A PROJECT REPORT ON OPERATIONS MANAGEMENT IN SHOPPERS STOP

Submitted by: 1. Neethu U (seat no: 01) 2. Nandhini S (seat no: 03) 3. Srijan Dhawan (seat no: 28) 4. Sayantan Ghosh (seat no: 77) 5. Deepa Bharati (seat no: 78)

Guided by: Mr. Ganganath Jayanthy SECTION C (2012-14 SEM II) MBA IBS HYDERABAD
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ACKNOWLEDGEMENT

We take this opportunity to thank all those who helped us directly or indirectly during the completion of this interim report. Our heartfelt gratitude to our project guide Mr. Ganganath Jayanthy, Professor Department of Operation Management. His support, advice and encouragement were very vital for this project. I am also thankful to the readers for their feedback. Last but not the least we thank our family and friends who gave us direction and moral support towards completion of this project.

Yours Sincerely, Neethu U Nandhini S Srijan Dhawan Sayantan Ghosh Deepa Bharati

TABLE OF CONTENTS

Chapter No. 1 2

Title 1.0) INTRODUCTION 2.0) BACKGROUND 2.1) Product Categories 2.2) Brands 3.0) RETAIL STORE LAYOUT 4.0) SERVICE PROCESSES 4.1) Characteristics of Services 4.2) Services Triangle 4.3) Cycle of Service 4.4) Degree of Customer Contact 4.5) Service Matrix 4.6) Service Blueprint 5.0) WAITING LINE ASSEMBLY 6.0) LOGISTICS & SUPPLY CHAIN MANAGEMENT 7.0) FACILITY LOCATION 7.1) Factor-rating Systems 8.0) INVENTORY MANAGEMENT 8.1) Auto Replenishment 8.2) Stock Keeping Units (SKUs) 9.0) CONCLUSION

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1.0) INTRODUCTION
Shoppers Stop is one of the leading retail stores in India. Shoppers Stop began by operating a chain of department stores under the name Shoppers Stop. Shoppers Stop has 56 stores across the country (with the latest one being the outlet at Kumar Pacific Mall, Pune) including three airport stores. Shoppers Stop retails a range of branded apparel and private label under the following categories of apparel, footwear, fashion jewellery, leather products, accessories and home products. These are complemented by cafe, food, entertainment, personal care and various beauty related services. Shoppers Stop launched its e-store with delivery across major cities in India in 2008. The website retails all the products available at Shoppers Stop stores, including apparel, cosmetics and accessories. Shoppers Stop opened stores in Amritsar, Bhopal and Aurangabad. In Hyderabad, Shoppers Stop is located in the following 3 major areas Begumpet Inorbit mall, Madhapur Banjara Hills

We made our visit to Shoppers Stop in Inorbit mall, Madhapur. During our visit, we have analyzed certain concepts of Operations Management which helped us to apply our theoretical knowledge on a practical basis.

2.0) BACKGROUND
Foundation of Shoppers Stop was laid on October 27, 1991 by the K. Raheja group of companies, one of Indias biggest hospitality and real estate players. The group crossed yet another milestone with its lifestyle venture-Shoppers Stop. With its immense expertise in the service industry and creditability, Shoppers Stop today boasts of 27 retail outlets across the country and is planning to spread its wings with futuristic expansion plans to meet the challenges of the retail industry. A benchmark for the Indian retail industry to follow, Shoppers Stop has progressed from a single brand shop to a Fashion & Lifestyle store for the families. Shoppers Stop is a household name, known for its superior quality products, services and above all, a complete shopping experience. Shoppers Stop was the first to redefine shopping experience and creating a niche for itself in the service industry. As Indias first specialty chain with outlets in Mumbai, Bangalore, Delhi, Hyderabad, Jaipur and Chennai, Shoppers Stop offers a complete range of garments and accessories for the entire family. More than 25,000 customers walk into Shoppers Stop everyday to feel the experience of shopping. Andheri was the first store to be opened in India. The initiative of this store was taken by B.S. Nagesh at a time when the concept of retail industry was just coming into the market. As on today, the current investors in Shoppers Stop are ICICI, IL&FS Investments and Zodiac clothing. Their combined shareholding in Shoppers Stop is 19% while 79% is held by Raheja Group & balance 2% is held by its employees.
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2.1) Product Categories Men Mens Apparel Mens Accessories Mens Footwear

Women Kids Kids Apparel Kids Accessories Kids Footwear Toys Mother care Womens Apparel Womens Accessories Womens Footwear

Jewellery Fine Jewellery Gold Coins Artificial Jewellery Fashion Jewellery and Accessories

Home & Travel Home Travel Sports & Fitness

Fragrances & Beauty Gifts Gift items Gift voucher Gift card Gift card top-up
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Cosmetics, Skin care & Hair care Fragrances

2.2) Brands

Apparels Adidas Allen Solly Arrow Austin Reed Calvin Klein Diesel DKNY Guess Gas Lewis Lee Cooper Louis Phillipe Pepe Puma Van heusen

Accessories Fastrack Casio Titan ESPIRIT Rayban Timex Sonata Polis Mothercare Diesel Davidoff Cross Blue and Blues

Footwear Catwalk Adidas Puma Loto Redtape Woodland US Polo Lemon and Pepper Kittens Footwear I Walk

Fragrances & Beauty Chambor Loreal Lakme Nike Playboy Reebok Revlon Ralph Lauren Tommy Hilfiger Roberto Cavalli Nautica Lady Gaga

Jewellery Asmi Carbon Gili Khashish Lucera Pretty Woman Real Effect Zaveri Pearls Viola Sparkles Nakshatra

3.0) RETAIL STORE LAYOUT

Store layout describes the overall look and feel of the interior of a Retail Store, including the placement of fixtures and products within the store. It is an important part of implementing retail store strategy. Effective layouts are designed to expose customers to the most products possible given the amount of floor space available. The three main types of Store Layout are Grid Layout Free flow Layout Boutique / Racetrack Layout

The layout which is used in Shoppers Stop is Racetrack layout. Racetrack layout exposes shoppers to a great deal of merchandise as they follow a perimeter traffic aisle with departments on the right and left of the circular, square, rectangular or oval racetrack. This layout divides the selling floor into shops within the store.

Advantages: It forces the customer to visit multiple departments as they pass through It exposes large amounts of merchandise This loop effect facilitates impulse buying

Disadvantages: Customers cannot focus on intended purchase Need for internal walls/island screens

4.0) SERVICE PROCESSES

4.1) Characteristics of Services Shoppers Stop exhibits the following basic characteristics of Services. Services are intangible Service output is variable Service have higher customer contact Services are perishable Service inseparable from delivery Tend to be decentralized and dispersed Consumed more often than products Services can be easily emulated

4.2) Services Triangle

While designing or producing a service, the following things are to be considered Strategy People Systems Customer

The Customer is at the center of the triangle because any service should always be customer centric. The strategy is vision or philosophy which is used to guide all aspects of the service delivery. Shoppers Stop has the Vision Statement to be a global retailer in India & maintain no.1 position in Indian market in Department Store Category. To achieve this they have the
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following mission statement - to strive and achieve nothing but the best in terms of processes, practices and deliverables. The System is the physical system and the procedures used. It is evident that Shoppers Stop has used the following basic concepts while designing their service Strategy Customer: A strategy must be focused to serve the needs of the customer Customer System : The system ( equipment and procedures must be designed with the customer in mind Customer - people : Everyone should be customer driven ( not just the operations people ) People system : indicates that the people depend on the system to deliver a good service Strategy System The system should logically follow from the strategy Strategy People : Everyone in the organization should be aware of the strategy

4.3) Cycle of Service Every service is delivered in a cycle of service. Every cycle starts with the point at which the customer first contacts the service delivery system. It continues with each subsequent contact the customer makes with someone in the company. The Cycle of Service for Shoppers Stop is as follows

1) Establish contact with a prompt, friendly greeting. Whether the prospect arrives via e-mail, phone, mail, or in person, your first response establishes an impression upon which all other contacts build. 2) Build rapport. A marketing truth goes like this: People dont buy because you make them understand. They buy because they feel understood. They also buy from people they like and feel a connection to, or from people they feel like they know. In the first few minutes with your prospect, establish a friendly relationship. 3) Present your product. You want your product to seem like a high-value solution to your customers needs. 4) Make the sale. Be sure to read a customer's buying signals and then close the deal. 5) Complete the sales transaction. Make the process of payment completely efficient, a reinforcement of your company service, and a confirmation of the customers decision to buy from your business. 6) Deliver the product. You also want to reaffirm the buying decision, offer to be of ongoing service, and invite future business. 7) Monitor customer satisfaction and troubleshoot any issues that cause customer concern. Assess service satisfaction, confirm complete satisfaction (and if the customer isn't completely satisfied, see what you can do to change that), and ask for future business. 4.4) Degree of Customer Contact One of the major considerations is the Degree of Customer contact. Low Contact- Process can be buffered from the customer and other external influences and therefore the potential for the customer to disrupt the process of production is low and hence high production efficiencies can be achieved. High Contact - May introduce a source of uncertainty into the production system. This sometimes leads to low production efficiency. In Shoppers Stop, High Contact Systems are required because they have the following characteristics which are essential for any Retail Store. Ideal for responding to a variety of changing and varying needs
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Require people with good interpersonal skills , including versatility, personality, flexibility and customer orientation Must respond to the demand as it occurs Generally require higher price and offer more customization and convenience

4.5) Service Matrix Service Matrix provides a basis for differentiation of the service to customers and different managerial tasks as well. It can be used to illustrate how the operational management tasks vary with different types of services. It provides a basis for defining the critical management tasks.

Here Y axis represents the Degree of Labor intensity and X axis represents the Degree of customization and interaction. Shoppers Stop belongs to Mass Service Category. 4.6) Service Blueprint A service blueprint describes a service in enough detail to implement and maintain it carefully. Blueprinting is described as Mapping out of a service journey identifying the processes that constitute the service, isolating possible fail points and establishing the time frame for the journey. A blueprint can be used by both business process managers, designers and software engineers during development, and can be used as a guide to service managers that operate services on a day-to-day basis. Currently, the biggest challenges in blueprinting revolve around ways of depicting services in a holistic way, from elements of the branding and user experience on one hand to back-end technical and business processes on the other. Methods: Service blueprints need to describe time in a service. This includes the sequence of events of a service experience, its durations and timings. A blueprint should graphically and narratively describe this time element. A sequence of events - sometimes called use cases or flows - is relatively easy to blueprint as it can be represented in a linear flow identifying user actions, service responses and the touch points or interfaces that enable the service relationship. Sequences become challenged when there are multiple options or directions and when the
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planned process goes awry. The danger here is that the sequence becomes prescriptive with little room for variation from the ideal path.

In Shoppers Stop, 1) The Customer arrives at Shop 2) The Customer walks onto sales floor 3) The Customer goes to one of the following departments a. Mens Section b. Womens Section c. Kids Section d. Jewellery e. Home & Travel f. Fragrances & Beauty g. Gifts 4) Then the respective Department Staff contacts the Customer and assists him/her in selecting the product 5) The Product is sent for billing. The Product is scanned by the cashier and is sent for Packing. 6) The Packed Product is retrieved from the storage area 7) The Packed Product is delivered to the Customer Service area 8) Product is handed to the Customer by the Customer Service Staff after checking the receipt 9) Customer leaves the store
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5.0) WAITING LINE ASSEMBLY

The Checkout counters in high-volume department stores like Shoppers Stop exemplify this type of structure.

The difficulty with this format is that the uneven service time given each customer results in unequal speed or flow among the lines. This results in some customers being served before others who arrived earlier, as well as in some degree of line shifting. Varying this structure to ensure the servicing of arrivals in chronological order would require forming a single line, from which, as a server becomes available, the next customer in the queue is assigned. The major problem of this structure is that it requires rigid control of the line to maintain order and to direct customers to available servers. In some instances, assigning numbers to customers in order of their arrival helps alleviate this problem. For Multi-Channel, Single-Phase system, the following notations are used for analysis = Arrival rate = Average rate at which customers arrive to the system = Service rate = Average rate at which customers are serviced in the system = Utilization = Ratio of total arrival rate to service rate for a single server = (/ ) S= Number of Service Channels Lq= Average number waiting in line Ls= Average number in system (including any being served) Wq= Average time waiting in line Ws= Average total time in system (including time to be served)

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Analysis: For every 5 minutes, =5 = 3 / = 5/3 = 1.6 S=2 Lq = 2.84 people Wq = Lq/ =2.84/5 = 0.568 = 2.84 minutes Ls = Lq + (/ ) = 2.84+1.6 = 4.44 people Ws = Ls/ = 4.44/5 = 0.888 of 5 minutes = 4.44 minutes For every hour, =60 = 36 / = 60/36 = 1.6 S=2 Lq = 2.84 people Wq = 2.84/60 = 0.047 = 2.84 minutes Lq = 2.84 + 1.6 = 4.44 people Ws = 4.44/60 = 0.074 of 1 hour = 4.44 minutes

6.0) LOGISTICS & SUPPLY CHAIN MANAGEMENT

A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer.

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They have created a strong distribution and logistics network, with their four Distribution Centers covering 303, 382.20 square feet handling over 400, 000 SKUs per year, and working 24x7. The distribution and logistics setup is networked and on line allowing them to deliver merchandise to the store within 48 hours of receipt / generation of auto replenishment order, which has helped them optimize in store availability of merchandise. The Distribution Center management is outsourced to service providers such as Toll (India) Logistics Private Limited. They believe their existing Distribution Centres, which have been designed to scale up, will be able to meet their growth requirements as they expand the number of stores. They have undertaken various initiatives in further improving the efficiencies of their supply chain, which they believe is critical for any retailer. These aim at meeting the conflicting requirements of reducing their inventory whilst ensuring availability of products at all stores at all stores as per customer needs, as well as reducing their operational costs. They have four Distribution Centers (DCs) servicing their departmental stores and specialty stores across the country. City Mumbai Region Western Stores Services Mumbai, Pune, Ahmedabad

Delhi Bangalore Kolkata

Northern Southern Eastern

Delhi, Gurgaon, Jaipur, Lucknow, Noida, Ghaziabad Bangalore, Hyderabad, Chennai Kolkata

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The distribution and logistics team handles all merchandise movement and warehousing requirements, including inbound and outbound logistics, functioning on a 24x7 basis. For this, they have extensively used technology to ensure on-line movement of information and have integrated most of their partners in the supply chain including various departments, vendors, and some of the other service providers into their information system. They have implemented JDAs Warehouse Management System (WMS) along with the Merchandise Management System to manage our inventory. The operations of the distribution Centers are outsourced to third party service providers such as Toll (India) Logistics Private Limited (formally known as Sembcorp Logistics (India) Private Limited) pursuant to contractual arrangements through wholly owned subsidiary, Upasana Trading Limited (UTL), for which it pays the service providers a fixed sum per article handled. Measuring Supply Chain Performance Inventory Turnover is a measurement of how many times the retail inventory is sold during twelve month period. Inventory turnover = Cost of goods sold / Average Aggregate Inventory COGS = 136721(in lakhs) Average Aggregate Inventory = (21204+1514) / 2 = 18159(in lakhs) Inventory Turnover = 136721/18159 = 7.529
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This means that the inventory was sold and replaced 7.529 times during twelve months period. Weeks of supply is the number of weeks that a wholesaler will stock an item based on the product turns. By keeping your eye on weeks of supply you can avoid inventory stock outs and lost sales. Weeks of supply = (Average Aggregate inventory value / Cost of goods sold) X 52 weeks = (18159 / 136721) X 52 = 7 Weeks For every 7 weeks the inventory has to be refilled.

7.0) FACILITY LOCATION

7.1) Factor-rating Systems Factor-rating systems are perhaps the most widely used of the general location techniques because they provide a mechanism to combine diverse factor in an easy-to-understand format. For Shoppers Stop, the following range of point values can be assigned to major factors affecting a set of possible sites:

Factors Proximity to customers Business Climate Competitive Advantage Transportation Living Conditions Supplies Labor Climate Power availability and reliability

Range 0 to 100 0 to 100 0 to 200 0 to 200 0 to 75 0 to 300 0 to 50 0 to 75

8.0) INVENTORY MANAGEMENT

The inventory management of Shoppers Stop comprises of Policies, procedures and techniques employed in maintaining the optimum number or amount of each inventory item. The objective of inventory management is to provide uninterrupted production, sales, and/or customer-service levels at the minimum cost. Since, for many firms, inventory is the largest item in the current assets category, inventory problems can and do contribute to losses of even business failures. Shoppers Stop has a system of checking stocks on a continuous basis. It consists of 90 departments each day one department is frozen after closing hours and the staff is made to scan the tags and feed in the stock levels in the system. The staff is completely unaware of the stock levels according to the system. The system then compares the actual to the customary and gives
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a variance reports. Thus there is stock matching done every day and the entire store completes a cycle in 3 months i.e. 4 cycles of stock taking each year. It has helped them to get the pilferage to its minimum. 8.1) Auto Replenishment Shoppers Stop has determined its minimum stock keeping units and as soon as the stocks in the store touch that level, the DC is triggered to send the replenishment. Thus the system automatically checks for stock out and replenishes it. The lead time for replenishment is 1 day. Every night data is collated and a store-wise list of merchandise is generated. During the day the dispatch is made ready and the next day morning 6.00 am the truck leaves reaching the store in an hours time. 8.2) Stock Keeping Units (SKUs) The Stock Keeping Units are determined on the basis of moving averages. The system generates averages of the required quantities for the last two weeks. The process is concurrent to the market conditions they go up with the demand and fall with the slump. The minimum units are fixed which are based on the past lows and highs.

9.0) CONCLUSION
Thus, understanding the importance of distribution and logistics in ensuring that merchandise is available on the shop floors, has led Shoppers stop to streamline its supply chain. The JDA ERP package also helps Shoppers Stop in handling ERP, warehouse management, sales management, merchandise management and automated replenishment. The company intends to bring the world's best technology, retail practices and sales in India. Currently, they are adding 4 to 5 new stores every year. These processes will help Shoppers Stop to become a global retailer in India and to maintain its No.1 position in the Indian market.

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