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Executive Summary Retail industries involve the sale of new or used goods to end consumers for personal or household consumption. Cut-throat competition is becoming tougher in retail space with growing supply and demand. Hyper-markets and Super-stores are battling each other on every major corner while direct marketers (including catalogs and online sites) are stealing customers from stores. Online selling at deep discounts is even making immense inroads into consumer purchases of automobiles and travel. Direct selling through online retailers, catalog companies and homeshopping television channels continues to increase. Sales via the Internet rose dramatically in 2005 globally. To continuously improve on the process and leverage on the core competencies, there is a need for a foundation that provides accurate information wherever and whenever required. This calls for a need for strategic management of supplies and inventory as far as retail industry in concerned. To change an in-store paper based environment of registering sales in retail shops to an online shopping environment, there needs an integration of the data to increase customer satisfaction, increase productivity and liberate sales people from registering chores and extend market beyond traditional bounds. Enriching category, item planning, streamlining product introductions and other business strategies alone are not sufficient to sustain and over-grow in the market place. Real-time visibility to sales and order status, in-store kiosks, and service desk enhancements and strategic technologies to track inventory have become the call of the hour to improve the customer experience and further differentiate the brand. New efficiencies in managing stock and collaborative forecasting and replenishment help ensure that the products customers want are readily available on store shelves. Strategic methods and tools like Vendor Managed Inventory, ERP and SCM are recognized very much these days. Several Indian companies have already come up with either a home-grown ERP or SCM model or they use packages from well-established firms. There is a need for a strategic collaboration of the internal process with the business process of the suppliers and customers. Hence, this paper would aim at answering the question, "How retailers need to organize their supply chain strategically to compete in consumer market?" Our team has, therefore, tried to analyze the present scenario of retail industry and has come up with some suggestions as possible strategies in Supply Chain Management for Retail industry. We are proposing the following model for information integration in a retail industry: -

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The strategic innovation should ideally start from identifying important supply chain member with whom it is critical to link, thus, making way for a spatial convenience. Focusing on providing dynamic visibility to the supplier about the status of the inventory, and using techniques to gather the consumption pattern of products, and thereby forecasting to a number nearer to accuracy, would form part of our suggestions. Introduction Delivering right product at the right time for the right price with the least possible cost through strategic planning of demand and supply and effective utilization of inventory, distribution, warehousing and transportation seems like a complex scenario of unattainable level. Well, this statement is nothing but the idealistic state. Nearing what is known as perfection needs continual improvement and timely innovations. Timely innovations and strategic moves can become disruptive many a times. Take the case of WAL-MART effect. What seemed way back in 1962 as a small outlet in the remote part of Arkanses, is now the legend of American retail business. Excellent inventory tracking system and efficient distribution coupled with reduced price for consumers is what made WAL-MART the hallmark of retail sector. In this paper, the urge for a retail industry to go for ways to improvise and maintain its supply chain along with suggested ways for the same are discussed. Challenges in Retail The following are the key areas that may pose a threat to those retail companies that ignore the impacts of giving less importance to manage their demand and supply: -

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Forecasting and Inventory Management for JIT replenishments of products. Peak Season Demand Handling. Order Management in case of retailers with multiple outlets. Warehouse Management in case of multiple outlets. Introducing new products. Handling variety of items. Need for Managing Supply Chain

A Supply Chain can be considered as the set of entities that collectively manufactures a product and sells it to an end-point. (Stern et al, 2001, p.513). To enhance service through time based delivery and make-to-order a retail industry should look at ways of building a relationship with suppliers through enhanced Supply Chain Management. Leveraging information as a service can enable staff to respond quickly to market opportunities and gain new insight from existing data. This calls for a system that efficiently tracks information and which is put to use strategically. "There is tremendous competition in the retail space," explains Ken Dschankilic, Enterprise Architect, Canadian Tire Corporation. "To keep our edge, we must continuously improve our processes and leverage our core capabilities in new ways. To do this, we need a solid foundation that provides accurate information wherever and whenever its needed." Flow of Information in the Market and Work of SCM

Figure 1: Flow of Information The area that has been highlighted would form part of our interest and the information that need to flow between the whole-saler and the retailer, and the information between the consumer and the retailer are of importance. The strategies proposed mainly will deal with how to effectively handle the available information and utilize them for the enhanced service at customer level specific to retail industry. Competitive Areas of Importance

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1. Fulfillment: Stock filling is taken care of at both customer end (end product) and at the end of shelves at the shop. Reaching the customer at the right time and constant check on stocks and making sure right quantity is ordered at the right time. 2. Logistics:

Safe and reliable transport at as much low price as possible. Constant contact with distribution teams (trucks, trains, etc.) and track where material is.

Partnership with transportation firms so that cost and transport can be shared if the shipment does not occupy the whole truck space. 3. Procurement: (Vendors side points to take care)

Strong Relationship Information sharing and updating plan change Combine vendors by minimizing transportation cost Choose vendors in proximity Optimum lot size taking vendors into confidence

4. Production: Line should run smoothly without delays due to ordering and transportation (fulfillment and logistics have to be met first). 6. Costs: Increase inventory turnover, control quality both internally and externally by reducing failure costs. Keeping the cost of purchased parts an products at acceptance level. 7. Co-operation: Mutual Benefit Scenario at a Small Scale Retail Outlet Before we proceed in detail, let us take an example of a purchase scenario in a relatively small retail outlet in any tier city (say, XYZ retailers). Stock details at XYZ retailers for certain items and certain brands as on 01.01.200X Tooth Brush Original Stock 60 Toilet Soaps 100 Bar Chocolates Bar Chocolates Beverages Rice Sugar (P) (Q) 150 75 50 30 40

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Scene 1: Date: 01.01.200X | Day-Sunday | Time: 22:45 hrs Customer 1 purchases the following: 1. 2. 3. 4. 5. 6. 7. 8. 10 Bar Chocolates of P Brand 10 Kg of Rice of Brand X 15 Kg of Sugar of Brand Y 100 Bar Chocolates of Brand P 50 Bar Chocolates of Brand Q 30 Nos of Beverage Bottles of Brand Z 40 Tooth Brushes of A Brand 50 Toilet Soaps of L Brand

Scene 2: Date 02.01.200X | Day-Monday| Time: 08:30 hrs Customer 2s purchase: 1. 2. 3. 4. 5. 6. 7. 10 Kg of Rice of Brand X 15 Kg of Sugar of Brand Y 100 Bar Chocolates of Brand P 50 Bar Chocolates of Brand Q 30 Nos of Beverage Bottles of Brand Z 40 Tooth Brushes of A Brand 50 Toilet Soaps of L Brand

At the end of the first days purchase, the following matrix would clearly represent the inventory status of XYZ retailers. Tooth Brush Original Stock Sales Demand Shortage 60 40 40 20 Toilet Bar Chocolates Bar Chocolates Beverages Rice Sugar Soaps (P) (Q) 100 50 50 150 110 100 60 75 50 50 25 50 30 30 10 30 10 10 40 15 15 -

Implications:

Alarming inventory. Shortage faced in case of 4 items of certain brand. If inventory not re-filled, sales is lost.

Need of the Hour:

Immediate communication to the supplier (Distributor/ Wholesaler / warehouse). Call for a transporter who would work at the required speed and pace.

Relationship with the supplier has to be smooth enough to ask for his help at any time of the day.

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Proposed Supply Chain Strategies for Retail Industry

Model in Detail Integrated Demand Management:

The sales in the outlet is kept track of bill after bill hour after hour. Store register work is made online and paper work is done with.

Forecasting made with data on past consumption and present market trend.

Optional forecasting is made in case of seasonal requirements.

Periodic offers and incentives are made available to the customers to generate demand.

Integrated Supply Chain Management: Here comes the main course, and the strategies that we propose for a retail industry can be summed up in 4 points: 1. Bulk-Breaking: Orders can be done in smaller lots with a good understanding with the supplier. This can be achieved by following ways: Spatial Convenience: Strategically locating the outlet with distribution networks and warehouses located proximally.

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Supplier holds inventory.

2. Vendor Managed Inventory: In this case, the vendor himself is given the responsibility to handle the inventory. A space for the vendor is rented in the outlet, and he takes care of the shelves and the space. It is a 2-way agreement wherein the vendor gets the space to market his product by interacting one-to-one with the customers. 3. Point of Sale Information System: As soon as one stock keeping unit moves out of the store when purchased by a customer, the information readily flows to the supplier.

He is given access to the inventory database.

A re-order point can be imposed based on consumption pattern and the supplier is asked to fill the shelf upon inventory reaching the re-order point. 4. SRM - Supplier Relationship Management: Relationship with supplier should not be a marriage of convenience. Supplier has to act in ways more than what is required.

By providing special offers, discounts and incentives, the supplier savors the relationship. This also serves as a promotion strategy for the outlet.

Also a relationship with the direct manufacturer can be established as in Farmer-Corporate Relationship. Conclusion

With the retail sector booming its way through the country, the need of the hour for every retailer in the industry is to cut across the competitive boundary and bring in cost-effective methodologies that work out ways of providing enhanced customer service and satisfaction.