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Future Group Supply Chain Optimization Strategies

May 18, 2010


The Pioneer of Indian Retail – Mr. Kishore Biyani, who probably understand the retail business better than anybody else in India has restructured his Supply Chain and back End. Today we will have a look at his efforts in Distribution Center Management.

The number of DCs for Apparels has been brought down from 15 to 5 and for General Merchandise from 16 to 8. This will help to consolidate inventory at fewer locations and cut out wastages from overlaps across multiple locations. While the travel distances for goods will increase, it will be more than offset by improved
truck load factors.

GST on Mind while Consolidating Distribution Centers – This will, however, be more useful post the GST implementation when transportation of goods from one state to another will not attract various state taxes like Octroi and VAT paid in one state will be available for offset for sale in another state.

Food and FMCG Distribution Centers: Currently Foods and FMCG are sourced and delivered locally through distribution network of vendors. However, this is resulting in massive loss of sales due to stock outs as vendors are currently providing fill rates of only ~60-65%. PRIL intends to setup 7 DCs for Foods and FMCG where stocks worth 3-7 days will be stored to ensure there is minimal loss of sales due to unavailability of goods.

Revamped infrastructure:Currently most of the DCs for PRIL as single level flat bed kind of DCs. However,with cut down in number of DCs, to better utilize the space in existing DCs, PRIL is now moving them to a multi layer, rack based configuration. Currently Mumbai DCs are undergoing transformation and this will be followed by revamp of DCs at Bangalore, Delhi, and Kolkata. This will also be supported by implementation of new software / technology which is essential to efficiently manage these multi-layered, high throughput DCs.

Technology Implementation:
Pantaloon has invested behind IT systems like Warehouse Management Systems (WMS), Put to Light (PTL) collection and sorting technology and SAP at the front end.

WMS – Each employee has a WMS Device. This device is an end-to-end enabler of tasks for workers as it provides them list of taks to be completed, guides them to storage location of products, and has a bar code scanner in-built in it which helps them to verify and reconcile goods being picked and stored at each step.

PTL – This technology is essential to maintain the high throughput required in these locations as it automates the sorting of goods for each store as per the store requirements. This has enabled PRIL to move away from store-by-store pick up of goods which was slow and error prone, leading to ~70% fill rates. With PTL, PRIL will now be able to double its throughput from 50,000 SKUs a day to 100,000SKUs a day and reduce error rates, thus cutting back on reverse transportation of goods from stores to warehouses.

They have also setup a High Computing Analytic Processing Lab with decision support system. But what Mr. Kishore Biyani’s decisions are creating wonders for Pantaloon Retail / Future Group. What say ?

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