One of the most important challenge in organized retail in India is faced by poor supply chain and logistics management.

The importance can be understood by the fact that the logistics management cost component in India is as high as 7% -10% against the global average of 4% 5% of the total retail price. Therefore, the margins in the retail sector can be improved by 3% 5% by just improving the supply chain and logistics management. logistics is the total process of planning, implementing and coordinating the physical movement of merchandise from manufacturer to retailer to customer in the most timely, effective and cost efficient manner possible. Logistics regards order processing and fulfillment, transportation, warehousing, customer service and inventory management as interdependent functions in the value delivery chain. It oversees inventory management decisions as items travel through a retail supply chain. If a logistics system works well, the retail firm reduces stock outs, hold down inventories and improve customer service all at the same time. The efficiency and effectiveness of supply chain and logistics management can also be understood by the fact that m modern retail stores maintain lower inventories than traditional retail. In India, generally in the traditional kirana stores, three weeks inventories are kept; while in a modern retail store like Hypercity, it's nine days and it's under two weeks for Food Bazaar. Now, it is beneficial for both the manufacturer as well as the retailer. If we go through the following food supply chain in India, we find that a lot can be improved by maintaining the supply chain and logistics. Future Logistics (management of supply chain and distribution) The group's flagship company, Pantaloon Retail (India) Limited operates over 5 million square feet through 450 stores in 40 cities. Some of its leading retail formats include, Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, EZone, Depot, Health & Beauty Malls and online retail format, www.futurebazaar.com. Future Group is working on the vendor network as well as the logistics network. The company has identified up to 40 anchor vendors, each with turnovers of US$45 million, to achieve economies of scale. The group is also keen to ensure that its smaller vendors are able to reach turnovers of around US$1 million and a growth rate of 40% annually, to be able to pass on the benefits of scales. The company is also working towards bringing its 1,200 vendors online, like Wal-Mart. In India, Future group derives significant economies of scale in managing their supply chain. With more than 170000 products, the company maintains a strong supplier relationship in a partnership mode, avoiding the exploitative supplier buyer transactional philosophy. The IT enabled back-end operations and supply chain management increases the reliability and efficiency of the business.

As part of the operation, Future Group is also undertaking to reduce its warehousing costs through a consolidation process. In a country like India, where most retail stores are located in the heart of the citywhere rents are high and storage space is scarcesupply chain management has even more serious business implications. Future Logistics now handles 30 million SKUs a day. Even with 98% accuracy, some 600,000 pieces will not be delivered correctly, resulting in an estimated sales loss of more than Rs 4 crore a day. The biggest driver in consumer logistics is going to be zero defect in managing the supply chain. While infrastructure, technology, automation, processes and people will all play an important role, zero defect can only be achieved through vertical integration across the entire supply chainfrom raw material supply, production, wholesale and retail. The different parts of the supply chain will no longer be able to work in silos as they do today. Future Group fortifies supply chain for better distribution: This distribution centre (DC), sprawled across 1, 25,000 square feet on the outskirts of Mumbai, caters to 50 Big Bazaar and Food Bazaar outlets. That's Rs 3 crore of merchandise turn around per day and at a cost of Rs 30 crore, boasts full automation. And it's just the first step in creating a strong national FMCG distribution network. Anshuman Singh, managing director & CEO, Future Supply Chain Solutions, said, "This is one DC where there are 6 software appliance working together. The fascinating bit is the process inside this centre. Each box entering the warehouse is barcoded and put on a conveyor belt. The barcode dictates whether the box is scheduled for storage, for direct delivery, or for piecemeal distribution. For this third option, an online order tracking system is used to ensure the products in the box go to the store which placed the order. The products are then repackaged and transferred to one of these 1,600 GPS-tracked trucks for delivery. So what's special about this system? Deliveries can be made 2-3 times a day to the same store, instead of the once or twice a week delivery mechanism offered by a regular distribution system. The company wants to take the business to a scale and size where it can service not just its own stores but also offer services to other modern trade retailers. So, for example, 9 more such exclusive FMCG and food distribution centers will be opened in the next 12-15 months calling for an investment of Rs 100 crore. Future Group will also open separate centers to exclusively cater to companies outside the group. Globally, F&V sales for most retailers is about 10% and we want to take it to that level. Within a year, we want to definitely hike the billing share of fruits and vegetables to 8-10%, Mr Biyani, chief executive of the Future Group, told ET. Fruit and vegetables currently account for 3-4% of

total supermarket sales for the group, which expects to end the fiscal in June with retail sales of 9,200 crore.

Future Supply Chains has developed expertise in Supply Chain Management of consumer product categories such as Fashion, Food, Home and General Merchandise. The company operates from 60 strategically located hubs, servicing more than 2600 retail outlets spread across the length and breadth of the country. Its network of facilities and specialized expertise enable it to manage more than 3 million SKUs. This requires 30 distinct supply chains to be managed simultaneously, each with their own specific requirements that need customized solutions. It is basically categorized into two broad categories Perishable and non Perishable FOOD SUPPLY CHAIN CATEGORIZATION: Perisheble supply chain:In perishable supply chain the shelf life for the products is very low. It requires managing the end to end supply chain with utmost care. The perishable supply chain typically requires a cold chain to manage it properly. The cold chain infrastructure is very capital intensive. The infrastructure consists of pre-coolers, temperature controlled warehouses, refrigerated transport etc Non-perishable Supply Chain The shelf life for the product is considerable (varying from 3-18 months). Typically FMCG/Processed products, staples etc fall under this category. Although the shelf life of the product is 3-18 months, the products falling under this category requires strict monitoring of FIFO at distributors end to ensure that the products reaching the end consumer are left with enough shelf life. Supply Chain Expertise - Fashion Supply Chai Future Supply Chains fashion supply chain expertise is in getting the merchandise to the retail stores in short time-to-market and at low cost-to-market. The company manages 5 distinct supply chains in the fashion domain for the Future Group, including two independent supply chains for Apparels - Fashion and Value. Future Supply Chains has the expertise in managing a fast and responsive supply chain with short time-to- market for high fashion products and separate lowcost supply chain for value apparels. Future Supply Chains is continuously evolving its fashion supply chain efficiencies through simple solutions like pre-packs & unitization and auto replenishment systems implemented in close coordination with its customers.

Supply Chain Expertise - General Merchandise Supply Chain General Merchandise (GM) solutions comprise 11 distinct supply chains, as GM is the most peculiar of all the product domains due to vast variations in size and value of the products. The handling requirements are also diverse, ranging from handling fragile products like crockery to goods like luggage and household utensils. Future Supply Chains has designed customized vehicle bodies specifically to accommodate GM's low-value voluminous cargo, keeping the transportation costs low. Initiatives like bulk packs, cross-docking and auto replenishment systems lead to improved supply chain efficiencies and reduced cost. The entire Home Category consists of the following segments:

1 Furniture Made of Metal, Wood, Glass and some products being in knocked down condition. They are often fragile and require training of SCM manpower in storage and handling. 2 Furnishings Comprising of Home furnishings, Home linen, and this category is similar to Fashion in its SCM requirements. 3 Home Improvement Comprising of Home Dcor, Paints with its multiplicity of SKUs, short life cycles, continuous launching of new designs, shades and sizes, which create complexity in the Supply Chain. 4 Consumer Durables Comprising of Private lables of Future Group as well as National brands of Global repute. The challenge here is to avoid duplication of services and costs among the various owners of the finished goods Supply Chain, and provide the most economical and fast method of delivering the product to the end consumer. The Storage & Fulfillment vertical of Future Supply Chains provides storage & handling solutions through a current warehouse footprint of over 3.5 million sqft across 67 locations - the largest by any Supply Chain player in India. This vertical includes supply chain network modeling, processes, layout & systems designing, capital procurement, installation & operation for MHE & technology (Racking, Reach Trucks, Sorters, Conveyors, RF Scanners, other automation etc.); and productivity & cost optimization. The key differentiators in warehousing are : Low cost operations based on the company's ability to lease large spaces and offer mechanization Enhanced service efficiency based on WMS enabled multi level storage and seamless integration with customer ERP

 Service efficiency arising out of the company's ability to handle multiple SKUs Eaches picking i.e. picking of individual pieces as against case-wise picking Ability to handle widely differentiated product groups; and their seasonality, cyclicality, and demand patterns Ability to minimise obsolescence 24x7 Operations Managing sales and business commercials of customers. Testing, Packaging, refurbishing, bar coding and other value added services Future Supply Chains core competency is creating an efficient replenishment system - the most critical function for any supply chain backend. This finely honed capability of the company, is being offered to its customers, so that they can gain from its experience and expertise Future Supply Chains capability enables it to handle an average of 1.5 million pieces everyday with peak single-day transactions reaching 4 million pieces. Snapshot of Future Supply Chains scalability: Future Retail has created India's most attractive popular Retail shopping Festivals like Big Bazaar's Sabse Sasta Din (26th Jan), Future Group Shopping Festivals andMahabachat (15th Aug). During these mega retail events, business volumes spike by 500% of the average daily business. Future Supply Chains delivers the required products seamlessly to Future Group's stores round the clock. This keeps the retail store shelves filled with goods even as customers continuously empty these shelves as they grab the best deals of the year. Solutions Transportation The Movement vertical takes care of Factory-Gate logistics involving pick-up of goods from vendors across the country, National Distribution of goods, and City Logistics that include store deliveries and home deliveries. Future Supply Chains is the first organized intra-city transportation services company - carrying out not only B2B deliveries but also B2C deliveries in the form of thousands of home deliveries every day across the country, especially for Furniture and Consumer Durables. Future Supply Chains offers following uniquely differentiated products : Metro Connectivity with door to door service- Metro First With in the City Movement - City Express Intercity trucking Future Supply Chains service offerings would be based on its own infrastructure and that of its business partners in the areas of FTL, PTL, Express, and Rail & Air Cargo. Low cost and seamless operations would be conducted based on:

 Hi Cube - Lowest weight vehicle combination Lean Infrastructure GPS enabled trucking integrated with TMS Flexible Product offerings based on line-hauls running on fastest transit times Future Supply Chains customers have the option of selecting services with differing transit schedules with differential costing Expertise in In-city deliveries and customer interface management Solutions - Reverse Logistics everse flow of merchandise is an integral part of any retail business. Future Supply Chains is the only organized supply chain company in India that offers reverse logistic solutions to its customers. This vertical manages the reverse flow of merchandise from the stores and refurbishes, repairs and refinishes the merchandise through its facilities for garments, carpentry and sheet metal work shops. This enables Future Supply Chains customers to re-sell their products and once again create value at a small incremental cost. Future Group is the largest retailer of fashion, furniture and electronics in India and Future Supply Chains intends to leverage the high volumes of the Future Group to become the biggest player in the sphere of Reverse Logistics Solutions - International Logistics Future Supply Chains International Logistics vertical manages the freight forwarding and custom clearance operations that involve international movements of goods by sea, by air and by road. The international logistics foray adds an important link in the end- to- end supply chain management that is the company's core expertise Solutions - Supply Chain Management This vertical provides value added services to Future Supply Chains customers, which involve inventory planning and control support, vendor management, supply chain network modeling, quality assurance, bar coding services, process & productivity management services and packaging solutions. Future Supply Chains plays the role of a supply chain manager for organizations and one of the key value-added services it provides is inventory decision support. The company assists organizations in making inventory-related decisions - be it inventory planning, analytics such as Pareto analysis and correlations, SKU movement analysis, alerting them on stock levels, obsolescence and management and liquidation of slow-moving / non-moving items.

Future Supply Chains works closely with organizations in reducing the overall supply chain inventory at all levels and improving the inventory turns. This helps in increasing the returns on capital employed and is of critical importance in tough economic times. The company, having its roots in retail, excels in interacting directly with the end-users and is therefore constantly exploring new ways to enhance the overall supply chain efficiencies by working closely with all its suppliers. Future Supply Chains will soon be undertaking initiatives to further integrate its supply chain.