Warehousing at

Savemart
Group 10
Sec - B

Alankrita Bari - 2011015

Anupama K - 2011295
Bibin Kumar S - 2011051
M Satish - 2011122
Pritosh Kindra - 2011179
Riveshu Trivedi - 2011206
Sai Charan Reddy M - 2011307
Case
Facts Indian Retail Industry

● The modern retailing began in early 2000s

● With liberalisation, Indian economy saw a tremendous growth - GDP
was more than 6% between 1991-2000 and was more than 7%
between 2000-2008
● The size of middle-class family grew phenomenally and their
expectations on the quality of products also increased
● Since 2009, Indian retail sector experienced a tremendous growth and
E-commerce is growing at more than 40% CAGR
Case
Facts Savemart Background

● It is a major Hypermarket retailer in India

● First store of Savemart established in 2004 in Bangalore and has 154
hypermarkets by 2014
● Savemart has 10 warehouses across India and each serviced 10 – 20
hypermarkets
● To avoid cannibalization between the stores, the stores are 7-8 kms
away from each other
● The warehouse handles multiple product categories like FMCG
products, Apparels, Plastics, Kitchenware, etc
 Steps involved in Savemart ERP

At warehouse, Stores raise their Each warehouse has

the cartons Once pick up dedicated trucks
Category Once GRN is items through
are opened done, items where merchandise
managers done, items Stock Transfer
and scanned are scanned is dispatched from
raise purchase are taken to Orders (STOs) and
individually to for preparing the warehouse to
orders on the storage send the pickup
prepare Goods Stock Transfer different stores
vendors locations list of items to the
Receipt Note Note (STN) through these
respective pickers
(GRN) trucks

01 02 03 04 05 06
 What are the major issues at Savemart’s
warehouses?
● Long time for inwarding goods to the warehouse and dispatching them to the stores
● These delays caused stock-out situations despite having enough stock at warehouse
● Loss of sales caused due to late entry of in-warding of goods received from Vendors,
and not reaching the stores on time
● Consignments were accepted from the vendors even after exceeding the last date of
delivery as per warehouse policy
● No prior communication from the vendors regarding the shipment against the POs
● No tracking system of the deliverables
● Delay in receiving process caused when large number of trucks reached the
warehouses on the same day

·
 What are the major issues at Savemart’s
warehouses?
● Delay in goods receipt process caused because of items having wrong or no
barcodes
● High inventory caused due to category managers’ wrong forecasting
● Space issues because of improper organizing caused due to lack of discipline in
storing items in their designated locations, damaged goods, returns from stores,
apparels which belonged to earlier season
● Inefficient picking process caused due to scattering of inventory at different places.
● Error in system inventory as the book stock didn’t match the physical stock
● Low throughput as piece-in and piece-out model is followed
● Increasing costs in packaging
 What initiatives can Rajesh Gupta suggest for reducing the receiving,
excess inventory, stock-out and throughput issues?

For reducing the receiving issue:

● Bring stringent policies to which the vendors must follow regarding deliveries on time (like penalties)
● Consider the trusted and efficient vendors from now on
● Encourage vendors to inform warehouse well-before regarding the shipment details against the POs
( investing in information management system)
● Shift to case-in and case-out model
● Increase further surveillance in the in-warding and out-warding stages, to identify irregularities if any

For reducing the excess inventory issue:

● Prepare the category managers well to forecast demands promptly while keeping them in loop with
the stores
● Audit by senior management by conducting regular visits to the warehouse and monitor any high
inventory issue
● Rearrange the inventories in their designated locations and any goods that are returned from stores
or which belong to previous seasons can be sold to smaller wholesalers at lower margins
● Properly plan the new store openings to avoid the delays
 What initiatives can Rajesh Gupta suggest for reducing the receiving,
excess inventory, stock-out and throughput issues?

For reducing the stock-out issue:

● Prepare the managers well to analyse the stock-out situations promptly while keeping both warehouse
and stores in loop
● The pick-lists from the STOs may be shared with the Category managers, which can help them to
communicate, assess and plan their inventories
● Reduce the discrepancies in the Book stock and the physical stock
● Bring stringent policies to which the vendors must follow regarding deliveries on time (like penalties)
to improve the delivery process

For throughput issue:

● Implement case-in and case-out model
● Train store managers, pickers and educate them about the model in collecting and then sorting the
goods
● Enhance scanning by removing existing errors in the system and introduce clear and visible
barcodes
 Impact of inventory discrepancy

Stockouts in Inventory
stores as there is no accumulation due to
stocks in warehouse to ordering of same stock
deliver to the stores that are not accounted

Order processing time Disorder

will increase since more in the warehouse since
time will spent on finding overstocked products
that goods not present in needs to be stored in
warehouse another location
 How to avoid inventory discrepancies?

Establish adequate
procedures and Implementation of
properly train staff technology based Always place similar
and ensure that they inventory management stocks together
adhere to the process system

Maintain a record Frequently monitor other

of stocks and their causes of discrepancies
locations and all and identify ways to
stock movements avoid it
Advantages of using case-in and case-out model

Increase in
throughput time

Better and faster

material handling

Reduction in
manpower
requirement
 Coordinate and seek support
01 of merchandise managers
and store managers

Make changes in the ERP, the lot

sizes, the way the items are
02 packaged. The vendors should also

How to implement be informed about the packaging

case-in and case-

Buying and setting up
out model? 03 equipment for case-in and
case-out model

04 Training the employees

in the warehouse
 Regarding Packaging

What is the current annual cost of buying the cartons for re-packaging?
No. of new cartons purchased every month = 15,000
Total no. of cartons purchased per year = 15,000 x 12
=1,80,000 Rs. 99,00,000
Cost of each carton = Rs. 55
Annual cost of buying the cartons for re-packaging = Rs. (1,80,000x55)
= Rs. 99,00,000

What is the payback period of buying the recyclable plastic crate? (assuming demand is equally distributed)
Total no.of plastic crates required for every month = 15,000/15 = 1,000 crates
No of plastic crates required for 3 years = 1,000 (each has a lifetime of 3 years)
Total spending on packaging material for 3 years = Rs.(1,000 x 500) = Rs. 5,00,000 18.305 days
Total spendings for 3 years on cartons = Rs. 99,00,000 x 3 = Rs. 2,97,00,000
Savings in Packaging for 3 years = Rs. 2,92,00,000
Savings per day = Rs. 2,92,00,000/3x12x30 = Rs. 27,314.81
Payback period in days = (5,00,000/27,314.81) = 18.305 days
 Regarding Packaging

How many recyclable plastic crates the company will have to buy to completely
eliminate the purchase of cartons?
No. of new cartons purchased every month = 15,000
Total no.of plastic crates required for every month = 15,000/15 = 1,000 crates
1000 crates
No of plastic crates required for 3 years = 1,000 (each has a lifetime of 3 years) every 3 years

For every 3 years the company needs to purchase 1,000 crates, assuming no
damage or loss in crates and no increase in demand for crates

What would be the cost savings over 3 years if they only use recyclable plastic
crates and stop buying cartons?
Total spending on crates for 3 years = Rs.(1,000 x 500)
= Rs. 5,00,000 Rs. 2,92,00,000
Total spendings for 3 years on cartons = Rs. 99,00,000 x 3
= Rs. 2,97,00,000
Savings in Packaging for 3 years = Rs. 2,97,00,000 - Rs. 5,00,000
= Rs. 2,92,00,000
Thank You