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Big Bazaar is a chain of hypermarkets in India, with more than 100 stores in operation. It is a subsidiary of Future Group Venture Ltds, and follows the business model of United States-based Wal-Mart. Big Bazaar, is the chain of retail stores of the big banner Pantaloon Retail (India) Ltd., which in turn is a segment of the Kishore Biyani, regulated Future Group of Companies. Moreover the customer friendly ambiance and the organized retailing of products also make Big Bazaar one of the successful retail companies in India.
1. Big Bazaar: Overview
Big Bazaar hypermarket is offering a huge array of goods of good quality for all at affordable prices. Big Bazaar has no doubt made a big name in the retail industry of India, moreover shopping here is further made a memorable experience with the varied rates of discounts on products as well as discount vouchers available in a variety of amounts, like INR 2000, INR 3000, INR 4000, INR 5000 and INR 10000 on all Big Bazaar products and accessories.
1.1 Product range in Big Bazaar
This large format store comprises of almost everything required by people from different income groups. The added advantage for the customers shopping in Big Bazaar is that there are all time discounts and promotional offers going on in the Big Bazaar on its saleable products.
1.2 Significant Features of Big Bazaar
Shopping in the Big Bazaar is a great experience as one can find almost everything under the same roof. It has different features which caters all the needs of the shoppers. Some of the significant features of Big Bazaar are:
1.3 Big Bazaar- Objective
In this new era, design is helping companies to sell differentiated experiences and solutions that connect with the consumer’s emotions.
It’s not just the matter of selling products and services nor just completing transactions in the need to achieve targets. Every customer is an opportunity to build a relationship and invite the customer to become a part of the new transformational scenario. Design management is helping us position the customer at the centre of every decision we take and also operate with true entrepreneurial spirit.
1.4 Big Bazaar- Target customers
Big Bazaar targets higher and upper middle class customers because there has been growth in Indian middle class that has so far been used to buying apparel and groceries from small and cluttered unorganised shops is fast realizing the joys of visiting malls that have redefined the freedom to shop and entertain. Such malls are the new temples of leisure and weekend entertainment.
1.5 Food Bazaar
Food Bazaar (Future Group) is a Private Sector Organisation that offers services in Retail with Annual Total Turnover of 250-500 Crores and with Employee Strength of 501-1000.
2. Vision and Mission
Future Group shall deliver everything, everywhere, every time for every Indian Consumer the most profitable manner.
We share the vision and belief that our customers and stakeholders shall be served only by creating and executing future scenarios in the consumption space leading to economic development.
We will be trendsetters in the evolving delivery format, creating retail realty, making consumption affordable for all customer segments- for classes and masses.
We shall infuse Indian brands with confidence and renewed ambition.
We shall be efficient and cost conscious and committed to quality in whatever we do.
We shall ensure that our positive attitude, sincerity, humility and united determination shall be the driving force to make us successful.
3. Organisation Chart
4. EXISTING ARCHITECTURE of IT System(Hardware)
The company maintains a 3 tier architecture.
Figure 1 Source: www.cardisoft.eu
4.1 Client: The client represents the face of IS, through which data relating to various retail operations could be keyed in and data stored in database can be extracted. It constituted the Terminals at the counters.
4.2 Application Server: The middle tier will comprise of clustered servers also called transaction servers, as they facilitate transactions taking place in the big bazaar. This is essential for the system to handle high workloads, especially during peak hours. The middle tier will serve as an interface between the clients and the database. The application server runs on a Dell Server.
4.3 Database Server: The database server will receive and process queries received from the middle tier transaction servers. All the data will be stored in this database server. The database server is located in Mumbai. The system runs on a HP Super dome server on HP UNIX 11i and the database is from Oracle.
4.4 Inventory management: For this bar-coding is used. Around 80 bar-coding machines are used in Calicut Big bazaar branch.
4.5 Personnel management: For this attendance swapping machines are in place to keep track of in and out time of employees. Also an IT system, called the PECK system, is used for automatic ordering of items whose stock goes below a minimum prescribed level. The reorder level depends on the Minimum Base Quantity (MBQ). Suppose,
MBQ = 10
Reorder level = 5
Now, whenever the quantity of this item in stock goes below 5, an automatic purchase order is sent to the centralised warehouse.
5. ANALYSIS OF THE EXISTING IT INFRASTRUCTURE
5.1 SAP ERP (R/3)
The SAP ERP application is an integrated enterprise resource planning (ERP) software manufactured by SAP AG that targets business software requirements of midsize and large organizations in all industries and sectors. It allows for open communication within and between all company functions for Big Bazaar. With the advent of distributed client-server computing SAP AG brought out a client-server version of the software called SAP R/3 (The “R” was for “Real-time data processing” and 3 was for 3-tier). This new architecture is compatible with multiple platforms and operating systems, such as Microsoft Windows or UNIX. This opened up SAP to a whole new customer base like retail market such as Big Bazaar. SAP R/3 was arranged into distinct functional modules, covering the typical functions in place in an organization. The most widely used modules were Financials and Controlling (FICO), Human Resources (HR), Materials Management (MM), Sales & Distribution (SD), and Production Planning (PP).
Each module handles specific business tasks on its own, but is linked to the others where applicable. For example, an invoice from the billing transaction of Sales & Distribution of Big Bazaar would pass through to accounting, where it will appear in accounts receivable and cost of goods sold.
5.2 Technology of SAP ERP(R/3)
SAP based the architecture of R/3 on a three-tier client/server as stated above in infrastructure.
5.2.1 Client Server
The Client server is actually a program named sapgui.exe. It is usually installed on a user’s workstation. To start it, the user double-clicks on an icon on the desktop or chooses a menu path. When started, the presentation server displays the R/3 menus within a window. This window is commonly known as the SAPGUI, or the user interface (or simply, the interface). The interface accepts input from the user in the form of keystrokes, mouse-clicks, and function keys, and sends these requests to the application server to be processed. The application server sends the results back to the SAPGUI which then formats the output for display to the user.
5.2.2 Application Server
An application server is a collection of executable s that collectively interprets the ABAP/4 (Advanced Business Application Programming / 4th Generation) programs and manages the input and output for them. When an application server is started, these executable s all start at the same time. When an application server is stopped, they all shut down together. The number of processes that start up when you bring up the application server is defined in a single configuration file called the application server profile. Each application server has a profile that specifies its characteristics when it starts up and while it is running. For example, an application server profile specifies number of processes and their types, amount of memory each process may use, length of time a user is inactive before being automatically logged off.
The Application layer consists of one or more application servers and a message server. Each application server contains a set of services used to run the R/3 system. Not practical, only one application server is needed to run an R/3 system. But in practice, the services are distributed across more than one application server. This means that not all application servers will provide the full range of services. The message server is responsible for communication between the application servers. It passes requests from one application server to another within the system. It also contains information about application server groups and the current load balancing within them. It uses this information to choose an appropriate server when a user logs onto the system.
The application server exists to interpret ABAP/4 programs, and they only run there-the programs do not run on the presentation server. An ABAP/4 program can start an executable on the presentation server, but an ABAP/4 program cannot execute there. If your ABAP/4 program requests information from the database, the application server will format the request and send it to the database server.cvb.
5.2.3 Database Server
The database server handles the user’s request for addition, retrieval and modifications in the data. The system runs on a HP Super dome server on HP UNIX 11i and the database is from Oracle. It is located in Mumbai and centrally stores data for each Big Bazaar in these small cities.
5.3 Implementation of SAP ERP
SAP ERP in Big Bazaar consists of several modules including: utilities for marketing and sales, field service, product design and development, production and inventory control, human resources, finance and accounting. SAP ERP collects and combines data from the separate modules to provide the Big Bazaar with enterprise resource planning.
Although there can be major benefits for Big Bazaar of SAP ERP, the implementation and training costs are expensive. It has overcome with problems when implementing SAP ERP software, such as: failing to specify their operation objectives, absence of a strong commitment or positive approach to change, failing to deal with organizational differences, failing to plan the change to SAP ERP properly, inadequate testing. All these factors which cause unsuccessful implementation of SAP ERP didn’t affect in Big Bazaar and it came successfully in overcoming them. SAP ERP is implemented correctly in BIG BAZAAR due to which it has gone from its old calculations system to a fully integrated software package. Potential benefits that it had gained from it are efficient business process, inventory reduction, and lead time reduction.
An integral part of the implemented IT infrastructure is the SAP Enterprise Resource planning system. The package has a range of functions and provides a range of benefits to the company in the following areas:
5.3.1 Billing System
The company has successfully implemented an ERP system with a comprehensive set of accounting applications. This helps in integrating the cost, profit, and revenue information of sales that are made, and presents in a granular way. The system is a very robust one that has failed only once in the past 3 years.
5.3.2 Inventory Replenishment
Inventory management is a very critical function for a store like Big Bazaar that deals with a variety of products involving wide categories like FMCG, Staple items, fruits, vegetables, footwear, etc. All these different products required different levels of inventory. A dating structure is set up based on the past data for each data which allows the company to be informed of when their inventory should be updated. This is important, because it allows the company to keep close track of their stock and helps maintain communication simple between different units of the supply chain management
5.3.3 Order Tracking
On the business side ERP is useful in order tracking. When the company receives orders for a product, being able to properly track the orders allows the company to get detailed information on their customers and marketing strategies. If different software packages are being used, this data may not be consistent.
5.3.4 Customer Relationship Management
ERP is highly useful in Customer Relationship Management as it helps in providing the best customer services by immediately attending the customer queries and with timely delivery of products. All customer delays have been effectively removed by the implementation of the ERP system as it aids in resolving the customer payments well before the scheduled deadline.
6. Why Outsourcing?
The reasons which drove Big Bazaar to outsource to Wipro Technologies are:
Big Bazaar is a fully centralized system in integration with the Mumbai Head office. The payment of all the stakeholders are been done through Mumbai branch. A message is triggered to the Mumbai Head Office the instant the inventory level falls below a minimum prescribed level; the optimum quantity is being supplied to maintain the Maximum Base Quantity (MBQ).
To maintain this dynamism across all the outlets and to gain the benefits of volume discount, a sophisticated IT system is required.
The core competency of the Big Bazaar is in retailing and this application system is a support-oriented information resource management (as in Mac Farlan’s Strategic Grid).
Hence, outsourcing was a viable option for Big Bazaar on account of the following reasons:
Access to higher professionalism
Risk of inappropriate IT architecture is reduced.
Maintenance of skilled staffs is not needed and the management can concentrate on the core business activities.
Subscribing is relative cheaper compared to purchasing a new technology. In addition, outsourced vendor would upgrade to new technology as and when needed.
7. Vendor Selection Process
Big Bazaar was diligently involved in the selection of the vendors to outsource. The steps it took to finalize the vendor were as follows:
They identified the requirements (functional and non-functional) and prepared an exhaustive list of the vendors’ software available in the market.
2. They narrowed down the list of vendors based on the non-functional requirements. The list included Wipro, Infosys, Patni Computers, TCS, etc.
3. They sent the Request of proposal (RFP) to the prospective vendors asking for information relevant to their service capabilities across a spectrum that includes financial, technical, and operational information.
4. Based on the responses of the vendors, they selected WIPRO for outsourcing.
8. Advantages & Disadvantages of Existing IT Structure
The advantages of such an infrastructure can be concluded as follows:
The architecture deployed currently has been modelled to facilitate the scale of operation of the company. For instance the application servers can be deployed on many machines. Also, the database no longer requires a connection from every client — it only requires connections from a smaller number of application servers. In addition, many Transaction Processing Monitors could be used to balance loads and dynamically manage the number of application server(s) available.
A replication of the same logic can be initiated from many clients or applications. Since the method of operation is standardized across all the outlets so a mechanism which can be replicated at less cost, reduces complexity and leads to optimum utilization of the resources.
Implementation of security mechanisms at multiple levels (not just the database) improves the security level. Security can be granted on a service-by-service basis. The placement on a very secure central server makes the business logic more secure.
Any new policy changes like discount offers and other incentives can be easily incorporated to the complete business logic by simply updating a few application servers and do not have to be implemented individually across all the clients.
The operations associated with the organization require the system to support numerous transactions, at the time of high sales. Such situations make use of redundant application servers and redundant database servers. Thus, it is possible to architect an application which can recover from network or server failures.
Hidden Database Structure
In order to facilitate the simultaneous transparent database changes, the actual structure of the database is hidden from the caller. Hence, it is possible that a service in the middle tier that exchanges information/data with other applications could retain its original interface while the underlying database structure was enhanced during a new application release.
Along with the advantages of the IT Infrastructure, some disadvantages also exist:
Inventory management System’s inefficacy often leads to problems: Big bazaar’s inventory management inventory, centrally connected to its head office, has often led Big Bazaar into big troubles including recent example of Sabse Sasta Din (On the eve of Republic Day) where many of its stores had to shut after overwhelming demand and insufficient inventory. This failure in inventory management caused Big Bazaar huge revenue loss as well as bad publicity.
Centrally managed system has its disadvantage too. The staff at its outlet has negligible knowledge of its IT infrastructure details. They generally lack the skills to treat the problems at their own. As all the control lies with Mumbai head office, thus in case any problem arises in system, either the store manager has to take help from its outsourcing partner or Head office IT team. The time delay in the procedure often cost it a substantial amount of business.
Big Bazaar IT infrastructure lags as compare to its global competitors (who are set to enter Indian Markets) in terms of effectiveness of its Data Mining system. The data mining system enables the retailer to critically analyze and select its consumer segments and its specific needs and thus coming up with schemes to target them.
Although existing customer billing system is very robust (failed only once in last 3 years: Kozhikode outlet), it often turns into bottleneck leading to longer queues and thus increased service time. The problem becomes worse during peak customer hours and the system proves to be Achilles heel during above estimated demands (recently in Sabse Sasta Din offer; 26 Jan 2011).
9. Security at Big Bazaar IT System
In recent years, the retail sector has become the targets of spear phishermen, a particularly devious and hard to detect targeted attack, according to the cyber security firm Message Labs Intelligence. In a targeted attack, cybercriminals go after only a few individuals within a particular company in the hopes of compromising the individual’s machine and gaining access to sensitive data, intellectual property, or confidential internal systems.
IP surveillance and automation is very difficult in retail sector, hence most retailers take other measures to ensure a secure network like backups of all application data, operating system, databases and files were taken on a daily basis onto tape drives and even on disk. All the backup media was stored offsite on a daily basis. Weekly and monthly backup tapes are stored at remote locations. If the OS or application software conks off, data can be restored by reinstalling the concerned software and retrieving the latest data backup.
IT Security in Big Bazaar Currently
10. Business Process Model
The business process model elaborates the individual processes involved in servicing the customer and the areas where IT plays an integral role in servicing the customer.
Fig: Business Process Model of Big Bazaar
The key processes involved in the completion of a transaction at Big Bazaar could be described as follows:
The customer selects an item to buy
The customer places the order
The order is then processed when the customer makes the payment
If the payment is correct then the inventory level of the corresponding item is reduced by one and the transaction is complete
However if the payment is not correct then the customer is intimated regarding the problem. If the customer still wishes to complete the transaction then he pays the appropriate amount else he decides to cancel the order if he does not have enough cash at disposal
After the inventory level is reduced by one, it is checked if the current inventory level is critical
If the inventory level is not critical then the transaction can be considered to be totally complete and the system is prepared for the next transaction.
However, if the inventory level is critical i.e. based on the MBQ system, an automatic reorder procedure is activated
This involves sending out a request for invoice order and another one for shipping order
Once the invoice data is validated with the accounts department, the invoice is raised and forwarded
Once the invoice order is complete, the items are packed and then shipped from the suppliers to the warehouse which stores the inventory
Once the inventory has been received at the warehouse, the inventory level is updated
From the above description it can be observed that IT plays a crucial role in three key areas namely Payment Processing, Inventory Management and Managing accounting information.
Payment processing software records the payments received from the customers and keeps track of the sales amount generated on a day to day basis to understand the customer behaviour. The role of IT in Inventory management is critical in ensuring automatic replenishment of the inventory whenever the quantity goes below the critical level. Finally the accounting system has to make sure that all the goods received and the invoices generated are in correspondence and to detect and prevent anomalies that might arise out of errors committed both intentionally and unintentionally into ballooning into a huge problem for the company. It is important that the above systems are properly in place for the efficient functioning of the day to day business activities.
11. Logical Design of Big Bazaar
In the logical diagram various processes are shown with the help of entities and their attributes. Various entities that are used in Big Bazaar are so linked with each other.
Fig: Logical Diagram of Big Bazaar
Following is the brief introduction about each entity and its attribute:
HO Site: it is central point in the database unit, which controls all the departments. It controls various operations like maintaining inventory, organizing suppliers, and giving salaries to employees and billing to the customers.
HO Employee: It defines the employees who will operate the HO site. They can make changes in the database of the product, and can even define new levels of cut off points for both inventory and shelf.
Employee: It defines all the employees working in various departments. This entity will be accountable for their salaries, their performance, their timings and their attendance. All the incentives will be decided after seeing the performance graph of the employee, which will be generated through the DBMS.
Product: This entity will define all the information about the product. It will tell the cost of the product, its unique ID code, its supplier, its self life.
Supplier: As there are too many suppliers in the market who will be supplying their products to big bazaar. This entity will help to maintain their database. It will tell about the supplier name, location, product supplied by him, and about billing of the supply.
Purchase rec.: This will tell about the purchase record of a particular product by the customer. It will tell the name of customer who purchased the product, date of purchasing, quantity purchased etc.
Customer: The end point of the business is customer. To create the database of the valuable customers, you should know name, address, and product & in what quantity they purchase.
Inventory: It is the store where all the products are placed before bringing them to the shelf. The supplies directly come to the inventory.
12. Use Case Diagram
The major actors in this use case diagram are:
Kozhikode branch employee
Mumbai Head office employee
The customer selects the goods he wants to buy and goes to the counter where the customer pays the amount. The employee at the counter enters the data in the database which is updated on the continuous basis. This database in turn is connected to the Mumbai database. Thus the entry made by the Kozhikode employee gives the inventory, sales etc status of the Kozhikode branch to the head office. Next, Mumbai head office checks the inventory level of the stock and if found to be below minimum base quantity level, then order is placed to the supplier regarding the same. The suppliers get the order request from the head office through the centrally connected database. All other functions of the Kozhikode branch are carried out in a similar manner.
Fig: Use Case Diagram
13. Module distribution Diagram of Big Bazaar
The value chain across which Big Bazaar operates is as shown below. First the vendor selection takes place. Than the centralized planning and merchandising is done for each of these stores according to the demand. Then the procurement of the goods takes place according to the forecast and plan. The goods are then distributed to each of the city branches. Then it is sold to the customers where the value chain is completed.
We can divide these into four different categories. They are Planning, Store management, Buying and Supply Chain. For planning the modules of SAP used are supply Chain Management, Production Planning and Sales and Distribution. For store management Customer Relationship management, Sales and Distribution Management, Material Management and Customer Service modules are used. For Buying Supplier Relationship management and Material management modules are used. And for supply chain activities Sales and distribution, Logistics and Logistics Execution modules are used.
Fig: Module Distribution Diagram of Big Bazaar
14. Scope of Improvement
Despite the various advantages that IT infrastructure has bestowed on Big Bazaar, there is still a varied scope of improvement that the organization can employ:
Big Bazaar can update the technology system by implementing WMS with RFID, Customer intelligence and CRM, Inventory and Promotions Optimization.
On account of the heavy rush on the weekends and the festival season, the available number of terminals is unable to meet the demand quickly. Hence, the customers have to wait in queue for longer period. However, there are certain floors wherein the terminals are idle as the demand for those items are not that high. Hence, the firm can decide to exchange the location of computers from less used areas to highly used ones.
15.1 Improving Warehouse Management by strategic use of IT
Big Bazaar faces many challenges. Not only it has to manage and coordinate a large number of local, regional, across complex supply chains but also the customers demand an increasingly large variety of products and faster deliveries, which often means that it has to hold smaller quantities of a larger range of SKUs. To satisfy customer demands and execute on its business strategies, you need a complete and accurate picture of where inventory is deployed and of its movement across the supply chain network. At the same time, you need to keep supply chain costs low, especially given fuel costs. Optimizing transportation management – and synchronizing it with warehousing plans to meet fluctuating customer demands and store needs -is essential to competing successfully when margins are tight.
Warehouse management can be further refined by the application of RFID technology. RFID will help Big Bazaar to align and optimize its task execution -which will include its loading time, sequence, and use of staging areas and bays – with the supply chain events that occur outside of the warehouse. This use of technology can be easily integrated with the SAP Supply Chain Management (SAP SCM) application, which provides an integrated supply chain solution. In the long run it will provide the necessary visibility and control needed to optimize logistical execution for competitive advantage.
There is a lot of scope for improvement in warehouse management. The direct tangible benefits that Big Bazaar will accrue are with the following components:
Re-Defining a Complete Warehousing Plan- Optimizing warehousing as part of a demand-driven supply chain model, with a comprehensive plan to manage activities every step of the way.
Order Management – Integration of the new SAP EWM with existing SAP ERP for comprehensive order management.
Warehouse Planning and Inventory Tracking and Tracing – Once you define the high-level plan, you can focus on optimizing activities within each supply chain location. Support for cross-docking enables a direct flow from goods receipt to goods issue. The application also supports the tracking and tracing of inventory down to granular levels of detail -information needed to initiate recalls. RFID technology makes these tasks more efficient and ensures accuracy.
Material Flow System – SAP EWM offers complete material flow control without additional software – allowing all programmable logic controllers to be connected to SAP EWM via remote function call (RFC) adaptors. To help ensure that goods keep moving inside the warehouse and to avoid unnecessary (and costly) manual intervention, the system offers high performance. That level helps ensure that a carton can be scanned, compared to the expected size and weight, and have a determination made about where it should be sent – in less than a second.
Tracking and Management of Warehouse Activities – SAP EWM provides enhanced monitoring features for tracking and managing warehouse activities. A warehouse cockpit provides an overview of key processes, costs, schedules, and value added services. This real-time visibility helps you manage daily operations and optimize the use of labour. You can plan ahead for upcoming activities, assign resources to tasks, and identify ways to minimize time per process step or eliminate steps.
With SAP Extended Warehouse Management and RFID Technology application, Bi
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