PROJECT ON

Production & Operations Management

For

Department of Business Administration, University of Lucknow Semester-II 2012

Submitted To

Submitted By:
Gaurav Mahajan Ravi Srivastava Prachi Jain Himanshu Katiyar

ACKNOWLEDGEMENT

We would like to take this opportunity to express our gratitude towards every individual who has helped and supported us in this project. Our deepest thanks to Lecturer, Ms. Anu Kohli, the guide of the project, for her constant guidance and supervision that inspired us to complete the project with sincerity. Our deep sense of gratitude to Mr. Amit Singh, Store Operation Manager, NMart Lucknow, for his support and guidance as well as for providing the necessary information regarding the project & for providing us his precious time in order to help us in completing the project.

TABLE OF CONTENT SL. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. CONTENT NMart Retail: Company Profile Suppliers of NMart Lucknow Inventory Management Store location Store layout Processes Undertaken Capacity of Nmart Lucknow Waste Management Quality Assurance Customers Page No.

NMart RETAIL A DIVISION OF NEWLOOK RETAILS PVT. LTD. Mr. Amit Singh, Store operation Manager at NMart Retail, Lucknow, was busy in assessing the inventory level and explaining the employees about importance of visibility of products at the store at the same time. The employees were quite seriously listening to the valuable information but the informative brief session was soon interrupted by the phone ring at the telephone on Mr. Singhs desk. We would finalise the order for the week by today evening and inform you accordingly, thank you for your cooperation, said Mr. Singh, to one of around 60 suppliers the store has and greeted the supplier before he finally disconnected the phone. You all may continue with your respective works, I have few more things to discuss which I would do during shift end briefing, he said to the store employees and they left the room. With a gentle smile on his face he finally turned to us, So, what all do you want to know? was his question to us and without any delays we had finally started our knowledge session.

NMart Retail: Company Profile

Nmart retail, one of the fastest growing retail chains in India is a division of Newlook Retails Pvt. Ltd., which has its business in diversified fields such as real state, commodity trading etc. The companys corporate office is based at Surat in Gujarat and is headed by Mr. Gopal Shekhawat, the CMD of the company. Company has around 246 stores across the country which also includes stores in Work in Progress status. NMart Retail stores offer Branded Product range of more than 5000 varieties under one roof such as FMCG, Garments, Fashion, Grocery, Crockery, Electronic, Vegetables, Eatables, etc. on discounted rates ranging from 2% to 50%. However, the store at Lucknow, which started its operations on November 2011, is an FMCG mall till date (March 31, 2012). The company also offers a unique Network plan with a retail concept known as Multilevel Marketing (MLM). Nmart has dedicated team of experts that come up with a lucrative plans and offer immense benefits to the members to help grow with the company hand in hand. In this business model, company charges onetime fee of Rs 5500 and the customer becomes an Associate (Permanent Shopping Customer) of NMart. An NMart associate is offered following benefits: 1. Each Associate gets free purchase vouchers of NMART Mall worth Rs. 220/- each month for 48 months, which can be redeemed at any NMART retail outlet across India.

2. To redeem the voucher one has to go to the mall and verify it online after shopping. The voucher must be redeemed in the same month as it is valid for 30 days (not applicable for associates living outside 20 km area from Nmart mall). 3. NMart also offers credit facility of Rs. 1500/- to its Associate. NMart has around 60000 associates across India and the number continues to rise as the company is promoting this business plan very aggressively.

Suppliers of NMart Lucknow:

NMart has around 60 suppliers and number of suppliers to the store keeps on changing as per the requirement of the store. Along with the big names like HUL and P&G, NMart also has many suppliers at local level who supply FMCG products to the store. NMart decentralised approach of managing retail stores gives all store manager a great deal of autonomy in making decisions at local level. Selection of suppliers largely depends on the ability of supplier to fulfill the demand of the store within the defined timeline and selection decision solely rests with the store manager. As discussed with Mr. Singh, inbound logistic handling can be broadly classified into two types: 1. Local 2. Corporate Local inbound logistics mean, each store decides its purchases and suppliers on its own and the decision is headed by the store manager. Companies like Big Bazaar has corporate inbound logistic, where centralized team takes the decision on purchase and suppliers. NMart follows local inbound logistics.

Inventory Management:
Each Nmart store has small dedicated area located outside the store but in the same premise that of the store to stock its products. Talking about NMart Lucknow, company uses First-in-First-Out inventory technique and has perpetual inventory system. Perpetual Inventor describes systems of inventory where information on inventory quantity and availability is updated on a continuous basis as a function of doing business. Using such inventory system helps the company to manage inventory in a better manner, as the store deals with FMCG products tracking the availability of each product type manually can be very tedious. NMart retail, Lucknow, places order to its suppliers on weekly basis and the lead time is around 2-3 days. The company does not have any fixed order quantity and quantity ordered depends on demand of product in last few weeks. Besides demand, seasonal factors also influence the quantity to be ordered. The store uses enterprise application Samvik which updates the inventory level with each sale and is used in each store across the country.

Store location & Store layout

In which city the store should be? Which location in the city would be the most appropriate for store? Such questions are answered by the operations team based at companys corporate office in Surat. With help of proper market analyses and market research, the operations team decides the city for store and identifies some most preferred locations in a particular city. NMart has quite unique way of selecting the location for its store. Company prefers locations which are not at the centre of city and has minimum competitors nearby. Nmart prefers its stores to be located in less densely populated area because of following reasons: 1. Company focuses more on Multilevel Marketing (Network business plan) 2. Reduces the transportation costs. 3. Customers walking into the store would not enter the store just for the sake of time pass which normally is the case with stores located in densely populated areas and malls. 4. Store can offer ample parking space to its customers.

Once the city and location in city has been decided by the operation team, work starts for the project team which visits the preferred locations and finalises the location for the store, layout of the store, and handover their report to the operation team for final approval.

Store Layout
WASHROOM STORE MANAGERS OFFICE

FOOD ITEM STOCK

G R O C E R Y S E C T I O N

F O O D S E C T I O N

B E V E R A G E S S E C T I O N

N O N F O O D S E C T I O N

S T A P L E S E C T I O N

P E R S O N A L C A R E S E C T I O N

Billing Counter2

Billing Counter1

Customer Care

Personal Care Prod

ENTER

EXIT STORE LAYOUT NMart, Near Aliganj, Lucknow

Processes Undertaken

Suppliers (FMCG products)

Store Warehouse (Inventory Updation)

Products display at store

Sales
(Inventory Updation)

Re-Order (after7 days)

NMart is basically involved in merchandising. It purchases its products from various suppliers and offesr it to the customers in its retail stores at discounted rates. The process starts with receiving products from the various suppliers and stocking it at the ware house present in the same premise that of the retail store. Bar codes are planted on each product and they contain every detail about the product. Received inventory is then updated in Samvik and as per the space available in the store the products are displayed for sale.

NMart has a standard sequence in which it displays its FMCG products at all its stores. In each store following sequence is used to display the products, which means first category of product that any customer would view soon after entering the stores would be Non-food items.

GROCERY

FOOD

BEVERAGES

NON-FOOD ITEMS

STAPLE

PERSONAL CARE

As soon as customers purchase any product and approach the billing centre for payment, the person at billing counter uses bar code reader to read the product details which is automatically displaced at the screen of the computer. Once the product is sold, the inventory also gets updated with current count. As soon as remaining count of any product reaches 2-3, the product is added in weekly purchase list. At the end of the week, the store manager finally places the order for next week and received the order within 2-3 days from date of order.

Capacity of Nmart Lucknow

NMart retail, Lucknow, is spread across 8500 sq feet and offers FMCG products ranging from food items to personal products. Capacity of the store is lesser in comparison to the big players in the market like Big Bazaar, but the store holds the products valuing around Rs 40-50 lakhs at any point in time. The store is focusing on expansion of its capacity and is engaged in adding soft drinks to its offerings,

the move triggered due to seasonal change. The store operates in its full capacity only during peak seasons. At present NMart does not have very aggressive expansion plans in terms of the capacity of its stores as the company at the moment is more focused on expanding its network building business plan.

Waste Management

Wastes for the company are basically expired items and damaged products. There are different types of mutual agreement in terms of waste management between NMart and suppliers. Some suppliers buy back the expired products and damaged products at discounted rates, whereas, some supplier does not take any responsibility of expired products and damaged products once the items have been received by NMart. In second case, in order to get rid of waste, NMart chooses one of the following ways of waste management:

1. Damaged items are sold to local Kirana shops at lower price. 2. Damaged items may be offered to customers at highly discounted rates. 3. Expired items are dumped by the store, which are finally disposed by the citys municipality.

Quality Assurance

As the store is an FMCG mall, quality becomes an important parameter as maximum items have a predefined working life. Quality management of the store is headed by the store manager and he is responsible for quality delivered by the store. Right from inbound logistics to inventory management, products display to sales persons service, quality maintenance at each level in monitored by the store manager. Also, annual audits are conducted by the central quality control team at the store.

Customers

NMart offers fast moving consumer goods in its retail store in discounted rates. Company tries to attract maximum customers to its retail shop residing in the city and nearby the city. Local kirana shops and small retailers nearby the city are also the target customers of the company. It promotes its Multilevel Marketing plan aggressively and tries to convert local shop owners dealing in FMCG products and at least one member of each family purchasing from the store into Associate of the company by offering lucrative offers. NMart promotional plan includes advertising during cricket matches as company considers it the best way to reach target customers.