“We want to become a truly omni-channel company, which we will achieve in the next 3 months’ timeframe. With this initiative, we would want to achieve our vision of ONE Customer Identity, ONE inventory view, ONE Order history, ONE Customer experience,” envisions Devadas Nair, Customer Care Associate & Head-Supply Chain, Shoppers Stop Ltd. In this free-wheeling interaction, he shared the broader spectrum of retail and how collaboration can change the entire retail dynamics with supply chain as the nerve centre. Excerpts…
You have witnessed Indian retail revolution from close quarters. Kindly highlight some of the changing dynamics. How was the scenario then & now? What critical role has the supply chain played in this revolution?
Supply chain management is the top management priority for retailers in today’s business scenario. Fierce competition is forcing retailers to respond to changes in the market quickly. This highlights the growing importance of supply chain management in managing stock availability, supplier relationships, new added value services and cost cutting. SCM is a key management function viewed to enable profitable growth in line with company’s strategic growth planning. The SCM function at Shoppers Stop coordinates and integrate all activities associated with moving products, services and information into seamless processes. This is facilitated by embracing all the partners in the chain including various departments, vendors, transporters and other service providers and necessary information system to monitor the SCM activities facilitates this.
SCM at Shoppers Stop begins and ends with customer. The guiding philosophy is to improve the organization’s performance by managing constraints and uncertainty inherent in the prevailing system. The focus is to use new tools and technique and change of mindset to manage the constraints and uncertainty.
When we started in 1991, organized retailing never existed in India. We are the pioneers of retail revolution in the country. We had nothing to benchmark our performance on. We have learned tricks of the trade on the go and built from thereon. Global best practices were not available for Indian companies at that point in time. For the first five years, we were only learning retailing and it took us that much time to open our second store. We were not even able to hire sales staff because retail was never a very respected profession then. Today the scenario has changed completely. You can see the best talent in Retail industry today. At that point in time, we even had hard time convincing suppliers to provide us goods to sell. There was no tech-support. Then we took two major decisions in 1998. First, we implemented a Retail ERP package and implemented Merchandise Management System and that was one of the turning point for us. Secondly, we decided to have Regional Distribution Centres, rather than dedicated DCs for each store, which is not an efficient model.
How has outsourcing of logistics services aided in organizational transformation?
In 1995, we also took the decision of outsourcing our logistics services. Today, all our warehouses are managed by 3PLs. We are extremely happy with their performance and association with us because we feel that if one takes the ownership of any job, the outcome is always better. We have close to 500,000 sqft warehousing spread among 4 DCs and all have been managed by 3PL partners. We have laid strong SOPs for clear understanding and guidelines so that there are no chances of mistake. With 85 Shoppers Stop stores and 15 Home Stop stores, we have been able to manage logistics extremely efficiently. It’s been close to two decades that all of these partners are still onboard. In supply chain, every day is a new day with something or the other new challenge coming to us. It is up to us to continuously keep upgrading the skillsets of the logistics team & impart training and move them to the next level of efficiency.
From the start, we were very clear that we are retailers and let us channelize all our energies into our core area of retailing, hence we have decided to outsource the logistics operation and use the expertise of the 3PL companies, who have expertise in managing the Distribution Centre operation better than us. To make the outsourcing operation success, one needs to have very high-level transparency with the logistics partners and also impart continuous training to the team to raise to the expectation. Every person in the value chain needs to take the ownership of the job they are supposed to deliver. Today everyone strives for achieving the best and is always ready to take new initiatives. Recently we have implemented warehousing management system at all our DCs from JDA Red Prairie. There is no manual process now while receiving and replenishing stocks as we do 100% scanning now. Once the merchandise is scanned, it is automatically uploaded in the system. We also have Perpetual Inventory Count system for stock takes. Earlier we used to do this exercise yearly, which has now come down to quarterly and it has greatly benefitted us in ensuring higher level of inventory accuracy and thereby enhancing the inventory replenishments to our stores. The stock take is done for few brands every day and within 3 months we complete the entire cycle, which is helping us in a big way. We have an Auto-allocation module running from DCs to store, replenishment happens almost every day to Local stores and we deliver the merchandise in the morning hours to ensure that the stocks are displayed before the First Customer walks in to our store.
If you look at the external factors, mall boom is itself a revolution. Disposable income is increasing, and people are spending more these days. These changing dynamics have inspired us to go beyond metros, which used to be the case earlier. Now we are really looking forward to service tier II & III cities. The introduction of wide and varied product ranges and the growth of competitive pressures have been the driving force behind the development of logistics systems in the retail environment. The challenge for the retailer has been to maintain control of a supply chain which has grown in complexity.
How can a truly omni-channel market be developed?
Lot of technological interventions have been taking place in the company, which would aid us in attaining our vision of omni-channel. With online expansion, we also want to tap into unexplored regions to mark our presence. We want to offer them the whole inventory, which is available in store. In short, omni-channel integration is aimed at achieving three things: single view of customer, single view of order to know his shopping history and preferences and single view of the stock across 85 stores, 4 Distribution Centres.
What are the tech tools you are implementing in enhancing supply chain?
For the company, digital evolution relates to the application of digital technologies across three main functions: Customer Experience and service (both online and offline), Merchandise and Supply Chain Management and Customer Analytics. We have made significant investments in multiple technologies such as Warehouse Management System(WMS), Order Management System, CRM, Master Data Management, etc., to enable single view of the customers. This will allow us to provide our customers with a contextual, targeted, personalized and integrated shopping experience. With warehouses in Mumbai, Bangalore, Kolkata, and Delhi, we wanted to build certain capabilities for the digital future. We had a powerful warehousing solution that met the demands of the varied distribution environment in which we operate. But we wanted an integrated, optimized and feature-rich WMS to help achieve our omnichannel vision. So, we deployed the new WMS solution in January 2017. The project has reduced warehouse operating costs, 24x7 warehousing operations have reduced the store replenishment cycle time drastically, systemized putaway has ensured a 30% increase in order picking accuracy while also leading to an overall inventory accuracy.
Earlier this year, we implemented a Master Data Management solution. The procurement process will gather data and digital content from Shoppers Stop’s vendors through a standardized process; merchandizing will be able to quickly grow the portfolio of private and exclusive brands with rich content for every product feature. Between the Warehouse Management System, the Order Management System, Master Data Management, and Customer Relationship Management – there are multiple data points and data flows that need to be streamlined and unified across the channel. An Enterprise Service Bus was needed to process this data swiftly and accurately across channels. In order to address this requirement, we are adopting Enterprise Service Bus. We have last 2 decades’ data with us as far as demand planning is concerned. We exactly know customers’ requirements based on the past data. We also can calculate like-to-like growth for each store.
You have been a part of Shoppers Stop since the initial years. What has kept you going for many years when people believe in switching jobs?
When I joined supply chain industry around three decades back, Distribution Centres were regarded as ‘godowns’ and everything used to be manual be it tagging, packing, shipping, which used to take 3-4 days. We were 100% people-dependent. There were days when we couldn’t dispatch stocks owing to the absence of that particular person managing the task. Today everything is tech supported and is completely fool-proof. Having said that, we need skilled manpower. Owing to people dependency, there were chances of mistakes. These days systems will prompt people if they have picked up the wrong size or stock. Accuracy results have drastically increased. Technology has evolved at a very fast pace that no one can imagine. Moreover, warehousing has seen a transformation. The structure, flooring, equipment, height and the nuances of distribution centres have changed. There are multiple entry & exit points at DCs which used to be only one in earlier days. Supply chain has also evolved through the technological advancements. Today one will find logistics parks built with all the amenities in every region.
Being in the business for close to three decades, I can surely say that every day will pose a new challenge in retail. We will have a lot of good days & bad days but there wouldn’t be any boring days in the life of supply chain professionals in retail industry. Sky is the limit for us to take any new initiative and be a part of the change. When you have that kind of scope to play with, you would always enjoy that work. There is lot to do and achieve. Every day is a new day in retail and for me, it’s a thrilling job.
How do you empower talent and what do qualities do you expect in supply chain professionals for hiring?
Manpower requirement is really high in the retail industry now. Today in DCs also you would find women taking charge, which was hardly the case earlier. In older times, we were unable to find institutes in this country, which trains manpower as per industry requirements. These days, thankfully owing to the awareness about the industry and the latent opportunities that it presents, MBA institutes have started including supply chain as a dedicated course. I can get enough and more supply chain professionals today to join us as trainees. Retail supply chain is really growing well. As far as hiring is concerned, we definitely look for prior experience be it retail or supply chain. When it comes to on the job skill enhancement, we host a lot of internal trainings and send the employees to external conferences to hone their skillsets. At Shoppers Stop, we have a very defined SOP, which leaves no scope of error and no employee can actually go wrong if they follow those procedures dedicatedly.
Kindly share with us the most challenging project managed by you.
Prior to 2006, we would generate proprietary product codes, print bar codes at our end and dispatch to hundreds of our suppliers through the country. This required ensuring that correct bar codes were generated for thousands/lakhs of their merchandise. It entailed substantial costs besides delays in receipt/dispatch of labels by partners with consequent delay in receipt of merchandises. It also resulted in inaccuracies and mismatches between orders placed and supplies received due to proprietary product coding practices followed by SSL and its partners.
Since 2006, we have switched from internal, proprietary product (SKU) coding to GS1 product identification standards in barcoding of all our merchandise, in line with global best practices. This change has enabled us to realize significant benefits from seamless information exchange with our trading partners and improve data quality through unambiguous and unique identification of merchandise across product categories, saving time, effort and associated costs to us.
For Shoppers Stop, GS1 standards have brought together companies representing all parts of the supply chain – manufacturers, distributors, retailers, and more. Today, GS1 standards mean much more than the barcode and include standards for electronic business messaging, data synchronization and RFID-based identification and solutions to a range of business issues related supply chain operations. These standards enable businesses to manage the supply chain more efficiently and to respond to challenges of a globalized supply chain by increasing their efficiency and maximizing profitability. In today’s global economy, an efficient supply chain is a must and GS1 standards help us to achieve the same.
What are the aspects that can develop a seamless supply chain network in the country?
I believe that for change to happen, the entire industry needs to unite. Push needs to happen from the industry side. Support is needed from all spheres to attain a holistic development. We have been taking lot of first-time initiatives in the supply chain domain. If there is support from the service providers, distributors and the retailing fraternity at large, the magnitude of impact would be much higher.
We need a common platform where all of us can discuss and deliberate upon the challenges faced and come to a consensus to drive the growth ahead. Until and unless that happens, it would be extremely challenging to change the dynamics of the industry. There are finer nuances that need to be ironed out. Supply chain has to be play an enabling role because the expectations are what’s sold today need to get replenished tomorrow. If that’s the kind of commitment we are desiring, we need to have systems & processes and a common goal in mind to achieve the same. For me, this is one of the biggest challenges leave aside the government side bottlenecks be it infrastructure or anything. We as an industry first need to play our part.
What are the industry-wide initiatives that are needed to achieve holistic growth?
We have a strong connectivity with our vendors through B2B portal. We provide all the information to our vendors on a daily basis. This is still a one-way traffic and we want it to actually develop a two-way traffic. What we desire from our suppliers is to give us the exact information and use data to further simplify the process by coming to us and telling us that this is what they can offer us more. There should be complete visibility of their processes as well. When a supplier can see everything online, they can always come to us that we can produce these many pieces more for you. This is the reason we are providing so much information to our vendors. Any information available has to be take due cognizance of. It has to be win-win for all. Today sky is the limit in retail but it just can’t be one person or one company driving the whole revolution, it has to be holistic. It’s time for manufacturers and retailers to sit together, do a milk run. The goods can come in containers for 4-5 retailers so that the cost can be shared and there can be a better use of vehicle instead of four different vehicles plying on roads. Similarly, when it comes to reverse logistics, there should be a mechanism where no empty vehicles move on the road. In fact, the quotations can also be negotiated well with the transporter as going alone, he can quote any random amount, but if five people go together, he might give a better deal. We are pushing this initiative through different channels.
Currently any transporter can come any time of the day to pick the stuff at our DCs, which is not the case overseas. We have some cut-off time of accepting goods and after that time, we don’t accept any product at our DCs. Still people don’t adhere to those guidelines. If the transporter can take prior appointment and come to our distribution centre, things would be much more organized. A proper delivery schedule should be followed and adhered to. Can we have better collaboration is a question to ponder. Can we have the visibility of inventory lying in your distribution centres? If you are technologically connected, every point in the value chain can be seen and desired action can be taken beforehand. That’s what we are trying to project and focus on.
How do you see the impact of GST on your industry?
In the long run, GST is really going to be a game changer. Yes, implementation challenges are going to impact you, but it would ease our processes going ahead. Transportation time has also reduced a bit but the toll nakas are still going to be a challenge. Speed to market will definitely improve.