company code and,the invoice details as the vendor code.P.O. no.,challan

no.,bill no.,invoice amount, invoice date the user department etc and saving it.

This will give scroll number, which is to be noted on the reverse side of the

invoice.

*Process for DMS(Document Management System)

Scannig

The invoice will be scanned and it will be attached inform of a file.

Then the option ‘create document’ will be selected.In it ‘new’ will be selected.

The file name will be given as ‘specific scroll number – 2007’ (here the scroll no

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will be the one generated when the document is scrolled and ‘2007’ for invoices

verified in the year 2007)and then saved.

The relevant details as the bill number, invoice date, currency,etc will be entered.

This would generate a DMS no.unique for the particular invoice being scanned

Scroll process :

The location code, company code,scroll no.(generated on scroll entry and

recorded on reverse side the bill) to be entered in.

A field will be displayed, in which relevant data will be entered in for the basic

data as location code , company code, payment mode – ‘c’ for cheque and ‘ bank

code’, P.O. no,payment period are entered .

On entering the scroll no. the system will link up the specific scroll number with

the relevant P.O. and GRN details.On basis of the payment period and invoice

date, it will calculate the due date for payment.

When these numbers are given the system will link up with the P.O. no. and pick

up the details of the P.O. items and display it on the screen. These sku’s will be

tallied with the bill (in case of direct purchase from vendor) or STN (in case of

purchase from mandi or CC’s) to ensure that no sku is left out .

In case of commission, click on ‘withholding tax’, so the T.D.S. will be deducted

from the commission.And the amount will ne the net amount payable towards

commission.

Simulate :

Click on ‘simulate’and then on ‘post’. This will give theD.M.S.(Document

Management System ) number, which is also recorded on the reverse side of the

invoice. On clicking ‘enter’, the invoice verification no.(I/V no.) will be generated

The document management system will also provide the document

number(accounting no.) The I/V no. is usefull for reversing the I/V if need

arises.It also helps in knowing the invoices which are verified through SAP,but

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their payments are pending. Both the numbers will be recorded on back side of

the invoice.

A print out of the invoice verified is taken. It will be signed by the person

carrying out this invoice verification work.It will be apporved and signed by the

head of the commercial department.

And all the documents(hard copy) will be filed as a set.

The rest of the procedure is same as in the case of ‘Bakery products and Ice-

creams’undertaken at ‘Reliance Retail office’, Asha Arcade-Ahmedabad.

Payment Block :

The invoices after being verified through SAP,the existing payment blocks which

hinders payments need to be removed.These blocks are kept to ensure that

payments are made only after thorough checking.

Payment Proposal :

It is not required except for e-payments.It is made giving details as the due date

for payment, amount to facilitate the arrangements required to be made for the

same.

For example, if a payment worth rupees 25 lacs is to be made through e-payment

then that much or higher than that amount should be there in the bank account. A

payment proposal facilitates this.

Payments :

The payments are made chiefly through any of the following modes.In the order

of their priority they are as under :

4) E-payment

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5) RTGS(Real time gross settlement system) / NEFT (National electronic fund

transfer)

6) Cheques

Cheques are sent through courier daily by 6.00 P. M..

RTGS is performed untill 1.oo P.M.

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INVOICE VERIFICATION FOR S.K.U.’s AT DRY D.C.

After preparing GRN through the HHT, the relevant documents for the goods received

are handed over to the commercial team at dry DC.

Invoice Verification Process

It is performed by the commercial team at dry DC.

The following are the steps for invoice verification :

1) Ensure that as far as possible all the invoices meant for resale are tax invoices.All

the items purchased for consumption for ‘Reliance retail ltd’ can have a retail

invoice.

In retail industry, an article purchased is meant for resale.If an invoice is of the

nature of ‘tax invoice’,then VAT(Value added tax) will be charged only on the

difference between the selling price and purchase price.It will be charged at 0%,

4% or 12.5% depending on the category to which the article belongs.

For example, If the selling price of a wrist watch is Rs1500 and the purchase price

is Rs. 1000, then VAT will be charged and paid only on the difference in both

these amounts which is Rs. ( 1500 – 1000 ) = Rs. 500.

In case of retail invoice such benefit is not available.In absence of tax invoice,

VAT would be payable on the entire amount of purchase.

In the above example, if VAT is charged on the entire amount of Rs. 1500 rather

than on Rs.1000.

For consumable items to be used by ‘Reliance Retail ltd’, rebate invoice is

allowable as the the purchaser humself has to bear the amount of tax .

2) Ensure that all the vendors have their TIN / VAT no and the CST no.

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3) Check that the following documents are there

a. Bill / Invoice

b. P.O. copy

c. GRN copy

d. ASN copy

e. Non- Returnable Gate Pass : If goods being returned back, either due to

being damaged or being in excess quantity than in the P.O., in such cases a

non-returnable gate pass is issued from the security guard at the gate.Same

is to be kept as an evidence for the reason of the invoice quantity being

lower than the P.O. quantity..

f. Octroi charges :If, besides the invoice for the goods delivered octroi fees are

paid in transist and the octroi bill is also presented for payment along with

the invoice for the delivered goods then,in such cases the octroi bill should

also be handed over to the commercial team.

Octroi charges and imprest

If octroi charges are paid by the labourer who delivers the goods at DC,and he

asks for the reimbursement for octroi charges than irrespective of the fact

whether octroi is to borne by the supplier or the company itself, after conforming

with the concerned category the octroi charges are reimbursed.If the supplier

has to bear the octroi charges than a debit note equal to the amount paid as octroi

is issued and given to the supplier and a copy of it is retained by the commercial

department. So the supplier’s account will be debited by the amount of octroi paid

by reliance Retail.For the payments towards octroi charges after getting

conformation from the concerned category( purchase department) a sum of Rs.

12000 is given as imprest amount.

Quantity Mismatch

If the actual quantity received is less than the P.O. quantity, GRN will be prepared only

for the actual quantity received. So the invoice will also be for the actul quantity

received.

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If the actual quantity received is more than the P.O. quantity, the GRN will be made

Only for quantity for which P.O.was raised. For quantity in excess of the P.O. quantity

GRN will not be prepared.AS per the decision of the concerned category the goods

received in excess will be either sent back or retained at the DC.The excess quantity can

be retained at DC at the ‘Inbound hold area’ with the permission of the DC manager or

the concerned category.

Rate mismatch

In case of a mismatch between the rate as per the invoice and the P.O.,always the lower

of the two will be taken.

4) Invoice verification process ( in SAP system)

Enter the data relating to the invoice by entering YSCM command.

Scroll : The purpose of scroll is to input the data of the invoice in the DMS

System.

Scroll Entry :

The document is then scrolled by selecting ‘scroll entry’and entering the location

code, company code and,the invoice details as the vendor code.P.O. no.,challan

no.,bill no.,invoice amount, invoice date the user department etc and saving it.

This will give scroll number, which is to be noted on the reverse side of the

invoice.

*Process for DMS(Document Management System)

Scanning

The invoice will be scanned and it will be attached inform of a file.

Then the option ‘create document’ will be selected.In it ‘new’ will be selected.

The file name will be given as ‘specificscroll number – 2007’ (here the scroll no

will be the one generated when the document is scrolled and ‘2007’ for invoices

verified in the year 2007)and then saved.

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The relevant details as the bill number, invoice date, currency,etc will be entered

inThis would generate a DMS no.unique for the particular invoice being scanned

Scroll process :

The location code, company code,scroll no.(generated on scroll entry and

recorded on reverse side the bill) to be entered in.

A field will be displayed, in which relevant data will be entered in for the basic

data as location code , company code, payment mode – ‘c’ for cheque and ‘ bank

code’, P.O. no,payment period are entered .

On entering the scroll no. the system will link up the specific scroll number with

the relevant P.O. and GRN details.On basis of the payment period and invoice

date, it will calculate the due date for payment.

When these numbers are given the system will link up with the P.O. no. and pick

up the details of the P.O. items and display it on the screen. These sku’s will be

tallied with the bill (in case of direct purchase from vendor) or STN (in case of

purchase from mandi or CC’s) to ensure that no sku is left out .

In case of commission, click on ‘withholding tax’, so the T.D.S. will be deducted

from the commission.And the amount will ne the net amount payable towards

commission.

Simulate :

Click on ‘simulate’and then on ‘post’. This will give theD.M.S.(Document

Management System ) number, which is also recorded on the reverse side of the

invoice. On clicking ‘enter’, the invoice verification no.(I/V no.) will be generated

The document management system will also provide the document

number(accounting no.) The I/V no. is usefull for reversing the I/V if need

arises.It also helps in knowing the invoices which are verified through SAP,but

their payments are pending. Both the numbers will be recorded on back side of

the invoice.

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A print out of the invoice verified is taken.It is attached with the vendor

documents. It will be signed by the person carrying out this invoice verification

work.It will be apporved and signed by the head of the commercial

department,and forwarded for ‘payment block’ removal.

And all the document (hard copy) will be filed as a set.

The rest of the procedure is same as in the case of ‘Bakery products and Ice-

creams’undertaken at ‘Reliance Retail office’, Asha Arcade-Ahmedabad.

5) Payment Block :

The invoices after being verified through SAP,the existing payment blocks which

hinders payments need to be removed.These blocks are kept to ensure that

payments are made only after thorough checking.

6) Payment Proposal :

It is not required except for e-payments.It is made giving details as the due date

for payment, amount to facilitate the arrangements required to be made for the

same.

For example, if a payment worth rupees 25 lacs is to be made through e-payment

then that much or higher than that amount should be there in the bank account. A

payment proposal facilitates this.

Payments :

The payments are made chiefly through any of the following modes.In the order

of their priority they are as under :

7) E-payment

8) RTGS(Real time gross settlement system) / NEFT (National electronic fund

transfer)

9) Cheques

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SUGGESTIONS AND RECOMMENDATIONS

1)Double counting of the stock of fruits and vegetables should be avoided.Stock taking

should be undertaken by either the commercial team or the procurement team.It should

not be undertaken by both.the teams as it involves waste of time and energy.

2)RFID should be used for the reefer vehicles.It will help to track the movement of

the vehicle,given to the 3PLG service providers..

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REFERENCES

Books:

Bovee, Courtland; Thill, John & Schatzman, Barbara. Business Communication Today. Seventh Edition. Delhi: Pearson Education.

Kotler; Philip; Keller, Kevin;Koshy, Abraham and Jha, Mithileshwar. Marketing Management: South Asian Perspective. Twelveth Edition.Delhi. Pearson Education

Sahay, B S; Supply Chain Management in the Twenty-First Century. New Delhi, Macmillan India Limited 2000.

Sreenivas Rao; S. Handbook of Writers & Editors: Ahmedabad: Academic Book Centre

Websites:

http://www.ril.com/html/business/business_retail.html accessed on 16/07/07

http://www.theindusview.com/vol2Issue7/pdf/20060706_Company_Watch_Reliance_Retail_v2i7_Draft1_NA.pdf accessed on 16/07/07

http://www.marubeni.com/dbps_data/_material_/maruco_en/data/research/pdf/0609.pdf accessed on 15/07/07

http://www.sap.com/index.epx accessed on 15/07/07

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APPENDICES

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