Natures Basket - Supply Chain Network for Grocery Supermarkets

TABLE OF CONTENTS

1. Abstract                                                                        (2)
2. Introduction                                                                        (3)

1. About the Industry                                                        (3)
2. About the Organisation                                                (3)
3. Online Research Insights                                                (4)
4. Nature’s Basket Differentiating Points                                (5)

1. Findings And Analysis                                                        (6)

1. Supply Chain Model                                                        (6)
2. Omni Channel Distribution                                                (7)
3. Store Location                                                                (9)

1. Exhibits                                                                        (12)
2. References                                                                        (14)

ABSTRACT

The project aims at understanding the supply chain network for grocery supermarkets. The company we have chosen is Nature’s basket. The rationale behind choosing the company is the wide range of product portfolio that Nature’s basket has. The supermarket holds in stock perishables from all across the world e.g. New Zealand mutton, Japanese rice paper and in-house sourced fresh produce. They follow an omni channel business strategy and has its presence through physical stores, online website and mobile app. Our research tries to understand Nature’s basket’s inventory and supply chain management model; analyzing the past trends and coming up with forecast strategies. The study was carried out in two stages. In the first stage online research was helpful in finding out Nature’s basket product offerings, tie ups and relevant information. In the next stage of study physical visits to store and contacting store managers and vendors over the phone helped us gather more data. The company is privately owned and hence the data available online and divulged otherwise was very limited. We did a thorough study of their store locations and developed a factor-based weightage model. With this weightage in mind we developed an ardalan heuristic model to predict where the next store of Nature’s Basket is to be established. The results of the exercise matched that of the future expansion plans of Nature’s Basket.

INTRODUCTION

About the industry
The uncertainty and the ever-growing competition in this industry requires an efficient and improved decision-making practices in supply chain. Thus, a retail network that deals with thousands of diverse categories; round the clock three-sixty-five days of operations, require efficient planning, process optimization and comprehensive supply chain and inventory management strategy. It is naturally expected that all the products will be readily available anytime the customer walks into the store. And to meet this expectation of customers, an efficient supply chain channel is a must.

Some challenges of Grocery Inventory Management
1)        Ensuring that the products in inventory to not become “dead inventory”
2)        Segregating the total stock of perishable items based on the varied shelf life
3)        Inventory counting is a must to keep a track of the goods and services, a general trend observed is that the physical count is taken every quarter

Optimizing replenishment of stock is not just about keeping the right items in stock but also optimizing the purchase costs, choosing the right vendors and providing the best quality products to the customers. While doing this they also need to keep the freight costs in check or price discounts for suppliers, offer to customers when ordering larger amounts at a time.
Inventory stock management by taking physical stock is a trivial taj and is a hassle for replenishment planner, which why it needs to be automated. Over the years several retailers have taken initiatives for forecasting and replenishment through Efficient customer response (ECR), CPFR (Collaborative Planning, Forecasting and Replenishment), Multi-Channel and the very latest Omni-Channel retailing.
Supply chain management can get the maximum benefit through four strategies:
(i)        Efficient promotions
(ii)        Efficient replenishment
(iii)        Efficient store assortment
(iv)        Efficient product introductions

About the Organization

Godrej’s nature’s basket is from the house of 119-year young Godrej Group. They are both present in the form of physical stores across India and have an online portal and a mobile application. The company’s aim is to redefine the finest and freshest food experience and be the go-to place for our customer’s ‘Daily Food Delights’. They have a wide product offering ranging from fruits and vegetables, finest meats, wide array of cheese, bakery products and much more. They not only procure products from the domestic market but also import a lot of products. They also have a range of own brands under the name Healthy Alternatives, L’Exclusif and Nature’s each providing a different offering to cater to the different tastes of the Indian Customer.
They always strive to create value to the customers by going an extra mile and creating long lasting relationship. To make the customer’s journey an enjoyable one, their trained employees help customers in putting together their demands and needs. They wish to become the No. 1 grocery retail in Omni Channel Business

Online Research Insights
•        Godrej’s Nature's Basket is on an ever-expanding strategy in tier-1 and tier-2 cities through regional retail chains. Their aim is to become three times in size by the year 2020.        
•        It targets to open up to 70 stores by 2020-2021, with target revenues worth Rs.1,000 crores by 2022
•        With the help of its in-house brands like Healthy Alternatives, L’Exclusif and Nature’s the chain plans to focus on the south and west regions
•        They focused a lot on supply chain and the way to stack fresh products in the supermarket. They have brought down the damages and wastages which were as high as 7.5 per cent to 3.7 per cent in all store, which contributed to the store’ profitability
•        They have invested heavily on technology and supply chain; and on the online portal. The customers have started buying from Nature’s basket online portal which helps them retain customers who purchase daily and not the customers who focus only on monthly purchases
•        The biggest challenge ahead of Nature’s basket or any other grocery supermarket business is to get the right strategy for the fresh supply chain
•        Fresh supply chain at a local level is not a difficult task, but at a national level It is a major challenge, as India doesn’t have a proper cold chain supply infrastructure
•        Nature’s basket has announced that it will work in partnership with Magsons Group on assortment, merchandising and sourcing, this will help Nature’s basket in increasing its market share in the western market
•        Nature’s basket is the 1st omnichannel food & grocery retail store which is delivering across 125 cities in India
•        Nature’s basket has consistently strived towards making international gourmet food available in the country, items in the assortment are handpicked from Europe, Australia, Asia and the US have to offer.
•        Nature’s basket has started home delivery, but currently only non-perishable items are available for delivery to pan-India.
•        Natures Basket Limited (NBL) recorded a growth of 18% in FY18 over the last year
•        The online business recoded a sale of Rs 19 crore in FY18, a growth of 10% over the previous year out of which online sales contributed to 6.5%
•        Nature’s basket overall customer base increased by over 13% in FY18.
•        Nature’s basket is to be a leading Omni Channel player by focusing strongly on in-store and online business channels in daily food delight space
•        Nature’s basket continues to improve its website and regular updates for it’s app experience
•        The brand has very recently partnered with Snapdeal.com for selling some of its range of products to 5000 cities. The alliance is aimed to increase the store brand’s reach
•        Nature’s basket is planning to launch an online marketplace in cities where it is not present by partnering with third-party vendors for gourmet products, while managing its logistics itself.
•        Nature’s basket has introduced i-Pro, an Operations Excellence initiative, which looks to improve performance through: 1) Improved Inventory Management 2) Better customer experience 3) Increased staff efficiency.
•        All products under private label are procured from a manufacturing plant in Mumbai
•        Other products are procured from several distributors spread across the city
•        Nature’s basket has also acquired grocery portal, Ekstop.com, and after revamping its back-end, aim is to increase the online revenues. The technology platform will improve the ease of placing an order on the site (naturebasket.co.in). The technology will help to track and monitor orders. This would however not create a conflict with the brand itself, as ekstop.com has been acquired for the platform it will provide and not the product, which will eventually get merged with the core existing website.