2016

LOGISTICS AND SUPPLY CHAIN

OF RELAINCE FRESH

SUBMITTED BYBHASKAR DIBYA (ROLL NO-46)

SUBHOMITA SAHU(ROLL NO-47)
SACHINDRA SINGH( ROLL NO-48)
ANKIT KUMAR (ROLL NO-49)
SNIGDHA MOHANTY (ROLL NO- 50)

INTRODUCTION
Retail is the process of selling consumer goods and/or services to customers
through multiple channels of distribution to earn a profit. Demand is created
through diverse target markets and promotional tactics, satisfying consumers'
wants and needs through a lean supply chain. In the 2000s, an increasing amount
of retailing is done online using electronic payment and delivery via
a courieror postal mail. Retailing includes subordinated services, such as delivery.
The term "retailer" is also applied where a service provider services the small
orders of a large number of individuals, rather than large orders of a small number
of wholesale, corporate or government clientele. Shops may be on residential
streets, streets with few or no houses, or in a shopping mall. Shopping streetsmay
be for pedestrians only. Sometimes a shopping street has a partial or full roof to
create a more comfortable shopping environment protecting customers from
various types of weather conditions such as extreme temperatures, winds
or precipitation. Online retailing, a type of electronic commerce used for businessto-consumer (B2C) transactions and mail order, are forms of non-shop retailing.
Shopping generally refers to the act of buying products. Sometimes this is done to
obtain final goods including necessities such as food and clothing; sometimes it is
done as a recreational activity. Recreational shopping often involves window
shopping (just looking, not buying) and browsing and does not always result in a
purchase.

ABOUT RELAINCE FRESH Reliance fresh was founded on oct 2006 in Hyderabad India. Reliance Fresh is the
convenience store format which forms part of the retail business of Reliance
Industries of India which is headed by Mukesh Ambani. Reliance plans to invest in
excess of 250 billion in the next 4 years in their retail division.[ The company
already has 1691 Reliance Fresh outlets across the country. These stores sell fresh
fruits and vegetables, staples, groceries, fresh juice, bars and dairy products.
A typical Reliance Fresh store is approximately 30004000 square feet and caters
to a catchment area of 23 km
After launch, in a dramatic shift in its positioning and mainly due to the
circumstances prevailing in UP, West Bengal and Orissa, it was mentioned earlier
in news dailies that Reliance Retail is moving out of stocking fruits and vegetables.
Reliance Retail has decided to minimise its exposure in the fruit and vegetable
business.
The company may not stock fruit and vegetables in some states. Though Reliance
Fresh is not exiting the fruit and vegetable business altogether, it has decided not to
compete with local vendors partly due to political reasons, and partly due to its
inability to create a robust supply chain. This is quite different from what the firm
had originally planned.
When the first Reliance Fresh store opened in Hyderabad last October not only did
the company say the stores main focus would be fresh produce like fruits and
vegetables at a much lower price, but also spoke at length about its farm-to-fork"
theory. The idea the company spoke about was to source from farmers and sell
directly to the consumer, removing middlemen out of the way.

Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trends, Reliance

Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and Reliance
Super are various formats that Reliance has rolled out.
In addition, Reliance Retail has entered into an alliance with Apple for setting up a
chain of Apple Specialty Stores branded as iStore, starting with Bangalore.[
In 2007 Reliance stores in Jharkhand faced the ire of mobs of local vegetable
vendors. They vandalised and attacked the stores claiming that they were stealing
their livelihoods.
In August 2007, Uttar Pradesh Chief Minister Mayawati ordered to close 10 new
stores keeping view of Law & order situation. In November 2007, Reliance Fresh
stores were attacked by Bharatiya Janshakti Party supporters headed by Uma
Bharti.
Reliance have started to try and take over the Indian retail sector. The entry of the
giant corporate retail in India's food market will have direct impact on India's 650
million farmers and 40 million people employed in tiny retail. More than 6600
mega stores are planned with Rs40,000 crore by 2011. In the following case
findings about Reliance Fresh were quite awakening and exemplary. Even after
recent shutdown of Reliance fresh stores from UP and unwelcoming vibes from
states like Kerala, West Bengal, Orissa and Jharkhand for its retail format (which
was allegedly capturing the unorganized sector and leaving thousands of self
employed people jobless) Reliance was not in any mood to hamper its 25000 crore
plan. Reliance responded with superb strategy in which it shifted its focus from
retailer to being a supplier i.e. targeting hawkers, vendors, Push cart wheelers
instead of customers. Big retailers like Reliance have huge resources and network

which directly impacted many of the retailers some of whom are planning to quit.
In our sample size of 75 retailers more than 30 agreed to have lost as much as 50%
of their sales. This case also discusses pros and cons of contract farming which on
one part assures farmers of price for their crop and knowledge about fertilizers and
seed but on other side has some obvious drawbacks like monopoly of big retailers.
As a big market in which organized sector is poised to grow with 25% - 30%
annually our government must come with appropriate regulations to save small
retailers and our agricultural sector.

Reliance Fresh
Marketing Mix (7 P's)

After segmenting the market, finding the target segment and positioning itself,
each company needs to come up with an offer. The 7 P's used by Reliance Fresh
are:
1. Product
2. Place

3. Price
4. Promotion
5. People
6. Physical Evidence
7. Process
Target Segment: what is Reliance fresh for me?
A Family with children, a purchase place to be for the children.Urban customer on
the move Great taste, quick service without affecting the work schedule. But keep
it affordable.
1. Product: How should the company design, manufacture the product so
that it enhances the customer experience?
Product is the physical product or service offered to the consumer. Product
includes certain aspects such as packaging, guarantee, looks etc. This includes both
the tangible and the non tangible aspects of the product and service.
Reliance fresh has intentionally kept its product depth and product width limited.
Reliance Fresh studied the behaviour of the Indian customer and provided a totally
different menu as compared to its International offering. India is the only country
where reliance Fresh serve vegetarian. Even the sauces and cheese used in India
are 100% vegetarian.

2. Place :Where should be the product be available and the role of

distribution channels?
The place mainly consists of the distribution channels. It is important so that the
product is available to the customer at the right place, at the right time and in the
right quantity. Nearly 50% of U.S.A is within a 3 minute drive from a Reliance
Fresh outlet. There is a certain degree of fun and happiness that a customer feels
each time he dines at. There are certain value propositions that reliance fresh offer
to its customers based on their needs. Reliance fresh offers hygienic environment,
good ambience and great service. Now Reliance Fresh have also started giving
internet facility at their centres and they have been playing music through radio
instead of the normal music. There are certain dedicated areas for children where
they can play while their parents can have some quality time together.
3. Price:What should be the pricing strategy?
Pricing includes the list price, the discount functions available, the financing
options available etc. It should also take into the consideration the probable
reaction from the competitor to the pricing strategy. This is the most important part
of the marketing mix as this is the only part which generates revenue. All the other
three are expenses incurred. The price must take into consideration the appropriate
demand-supply equation. Reliance fresh came up with a very catchy punch line
"Growth Through Value Creation". This was to attract the middle and lower class
consumers and the effect can clearly be seen in the consumer base Reliance fresh
has now.

4. Promotion: What is the suitable strategy and channels for promotion of

the product?
The various promotion channels being used Reliance fresh to effectively
communicate the product information are given above. A clear understanding of
the customer value helps decide whether the cost of promotion is worth spending.
There are three main objectives of advertising for Reliance fresh are to make
people aware of an item, feel positive about it and remember it. The right message
has to be communicated to the right audience through the right media. Reliance
fresh does its promotion through television, hoardings and bus shelters. They use
print ads and the television programmes are also an important marketing medium
for promotion. Some of the most famous marketing campaigns of Reliance fresh
are: "Food and Fun"

5. People :How to converge the benefits of internal and external

marketing?
Reliance fresh understands the value of both its employees and its customers. It
understands the fact that a happy employee can serve well and result in a happy
customer. Reliance fresh continuously does Internal Marketing. This is important
as it must precede external marketing. This includes hiring, training and motivating
able employees. This way they serve customers well and the final result is a happy
customer. The level of importance has changed to be in the following order (the
more important people are at the top):
1. Customers

2. Front line employees

3. Middle level managers
4. Front line managers
6. Physical evidences
-Actual Experiferal evidence
-A good time entry.
-Sign boards.
-Essential eminence of service.
-Good parking place

7. Process
Process Exist are complex on railways like some processes are:
-refund process / claim process.
-Communication process.
-Entraining/Detraining Process.

SUPPLY CHAIN STRATEGIES AT

RELIANCE FRESH

Procurement
Grocery industry is unique in terms of suppliers, in this industry suppliers are
fragmented and produce usually in smaller quantities.
Reliance Fresh makes most of its procurement for vegetables, fruits, dairy
products, bakery items directly from the suppliers based on the pre-negotiated
contracts. By procuring directly they weed out the middleman commissions, costs
of loading and unloading, transportation costs and wastage due to exchange of
hands. They provide the farmers with high quality seeds and technical knowhow
and later buy their produce and prices higher than the wholesale market prices.
They make the farmers aware of the market prices of different crops to enable
them to choose the crops that provide them best yield on their investment and hard

work. The prices for the produce are determined based on the quality of the
produce and the prevailing wholesale market prices.
They source the perishable produce from the areas which are near to their
distribution centers which enables them to maintain lower price and maintain short
cycle times. Non-perishable produce as FMCG products which have longer shelf
life are procured centrally by their merchandising department. This allows them to
procure in bulk and bargain a better price from the supplier.
In certain areas where demand exceeds supply, their model includes the
following
Procure the produce from the suppliers by grading their produce and offering
them a better than market price
Procure good quality produce directly from the wholesale market in bulk
Their distribution centers not only provides to their retail stores but also to other
business concerns. This ensures whatever has been bought from the supplier is sold
ensuring the assured demand to the supplier and reliance fresh has the benefit of
locked in suppliers.
The perishable produce like fruits and vegetables is not kept for more than 2 days,
whatever is left over is sold back in the wholesale market and prices lower than the
market price. This strategy allows them to consistently maintain quality of produce
in their stores and also get rid of the unsold produce before it becomes waste. The
non-perishable products like FMCG goods are kept till their expiry and after that
usually returned to producers.

The farmers are made payment on the spot when their produce is bought at their
farms. The perishable goods like fruits and vegetables once bought are moved
through sophisticated cold chain of cold storages and special trucks.
Large distribution centers are established to economize on the cold storage
infrastructure costs and minimize inventory levels.
Supplier Contracts
Reliance fresh procures most of its perishable produce through contract farming
with farmers from nearby areas of their collection/distribution centers. The
contracts involve a pre-agreed price, payment term, measures of quality, quantity
and duration of the contract
Dairy products are procured from the dairy cooperatives or locally operating
vendors such as Amul in Gujarat, Nandini and Heritage in Karnataka etc. The
cooperatives act as partners and are provided with the daily demand forecasts to
supply directly to their distribution centers. Bakery items are sourced from
multiple suppliers located in the vicinity of the collection or distribution centers.
These products are usually contracted such that they are returned to suppliers after
the products expiry date.
The merchandising department procures the non-perishable goods from the
suppliers using variety of contracts. This includes the contracts to return goods at
lower price on expiry, bulk purchase at lesser prices, minimum purchase contracts
etc.

LOGISTICS OF RELAINCE
FRESH-

Logistics Perishable
The produce from the farmers is collected at the collection centers. Which are
smaller and do not have cold storage facilities. A preliminary quality check is done
here.

Then the produce is moved to the distribution centers where they are sorted, graded
and packaged. Here, the data (product type, quantity, grade, cost price etc.) is
entered into the SAP system for easier tracking of the inventory.
Every day the retail store manager raises a purchase order for the next day based
on the estimated demand, which is received by the cluster manager at the
distribution center. Based on the availability of the products the ordered items are
delivered to the area manager daily in full or proportionately when overall demand
exceeds availability.
Logistics Non-Perishable
Items are collected from the manufacturer or national level distributor and
delivered directly to the various distribution centers. Each store has the minimum
order quantity level for each type of product which is tracked by SAP system.
Based on the sales data, as soon as the product level goes below its minimum order
quantity the SAP system automatically places the order.

Inventory
Most of the inventory is kept at the distribution center level to minimize the overall
inventory across the supply chain. Perishable items are stored usually in cold
storage, and are supplied based on first in first out basis. Non-perishable items are
stocked and reordered based on the minimum order quantity levels.
However, retail stores are usually provided with small storage facility based on the
forecasted demand at that store. Store inventory is usually to store the

nonperishable items. Perishable are usually kept for more than 2 days, and after
that period they are thrown provided they perish.
Distribution Center
Reliance Fresh has strategically placed their distribution centers taking in to
account both collection centers and retail stores. Replenishment of the stock to the
stores has a lead time of 2 days, that means each store has to provide a forecast 2
days in advance.
Perishable goods, once arrived at distribution center, are graded into different lots
based on the quality of the produce and then data is entered into SAP system.
Based on the demand they are shipped to reliance retail stores and other party
stores. Left over is moved to cold storage or sold back in the wholesale market.
Certain produce like pulses, porridge, rice, sugar are procured in bulk, graded and
packaged and then sold as private labels under the name Reliance Select. The
powerful brand of Reliance provides them good margins on their private labels
than other brands.

Retailers
A typical reliance store is ranges from 2000 to 4000 sq.ft. And layout is done to
maximize shelf space taking into account the ease of movement within the store.
Product arrangement is done in a way that similar items are stocked together on the
shelves. Due to better margins stores provide better and larger shelf space to
private labels and restocking is done based on the forecasted demand.

They provide customers with a variety of fresh fruits, vegetables, dairy products
and bakery items. Pulses and staples are available both under reliance and other
company labels. The stores are well lit and kept clean to provide a world call
ambience to the customers.
Stores do not extensively use IT systems and almost all of the restocking
requirements are inspected and forecasted manually. However, they have
implemented SAP systems to enter the sales data as and when the sales happen.