RISK ANALYSIS IN MERCHANDISING

Project title:

Risk Analysis in Merchandising Ms. NUPUR CHOPRA Mr. PANKAJ SHRIVASTAVA- Divisional Merchandising Manager

Institute mentor:

Industry mentor:

Sponsor:

Shahi Exports Pvt. Ltd, Faridabad

DUTIES OF MERCHANDISER

Coordinator

of all activities at the manufacturer's

end Correspondence with buying Agencies Takes care of PD, sampling, costing, negotiations, delivery schedules, production planning, fabric and trim orders, regular follow up. Is directly responsible for the merchandise. Ensuring inspections and quality levels.

WHAT IS RISK?
The quantifiable likelihood of loss or less-than-expected returns
Fear of some harm ought to be proportional not only to the magnitude of the harm, but also to the probability of the event. - Logic, or the Art of Thinking Antoine Arnauld, 1662

RISK ANALYSIS SYSTEM

Risk assessment

Identifying sources of potential harm, assessing the likelihood that harm will occur and the consequences.
Implementation of the plans of actions that are required to ensure the control the risks. Interactive dialogue between stakeholders and risk assessors and risk managers which actively informs the other processes.

Risk management

Risk communication

BENEFITS OF RISK MANAGEMENT SYSTEM

Capability of proactively identifying the risks and taking steps to mitigate them. Reduction in losses and rejections. Promoting continuous improvement. Enhancing communication between departments. Fewer shocks and unwelcome surprises

OBJECTIVE

To propose a Risk Management System in merchandising department of Kohls in Shahi Exports Pvt. Ltd., Faridabad.

To understand the concept of risk analysis

To understand the current working of the merchandising department

To identify the potential risks for a style-risk assessment

To work out a procedure of FMEA for risk management

Finding how to control these risks in merchandising process

To develop and propose a web application for Risk Management System

METHODOLOGY
Selection of problem Collection of literature review Primary data collection

Project suggestion

Development

Data analysis

Project conclusion and feedback

Documentation

TOOLS USED
HISTOGRAM PARETO CHART FISH BONE DIAGRAM FMEA

FMEA

Structured

and systematic process to identify potential design and process failures before they have a chance to occur with the ultimate objective of eliminating these failures or at least minimizing their occurrence and severity

PROCESS FMEA

The Process FMEA is used to

Identify the potential consequences of errors and omissions in the production process Error proof the production process and develop process improvements Develop the production control plan

KEY INGREDIENTS OF FMEA

SEVERITY A numerical measure of how serious is the failure

OCCURRENCE A measure of probability failure will happen

DETECTION A measure of probability that a failure or cause in our operation shall be detected in current operation and shall not pass on to the next operation.

FMEA BENEFITS
Improved process Cost savings Considering the possible failure modes Well-documented record of improvements Provides historical information.

DATA COLLECTION AND ANALYSIS

Shipment analysis Reasons of rejection Activities suffered Planned and actual dates Approval dates Number of redoes FMEA

SHIPMENT ANALYSIS (FINANCIAL YEAR 20092010 )

Total number of shipments 147 Total volume shipped 1191522 Sea shipments 104 Volume of Sea shipments 1108071

Air shipment

43

Volume of Air shipment

83451

% air shipment

29.2517%

% volume of air shipment

7%

Shipment by number
29% Air shipped Sea shipped

Shipment by volume
7% Air shipment Sea shipment

71%

93%

REASONS OF SHIPMENT DELAYS IN

MERCHANDISING Rejections : 23.46 days Difference between planned and actual date : 25.3 days Delay in approval by the buyer : 2.4 days

Delay Reasons
5% 46% 49%

Rejections Diff. b/w planned & actual date Delay by buyer

REASONS OF REJECTIONS

Reasons Color Handfeel Fit embroidery Trims Finishing Pattern process/handling Smocking Fusing Print Stitching Average

Avg delay frequency 66.64 10 50.67 9 21.78 9 21.67 3 21.00 6 21.33 3 24.50 2 14.50 2 8.00 1 18.75 4 37.33 3 11.00 1 26.43

Avg. Delay for 10 styles

70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00
66.64 50.67 37.33 21.78 21.67 21.00 21.33 24.50 14.50 18.75

8.00

11.00

delay avg

REASONS OF REJECTIONS (PARETO CHART)

Pareto Chart for Reasons of rejections
300.00 89.4% 83.5% 97.5% 94.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 66.64 21.0% 50.67 50.00 37.33 24.50 0.00 21.78 21.67 21.33 21.00 18.75 14.50 11.00 10.0% 8.00 0.0% 20.0% 100.0%

250.00
70.2% 200.00 Delay 56.5% 63.3%

76.9%

150.00 37.0%
100.00

48.8%

Reasons

FISH BONE DIAGRAM(FUSING COLOR HANDFEEL FIT TRIMS ) ))) )

ACTIVITIES SUFFERED

reasons lab dip initial fabric bulk fabric embroidery fit sample pp sample ad sample fusing ring adjuster crochet lace smocking heat seal label stike off buttons

delay avg frequency 21.67 6 20.17 6 44.38 8 25.00 2 23.13 8 14.33 3 18.60 5 16.50 4 15.67 3 12.00 1 23.00 1 44.00 1 34 2 16 1

Activities suffered(approval)
50.00 40.00 30.00 20.00 10.00 0.00
44.38 44.00 34 21.6720.17 25.0023.13 23.00 18.6016.5015.67 14.33 12.00 16

delay avg

ACTIVITIES SUFFERED (PARETO CHART)

activities suffered
100.0% 300.00 87.2% 82.3% 250.00 77.3% 92.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 34 25.00 23.13 23.00 21.67 20.17 18.60 16.50 16 15.67 26.33 10.0% 0.0%

71.7%
65.5% 200.00 Activities 51.9% 150.00 37.3% 100.00 26.9% 50.00 44.38 44.00 13.5% 44.9% 58.9%

0.00

Delay

PLANNED AND ACTUAL DATE

Average delay : 25.3 days Avg delay
60.0 50.0 40.0 30.0 20.0 10.0 0.0 14.7 6.3 7.5 48.5 36.1 32.4 29.6 37.0 37.0

33.3

24.7 25.9
14.0

29.0

25.3

4.0
avg

APPROVAL DATES
Early approval for 10 styles :164 days Late approval for 10 styles: 188 days Difference for styles: 24 Difference for 1 style : 2.4 days

Delay frequency (agent)

on time early late freq

31%

22%

47%

NUMBER OF REDOES
Activities
lab dip initial fabric bulk fabric Embroidery fit sample pp sample ad sample Fusing ring adjuster crochet lace Smocking heat seal label stike off Buttons

Cost/ submit (Rs.)

26.1 8.7 15.5 4.6 264.4 264.4 264.4 2.6 0.5 11.8 16 1.4 15.5 4.3 900.2

Avg. no. of submits

3.6 2.8 6.2 2.4 3.0 1.9 1.6 2.0 1.8 2.0 2.1 2.6 3.4 2.1

Total cost
94.0 24.4 96.1 11.0 793.2 502.4 423.0 5.2 0.9 23.6 33.6 3.6 52.7 9.0 2072.7

FMEA
Style 1 Style 2 Style 3

SYSTEM DESIGN
Checkpoint

forms

Web

application

Pattern request Sample request Embellishment request Washing request Final check request

FMEA Submit records Time and action Check points Reports

SUGGESTIONS
Checkpoints implementation. Checkpoints printout on red A-4 paper for URGENT requirement. Urgent request should be authorized by DMM. Signature of the concerned person on the checkpoint form. Highlighting of important points in the techpack. Implementation of web application.

RESULT Reduction of the resubmission from 2.68 to 1.83 Total saving per style= 2072.71597.38 = 475.32 INR

Activities lab dip initial fabric bulk fabric embroidery fit sample pp sample ad sample Fusing ring adjuster crochet lace smocking heat seal label stike off buttons

Cost/ submit (Rs.) 26.1 8.7 15.5 4.6 264.4 264.4 264.4 2.6 0.5 11.8 16 1.4 15.5 4.3

Avg 2.6 1.8 3 2.2 2.6 1.4 1.2 1.4 1.6 1.6 1.2 1.4 2 1.6
1.83

Total Cost 67.86 15.66 46.5 10.12 687.44 370.16 317.28 3.64 0.8 18.88 19.2 1.96 31 6.88
1597.38

PLANNED DATE AND ACTUAL DATE

DIFFERENCE Average delay before implementation = 25.3 (days) Average delay after implementation = 10.56 (days) Days saved =14.74 (days)
Avg delay
25.0 20.2 20.0 15.0 10.6 11.2 10.4 7.4 4.0 4.8 5.2 1.8 avg 14.8 9.0 13.3 17.5 15.6 12.6

10.0
5.0 0.0

SUMMARY OF THE RESULT (PER STYLE)

Preimplementation Postimplementation Difference Percentage

Delay due to rejection Delay due to late in submission No. of redoes

26.43 (days)

20.9 (days)

5.53(days)

20.92%

25.3 (days)

10.56 (days)

14.74 (days)

58.26%

2.68 (submissions)

1.83 (submissions)

0.85 (submissions)

31.72%

Cost of redoes

Rs. 2072.7

Rs.1597.38

Rs.475.32

22.93%

LIMITATION

Designed for a specific team and has to be generalized. The severity, occurrence and detection rating has to be tailored as per the team. The performance evaluated is limited by the data collected. The project was stationed at the merchandising department. Manufacturing part is not covered. Due to time constraint post implementation shipment details could not be analyzed.

SCOPE Standardization of risk management system of all the teams. FMEA studies for production department. Standardization of the web application. Modification of features. Integration with the existing ERP system Movex.

CONCLUSION

Proactively identifying risks and taking measures to mitigate them > fire fighting. Proper tracking and record maintenance = save cost and time. Benefits of better decisions, fewer surprises, improved planning, performance and effectiveness and improved relationships with stakeholders.

THANK YOU