School of Business Management

Narsee Monjee Institute of Management Studies, Mumbai

Operations and Supply Chain Management

Submitted to
Dr. Ashu Sharma

Submitted by: Group 7

Shashank Shekhar Singh (B007)

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Table of Contents
Introduction......................................................................................... 3
Company’s Profile ............................................................................... 3
Review of Literature............................................................................ 5
Project Analysis ................................................................................... 7
Advantages in Online Operations ..................................................... 10
Challenges in Online Operations ...................................................... 11
Learnings from the Project................................................................ 12
Strategic Recommendation............................................................... 13
References ......................................................................................... 14

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Introduction

The project outlays the operation and supply chain management of Nykaa company. The

report portrays the use of JIT, inventory management, location planning and quality control

concepts in relation to the operation and supply chain systems at Nykaa. Further, the report

points out the limitations within the operation and supply chain processes and strategic

recommendations on the basis of the literature review and analysis.

Company’s Profile

Nykaa is a multi-brand beauty shop established in Mumbai that sells cosmetics and wellness

items. Nykaa was founded by Falguni Nayar in April 2012 as an online retailer, and in

November 2015, it established its first physical retail store at Indira Gandhi International

Airport's T3 Terminal. Nykaa is an e-commerce website that sells beauty and wellness goods

from a variety of well-known brands, including Lakmé, Kaya Skin Clinic, L'Oréal Paris, and

others. Nykaa operates on an inventory-based approach, with warehouses in Mumbai, New

Delhi, and Chennai, as well as a 35-store physical presence that is growing. It promises to

feature over 35,000 goods and 850+ handpicked brands.

Nykaa's primary target demographic is those between the ages of 22 and 35. Nykaa also

offers two different offline retail formats: Nykaa Luxe and Nykaa on Trend. The Luxe format

includes Indian and worldwide luxury beauty brands, as well as Nykaa Beauty, the

company's own line of cosmetics. The On Trend model is the industry's first of its type, with

items chosen by category based on their popularity. Nykaa launched private label items in

the bath & body care sector in March 2016.

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Nykaa has grown to become India's greatest beauty destination in only three years, with

half a million satisfied customers who rely on us not just for their favourite brands, but also

for advice, updates, expert tips, and videos on how to look and feel beautiful at all times!

Nykaa prides itself on giving a complete range of cosmetics, skincare, hair care, perfumes,

bath & body, luxury, and wellness goods for women and men, with about 850+ selected,

well-priced, and 100 percent authentic brands and 1 lakh items.

We go to great lengths to delight you, even if it means travelling to the farthest reaches of

the country! Today, Nykaa uses the services of top and dependable courier firms to

transport throughout the country to practically every zip code. 'We feel that the Nykaa lady

deserves nothing but the greatest, purest, authentic beauty and health products money can

buy, just as we admire the real worth in every woman.'

Unlike other online retailers, we never buy from the 'grey market,' preferring instead to sell

items that are 100 percent genuine and come straight from the companies or authorized

distributors. Our sincerity extends to every element of how we conduct business.

Nykaa.com has endeavored to set the standard in product quality control since its start,

ensuring that clients receive 100 percent authentic and fresh items acquired directly from

manufacturers or approved wholesalers.

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Review of Literature

Paper citation: Pai, S. R. (2021, December). NYKAA: A Comprehensive Analysis of a Leading

Indian E-Commerce Cosmetic Company (ISSN: 2581–6942). SRINIVAS PUBLICATION.

https://doi.org/10.47992/IJCSBE.2581.6942.0140

The paper examines the cosmetics industry as one of the major industries that have

attracted many players due to its rapid growth. The cosmetics industry plays an important

role in developing the country's economy. This study has been taken up to better

understand the contribution of the beauty industry to the development of the country and

to evaluate the strategies of these companies. They try to elaborate on multinational

operations and how it attracts customers from various regions. Initially, it started the

business by offering beauty products later on diversified with fashion, skincare, luxury

products. The study has been conducted to evaluate the strategies used by NYKAA to be one

of the top companies in E-Commerce.

Role of Nykaa in Supply Chain

Nykaa contributes to its supply chain in two facets by means of a phygital experience.

· The online marketplace provides retailers a platform to leverage the existing user base

of Nykaa and increase visibility

· Nykaa allows offline retailers to purchase products and raw materials from

manufacturers, wholesalers, and distributors.

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· Suppliers, like retailers, have the option of selling directly through Nykaa or via their

own established channels.

· Drop-shipping allows businesses that utilize Nykaa for both purchasing and selling

cosmetic items to completely eliminate their own supply chain management. When a

consumer places an order on the Nykaa website, the store does not need to worry about

the order since the Nykaa warehouse will handle it and the goods will be delivered straight

to the customer. The retailer's only responsibility in this transaction is to take money from

Nykaa and then pay the supplier.

Inventory strategy

Nykaa is a wonderful company when it comes to reactivity; they ship virtually all of their

items within 1-4 days of receiving them from the warehouse. Nykaa keeps 95 percent of the

goods featured in the catalog in stock, but certain products are so unique that they must be

transported straight from the maker to the buyer.

Due to the large number of orders, products bought at the time of sale may be delayed,

however they aim to ship within 5 days.

Nykaa also launched two other categories: Nykaa Luxe and Nykaa On Trend. The premium

format features Indian and international luxury beauty brands, as well as Nykaa Beauty, the

company's own line of cosmetics. It has strategic tie-ups with delivery companies like Wow

Express, Delhivery, Tanvi Express, Aramex, DTDC, Bluedart and Ecom Express.

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Project Analysis

In terms of Operations, Nykaa follows a distribution network of distributor storage with

carrier delivery.

Inventory Management

The inventory that to be kept at the Nykaa distribution centre should be high in number in

order to avoid delays. For high responsiveness, Nykaa keeps 95% of their catalogue on their

inventory. While having too much inventory can lead to waste and a higher need for working

capital assets, having too little inventory can lead to delivery delays and stockouts. Nykaa

creates adaptable business processes through the use of technology, allowing it to deal with a

wide range of demand scenarios. By properly managing inventories and sales orders,

analytics aids in the achievement of financial goals.

Ware house Management and Transportation

Nykaa has a wide range of beauty and wellness goods from well-known brands such as

Lakmé, Kaya Skin Clinic, L'Oréal Paris, and others. Nykaa has warehouses in Mumbai, New

Delhi, and Chennai, and operates on a stock-based approach. It has over 850 well selected

brands and 35,000 goods. Nykaa's core demographic is between the ages of 22 and 35. Nykaa

also offers two offline editions: Nykaa Luxe and Nykaa on Trend. The premium format

features Indian and international luxury beauty brands, as well as Nykaa Beauty, the

company's own line of cosmetics. Format On Trend is the first product of its sort on the

market, categorizing things by popularity. Nykaa launched private label items in the

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bathroom and body area in March 2016. Nykaa has partnered with a number of organisations

for product delivery, including Aramex, DTDC, Bluedart, and Delhivery, among others.

Distribution Centres

There are various distributions centres that have been established across the country keeping

in mind the need to provide quicker service to the customers. It follows a JIT inventory

management system in which the goods are received from suppliers based on need. This in

turn helps reduce the inventory holding period.

Data Systems

Key information associated with orders and delivery to the customer serves as the key source

of data. Nykaa can then use this data to perform data driven analysis in order to target

specific segments of their audience, or push new product to the markets.

JIT

• Once the Nykaa system processes the order, the products are inspected thoroughly to

ensure they are in a perfect condition.

• After they pass through the final round of quality check, they are packed and handed over

to our trusted delivery partner.

• The delivery partner takes care of the delivery of the package.

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• International Shipping – International clients do not pay import duties levied by their

government to Nykaa. Clients will have to pay the customs duty to the courier provider in

order to receive the product.

Cost factors vs Performance

Cost factor Performance

Inventory Higher than manufacturing storage

Transportation Somewhat lower than from manufacturer

Facilities Higher

Information Lower

Service factor Performance

Response time Faster

Product variety availability Higher

Returnability Easier

Time to market Higher

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Advantages in Online Operations

➢ Cost Reduction

E-commerce has made it possible for transportation businesses to exchange papers

electronically. E-Commerce, in general, aids businesses in reducing overall costs,

improving data accuracy, streamlining supply chain services, optimizing business

cycles, and improving customer service.

➢ Efficient Logistics

Logistics is significant because of the e-commerce-related growth in stock holding

units, buffer stock, returned products, and individual picking, packaging, and

shipping. Outsourcing warehousing to third-party logistics (3PL) leads to more

effective logistics management and cost savings.

➢ Effective Demand Patterns

Technology, globalization, and e-commerce are becoming increasingly intertwined,

allowing firms to improve their connectivity and enhance sales. Businesses are in

regular contact with their customers as a result of technological advancements, and

demand may be foreseen effectively.

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Challenges in Online Operations

➢ Cost trap in form of excess inventory

When their operations develop, most E-Commerce companies make the error of

increasing inventory in order to reach the necessary customer service level.

Inventory is a fixed capital that accounts for a significant portion of the entire

investment; hence this technique fails. Storage expenses, opportunity costs, and

product depreciation costs all rise with excess inventory.

➢ Higher Lead time than offline stores

There is a trade-off between on-time delivery and delivery cost. The consumer must

pay extra for a faster delivery. And if the consumer does not pay extra, he will have

to wait for the thing to be delivered for a few days to a few weeks. As a result,

customers choose to buy from traditional retailers rather than E-commerce

platforms most of the time. Also, if there are any difficulties with the goods, reverse

logistics is a pain point for the firm since it entails expenditures that are totally paid

by the corporation, and it is a pain point for the client because he must wait for the

reimbursement.

➢ Product Availability and Service Level

E-commerce has aided in the development of a client expectation of immediate

satisfaction. In today's environment, the most critical element that any E-Commerce

firm must accomplish is fulfil consumer orders fast and properly. If not, there are a

number of rivals on the market who can. Nykaa, for example, competes with Smitten

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 in the cosmetics market and Zivame and Clovia in the underwear division. A delayed

supply chain results in a longer lead time, which has an impact on the E-commerce

site's ratings and reputation. Logistics, order placing, procurement, delivery, and

customer service are all processes that should be ideally matched and streamlined.

Even if one of the processes is out of sync, it affects the entire supply chain, causing

consumer discontent.

Learnings from the Project

➢ The most cost-effective way to reduce your supply chain costs is to manage your

labour force effectively. Communication activities, market demand analysis, and

procedure forecasts are all part of labour force management. Inadequate

communication methods might result in missed delivery deadlines or items being

returned. When warehouse management incorporates process forecasting into their

business development system, they are better prepared to utilize their employees,

increasing employee ROI while lowering expenses. The rise in savings will continue to

accumulate after some time with clear and trustworthy staff training.

➢ Reduced production network costs necessitate an effective inventory management

strategy. A good inventory management system includes a purchase strategy and a

failure analysis, among other things (for when the unavoidable mistakes occur).

➢ The earnings boost one is looking for is by employing third-party services when

necessary. A growing number of warehouse managers and supervisors are

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 incorporating third-party logistics into their overall business plan.

➢ Keeping up with the latest technical advancements in shipment tracking interfaces,

maintaining expertise with logistics analytics tools, and, in any case, considering

solutions such as IoT devices or warehouse layout analytics can result in more

significant supply chain savings.

Strategic Recommendation

As Nykaa looks to expand its offline presence after achieving internet success, another

approach to explore is focusing on its brick and store concept expansion. Nykaa has evolved

into an e-retailer that began with 100+ brands and has now expanded to become a one -stop

shop for all of our premium requirements, with 600+ brands and over 20 luxury brands

available on its site. Nykaa's business strategy and long-term plans have proven to be

incredibly effective. Both online and physically, it is already a huge hit in India. It has 33

locations around the country and plans to launch more quickly. Nykaa has partnered with a

number of big companies from all over the world to allow its consumers to shop for their

favourite brands from the comfort of their own homes. Nykaa should now prepare to grow

worldwide, since several of its evaluations have expressed concerns regarding the

company's international expansion. Few firms now provide multi-brand luxury items on

their websites or in their storefronts. As a result, Nykaa has a chance to become the

dominating player in its market. Nykaa.com is expected to grow globally as a result of its

international web presence and exports. Nykaa's progress will not be slowed if the aforesaid

techniques are implemented.

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References

1. Pai, S. R. (2021, December). NYKAA: A Comprehensive Analysis of a Leading Indian E-

Commerce Cosmetic Company (ISSN: 2581–6942). SRINIVAS PUBLICATION.

https://doi.org/10.47992/IJCSBE.2581.6942.0140

2. Importance of technology in manufacturing industry. Directive Group. (2022, March

8). Retrieved March 2, 2022, from

https://www.directivegroup.com/ideas/tools/news/blog/role -of-technology-in-

supply-chain-management/

3. Asuti, S., & Asuti, S. (2018, January 31). How Does E-Commerce Fit into Supply Chain

Management? | I.B.I.S Software. I.B.I.S. Inc.

https://ibisinc.com/blog/how-does-e-commerce-fit-into-supply-chain-management/

4. Seidel, D. (2020, December 16). Supply Chain Management in eCommerce: How to

keep up with growth!

https://www.eazystock.com/blog/supply-chain-management-in-ecommerce-

growth/

5. Nykaa Website. Retrieved March 1, 2022, from

https://www.nykaa.com/

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