`A Study on Supply Chain Management

of Reliance Polymers and Reliance

Fresh at Hyderabad

RELIANCE INDUSTRIES LTD

An Internship Report

Himanshu Prasad
PID No – P001069010
Thursday, November 25, 2010

In Partial fulfillment of the Master’s Program in Business

Administration, Ohio University, Athens, USA

Ohio University Christ College Academy for

Management Education
Christ College Campus,
 Hosur Road, Bangalore – 29

Declaration of the Researcher

I, the undersigned, hereby declare that the stated work, a study on

supply chain is my own work the report has been prepared in partial
fulfillment of requirements towards the award of the degree of Masters of
Business Administration, Ohio University Christ College Academy for
Management Education, Bangalore.I further declare that this dissertation has
not been submitted earlier to any other university or institution for the award
of any other degree or diploma.

Place
Date Himanshu Prasad

2
 Acknowledgement

I would like to express my gratitude to all those who gave me the possibility
to complete my internship at Reliance Polymers and Reliance Fresh.

I am deeply indebted to my supervisor Mr.Manivannan(General Manager

PVC Sales) whose help, stimulating suggestions and encouragement helped
me in all the time of research. I am thankful to Mr.Krish Iyengar (Vice
President Marketing, Reliance Polymers), who gave insightful comments and
reviewed my work on a very short notice. Besides my senior executives I
would also like to thank Manoj sir for his support during my internship.
I am grateful to Mr. Radhakrishnan, General Manager Retail HR for letting us
work at Reliance Fresh at such a short notice and for such a short time.

The collective effort enabled me to work as a team in a harmonious

environment, which contributed in no small measure to the fulfillment of the
task entrusted to me without any serious impediment.
I would like to express once again our gratitude to all the people in the office
for having granted us adequate office space and the timely help we got from
Mr. Krish Iyengar & Mr. Manivannan through whom we got the office set up in
quick time.I would also like to thank Prof.Amalendu and Mr.Girish who helped
me immensely in the smooth functioning of the process of my internship.

Let me also say a “thank you” to the following people:

Prerna Malhotra – My colleague without whose extensive support the project

would not have been possible and so efficient.

Shravan Shetty- My senior who guided me at every stage of my research with

valuable suggestions which were very crucial.

3
 Table of Contents

1. Executive
Summary……………………………………………………........................5
2. Introduction……………………………………………………………….…………..
…………6
3. Company’s Profile……………………………………………………….
……………..………7
4. Organizational Structure…………………………………………….
………………..…….8
5. Reliance Polymer…………………………………………………….
………………………...9
a. Polypropylene……………………………………………….
………………….…..10
b. Polyethylene………………………………………………….………………..
…….11
c. Poly vinyl Chloride…………………………………………….
……………….….12
6. Competitors of Reliance
Polymers………………………………………………………13
7. SWOT
Analysis…………………………………………………………………………………
14
8. Financial Analysis………………………………………………………..
…………………..17
9. An Overview of Supply Chain Management…………………………….
……….…19
10. Study of Supply Chain Strategy at Reliance Industries Limited….….….
…..23
11. Clearance of order ………………………………………………………………..
………..33

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 12. Accounting…………………………………………………………………………….
……….34
13. Warehousing……………………………………………………………………….
………….36
14.Inbound
Process……………………………………………………………………………….39
15.Recommendations……………………………………………………………………
……….41
16.Reliance Retail
………………………………………………………………………………….43
17.Reliance
Fresh…………………………………………………………………………………..44
18. Findings…………………………………………………………………………………
……….…47
19. Recommendations…………………………………………………………………….
……….48
20. Future Line of
Work/Research…………………………………………………………….49
21. Sources……………………………………………………………………………………
……….50

Executive Summary

I had the opportunity to take up the internship project at Reliance Industries

Limited at their Hyderabad Regional office. The internship was from March
12, 2007 to April 20, 2007. During the project I had the privilege of being
guided by Mr. M. Manivanan, General Manger PVC Sales.

5
The objective of my internship was the study of the supply chain strategy at
Reliance Polymer and Reliance Fresh. The objective has been amply fulfilled
at the end of my tenure at Reliance Industries Limited. During the internship I
was exposed to the supply chain process of both Reliance Polymer and
Reliance Fresh.

As part of my internship, I was also guided by Mr. Radhakrishnan, HR

Manager at Reliance Retail Industries, and received the exposure to the
functions of supply chain process of Reliance Fresh.

The supply chain strategy at Reliance Polymer and Reliance Fresh is studied
on the basis of Lambert’s process of supply chain. At Reliance Polymer I
observed that the supply chain has been reengineered various times and it
cannot be influenced because the demand and the supply of the polymer
commodities are fixed. Whereas, the supply chain of Reliance Fresh is at its
nascent stage. It has already been reengineered many times and has the
potential to be influenced further.

The study reveled that the supply chain process at Reliance Polymer is
carried out more efficiently as compared to Reliance Fresh

Introduction

Indian scenario of Polymer industry

India has an estimated production capacity of 4500 thousand metric tons

annually. Of this, 60-70% accounts for the production of polyethylene (PE)
and polypropylene (PP). India with 4 Kg per capita consumption per year

6
ranks eighth in the world against world average of 20 Kgs & developed
nations above 100 Kgs. The industry demand is expected to touch 12.4
million tons by 2010-11, becoming third largest consumer after US and China.
The polymer industry is growing at about 12-15% annually. Over the last few
years, the Indian Petrochemicals industry has witnessed consolidation phase.
The top players – Reliance, IPCL, Haldia Petrochemicals (HPL) and GAIL – hold
the majority of the polymer capacity in the domestic market. Buyers in the
industry have very little bargaining power against the suppliers. Buyers are
all highly vulnerable to raw material prices, which are highly influenced by
international demand and supply conditions.

Indian scenario of Retail industry

(Indian polymer industry)

The objective of the internship project was to study the supply chain strategy
of Reliance Polymer, which is the premier well established company in
petrochemicals; and Reliance Fresh, which is an emerging retail company in
India. The report starts with the present profile of Polymer and Retail Industry
in India, followed by Reliance Industries Limited’s profile and the organization
structure. The second chapter tells about the products and brands provided
by Reliance Polymer and Reliance Fresh and about the competitors in India
and their analysis. The third chapter discusses about the financial analysis of
the company. The fourth chapter consists of the learning of supply chain
process at both business units of Reliance Industries Limited at Hyderabad
Regional office. In the conclusion the loopholes are discussed and the future
line of work, which can be carried out at Reliance Industries Limited.

Company’s Profile

Reliance Group

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's

largest private sector enterprise, with businesses in the energy and materials

7
value chain. Group's annual revenues are in excess of USD 22 billion. The
flagship company, Reliance Industries Limited, is a Fortune Global 500
company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and
growth of Reliance. Starting with textiles in the late seventies, Reliance
pursued a strategy of backward vertical integration - in polyester, fibre
intermediates, plastics, petrochemicals, petroleum refining and oil and gas
exploration and production - to be fully integrated along the materials and
energy value chain.

The Group's activities span exploration and production of oil and gas,
petroleum refining and marketing, petrochemicals (polyester, fibre
intermediates, plastics and chemicals), textiles and retail.

Reliance enjoys global leadership in its businesses, being the largest

polyester yarn and fibre producer in the world and among the top five to ten
producers in the world in major petrochemical products.

The Group exports products in excess of USD 7 billion to more than 100
countries in the world. There are more than 25,000 employees on the rolls of
Group Companies. Major Group Companies are Reliance Industries Limited
(including main subsidiaries Reliance Petroleum Limited and Reliance Retail
Limited), Indian Petrochemicals Corporation Limited and Reliance Industrial
Infrastructure Limited.

Organization structure

8
 Reliance Polymers

Reliance's polymer business is integrated with its cracker facility at Hazira, as

well as its refinery at Jamnagar,. Reliance's manufacturing capacities are
Polypropylene (PP) 1,150 KTA, Polyethylene (PE) 450 KTA and Poly Vinyl
Chloride (PVC) 325 KTA. Along with IPCL, Reliance is among the world's top
10 plastic producers.
Reliance has adopted the world class "Sclairtech" Solution Polymerisation
Process of Du Pont, Canada (Now M/s. NOVA Chemicals) for manufacturing
PE.

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DISTRIBUTION

Reliance Industries Limited has established a wide marketing network for

distributing Relene / Reclair PE grades in India consisting of Regional offices,
Resident sales offices, dealers and agents, spread throughout the country.
This ensures that the customer, wherever located, is served efficiently and
benefit from any of this depth and breathe of marketing reach.

Relene / Reclair Polyethylene thus reach the Customer with a comprehensive

package of product quality and service unmatched by any other alternative
sources in the market place.

With 5 Regional Offices,17 Area Offices, 16 Depots (Warehouse) and a

network of over 60 Distributors and Agents, Reliance has established the
necessary Distribution Network to ensure superior Customer Service to over
3000 customers worldwide.

Polypropylene

Reliance Industries Limited is Asia's largest manufacturer of Polypropylene

(PP). With a combined capacity of over 1 million tonnes, Reliance figures
amongst the Top eight Polypropylene producers in the world. Reliance holds a
70% share of the Indian Market and caters to 3% of the world’s consumption
of PP.

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Reliance has adopted the world acclaimed Unipol Process of Union Carbide
(now merged with Dow Chemical) for manufacturing PP at all its sites. Unipol
process combines the production efficiency of gas phase fluidized bed reactor
technology with the high activity and stereospecificity of the SHAC catalyst
system. The two production sites offer a wide range of Homopolymer,
Random and Impact copolymer grades. These can cater to the entire
spectrum of Extrusion, Injection & Blow molding processes.

Repol - Polypropelene(PP)

Technology Partner: Dow-UCC, USA.

End Use : Woven sacks for cement, foodgrains, sugar, fertilisers; leno bags for fruits &
vegetables; TQ & BOPP films and containers for packaging textiles, processed food,
FMCG; office stationary; components for automobile and consumer durables; moulded
furniture & luggage; houseware; geotextiles; fibres for socks, sports wear; soft luggage.

Relpipe - Poly-Olefin (HDPE & PP) Pipes

End Use: Irrigation, water supply, drainage, industrial effluents, telecom cable ducts,
gas distribution

Polyethylene

Reliance Industries Limited commissioned its first PE plant with a capacity of

200 KTA in 1992 at Hazira Petrochemical Complex. This was followed by the
commissioning of another line of 200 KTA at Hazira in 1996.

Reliance has adopted the world class "Sclairtech" Solution Polymerisation

Process of Du Pont, Canada ( Now M/s. NOVA Chemicals) for manufacturing
PE. The process has capabilities to manufacture both LLDPE & HDPE.

Reliance Industries Limited, markets its HDPE under the trade name "Relene

11
The quality of Relene / Reclair Polyethylene meet the international standards
and is being exported to various countries in Europe, Africa, Middle East,
China and other Southeast Asian countries. All the grades are suitable for use
in contact with drinking water, food , pharmaceutical applications & conforms
to relevant BIS / FDA regulations.

Relene- High Density Polyethylene (HDPE)

Technology Partner : Novacor,Canada

End Use: Woven sacks; raschel bags for fruits & vegetables;
containers for packaging edible oil, processed food, FMCG,
lubricants, detergents, chemicals, pesticides; industrial
crates & containers; carrier bags; houseware; ropes & twines;
pipes for water supply, irrigation; process industry & telecom.

Reclair - Linear Low Density Polyethylene (LLDPE)

Technology Partner : Novacor,Canada

End Use: Woven sacks for cement, foodgrains, sugar, fertilisers; leno bags for fruits &
vegetables; TQ & BOPP films and containers for packaging textiles, processed food,
FMCG; office stationary; components for automobile and consumer durables; moulded
furniture & luggage; houseware; geotextiles; fibres for socks, sports wear; soft luggage

The proficient and effective in-house technical team in co-ordination with

customers, formulate special grades with tailored property parameters to
provide cost effective solutions to meet the needs of the processing industry.

Polyvinyl Chloride

Reliance Industries Limited is India's largest manufacturer of Poly Vinyl

Chloride (PVC). With a capacity of 300 KTA, Reliance holds about 40% share
of the Indian Market and caters to a wide range of grades from K 57 to K 70.

12
Reliance has adopted the world acclaimed EDC/Ethylene process (Licensor ,
BF Goodrich (USA) , Presently M/s Oxy Vinyl . REON product portfolio covers a
wide range of grades to cater to a wide spectrum of industries.

Reon - Polyvinyl Chloride (PVC)

Technology Partner : Geon Company, USA

End Use: WPipes & fittings; door & window profiles; insulation
& sheathing for wire & cables; rigid bottles & containers for
packaging applications; footwear; flooring, partitions, roofing;
I.V. fluid & blood bags.

Competitors

Domestic Manufacturers
GAIL
GE Plastics India
Haldia Petrochemicals
Karnataka Petrosynthese Limited
NOCIL
Supreme Industries

International Manufacturers
Exxon Mobil
Honam Petrochemicals
Hyndai Petrochemicals
Samsung
Shell
Dow Chemicals

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 SWOT Analysis

Strengths
1. The cost of capital is large so the naptha cracking unit cannot be
established easily.
2. Gestation period is long.
3. Developing a customer base takes a longer time.
4. The aromatic unit of RIL at Jamnagar is the only world class and
biggest unit in Asia.
5. After 1999, when the plant was set up, the total exports exceed the
total imports.
Weaknesses
1. Though produced from world-class polymer resin, there is lack of
quality because of inferior processing.
2. The inferior quality polymer resin limits the ability to export in
international market.

Opportunities
1. India has shown a higher growth rate of polymer consumption in the
last five years.
2. Demand for plastic is positively correlated with GDP. India’s GDP has
been increasing at the rate of 6% and the polymer demand has been
increasing at the rate of 12%.

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Threats
1. The year 2006-2007 has so far faced the highest demand for polymer.
Due to its cyclicality nature there is prediction of decline in the
demand.
2. The competitors are increasing their production capacity by
establishing new plants. Thereby leading to a decrease in market share
of Reliance.
3. The demand is highly price sensitive. That implies increase in price will
lead to decrease in demand.
4. Imports of cheap plastic from China are also affecting the Indian
polymer market.

15
 Financial Analysis

The financial analysis of the company is done based upon the ratio analysis
for the past three years.

Ratio Analysis
As on 31-March-06 31-March-05 31-March-04
Current Ratio 1.238 1.485 1.406
Inventory 7.731 8.831 7.053
Turnover Ratio
Fixed Asset 1.566 2.469 1.821
Turnover Ratio
Debt Ratio 25% 24.33% 30.93%
Profit Margin on 11.59% 11.56% 10.17%
Sales
Return on Total 0.104 0.098 0.076
Assets
Return on 6.51 5.43 3.68
Common Equity
Price/Earning
Ratio
Book Value per
Share
Market Book
Ratio

Figure - 1

16
Current Ratio: The groups current ratio has relatively decreased from the
previous fiscal years to 1.238 as on March ending 2006. Although this is a
weak current ratio, if considered from a shareholder’s point of view higher CR
reflects that the working capital such as cash, inventory, marketable
securities etc. are blocked and are nonproductive assets.

Inventory Turnover Ratio: It has declined relatively when compared with

the last 2 financial year’s ratio. The ratio for the year 2005-2006 is 7.731.
This shows that in the year 2005-2006 the inventory utilization was not
comparatively productive.

Fixed Asset Turnover Ratio: The ratio has decreased as compared to the
previous years to 1.566. This shows that the company has not improved in
its utilization of fixed assets as denoted by the decrease in the ratio.

Debt Ratio: The ratio is 25%. When compared with year 2003-2004 debt
ratio has declined. But when compared with the year 2004-2005 the debt
ratio of the company has increased which suggests that Reliance Industries
Limited has raised its capital more from its creditors than raising the equity.

Profit Margin on Sales: It has increased gradually in the year 2004-2005 to

11.56%. But in the year 2005-2006 the percentage has increased only
minutely.

Return on Total Assets: The ratio has been increasing very insignificantly.
The ratio for the year 2005-2006 is 0.104.

Return on Common Equity: Every year this ratio is improving

tremendously. This is beneficial for the stockholders because every year they
are getting higher return on their invested money. The increasing RCE ratio
also indicates the company’s effective utilization of debt.

17
 An overview of Supply Chain Management

A Supply chain consists of all parties involved, directly or indirectly, in

fulfilling a customer request. The supply chain includes not only the
manufacturer and suppliers, but also transporters, warehouses, retailers, and
even customers themselves. Within each organization, such as a
manufacturer, the supply chain includes all functions involved in receiving
and filling a customer request. These functions include, but are not limited to,
new product development, marketing, operations, distribution, finance, and
customer service.
A Supply chain is dynamic and involves the constant flow of information,
product, and funds between different stages.

Suppliers

Wholesalers

Manufacturer

Retailers

18

Consumers
Each stage in a supply chain is connected through the flow of products,
information, and funds. These flows often occur in both directions and may be
managed by one of the stages or an intermediary. The appropriate design of
the supply chain depends on both the customer’s needs and the roles played
by the stages involved.

The objective of every supply chain should be to maximize the overall value
generated. The value a supply chain generates is the difference between
what the final product is worth to the customer and the costs the supply
chain incurs in filling the customer’s request. Supply chain profitability or
surplus is the total profit to be shared across all supply chain stages and
intermediaries. The higher the supply chain profitability, the more successful
is the supply chain. Supply chain success should be measured in terms of
supply chain profitability and not in terms of the profits at an individual stage.
At individual stages may lead to reduction in overall supply chain profits.

Effective supply chain management involves the management of supply

chain assets and product, information, and fund flows to maximize total
supply chain profitability.

Process view of supply chain at Reliance Industries Ltd

All processes in a supply chain fall into one of two categories depending on
the timing of their execution relative to end customer demand. With pull
process, execution is initiated in response to a customer order. With push
process, execution is initiated in anticipation of customer orders. Pull process
may also be referred to as reactive process because they react to customer
demand. It operates in an environment in which customer demand is known.
They are often constrained by inventory and capacity decisions that were

19
made in the push phase. Push processes may also be referred to as
speculative process because they respond to speculated (or forecasted)
rather than actual demand. It operates in an uncertain environment in which
customer demand is not yet known.

Reliance polymer executes all process in the customer order cycle after the
customer arrives. All processes that are part of the customer order cycle are
thus pull processes. Order fulfillment takes place from product in inventory
that is built up in anticipation of customer orders. The goal of the
replenishment cycle is to ensure product availability when a customer order
arrives. Whereas at Reliance fresh, all process in the replenishment cycle are
performed in anticipation of demand and are thus push processes. The stores
raise indents based on the forecast from the historical sales.

Study of Supply Chain Strategy at Reliance Industries Limited

The study of Supply Chain strategy carried out at Reliance Polymers and
Reliance Retail Ltd can be discussed into three phases which are called the
Decision phases in a Supply Chain.

Decision phases in a supply chain

Supply chain strategy or design: During this phase, given the marketing
and pricing plans for a product, a company decides how to structure the
supply chain over the next several years. Supply chain design decisions are
typically made for the long term (a matter of years) and a very expensive to
alter on short notice.

• For strategic network optimization, the number, location, and size of

warehouses, distribution centers and facilities are decided.
• Strategic partnership with suppliers, distributors, and customers,
creating communication channels for critical information and
operational improvements such as, cross docking direct shipping, and
third-party logistics.

20
 • Products design coordination, so that new and existing products can be
optimally integrated into the supply chain, load management.
• Information Technology infrastructure, to support supply chain
operations.
• Align overall organizational strategy with supply strategy

Supply Chain Strategy at Reliance Polymer

Supply chain management starts with fulfilling the customer’s demand. At

Reliance polymer the customer, who are the end product manufacturing
units, give their order to Del Creder Agents. The DCA further punches the
order via internet, which reaches the Regional Office.

The Regional office checks for availability of raw material at the Hazira
manufacturing plant and the financial position of DCA. Further the RO clears
the order, which is forwarded to the warehouse and the manufacturing plant.
The manufacturing plant sends the polymer resin to the warehouse and it is
further transported to the respective customers via Relogistics. End products
are manufactured at manufacturing unit and stored at branches cum depot.
From there the end products
are distributed to the final customer.
A better view of the supply chain strategy at Reliance Polymer is explained by
the diagram below.

21
 Polymer Industry and Supply Chain Strategy

Regional Office

Refined oil Order clearance Order Punching

(Ethane)
Suspension Order Dispatch
Manufacturing Plant Warehouse DCA
Customer
PVC Resin Raw Material Manufacturing
Unit

Common Salt
(Chloride) add
Wholesalers Compounding
Extrusion
Ingredients

End-users Branches cum Depot PVC

Pipes

Retailers

22
23
 Supply chain strategy at Reliance Fresh

The supply chain process at Reliance Fresh is used to receive, allocate,

manage and distribute the flow of fruits and vegetables, milk articles, frozen
food, staple foods and FMCG from Ranger Farm CPC and the Milk vendor to
Reliance Retail Stores.

In the process every store raises indents for the delivery of goods 48 hours in
advance. The indents are raised based on the actual sales The indents are
transferred to respective category through SAP, and they are converted into
purchase order.

Ranger Farm is responsible for the procurement of the goods from the
collection centers, cleaning and repackaging. Purchase order is also
forwarded to Distribution Center for reference and the proper dispatch of the
material. From the DC the order is dispatched to the respective Reliance
Fresh Stores.

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Supply chain planning: Company start the planning phase with the
forecast for the coming year (or a comparable time frame) of demand in
different markets.

• Sourcing contracts and other purchasing decisions.

• Production decisions, including contracting, locations, scheduling, and
planning process definition.
• Inventory decisions, including quantity, location, and quality of
inventory.
• Transportation strategy, including frequency, routes, and contracting.
• Benchmarking of all operations against competitors and
implementation of best practices throughout the enterprise.
• Milestone payments

a) Manufacturing/ Procurement flow management process

The manufacturing process is produced and supplies products to the

distribution channels based on past forecasts. Manufacturing processes must
be flexible to respond to market changes, and must accommodate mass
customization. Orders are processes operating on a just-in-time (JIT) basis in
minimum lot sizes. At Reliance Polymer and Reliance Fresh manufacturing/
procurement flow process lead to shorter cycle times, meaning improved
responsiveness and efficiency of demand to customers. Activities related to
planning, scheduling and supporting manufacturing operations, such as work-
in-process storage, handling, transportation, and time phasing of
components, inventory at manufacturing sites and maximum flexibility in the
coordination of geographic and final assemblies postponement of physical
distribution operations.

25
Supply chain operation: The time horizon here is weekly or daily and
during this phase companies make decisions regarding individual customer
orders.

• Daily production and distribution planning, including all nodes in the

supply chain.
• Production scheduling for each manufacturing facility in the supply
chain (minute by minute).
• Demand planning and forecasting, coordinating the demand forecast
of all customers and sharing the forecast with all suppliers.
• Sourcing planning, including current inventory and forecast demand, in
collaboration with all suppliers.
• Inbound operations, including transportation from suppliers and
receiving inventory.
• Production operations, including the consumption of materials and flow
of finished goods.
• Outbound operations, including all fulfillment activities and
transportation to customers.
• Order promising, accounting for all constraints in the supply chain,
including all suppliers, manufacturing facilities, distribution centers,
and other customers.
• Performance tracking of all activities.

The key supply chain processes stated by Lambert (2004) are:

a) Customer relationship management (CRM) is a broad term that

covers concepts used by organizations to manage their relationships with
customers, including collecting, storing and analyzing customer information.

Aspects of CRM

26
There are three aspects of CRM, each of which can be implemented in
isolation:

1. Operational CRM: The automation or support of customer processes

involving sales or service representatives
2. Collaborative CRM: Direct communication with customers not involving
sales or service representatives (“self service”)
3. Analytical CRM: The analysis of customer data for a broad range of
purposes

Operational CRM

Operational CRM provides support to "front office" business processes,

including sales, marketing and service. Each interaction with a customer is
generally added to a customer's contact history, and staff can retrieve
information on customers from the database as necessary.

Collaborative CRM

Collaborative CRM covers the direct interaction with customers. This can
include a variety of channels, such as internet, email, or automated phone
answering system. It can generally be equated with “self service”.

Collaborative CRM also includes Partner Relationship Management (PRM)

which enables organizations to manage their relationships with partners
(consultants, resellers and distributors), and potentially the customers of
those partners.

b) Customer service management process

Customer Relationship Management concerns the relationship between the

organization and its customers. Customer service provides the source of
customer information. It also provides the customer with real-time
information on promising dates and product availability through interfaces
with the company's production and distribution operations.

27
The RelianceOne loyalty membership is currently over 750,000 customers.
This number is growing steadily. The RelianceOne loyalty customers can take
advantage of adding loyalty points with the same membership card at the
Reliance Digital stores as well.

c) Demand Management and Order fulfillment

Strategic plans are developed with suppliers to support the manufacturing

flow management process and development of new products. The desired
outcome is a win-win relationship, where both parties benefit, and reduction
times in the design cycle and product development is achieved. Also, the
purchasing function develops rapid communication systems, such as
electronic data interchange (EDI) and Internet linkages to transfer possible
requirements more rapidly. This requires performing resource planning,
supply sourcing, negotiation, order placement, inbound transportation,
storage and handling and quality assurance. Also, includes the responsibility
to coordinate with suppliers in scheduling, supply continuity, hedging, and
research to new sources or programs.

ORDER PROCESS

The order process is carried out in two phases. First phase is order punching
by the Del Creder Agents. The second phase is the clearance of order by the
Regional Office.

ORDER PUNCHING

For placing the order to the customers as per the material requirement
agents have to log on to RIL website. Once the site loads (www.ril.com), they
have to click on “internet B2B sales”. Then they can view a window which
asks for their authenticated login ID and password. On entering the password,
they will be viewing a screen which consists of various divisions namely;

28
 a) Polymers
b) Chemicals
c) Fiber and fiber intermediates

Under polymers they get different products namely PE, PP and PVC.
Subsequently based on the grade requirement of the customer the agent
punches the order in the system. This B2B also lists out the customer names,
grade names, which are programmed and created in SAP using master data
structure

Once the order format is opened the agent is selected. Select the customer
name by using drop down command. Subsequently he fills up the following
fields in the order format:
1. Grade name
2. Quantity (mtrs )
3. P.O. no. and date
4. Payment term
a) ZEAS for cash order
b) Z014 for credit order
5. Warehouse code
6. Contact person no.

Once the above data are filled, agent saves the order and the order no. is
generated for their records.

29
30
 ORDER PUNCHING
DCA

Polymer

www.ril.com Internet Sales B2B Polymer Grades:

Chemical -PE
Fibre & Fibre Intermediaries -PP
-PVC

Order number
is generated
Main Server Order form: Select Customer AUTHENTICATION
(Mumbai) -Grade name LOGIN ID______
-Quantity (mts.) PASSWORD____
-P.O. no. and date
-Payment term
• ZEAS for cash order
• Z014 for credit order
-Warehouse code

31
CLEARANCE OF ORDER

Orders that are punched in the system by the agents are reflected to the main server
and are viewed at the local RIL office for clearance. Based on the availability of the
material the order is cleared. There is a listing called ZORL i.e. order listing in which
all the orders punched by the agents can be viewed. All the orders are cleared
through a command called VA02 where in order no. is inserted in the field of VA02.
This is also called as change order command. Once the order is opened we will check
whether all fields are entered clearly. Upon checking the order is cleared by entering
tax code. Upon checking the order is cleared by entering tax code “A” as for Andhra
Pradesh the tax is “A” as per the new VAT rules. Subsequently we go to payment
terms. Where we enter as E- finance as all the aspects are having BG’s and is tied up
with their respective banks for channel financing. If sufficient funds are available in
the account of the agent the order gets cleared automatically. There are various
blocks in sales order, ex. 21’ means the agent’s funds still have to be checked. After
the funds are checked the number changes to ‘20’. ‘A means the order is cleared
automatically. ‘B’ means there were not sufficient funds to clear the order. When the
order amount is deposited the order has to be released automatically. For this the
customer will get block grade of ’20 D’. After checking everything they move on to
billing section.

For materials dispatched locally freight has to be borne by the customers and for
materials dispatched. The freight from plant is shown to the customer along with the
price.

32
33
 CLEARANCE OF ORDER

Order punched
by DCA

SAP Change order SAP

command

Main Server RIL ZORL VA02

Warehouse
(Mumbai) (Regional Office) (Order listing) Codes:
• 20- HO block
• 21- RO
• 20 A-Auto clearance
• 20 B-Block order
• D- Manual release

34
ACCOUNTING
21 B
21 – RO (regional office)
B-block
MRO stands for Madras regional office

PAYMENT ASSIGNMENT
E-Finance is an easy option now by which the work can be done faster and in a more
accurate manner. All agents have a bank guarantee with RIL. The guarantee depends
on the financial capacity and the trading terms with the company. An order can be
cleared through e-financing. It is also known as channel financing.

There are various codes for various offices and head quarters by which the bill is
recognized.

For example:
20 – HO block
20 A – Auto clearance
20 B – Blocked order
D – Manual release

After the goods are dispatched from the regional head office they are marked as 20 A
i.e.

21 B – directly to – 20 A

GRL – goods received listing. This is mainly for excise.

Truck exit entry is also marked after each truck is dispatched to their respective
delivery locations.
Invoice is printed at 00:01 hrs.
The price at the time of generation of the invoice is considered.

35
d) Product development and commercialization

Here, customers and suppliers must be united into the product development process,
thus to reduce time to market. As product life cycles shorten, the appropriate products
must be developed and successfully launched in ever shorter time-schedules to remain
competitive. According to Lambert and Cooper (2000), managers of the product
development and commercialization process must:

1. coordinate with customer relationship management to identify customer-

articulated needs;
2. select materials and suppliers in conjunction with procurement, and
3. develop production technology in manufacturing flow to manufacture and
integrate into the best supply chain flow for the product/market combination.

Warehouse

Hyderabad warehouse at Kompally is the largest warehouse in India other than

Hazira’s. It is 40,000 sq ft in size. The raw material comes from plants situated in
Baroda, Dahej, Nagothane, which are supplied by IPCL, and Hazira and Jamnagar plants
are under RIL. From Nagapur partially oriented yarn (POY) is supplied. The main raw
materials stored in the warehouse are high density poly ethylene (HDPE), low density
poly ethylene (LDPE), linear low density poly ethylene (LLDPE), poly vinyl chloride
(PVC), polypropylene (PP) and rubber (RU). Each product is divided into grades
according to the goods in which they can be converted. Each consignment is of 16,000
metric ton. Each package is of 25 kg. Total of 640 packages come at a time through
transportation. In the warehouse 24,000 sq feet are allotted to IPCL and 11,000 sq feet
to RIL. At a time a total of 16 vehicles can be loaded and unloaded. Loading and
unloading is the fastest process at warehouse which can be done in 45 minutes.

When agent’s order form is cleared, the form is then reflected in the warehouse unit for
dispatch. Raw material reaches the warehouse from the plant. That is called the
primary transportation.

36
Inbound Process

When the truck reaches warehouse from the plant it has to encounter the security
guard. The truck driver has to produce the following documents before he could enter
the warehouse:
• Consignment copy of driver
• Consignment copy of warehouse
• Duplicate copy for transporter of Invoice cum Challan
• A test report copy for quality assurance
After checking all the documents, security enters the arrival of the material in security
inbound register. All the documents are entered in the register and forwarded to office.
Floor supervisor handles the unloading of the stock. He prepares the report on goods
in transit (GIT). While the stock is getting unloaded it is checked the packaging is
checked for any cut and torn and it is also seen whether any material has spilt from the
packages. All details are processed into the system and Goods Receipt Note is
prepared, which is attached with the documents handed over to the office.RG-23 Depot
document is also attached. It is the central excise document for receivable goods that
the transporter must have when the goods come from plant to the warehouse. It is
road permit which also supports the APGST i.e. Andhra Pradesh General Sales Tax.

GRN – goods receipt note

After this note is issued the goods are unloaded in the warehouse.

While unloading or carrying out any procedure for stocking the raw materials, the
material falls down it is called sweep.

If the material is not spilled it is known as an impact bag

If the bag is cut but still the material has not been spilled it is known as cut and torn
bag. All these options are available in SAP.

If in case of wet stock it is termed as wet material.

37
It is collected in large containers and stored until reuse.
After being processed this order goes to RG23 Depot which is the central excise for
receivable goods.
OUTBOUND PROCESS / DISPATCH

Pending Order Listing

When the order is cleared on accounts of the availability of raw material, terms of
credit and credit limit of the agent a pending order list is reflected through SAP in the
warehouse system.

Materials Dispatch Note

When a customer comes directly to the warehouse he has to show an authorization

letter. This goes to the floor supervisor. He will place the truck for loading.

The floor work goes on for about 12-14 hours. If a single person is working, this much
work is not manageable and also reduces the efficiency of that person. So here, 2 floor
supervisors are engaged in doing the work.

There is a system of BIN cards for stocking up the material. Here the bay reference
number, piling up the stock etc. are mentioned on a card for future reference.

MDN number – Materials Dispatch Note

After the MDN is received by the system an invoice is generated which is sent to the
RG23D entry is made for excise duty.
Then the APGST- Andhra Pradesh General Sales Tax is to be paid. None of the
consignments can leave without this document.

All these documents got the security in charge of the warehouse who records it in the
outbound register.

This warehouse is about 40000 sq. ft large and it has 16 points where materials can be
unloaded simultaneously.

38
Counter checks are carried out at various points to ensure proper delivery of product
and remove mismanagement and manipulation. The checks are carried out on the
basis of many parameters i.e. grade, quantity, vehicle conditio0n etc.

All the above 10 documents are made according to the ISO standards.

39
 Inbound Process
Goods in Transit Security check Unloading
Storage

Truck Driver Security Guard Floor Manager Labor

Arrival of stock Inbound records Goods Receipt Note Bin Card

• Consignment Note -Impact * Bay
reference no.
• Invoice cum challan -CTD * Date of
stocking
• Certificate of Quality -Sweep
*Mother invoice no.
• Excise Invoice (RG 23-D) -Shortage
-Wet

40
41
e) Physical distribution (logistics)
This concerns movement of a finished product/service to customers. In physical
distribution, the customer is the final destination of a marketing channel, and the
availability of the product/service is a vital part of each channel participant's marketing
effort. It is also through the physical distribution process that the time and space of
customer service become an integral part of marketing, thus it links a marketing
channel with its customers (e.g. links manufacturers, wholesalers, retailers). Reliance
fresh is large consolidated retailer, which is the large chain buying consumer goods
from most manufacturers. This consolidation gives retailers sufficient scale that the
introduction of an intermediary such as a distributor does little to reduce costs and
may actually increases cost because of any additional transaction. The only way to for
a manufacturer to keep transportation costs low is to bring full truckloads of product
close to market and then distribute locally using “milk run” with smaller vehicles. The
presence of an intermediary who can receive a full truckload shipment, break bulk, and
then make smaller deliveries to the retailers is crucial if transportation costs are to be
kept low.

f) Outsourcing/partnerships
This is not just outsourcing the procurement of materials and components, but also
outsourcing of services that traditionally have been provided in-house. The logic of this
trend is that the company will increasingly focus on those activities in the value chain
where it has a distinctive advantage and everything else it will outsource. This
movement has been particularly evident in logistics where the provision of transport,
warehousing and inventory control is increasingly subcontracted to specialists or
logistics partners. Also, to manage and control this network of partners and suppliers
requires a blend of both central and local involvement. Hence, strategic decisions need
to be taken centrally with the monitoring and control of supplier performance and day-
to-day liaison with logistics partners being best managed at a local level. Reliance
Industries Limited out sources parts of its supply chain process to its sister concerns.
The transportation of the material both at polymer and fresh is outsourced to
Relogistics Ltd. At Reliance Fresh procurement of fruits and vegetables and the staple
goods is outsourced to Ranger Farms.

Recommendation for Reliance Polymers

1. To maintain good customer relations.

2. To inculcate a proper work culture in the organization.

43
 Reliance Retail

Organized Retailing in the last decade has emerged as one of the sunrise industries in
India, closely following the Information Technology and Biotechnology industries. The
boom in the sector started after the liberalization measures were initiated in 1991 in
the country. Several large chains have entered the bandwagon and have achieved fair
to significant success. Philip Kotler in his book on Marketing Management defines
retailing as all the activities involved in selling goods or services directly to final
consumers for personal, non-business use. Indian retailing has evolved over the past
decade, from largely an ‘informal’ and disorganised marketplace to an increasingly
corporatised industry, at least in the urban India. With the increased popularity of food
retailing in an organised way this sector has thrown up a wide range of opportunities
for Indian agribusiness. Organised retail is experiencing a fast paced revamp with large
players setting their foot in the retail sector with many organised retailers' turnover
growing by leaps and bounds and operations expanding through many new stores. The
traditional formats are making way for the western style malls ranging from
convenience stores, supermarkets and hypermarkets. The range of products that you
find in a mom and pop store is very less compared to the western format of a
convenience store.

The Current Scenario

The change in the social formats has led to the development of modern retail outlets,
mainly in the southern parts of the country. Chennai, Bangalore and Hyderabad are
developing as the hub of organised retail in India. The culture is spreading to the other
parts of the country too, with the western and northern parts of the country too
providing good opportunities currently. Different players are trying out different
formats. A successful fully Indian or ‘swadeshi’ model in Indian retailing is yet to be
developed. The models, which are highly successful in certain areas of the country, are

44
able to achieve only moderate success in certain other areas. The major formats being
followed for organised food retailing in India are:

Supermarket: Relatively larger-low cost, low margin, high volume, self service
operation designed to serve total need for food, laundry, and household maintenance
products. E.g.: Food World, Nilgiris, Shoppers Stop

Discount Store: Standard merchandise sold at lower prices with lower margins and
higher volumes. True discount stores regularly sell merchandise at lower prices and
mostly national brands. E.g. Margin Free Markets, Subhiksha

Fresh Product outlets: Outlets selling fruits and vegetables in value-added packing.
These outlets generally cater to the higher segment of the society. E.g. Namdhari and
Safal

Specialty Stores: Narrow product line of an individual food-processing firm. E.g.

Haldirams, MTR

Convenience Store: Relatively small store located near residential area, open long
hours seven days a week, and carrying a limited line if high-turnover convenience
products at slightly higher prices. E.g.Outlets near petrol pumps, cinema halls etc.

Off-Price Retailer: Merchandise bought at less than regular wholesale prices and sold
at less than retail.

45
 Reliance Fresh

Reliance retail, a 100% subsidiary of Reliance Industries unveiled Reliance Fresh on

October 28th,2006 . An investment of 2500 crores is planned to make this retail
venture successful. Besides, it has planned hypermarkets, supermarkets, discount
stores, department stores, convenience stores and specialty stores, to be unveiled
shortly.

These stores will range from 2,000 to 5,000 sq feet, will provide customers with a
variety of fresh fruits, vegetables, staple foods and other products in a world-class
ambience. The strategy is to open one Reliance Fresh store in a radius of three to four
km to serve 1,000-2,000 families. This means about 30-40 stores in the major metros.
The air-conditioned stores recorded a combined sales of Rs 22 lakh on the inaugural
day itself.

The USP’s of Reliance Fresh:

• No adulteration
• Perfect weighing system
• The vegetables you get to buy from the traditional mandi are, for example,
inconsistent in terms of quality and price.
• You walk away with a very good bargain sometimes and you are practically
robbed sometimes.
• Dump is actually dumped and not sold for a cheap price.

46
 Wet Distribution Centre

About 75% of the requirement is sent in the morning and the rest in the afternoon. On
the basis of the indent system, the delivery schedule is designed. Delivery is made
twice a day. The indent is recorded is the distribution centre through SAP. Once the
inventory comes to the distribution centre the unloading team gets to work. The
inventory is unloaded, weighed and transferred to crates and piled up accordingly.

Grading at Reliance Fresh:

Reliance Retail Grade

• Non- Reliance Retail Grade.

• Dump

Out of the total inventory procured only about 75% is as per the standards Reliance
Fresh. The non RR grade fruits and vegetables are sold in the local mandi. And the
dump which on an average is about 7-8% is thrown away.

Inbound Inventory Process

Inventory is received 2 times in a day. One is the morning shift when the inventory
comes from distant places like (Karnataka, Chennai), and the other is afternoon shift
when the inventory comes from local mandis.

Outbound Inventory Process

The FIFO method is followed for outbound process. A fleet of 37 trucks is coordinated to
maintain the level of inventory in the stores out of which only 11 are air-conditioned

47
trucks. We had the opportunity to meet Mr.Raju(transport head, Reliance Fresh) who
has made a record for scheduling maximum number of trips per truck i.e. 2.4 trips/day.
the transport plan is made everyday in accordance to the demand made by the stores.

Dry Distribution Centre

There are 25 stores in Hyderabad and hence the transport schedule is made
accordingly. Some of the vans are sent on cluster basis i.e. 1 van for 2 stores.

1. Processed foods
2. Staples
3. Fruits and vegetables
4. Dairy products

GOODS RECEIPT

Ranger Farm will start supplying the finished goods in crates to RR DC in batches (A
batch is a summary of the number of crates delivered for a particular SKU, there can
be multiple batches for a SKU) against the respective PO raised by RR. Each crate will
have a tag (size of crate tag is 50mm * 90mm) mentioning the following details:

Barcode which includes EAN code, CPC code, scale Sr#, crate serial #, UOM & actual
quantity in crate

• Date & Time of label creation

• SKU description
• SKU code
• Actual quantity and UOM

Crate Tag

Ranger farm would also provide a summary label with every batch mentioning the
SKU, nos. of crates for the particular SKU & total actual quantity supplied for the same.

48
Batch Summary Label

While receiving the crates from ranger farm, the receipt supervisor should ensure that
the crates are segregated SKU wise and put on a pallet in the receipt staging area. The
supervisor should verify that the count of physical crates received is same as
mentioned in the label summary. The receipt operator will prepare GRN in the system
by entering the SU code & actual quantity mentioned in the summary label. Once the
receipt is saved the system would issue a GRN nos. and SKU would lie in the receipt
staging area SAP. The receiver will use the article pick list printout to manually
document the crates received and allocated for receiving purposes and initial off on
this sheet. He should verify the crates-circle the SKU quantity and initial off on each
line. They will sign at the bottom and then place in PO basket at the processing table.
The GRN in noted on the summary PO printout. This will then be stapled with PO
printout and summary labels. If excess materials or wrong SKU’s have been received
and recorded in GRN, then we need to process a reversal of GRN for the excess of
crates and hand back the crates physically to Ranger farm.

49
 Findings

Stores:

1. Space constraints in stores.

2. The greens stale out
3. Most of the staff of Reliance Fresh is inside the store doing some work or the
other which leaves a very narrow space for the consumers to walk and shop
conveniently.
4. They run out of stock
5. Many customers are not informed about the loyalty programme.
6. Very less choice

Distribution centers:

1. The temperature is not maintained, which causes a huge invisible loss to the
inventory.
2. The dump is stacked at the receiving end of the distribution centre.
3. Cleanliness is not maintained.
4. Highly demotivated workers

50
 Recommendations

Stores:

1. The greens are stored in the fridges, still are shriveled up and limp. Food grade
polythenes should be used to pack them for better shelf life.
2. The weighing machines should be electronic as well as bowl shaped for
elimination of inconvenience.
3. More spacious
4. More inventory and FMCG products.

Distribution centers:

1. Basket to basket transferring of vegetables.

2. Employing more sweepers
3. Temperature control

51
 Future Line of Research

I have planned to extend my research on Reliance Fresh beyond the internship period.
I will conduct a survey on the brand value and the brand image of Reliance Fresh in
Bangalore in the next two months.

52
Sources

www.ril.com
www.myiris.com
www.google.com
www.mouthshut.com
www.indiadaily.org

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