Master of Business Administration (Full Time)

Batch: 2016-18, Term: IV

Supply Chain Management

Group Assignment

Supply Chain system implementation in BigBasket

Submitted to:
Prof. Praneeti Shah

Submitted by:
Group 6, Section-B

Names of Student Roll No.

Pratul Batra 161338
Shailendra Garg 161349
Vardhan Shah 161364
Vimal Pokal 161365
Yash Shah 161367

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ABOUT BIG BASKET

Big Basket was founded in 2011 by a team of five members who were highly experienced in
offline and online grocery retailing business. It was founded under the name Supermarket
Grocery Supplies Private Limited.

Highly efficient inventory management capabilities differentiates Big Basket from its
competitors and enables them to offer a wide assortment online containing over 19,000
products and approximately 1,000 brands across categories such as fruits, vegetables, staples,
meat, beverages and personal care. Strong relationship with suppliers gives the company
competitive advantage by reaching economies of scale.

Big Basket is making significant investments to strengthen the supply chain of its private
labels brands. It is also going to launch its fifth private label brand, GoodDiet soon. The
contribution of private labels to the annual turnover will increase from 35 per cent at present
to 40 per cent by March 2018 said Hari Menon, co-founder and CEO, Big Basket. Fresho,
BB Royal, BB Popular, Tasties, and Happy Chef are the firms current private label brands.

Big Basket has classified its services majorly into four segments

1. Full-Service Platform: Primarily for Tier I cities to fulfill the planned monthly
demand for grocery of its customers
2. Tier II cities
3. Express/ specialty delivery: For top-up/urgent requirements as well as for perishable
items. Supply of products such as meat and confectionary is carried out with the help
of specialty stores
4. B2B or Kirana: Inventory management services for smaller provision stores/hotel
chains. In Ahmedabad BB caters to 230 Kirana outlets. The Kirana outlets have been
classified into A,B,C categories based on the bill size, bill amount and frequency of
order.

The company offers value to its customers by providing them with the most convenient way
to buy fruits, vegetables, groceries, personal care and other products from over 20,000 SKUs
through selected delivery slots. The delivery can be made via express delivery or from
neighbourhood specialty stores as per the demand of the customer i.e. weekly, emergency or
top-up buy. The order fill rate for home deliveries is 99.5%, on-time delivery is 99%, and
96% of the items are in-stock.

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Big Basket started its operations with just in time model but with its expansion to various
cities and increasing customer base it has shifted towards an inventory model.Big Basket
maintains warehouses in each city to keep the stock of products which they purchase from
different vendors. Mainly the vendors are big firms like P&G, HUL etc. as well as small
mandi vendors and kirana shops. The procurement of the product depends on two major
factors, the type of the product and from where the product has to be purchased.BB procures
Fruits and Vegetables directly from farmers to maintain high margins. Every morning a team
benchmarks different prices, so that procurement could be done efficiently saving cost and
time.

Big Basket also follows the hyper local strategy to serve express delivery customers. It has
tied up with local grocery stores for urgent order of items such as rice, lentils, cooking oil etc.
in 60 minutes. They also acquisition DELYVER for the same purpose.Earlier DELYVER
was a 3PL to BB providing bikers for delivery of orders.

Every city has a storage facility by the name of Dark Storage. It stores products before they
are dispatched to the customers. The supply of products is given to dark storages from
different warehouses. Refrigerated vans are also used to transfer goods between a warehouse
and dark storage and to deliver orders to customers as well.

The company also uses various data analytics tool to forecast order and avoid wastage of
perishable items. Big Basket processes more than 35000 orders every day and currently
operates in more than 25 cities nationwide. With a customer base of three million
BigBaskets revenue increased to 563 crore in FY 2016 from 170 crore in FY 2015.
Currently, they are operating 25 warehouses and 63 storage facilities.

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Supply Chain Process of Big Basket

Vendors such as farmers (growing fruits and

vegetables) and FMCG companies (P&G, HUL)
Procurement supplying products to Big Basket

Storage of products in Warehouses/Distribution

Centers/Fulfilment Centers
Storage Each city has a separate Distribution center

Pick-up from Vendors i.e. First mile delivery

Last Mile Delivery to customers and retailers
Logistics

Procurement

In Ahmedabad, Big Basket maintains an inventory of 10,000 SKUs. A team is dedicated for
the procurement by the name of Inventory Planners. Team consist of 11 members whose
primary function is to decide the merchandising mix to procure and from which sources. The
teams primary aim is to minimize excessive stock and loss of sales due to unavailability of
the stock. The primary activities carried out by the team are managing suppliers and placing
orders to them, negotiating the procurement rate and ensuring the availability of the stock.

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Storage

The Ahmedabad warehouse maintains an inventory of about Rs. 2,50,00,000.The Ahmedabad

warehouse manages 14 days of inventory cover for Gujarat. The primary function of the
warehouse is to ensure the availability of the product whenever it is required. Under the B2B
segment when an order comes from a Kirana store it gets automatically punched into the
system. The order picking is done by the picker using Hand Held Devices. The devices show
the list and location of the products in the order category wise. The order is distributed
between pickers based on the categories. Each category is stored in a separate section of the
warehouse and each section has separate pickers to pick the orders.

Logistics

The delivery is done based on the time slot selected by the customer. BB maintains its own
fleet of vans for delivery of orders in each city as well as they have tie-ups with 3PL. When
the product is procured from the vendors, it is delivered from the manufacturing plant of the
vendor to Mother Warehouse (Ahmedabad Warehouse in Gujarat). From Mother Warehouse
it is transported to regional warehouses (Warehouse in each city). From regional warehouses
it is transported to Distributors/Clearing and Forwarding agents. The retailers procure
material from C&F agents and deliver them to customers using 3PL. The above mentioned
logistics is followed for customer orders which are fulfilled by the retailers.

Drivers of supply chain:

I. Facility:
Bigbasket.com allows customer to walk away from the drudgery of grocery shopping
and welcome an easy relaxed way of browsing and shopping for groceries.
Customer can shop for all their food and grocery needs from the comfort of home or
office. No more getting stuck in traffic jams, paying for parking, standing in long
queues and carrying heavy bags. A customer can get everything they need, when they
need, right at their doorstep.
BigBasket also offers products such as cut fruits and vegetables, a range of recipe
mixes & have recently launched their own bakery in Bangalore, which delivers bread
baked to order & continuous innovation with the help of technology.

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 Convenience: Big Basket offers an escape from the hassle of standing in the queues of
malls or going all the way to the retail stores. They give the products right at the
doorstep and offer multiple payment options.
The on-time delivery guarantee makes it a lucrative option, especially in big cities
where life is fast and it is difficult to reach customers, so they can shop at any time of
the day.
The online store design has improved over the time. It is easy to surf around in
application as compared to the website. Sub categories within category are listed and
within sub categories products or items are listed.
Also one can find the list of products without choosing sub category. This is similar ro
roaming around in a physical store where a customer browses through the products
under a category without choosing any sub category.

II. Information:
In BigBasket there are two groups of people. Group 1 consist of Data entry operators
to Regional business head whereas Group 2 people are the delivery boys, segregators,
pickers, receivers who are not well educated.
The B&M team is in constant contact with the vendors and wholesalers so as to make
the price of BigBasket products competitive in the market. They are responsible to
provide discounts on products.
The HR and trainer are very skillful in hiring the right person for the right job. They
make sure that the Group 1 and Group 2 people work efficiently and the information
is moving in flow.
The DC and HUB are responsible for the operations of the company. They make sure
that the right product reaches the right customer in his or her desired time slot. All the
employees of BigBasket have their skills to carry out their work efficiently.

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III. Sourcing & Inventory:
Product Range: Big Basket offers a huge range of products which stretches to about
18000 products.
Exotic Range: It also offers exotic fruits, vegetables and imported groceries which are
not easily available in nearby retail outlets. This gives them an edge in catering to
customers who like buying such stuff.
Range of categories- The Big Basket stores across India have different products
pertaining to the region it serves. For Ahmedabad region the store offers categories
like fresh fruits and vegetables, grocery and staples, bakery, cakes and dairy,
beverages, branded foods, personal care, household, imported and gourmet, eggs,
meat and fish. The range offered is sufficient for daily needs. The products browsed
by category are easy to find and convenient to order.

They buy the products from mandis, but in bulk so that the bargaining power is
increased. They have huge turnover, so that buying in bulk is the feasible option,
which helps them in generating good profits.
The perishable items are at the highest rate in the peak hours (rate is more as
compared to the market because of transportation cost) and at the end of the shelf life,
the rate decreases gradually.
In the case of cereals, they buy it in huge quantity and store it in their mother
warehouse.

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 They even have tie-ups with farmers, which helps them maintain the same quality
throughout.
The items that were not sold and the shelf life is over, the company uses to destroy it.
As the majority of items are perishable items, they buy the products on Single period
inventory model.
Safety inventory: BigBasket does not believe in the policy of safety stock, i.e. they
put all their products on the display. This is done in order to save the storage cost for
safety stock.

IV. Pricing:
The prices of products are very competitive, in comparison to the modern retail stores.
They use farm-to-home model, where vegetables and fruits were bought directly from
farmers, and the prices were pre-defined. So, change in price in the market, wont
affect the prices for the company.
They provide timely coupons. They even accept Sodexo coupons.
Big Basket offers huge discounts on various products. They also have the product
bundling technique to maximise sales and offering maximum discounts to the
customers. This makes a lucrative option for customers to buy.
Mobile application shows prices clearly and the difference between original price and
discounted price is noticeable.

Types of Discounts preferred and problems faced by the company due to this:

Discounts which are directly offered on MRP are most sought after. This is because of
the offline retail stores that offer direct discounts.
The dip in sales could also be attributed to the visibility of offers as a lot of customers
were unaware of existing offers.
Cash back preference is low, this is due to the comparison done by customers with
offline stores. As these stores give discounts at the time of purchase, customers feel
they are at benefit when they buy from retail outlets and this perception results in low
preference from cash back.
Bank offers have reduced when a detailed analysis of vouchers was done and so
customer now prefers direct discount rather than bank Cash back.

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 V. Transportation:

The company generally uses third party logistics for procurement purpose, i.e. from mandis
to warehouse or from farmers to warehouse. But on the front end, when the product has to be
delivering to the customer, the company uses mini-trucks which are sufficient enough to
carry products for many orders and then delivers it in a route. It decreases the fuel cost and
the efficiency can be achieved.

On the front end, BigBasket has 5 models and delivery time and type of product is different
in each type:

1. FSD (Full service delivery) Here the customer has to choose the date and time for their
delivery. It is for normal customers (B2C). The slots are as follows:

a. S1 7:00 am to 9:30 am

b. S2 9:30 am to 12:00 pm

c. S3 5:00 pm to 7:30 pm

d. S4 7:30 pm to 10:00 pm

2. Express delivery In this type of delivery the customers will get their products within 90
minutes from the time they place an order. In this, BigBasket ties up with the local Kirana
stores to deliver the products.

3. Kirana Model In this type, BigBasket acts like a wholesaler. They sell their products to
the Kirana stores in bulk. (B2B model)

4. Speciality delivery This type of delivery only focuses on Bakery and cake department.
BigBasket has collaborated with bakery shops in the cities in order to provide the customers
with a new variety.

5. HORECA It stands for Hotels, restaurants and catering services.

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Supply Contracts

Supply Contract is a type of agreement between a seller and a buyer in which a seller
promises to supply all the needed specified goods and services to a buyer over a certain time
and at a fixed price. The terms and conditions of the contract varies from different sellers and
different buyers. These terms and conditions are often negotiated and can vary as the
situation demands.

Supply Contract can include the following:

Pricing and volume discounts.

Minimum and maximum purchase quantities.

Delivery lead times.

Product or material quality.

Product return policies.

Big Basket has a large product portfolio that includes fruits and vegetables for which it is
mainly known for(Almost 70% of their orders are fruits and vegetables) and also other
grocery items and FMCG products. The company is known for providing best quality fruits
and vegetables for the reason that they are fresh and they have tied up their supply contracts
with local farmers and they also own many farms for fruits and vegetables production.

1. Pricing and volume discounts: Because Big Basket has tied up with local farmers
and also own their own farms in the outskirts of the city, the pricing of those fruits
and vegetables which have less shelf value are generally kept at competitive prices i.e.
the price at the Mandis. For FMCG and other grocery products, Big Basket tries to
keep their prices lowest in the market i.e. little less or same as the lowest competitor
prices. For this, they periodically check the prices of the competitors. The discounts
on volume purchase to suppliers are decided purely on negotiation terms. Mostly, the
company do not give such discounts to suppliers even for bulk purchases.

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2. Maximum and minimum purchase quantities: In Big Basket the maximum or
minimum purchase of any product is done purely on the basis of sales forecasting of
previous sales data. In its initial days, Big Basket had adopted just in time model i.e.
purchased-to-order where the delivery boy directly picks the order from the retailer
and delivers to the customer directly. But, with the expansion of the company in many
cities, the company has now adopted Hyper-local strategy where it has join hands
with neighboring grocery stores to deliver goods in short time and for fruits and
vegetables the company has join hands with local farmers. So there is no minimum or
maximum purchase order quantity for Big Basket. It is purely based on forecasting
and it is done on weekly basis. They do keep inventory for imported products like
apples and onions that has longer shelf life and may not available locally.

3. Delivery lead times: In Big Basket, the average delivery lead time from suppliers is
one and day from the time of ordering to the receiving of order in their inventory
storage godowns. In case of fruits and vegetables order purchase, Big basket have
their fruits and vegetables collection centers near the farms and lands where these
items are produced. After doing the forecasting for the week, Big basket give order
during the end of the day and the respective order is collected in the collection centers
where quality check is done by the experts. The next day Big basket vans collects the
order and bring them to the inventory godowns before evening. This new inventory is
thus available for the next day customer orders. So the lead time from procurement to
the final delivery to customers takes one and a half day.

4. Product or material quality: Big basket is known for its good quality fruits and
vegetables. The company maintains these quality standards for low shelf life fruits
and vegetables through their small delivery lead times and highly secured inventories
godowns which ensures that the quality remains intact, e.g. they have large
refrigerated inventory godowns where they maintain temperatures upto -20 degree.
When Big basket receives order in their collection centers, they do expert quality
checks for each piece of fruits and vegetables and reject the scrap. Thats why they
make order for little more than what is required because they know some pieces will
get rejected from the total order as quality for them is an important criteria to maintain
their standards.

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 5. Product return policies: Because Big basket do quality checks for each and every
product during time of purchase, they only return products at the time of purchase if
found defective. After making the purchase they dont follow any return policy for the
suppliers. At the time of procuring fruits and vegetables, they dont pay the farmers
for the unaccepted quality of fruits and vegetables. But for the customers Big basket
always have return policies if customers make complaints about any product delivered
by Big Basket.

Customer Value Dimensions

Customer value dimension generally has four parts: revenue, loyalty, sentiment, and
engagement.

Revenue

The more money a customer spends, the higher the revenue for your company. Though not
tied to profit, there should a correlation between the two. This is the most direct measure of
value, as it ties every customer to clear, measurable financial metrics that have already been
observed.

Loyalty

Loyalty is a measure of likelihood of future revenue. Would you choose a customer that
spends $1,000 today and never again, or one that spends $100 today and likely will return
every month for the coming years? Generally speaking, loyal customers are preferred as they
tend to spend more in the long run. They are the ones who return to your brand, spending
money regularly and providing much-needed cash infusions into your business. In this case,
long-term benefits win at the cost of short-term revenue.

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Sentiment

Another estimate of future revenue is sentiment: happy customers tend to be loyal, and likely
will spend money in the future. Happy customers tell their friends, colleagues, and
acquaintances about your company, which also drives increases in expected future revenue.
Note that such customers need not be loyal or drive revenue: a customer who tells their
friends about you might drive several referrals, regardless of whether they purchased your
products or services.

Engagement

Engagement is your final customer lifeline an indicator of whether a potential customer

even thinks about you when considering their options. Take the worst case scenario: you have
a potential customer (no revenue, no loyalty) who is unhappy. The saving grace for your
company is if this individual is, at the very least, engaged with your company or brand. If
they reach out to you for technical support, Tweet about you, or call your sales team for help,
you have an engaged lead that can be converted into a sale. In this way, engagement is a last
hope for companies struggling to find revenue generating opportunities.

Big Basket Customer value dimensions

For Inbound

There are many SKUs in vegetable department which are directly procured from the
farmers
o This helps Big Basket to be price competitive in the retail industry
The farmers prefer to give their products to BigBasket because of the following
reasons:-
o They can avoid going to the Sabji Mandi.
o Farmers do not get the correct for their products from the commission agents
o The BigBasket pays the farmers within 3 days after the invoice is generated
Exotic products are present in the inventory of BigBasket
Cold storage in the inventory helps keep up the quality of products
Big Basket has a software which automatically generates the list of items that needs to
be ordered to keep up the inventory

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For Outbound

4 time slots for delivery

Multiple payment options
o Cash
o Credit/ Debit card
o Sudexo
o Credit and debit option
The company will pay 10% of the order value if the delivery doesnt happen on time
If the customer asks for a return of product then Bigbasket will not any question
You Order; We deliver Big basket believes in the philosophy that they shall
deliver whatever is ordered by the customer
o The customer will get 50% refund if all items are not delivered

Role of IT:

BigBasket has both android and iOS mobile apps which allow customers to order
groceries on the go.
Features such as Smart-basket, which predicts what a customer needs more often
and reduces the time-to-order to within 5 minutes.
The whole industry has developed because of the development of technology.
Technology has provided the customer and firm a better advantage. Systems are
updated on a regular basis to be kept updated with the going trends in the market.
One of the most crucial software that they operate is called Locus. This software does
the work of allocating the delivery vans to a particular route (to achieve efficiency).
With the help of its sophisticated algorithm the locus software is capable of providing
an optimized route for every delivery van.
BigBasket has their ERP installed. It is called BB utilities wherein all the data can be
accessed.

Suggestions:

The products offered are competitive in price. But the visibility of price should be
improved. Particularly for website products on discount should be highlighted with
bold font to catch the eyes of customer.

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References:

https://www.bigbasket.com/
http://www.grabon.in/bigbasket-coupons/
https://www.quora.com/What-is-the-supply-chain-process-of-companies-like-Big-
Basket-Do-they-store-grocery-somewhere-If-not-how-they-manage-their-orders
http://www.thehindubusinessline.com/companies/bigbasket-invests-heavily-in-
supply-chains-of-fresh-produce-private-labels-to-take-on-amazon/article9783971.ece
http://tech.economictimes.indiatimes.com/news/internet/bigbasket

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