Inventory Management at big bazaar

1. Inventory Management System
Submitted to: Prof. Kapil Garg
Submitted by:
ADITYA VARDHAN (16DM010)
ALLAM DIVYA SANJANA (16DM018)
ANSHUL MASIH (16DM032)
ARVIND SHARMA (16DM045)
ASHISH PANDEY (16DM046)
CHEENU KANSAL (16DM061)

2. INDEX
Contents
Page
No.
Acknowledgement 3
1.Inventory Management 4-6
1.1-Objective of Inventory Management
1.2-Information System in Retail Chain
1.3-What is Inventory Management System
1.4-Types of IMS
1.5-Need and Importance of IMS
1.6-Inventory Costs
2.Introduction to Big Bazaar 6-9
2.1-Competitors of Big Bazaar
2.2-Inventories in Big Bazaar
2.3-Supply Chain for goods
3.MIS (Management Information System) 10-12
3.1-MIS in Big Bazaar
3.2-Enterprise Resource Planning
3.3-Functions of ERP in Big Bazaar
3.4-IM using other software
4.Bibliography 13

3. Acknowledgement
We would like to gratefully acknowledge the contribution of all the people who took active
part and provided support to us during the course of this project. To begin with, we would
like to offer our sincere thanks to Prof. Kapil Garg, for giving us the opportunity to study
the inventory management system of BIG BAZAAR. Without his guidance, support, and
valuable suggestions during the research, the project would not have been accomplished.
Our heartfelt gratitude goes to him for his co-operation and willingness to answer all our
queries, and provide valuable assistance that shared his rich corporate experience, and
helped us script the exact requisites.
Last, but not the least, I would like to thank Birla Institute of Management
Technology for giving us this wonderful opportunity to learn about the need for
information systems in today’s business models.

4. Inventory Management
Imagine a condition that you visit a supermarket and ask for a product and reply you
get are as follows “I am sorry we are out of stock, May we order it for you?” then
what will be your reaction. Will you be visiting that store again or recommend to
someone else? Most probably your answer must be a “NO”. This creates the need
for inventory management.
If any store irrespective of their size does not manage their inventory, it will definitely
lose its customer.
Inventory management is the practice of monitoring, controlling and coordination of
the ordering, storage and use of components that a company uses in the production
of the goods it sells. Inventory management is also the process of monitoring and
controlling of quantities of finished goods for sale. A firm’s inventory is one of its
major assets and represents an investment that is wound up until the item sells.
Objective of inventory management
Objective of the inventory management is to maintain an optimum size of inventory
for efficient and smooth production and sales operations. Its objective depends on 5
R’s: Effort should be made to place an order at the right time with right source to
acquire the right quantity at the right price and right quality.
Information System in Retail Chain
An IS is a system that takes different resources as input and processes them
efficiently into an information product as output. It is a coordinated and organized
blend of people, hardware, software, network both intranets and extranets and
internet and data resources.
In the present scenario, if the retailer is on highest rung of the information system,
then he would be able to coordinate and manage his business efficiently and easily.
For large retailers, it becomes very necessary to centrally coordinate and manage all
the shops. Retail management IS exactly does this very simply and efficiently with
help of different specialized hardware, software and networks, database
management systems and various useful modules.
The primary role of Retail IS is to facilitate basic retail functions like raw material
procurement, storage and warehousing, dispatch and efficient delivery, etc. It should
allow the manager to oversee sales of differentiated product mix and daily sales
volume. An information system can help to a very large extent in inventory
management.
The objectives of the retail management information systems are as follows:
 An information system should provide necessary and concise data to retail
manager in regular intervals.

5.  An IS must foresee needs and requirement of the retail manager.
 An IS should be flexible enough to encompass constant increasing and
evolving needs of the consumer market.
An information system should be able to captivate, store and organize all the
necessary data on a regular and continuous basis.
What is Inventory?
Inventory refers to the stock of work-in-process goods, raw material and finished
goods that are the assets of a business which are ready or will be ready for sale.
The different types of inventory are as follows:
 Raw materials
 Supplies and purchased parts
 Tools and Equipment
 Finished Goods
 Work-in-process or partially completed products
What is Inventory Management System?
When the customer is ready to spend, then you have got to be ready with required
goods at any condition. This is what the inventory management system is all about. It
is a system which tracks inventory levels, sales, orders and deliveries to keep a
sufficient supply of goods while minimizing the cost of.
Companies generally use inventory management to avoid product shortage or
overstock. Inventory Management System helps in managing all your sales,
accounting, stock, and customer data.
Inventory management is becoming one of the most crucial elements in the
organisation as inventory constitutes the one of the biggest part of Investment of any
organisation in its current assets. So funds blocked in inventory should neither be too
high nor too low. It should just be optimum. So one of the biggest aims of this
inventory management system is to maintain the optimum level of investment in
inventory and stocks. As we know too high investment of funds in inventory results
into the high blockage of funds in the stocks which bears many kind of costs say the
cost of interest on amount of money blocked, cost of risk to bear, cost of storage in
warehouses etc. So we can say that it reduces the overall profitability of the firm
which is one of the main aims of any organisation. On the other hand, insufficient
investment in inventory is also not desirable as it may lead to frequent stock outs
which is the biggest problem as it breakdown the production and selling processes.

6. Therefore, the firm may lose their current market share as consumers once shifted
can never be regained.
Inventory Management can be easily understand by the following diagram in which a
tap which is filling the tank can be considered as the supply of inventory and one tap
which is emptying the tank can be considered as selling of inventory. The flow of
both the taps can be considered as the frequency of inflow and outflow of the
inventory. The capacity of tank can be considered as the adequate amount of
inventory which is required to maintain to avoid shortage or surplus of inventory. We
should maintain the inventory level to avoid any uncertainty in demand or supply of
inventory.
Types of Inventory Management System
Inventory Management Systems are of two types:
a.) Periodic Inventory System:
The periodic inventory system measures the level of inventory using an
occasional physical and the cost of goods that are sold. Commodity
purchases are recorded in the purchase account. The cost of goods sold and
the inventory account are always updated at the end of a specific period.

7. b.) Perpetual Inventory System:
The perpetual system keeps continuous track of the inventory balances, by
making updates automatically whenever a product is sold or received.
Returns and purchases are recorded immediately in inventory account.
Need of Inventory Management System
 SMOOTHENING DEMAND: This is one of the most important purposes of
inventory management system to smooth the seasonal and cyclical demand.
 ACT AS PRICE CUSHION: Good inventory management system also acts as
cushion against the sudden rise or fall in price. Also it enables the firm to gain
the benefit of various kinds of reductions in price.
 SAFETY PURPOSE:
1. In internal process of the organisation due to any breakdown or
shortage
2. For acting as cushion for any kind of delay in receiving goods in our
supply chain.
Importance of Inventory Management System
 Provides adequate inventory:
The firm has to maintain sufficient inventory for smooth selling and production
activities so that surplus or shortage of inventory would not become the
reason for the downfall of the firm.
 Increase efficiency and effectiveness:
If you want to enhance a profitable firm then it has to minimize the investment
in inventory so that we can use such limited resources in any other way which
will enhance the efficiency and effectivity.
 Increase productivity:
The main objective of inventory management is to minimize the total cost of
carrying and ordering the inventory and the shortage costs. So as to enhance
the productivity of the organization they are maintaining the optimum balance
between these costs
 Avoid stock outs: As we know that no organisation wants the loss of their
prospective customers due to the lack of their supply when the customers
demanded as customers once gone are very difficult to regain.
 Matching the requirements:
Proper inventory management systems should be there in an organisation so as to
match the requirement of the organization in terms of the information system
required to control.

8. Inventory Costs
Basically there are three types of costs involved in inventory handling. These are
 CARRYING COST: It means the total cost of holding the inventory in
their store. It includes the cost of capital blocked in the stock.
 ORDERING COST: It includes the cost of replenishing the stock from
the sources.
 SHORTAGE COST: It arises from the difference between the actual
demand and the forecasted demand. It is equal to the value of sales
lost due to shortage of inventory.
Introduction to Big Bazaar
Big Bazaar is an Indian chain of retail hypermarkets which have greater than 120
stores which are currently in working. From the success of the US based super retail
store Wal-Mart the Future Group Venture Ltd.’s took an initiative to explore the
similar market in India by opening the subsidiary named Big Bazaar.
A very unique campaign “Hafte ka sabse sasta din” was introduced by the Big
Bazaar after being influenced from a very successful campaign of Wal-Mart, in which
special and extra reductions in prices were given on Wednesday every week, to
attract the would be consumers into their market. They have a tight security check
like at every exit point of Big Bazaar, they use various kinds of alarm systems or
Electronic Article Surveillance system, which can detect the goods that have
attached tags or not.
1. Big Bazaar is a large chain of retail hypermarket in India, which satisfies the
number of the wants and requirement of every family.
2. Big Bazaar has emerged into the fashion market, ordinal merchandise like
cutlery, sports products, utensils, crockery and home furnishings materials etc. at the
reasonable prices.
3. Big Bazaar chain has more than 120 working stores across the country.
4. Big Bazaar is the biggest country chain promoted by CEO of the Future Group,
Mr. Kishor Biyani. Their Unique Selling Price is the basic attraction associated with
the reasonable prices.
Competitors of Big Bazaar
 Wal-Mart
 Easy Day
 Reliance Store
 Vishal mega mart
 Shoppers stop
 Spencer

9. Types of inventories in Big Bazaar
The inventory management for all the branches is that they adopt different
methodology for different categories of products.
1) Cycle inventory is carried for the FMCG product category and Food Category
as the turnover of these products is high and after a period they get expired.
2) Safety level of inventory is adopted for Apparel as the cost of these products
is high and they can be retained for longer span.
3) Seasonal inventory is adopted for the products which are in demand for only
peak season
Big Bazaar generally deals in international level brands like Lee, Levis etc., and
Wrangler along with this it also deals with Private label brands KORIA in electronics,
DJ&C in apparel, etc. The inventories can be further classified into FMCG, fashion &
apparels, FOOD & NON- FOOD junction, fruits &vegetables, chill section, home
decorator, book zone, footwear, etc.
Apparels: Formal & casual wears, fabrics, jeans & shirts, etc.
Home Care: soap, detergents, cleaning agents
Chill station: beverages products, drinks
Farm Products: fruits, vegetables, dairy products
Electronics: TV, Mobile, Accessories
Supply chain for perishable and imperishable goods
Perishable products like fruits and vegetables are handled with care and accuracy.
They are purchased on regular basis as per demand. Care is also taken that
damaged and rotten vegetables are either rejected or sold at a lower cost to the local
market.
On the other hand for imperishable products which are utensils, electronic items and
staple goods are generally purchased from local manufacturing units from different
parts of countries.
Big Bazaar is operated by Central Distribution Channel and by this mechanism
commodities are transported to every Big Bazaar Store. The modes of transportation
are Truck & Rails, but in emergency cases, flights are also used. The transportation
is mostly outsourced which are primarily Quick & Safe, Gati, Deluxe Roadways, and
TNT.

10. Management Information System (MIS) in Big Bazaar
Big Bazaar has strong MIS capability that helps them to improve their operations, as
well as enhancing their speed of execution in response to what the customer want.
They are thus able to monitor their speed of response on daily basis across stores,
departments and also for category of products. This really helps them to take correct
action on a timely basis and optimize their stock accordingly.
Big Bazaar uses JDA ERP and SAP ERP software. JDA ERP is an enterprise
resource planning software developed by an American software and consultancy
company while SAP ERP is an enterprise resource planning software developed by
a German company SAP (System, Application and products) SE to manage the
inventory system of different business and improve customer relationship
management.
What is ERP?
ERP is an acronym for Enterprise Resource Planning which is software used for
business process management that allows any organization to use an information
system of integrated applications to do many back office functions related to
information technology and manages the business.
Function of Enterprise Resource Planning in Big Bazaar
 Product ordering
 Merchandising buying
 Inventory Management
 Stock Transfer
Process of MIS in Big Bazaar
a.) SOD (Start of the Day)
Procedure:
 Start the web Portal
 Enter provided login ID and password
 Open webapp basics
 Click SOD status
 Click Start SOD
b.) EOD (End of the Day)
Procedure:
 Start the web Portal
 Enter provided login ID and password
 Open webapp basics
 Click EOD status
 Enter Login ID and Password again
 Press Enter

11. Functioning of Management Information System (MIS) in Big Bazaar
 There are 2 servers used by the MIS: Main Server and Backup Survey
 Each of the servers has its own storage system (15 hard disks to store the
same information)
 The information is backed up daily at the EOD (End of Day).
 There are generally 15 counters for transaction in Big Bazaar. The recording
at the transaction at each of these counters is done.
 The average no. of transactions made per day varies from 3500-4500 and all
transaction data is recorded at each terminal and stored at the database.
Inventory Management using different software
Information System is very instrumental to reduce costs, improve optimization and
efficiency, providing a value proposition to the consumers and increasing the valued
customer experience in every area. Achieving cognizance in activities across various
procurement processes of inventory is easily done by using specialized software.
Now Information System is playing an indispensable role in most of the critical
functions of Supply Chain, Operational, Financial & Accounting activities and HR. IS
has helped them to reduce processing time and enable them to respond efficiently to
Main Server
Backup Server
Transaction
Counter ---atleast15
Transaction
Counter
Transaction
Counter
Transaction
Counter
SOD/EOD SOD/EOD SOD/EOD SOD/EOD

12. the changing customer requirements. This has also helped them a lot to reduce the
cost and expenses of operations through reduction in unnecessary wastage.
Other than from ERP’s, Big Bazaar uses some other methods like Bar Code
Technology, CCTV and RFID. Bar Code is a popular device which is used to identify
and point the items in the supply chain of the business while RFID (Radio Frequency
Identification) removes the limitations of Bar Code. Big Bazaar also uses CCTV’s
installed in different locations around the store such that entire functioning and live
activities taking place in a store can be monitored closely by a human operator.

13. Bibliography
Essentials of Inventory Management by Max Muller
Inventory Accuracy by David J. Piasacki
https://www.academia.edu/7108307/RETAIL_MANAGEMENT_BIG_BAZAAR_Introd
uction_to_Retail_Industry
http://www.inc.com/encyclopedia/inventory-control-systems.html
http://www.capterra.com/inventory-management-software/
https://www.tradegecko.com/product-tour/inventory-management-system
https://www.asapsystems.com/inventory-management-system.php
http://searchmanufacturingerp.techtarget.com/definition/Inventory-management
http://www.cmu.edu/information-systems/
https://www.microsoft.com/en-us/dynamics/what-is-erp.aspx
http://www.netsuite.com/portal/products/netsuite/erp.shtml