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Mapping the Food Supply Chain of Fruits & Vegetables for

Format Retail Stores: A Case Study


Dissertation Submitted to the University of Calcutta In Partial Fulfillment for the Award of Master of
Public Systems Management (With Specialization in Transportation & Logistics Management)

by
RITABRATA MUKHERJEE
ROLL NO.: 107/MPS/140052
SESSION: 2014-2016

Dissertation Guide: Dr. Anupam Ghosh


Date: 07-06-2016

The unorganized nature of food supply is an age old problem. This not-so-fragmented organized

sector was an opportunistic market for corporate giants. But the food supply chain was eating
up the profit at that point of time, so the houses disguised as do-gooders for farmers and
revamped the entire supply chain and designed it in such a way where they will make profit, the
farmers will earn more and the consumer has to pay lesser price from unorganized market, a
win-win situation for every stakeholder, just by redesigning the supply chain and removing non

value-adding nodes of the supply chain.

Vegetables, fruits, and grocery play a vital role for the existence of people and also a very

influencing role in the economy. Though fresh fruit, vegetable, and grocery retail has been
considered as a very low-margin business, the market potential has attracted Indian business

houses and corporate, driving the forays through different models like single-format, multi
format or integrated urban rural models (Sengupta, 2008).

Traditional Indian retailers account for 12 million retail outlets all over India and more than 40
percent of them sell vegetable and grocery (IBEF, 2008). Indian food retail consists of staple

commodities comprising grains, pulses, and vegetables. The Indian food retail business,
especially vegetable retailing is witnessing a rapid growth in India's organized retail sectors. The
traditional retailing of vegetables is not very much organized, amounts to 97% of the total 5
market (Ernst & Young, 2006), is extremely localized and highly fragmented with large number
of intermediaries.

My dissertation addresses to a no of issues related to the highly fragmented fruits and

vegetables retailing in India. The main objective was to face challenges and provide theoretical
and managerial insights regarding the stocking policy and the revamped supply chain. In case of
perishable items the inventory management and demand forecasting should be with minimum

imperfection due to low shelf life and high spoilage rate. My idea was to cross check know-how
of the transforming perishable retail market from unorganized to organized and how the

information is playing its role in order to having a sustainable supply chain.

1. To Map the supply chain of Fruits & Vegetables for Format Retail Stores

2. To criticize the stocking and purchasing policy

3. To provide insights regarding demand and inventory planning

The main elements of my data collection, was to gather information regarding the supply chain
model of a format retail stores. And also the sales and purchasing data to judge the proper

utilization of information throughout the supply chain.

With the data available, I tried to perform comparative analysis by visual graphs for easier
interpretations. I also tried to prepare clusters of datasets to make the process of data

interpretation becomes easier and the data will be more generalized. I tried to use ABC
classification a selective inventory control technique to judge their pattern. Then I tried to

compare the sales and purchase order data to analyze the efficiency of the indenting.

As per the graphs above are concerned, we can see that the Sales is taking place in each and

every days. But the most of the sales is taking place on 02/01/16 & 03/01/16 i.e. Saturday and
Sunday; hence we can determine the buying pattern and the stocking policy. And also on

06/01/16 i.e. Wednesday the weekly domestic replenishment is taking place, this we can also
observe.
These observations will lead to the purchase and inventory planning formulation.

We can see that the cluster analysis of fruits are coming different for the quantity basis and the

sales basis hence we can conclude that the basis of quantity sales and value sales are different
so the organization should determine the stocking and purchasing decision accordingly to
ensure volume sales from the value point of view.

As we can see here the clustering the third and fourth cluster draws most of the amount to it.
The third cluster has got the most of the sales both value and quantity wise if we consider it

from the article wise view point, but the cluster 4 is the most important cluster here providing
volume here. One also should cluster 1 in case of quantity sales. The organization should

purchase and stock accordingly.

The holistic cluster analysis by K-means is portraying that how total sales by quantity and value

vary over clusters. But this should not determine the stocking policy as the organization should
consider fruits and vegetables differently.

Cum.

ABC Class

Number of items Items

Items

10%

1450

1450

20%

4350

2900

70%

14499

11600

As we can see here how the


inventory should be controlled, and

how the items should be classified.

There are few fast moving items which are being ordered highly, i.e. Purchase Quantity is more
than the Sales Quantity. And the shelf life of these items can be higher. On the other hand there
are items where the sales quantity is higher than purchase; here shelf life is a very important

factor. And if we notice we will be able to observe that there are few essential vegetables which
are being purchased by volume.

The organization should stock and purchase after considering a number of factors such as
sales, shelf life, and comparison of quant of sales and value of sales sales volume.
The forecasting technique should also be determined to avoid spoilage. Moreover they should
also simulate the results with FSN, VED & PQR techniques which I could not do due to data

constraints.
They should maintain a customer relationship management and analyze buying pattern to
accomplish a robust supply chain and a sustainable stocking policy.

The research from start to end was interesting with facts and know-how; this research with the
help of primary and secondary data provides a brief but holistic overview of the transformation
of the perishable retail sector in India. This research put an effort to using data in order to
provide managerial and theoretical insights in order to bring sustainability to this sector.
Though the data was not ample but some basic analysis took place with which we can see that

the stocking and purchasing policy would depend on many factors apart from the thumb rule
sales data. Its really very important to ensure the utilization of data and having demand
mapping to ensure robust supply chain.

Your questions are welcome!