NATIONAL INSTITUTE OF FASHION TECHNOLOGY

BENGALURU (2015 -2017)

SUPPLY CHAIN MANAGEMENT

MFM SEMESTER- III

Assignment One
Supply Chain Models of Fashion &
Lifestyle Companies (Globus and AliBaba Group)

K.P. Anirutha Sri - MFM/15/323

Amrita V Arora - MFM/15/332
Pranpratim Ron Bhuyan - MFM/15/40
Saadana J - MFM/15/18

Under the guidance of

Mr. Pratik Ghosh

Declaration

We hereby declare that the report entitled

Supply Chain Models of Fashion and Lifestyle companies submitted to NIFT
Bengaluru is a record of original work done by us under the guidance of Mr. Pratik Ghosh.
Assistant Professor, FMS, National Institute of Fashion Technology, Bengaluru, and this
project work is submitted in the partial fulfilment of the requirements for the award of the
degree of Masters of Fashion Management. The results embodied in this report have not
been submitted to any other university or institute for the award of any degree or diploma

Amrita Arora

Anirutha Sri

Pranpratim Bhuyan

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Saadana S

Acknowledgement

We would like to express our sincere gratitude to Mr. Pratik Ghosh for his continuous
support, his patience, motivation, and immense knowledge.
His guidance helped us in all the time of research and writing of this report.
We would also like to thank our fellow classmates for the stimulating discussions,
brainstorming sessions and the sleepless nights we were working together to meet the
deadlines.

Amrita Arora

Anirutha Sri

Pranpratim Bhuyan

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Saadana S

Executive Summary

The fashion industry has short product life cycles, tremendous product variety, volatile and
unpredictable demand, and long and inflexible supply processes. These characteristics, a
complex supply chain and wide availability of data make the industry a suitable avenue for
efficient supply chain management practices. The industry has also been in a transition
over the last 20 years: significant consolidation in retail, majority of apparel manufacturing
operations moving overseas and, more recently, increasing use of electronic commerce in
retail and wholesale trade. This paper aims to review the current state of operations and
recent trends across the fashion supply chain in the US. We use industry-wide data,
articles from business journals, industry reviews and extensive interviews with an apparel
manufacturer in California, and a major US department store chain to describe the current
operational practices and how the industry is restructuring itself during the transition,
focusing at the apparel manufacture and retail segments of the supply chain.
Retailing has entered a new age in which consumers are demanding and expecting all
store owners to offer a multichannel shopping experience, delivered seamlessly across
mobile, online, and in-store merchandising platforms. Virtually all of the growth in retail
sales over the next few years will come from multichannel venues, driven primarily by the
impact of digitisation the changes in peoples lives as smartphones, tablets, and highbandwidth connections become prevalent.
Retailers can choose among six different supply chain models to operationally support
seamless multichannel shopping experiences. In making this choice, each retailer will
have to decide between independent and shared supply chains, and whether to build them
internally or through outsourcing. These choices will depend on the retailers overall value
creation proposition. Each retailer has a distinctive way to play that combines a business
model, customer expectations, and distinctive capabilities to set a strategy for driving
growth, profitability, and long-term success.

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Table of Contents
Executive Summary .................................................................................................... 04
Chapter 01: Supply Chains in Fashion & Lifestyle Industry ................................... 06
1.1 Nature of Fashion Markets ................................................................................. 08
Chapter 02: AliBaba Group Holding Limited: Introduction ...................................... 07
Chapter 03: AliBaba Group Supply Chain Overview ................................................ 08
3.1 Business Model .................................................................................................. 08
3.2 Logistic Service Development ............................................................................ 08
3.3 Value Propositions, Value Chains, and Supply Chains ...................................... 09
3.4 The AliBaba Workflow ........................................................................................ 11
3.5 Alibabas Role in a Customers Supply Chain .................................................... 11
Chapter 04: Logistics and Supply Chain Stages ...................................................... 12
4.1 Stage One .......................................................................................................... 12
4.2 Stage Two ........................................................................................................... 14
4.1 Stage One .......................................................................................................... 16
Chapter 05: Future of AliBaba Supply Chain ............................................................ 17
Chapter 06: Globus: Introduction .............................................................................. 18
Chapter 07: Globus Supply Chain Overview ............................................................ 21
Chapter 08: Logistics and Supply Chain Stages ...................................................... 23
8.1 Warehouse ......................................................................................................... 23
8.2 Information Handling System ............................................................................. 23
8.3 Inventory Management ....................................................................................... 24
8.4 Transportation ..................................................................................................... 24
8.5 Information Flow ................................................................................................. 25
8.6 Technology ......................................................................................................... 25
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Chapter 09: Inward Process in Warehouse ............................................................... 26

9.1 Documents check ............................................................................................... 26
9.2 Stock Transfer Order (STO) ............................................................................... 26
9.3 Purchase Order (P.O.) ........................................................................................ 27
Chapter 10: Warehouse Storage Process ................................................................. 29
10.1 STN is drawn from SAP .................................................................................... 29
10.2 Check availability of stock through SAP ........................................................... 29
10.3 Pick list is made according to the STN ............................................................. 30
10.4 Employees pick items according to the pick list ............................................... 30
10.5 Items are scan through the SAP ....................................................................... 30
10.6 Pre Delivery Investigation (PDI) of stock .......................................................... 30
10.7 Stock is packed ................................................................................................ 31
10.8 Documentation ................................................................................................. 31
10.9 Outward Entry Register .................................................................................... 31
10.10 Dispatch of stock ............................................................................................ 31
Chapter 11: Points of Comparison: Globus v/s AliBaba .......................................... 32
Conclusion ................................................................................................................... 34
Bibliography and References ..................................................................................... 35

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List of Tables and Figures

Figures
Figure 01: General Order Fulfilment Process ............................................................... 10
Figure 02: Value Propositions and Value Chain ........................................................... 11
Figure 03: Value Propositions and Value Chain ........................................................... 12
Figure 04: AliBaba Workflow ......................................................................................... 13
Figure 05: AliBabas Role in SCM ................................................................................. 13
Figure 06: AliBabas Order Fulfilment at Stage One ..................................................... 14
Figure 07: AliBabas Order Fulfilment at Stage Two ..................................................... 16
Figure 08: AliBabas Order Fulfilment at Stage Three .................................................. 18
Figure 09: Efficient Supply Chain ................................................................................. 21
Figure 10: Process Flow of Globus ............................................................................... 22
Figure 11: STO Movement ............................................................................................ 27
Figure 12: PO Format ................................................................................................... 27

Tables
Table 01: Comparison between Globus and AliBaba ................................................... 32

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Chapter 01
Supply Chains in Fashion & Lifestyle Industry
Fashion markets are synonymous with rapid change and, as a result, commercial success
or failure in those markets is largely determined by the organisations flexibility and
responsiveness. Responsiveness is characterised by short time-to-market, the ability to
scale up (or down) quickly and the rapid incorporation of consumer preferences into the
design process. In this paper it is argued that conventional organisational structures and
forecast-driven supply chains are not adequate to meet the challenges of volatile and
turbulent demand which typify fashion markets today. Instead, the requirement is for the
creation of an agile organisation embedded within an agile supply chain.
1.1 Nature of Fashion Markets
Fashion is a broad term which typically encompasses any product or market where there
is an element of style which is likely to be short-lived. We have defined fashion markets as
typically exhibiting the following characteristics:

Short life-cycles: the product is often ephemeral, designed to capture the mood of the
moment: consequently, the period in which it will be saleable is likely to be very short
and seasonal, measured in months or even weeks.

High volatility: demand for these products is rarely stable or linear. It may be
influenced by the vagaries of weather, films, or even by pop stars and footballers.

Low predictability: because of the volatility of demand it is extremely difficult to

forecast with any accuracy even total demand within a period, let alone week-by-week
or item-by-item demand.

High impulse purchasing: many buying decisions by consumers for these products
are made at the point of purchase. In other words, the shopper when confronted with
the product is stimulated to buy it, hence the critical need for availability.

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Chapter 02
AliBaba Group Holding Limited: Introduction
Alibaba Group Holding Limited s a Chinese e-commerce company that provides
consumer-to-consumer, business-to-consumer and business-to-business sales services
via web portals. It also provides electronic payment services, a shopping search engine
and data-centric cloud computing services. The group began in 1999 when Jack Ma
founded the website Alibaba.com, a business-to-business portal to connect Chinese
manufacturers with overseas buyers. In 2012, two of Alibaba's portals handled 1.1trillion
yuan ($170billion) in sales.
Founded in Hangzhou in eastern China, Alibaba.com has three main services. The
company's English language portal Alibaba.com handles sales between importers and
exporters from more than 240 countries and regions. The Chinese portal 1688.com was
developed for domestic business-to-business trade in China.
Suppliers from other countries are supported (with more stringent checks than for Chinese
companies), but the company primarily operates in the People's Republic of China (PRC).
At closing time on the date of its initial public offering (IPO), 19 September 2014, Alibaba's
market value was US$231billion.
Alibaba's consumer-to-consumer portal Taobao, similar to eBay.com, features nearly a
billion products and is one of the 20 most-visited websites globally. The Group's websites
accounted for over 60% of the parcels delivered in China by March 2013, and 80% of the
nation's online sales by September 2014. Alipay, an online payment escrow service,
accounts for roughly half of all online payment transactions within China.
Alibaba is planning to enter India and was in talks with Snapdeal in September 2014.
[Alibaba

reported sales of $14.32billion on China's Singles' Day on 11 November 2015, up

60 percent from 2014. It is the world's largest retailer as of April 2016. Alibaba entered
India's e-commerce space with 25% stake in Paytm owner One97.

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Chapter 03
AliBaba Group Supply Chain Overview
3.1 Business Model
The business model of Alibaba is very simple. It is to help sellers meet buyers. More
specifically, it provides an Internet based business-to-business (B2B) platform where
sellers (suppliers / manufactures) can meet buyers (outsourcers / wholesalers) on a global
scale. The company offers two platforms, one in Chinese for Chinese businesses, and
another in English for the other international customers. Customers are both the sellers
and the buyers, who are able to post storefronts to advertise their products or needs.
Alibaba offers several services to aid the e-commerce, some of which are free and come
with the basic account, and others must be paid for. Income is primarily generated from
suppliers who purchased services to be listed on the site, such as priority placement in
industry listings and searches. By June of 2007, Alibaba had over 19.8 million registered
users, with 16.6 within its Chinese marketplace. 219,098 of these 19.8 users where paying
members.
3.2 Logistic Service Development
The development of AliBabas logistic service can be divided into three stages according to
the time sequences. In general, the order fulfilment process can be described as below:

Figure 01: General Order Fulfilment Process

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3.3 Value Propositions, Value Chains, and Supply Chains

The operations of Alibaba can best be
understood through an analysis of its
value chain, which provides a framework
for its supply chain. Although most of
Alibabas customers use a traditional
supply chain for generating value for their
customers because they are dealing in
physical product, Alibabas model is a
modified one reflective of their entirely
virtual service nature. Traditionally, the
primary activities of a company included
inbound logistics or receiving supplies,

Figure 02: Value Propositions and Value Chain

manufacturing the product, and shipping it

out. Once the product is ready, the marketing
and sales team sells the product to customers and customer service works to ensure the
satisfaction of the customer. Each one of these steps increases the value of the final
product, from simply being a mix of supplies to a happy customer whose needs had been
met.
With the emergence of virtual service companies, the model has a need for change to
incorporate the different nature and timing of value adding procedures. The very first step
to creating value for these companies is to have customers from with to generate value
with and for. It is true that value is relative to the user regardless of whether the proposition
includes a physical product, only an intangible service, or a combination of both. The value
proposition of virtual service companies, such as Alibaba, however, is that they could
never make an offering without an initial customer to serve and give value to. In dealing
with models that involve the production of physical products, such as a car, a car can still
be manufactured without a customer, and at least have value to the manufacturer. Without
first having a customer, Alibaba has no platform for which to add value and offer value to
other customers. In light of this, the following model is proposed to incorporate the virtual
value and supply chain. For Alibaba, technology has incorporated operations on an
expanded scale.

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In light of this, the following model

is proposed to incorporate the
virtual value and supply chain. For
Alibaba, technology has
incorporated operations on an
expanded scale. Technology for
Alibaba is more than a way to
work more effectively and add a
few new value-added services; it is
fundamental for their business
model to generate their value and
revenues. Because the entire
value proposition is built upon the

Figure 03: Value Propositions and Value Chain

customers, marketing & sales and customer

service span the whole time of the value generating operations.
The three operational steps are then the inputs, operation of information, and outputs.
The inputs are the customers who join the service looking for a matching company for
their supply chain needs.
The operations of the website manipulate the information and generate business
connections the customers are using Alibaba for. These operations steps, done through
their technology, include gathering, organising, selecting, synthesising, and distributing
information.
Output for Alibaba is when a supplier and a buyer have formed a relationship and leave
Alibaba to finalise their transaction. This is different than the operations of a manufacturing
supply chain because supplies are the inputs and a finished product is the output. For
Alibaba, the service uses the information from the inputs to generate value for them.
To analyse this model closer, the typical trading process on the Alibaba marketplace is
entered into the model.iii Together, the two models show the value and supply chain of the
company from both the companys strategic point of view, and their functional point of
view, which is most often seen by their customers.
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3.4 The AliBaba Workflow

1. Suppliers and buyers post their listings,
matching the inputs from the companys
strategic perspective.
2. Listings are searched, contacts are made, and
information is exchanged between the suppliers
and buyers. This will often include product
specifications and capabilities.
3. This corresponds to the information manipulation
the companys servers and software use to

Figure 04: AliBaba Workflow

generate the value for the customers.

4. Customers then negotiate with each other, which is the outbound part of the workflow.
5. All of the communications for suppliers and buyers is enabled through tools within
Alibabas software.
3.5 Alibabas Role in a Customers Supply Chain
The result of this supply chain is the
value generated by each of its steps. To
better understand the value generated,
Alibabas role in the supply chains of
their customers must also be briefly
analysed.
The traditional value chain is again

Figure 05: AliBabas Role in SCM

displayed, as the vast majority of

Alibabas customers are on either the
inbound or outbound side of the manufacturing process. For buyers, Alibabas role in their
supply chain is connecting with suppliers who deliver a product. The buyers company then
processes their purchase according to their needs, markets it, and services the customer.
For Sellers, Alibaba shifts to the outbound and marketing aspects of a supply / value chain.
For sellers, marketing & sales is included because for many companies, their top method
of marketing is their presence on Alibaba.

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Chapter 04
Logistics and Supply Chain Stages
4.1 Stage One
In 2010, the website launched and UPS became its first logistic partner. The collaboration
with UPS lasts a year then the sole partnership ended. The reason that AliBaba chose to
collaborate with UPS was because UPS is one of the most prevailing and experienced
logistic companies in the world. Another reason to pick UPS over other logistic providers is
because UPS is a US based company, and US was AliBabas primary target market at that
time. In terms of services offered, UPS provides full logistic services for customers on
AliBaba including consolidation service, warehousing, order fulfilment and transportation.
At this stage, UPS is in a leading position over AliBaba in terms of negotiation power
because AliBaba is a new website with relatively low trading amounts. Thus, details
regarding logistic services were actually mainly determined by UPS. On the contrast, the
position of AliBaba was a follower in terms of logistic aspect. The aim of AliBaba at that
stage was to learn experiences from UPS on how to design logistic activities and details
such as logistic database integration, warehouse management etc. Because there are no
competitors over UPS at this stage, the customers get a 78% huge discount from UPS in
terms of delivery fee. The reason behind this huge discount is that AliBaba promised to
reach a certain amount of trading volume in a certain time so that UPS can receive
economy of scale advantages to keep offering such discount.

Figure 06: AliBabas Order Fulfilment at Stage One

Once a customer made an order on AliBaba, the seller will get a notice with details of
quantity, price etc. The customer may or may not contact the seller prior to order, which
depends on the description of the product, buyers knowledge of the product and
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complexity level of the product. After the seller got the details of the order, he/she will
approach the manufacturer and schedule the production and delivery plan. When the
product is ready to ship, the manufacturer will send the product to seller first then the seller
will do the packaging and call UPS for a pick up delivery. The final phase is completed by
utilising UPSs own equipment and services to send the product to the final customer.
The advantage of this order fulfilment process for AliBaba is that AliBaba does not need to
take care of the delivery of the product since UPS will cover it. If any problem occurs, the
seller or the customer will contact UPS first in terms of delivery problems and AliBaba will
not be involved. However, if UPS cannot resolve the problem, then AliBaba will be notified
to deal with the problem. Thus, AliBaba was able to invest more resources into core
activities such as website design, marketing and website optimisation etc., and keep a
dedicated team to handle logistic services and learn from UPSs experiences. However,
the disadvantage for AliBaba was that it had no control over the logistic activities. In terms
of UPS, it has no competitor at this stage and can also learn about AliBabas strategy and
operations so that it can decide whether AliEx-press is a promising business partner.
Moreover, UPS have more negotiation power over AliBaba at this stage, thus details
regarding the collaboration and profit share gave more benefits towards UPS.
After one year collaboration, AliBaba did not reach UPSs expectation and the partnership
ended by the end of 2010. At the same time, PayPal also decided to not support AliBaba
anymore. Thus the trading amount fell short for that duration. However, AliBaba was not
fully unprepared. Ms. Ye summarises this year as the learning year for AliBaba and it was
always tough for a newly launched business even within a well-established company. In
terms of logistic services, AliBaba has learned a lot that year from UPS and already began
to negotiate with other 3PLs to move into stage two, which means AliBaba was ready to
engage in logistic activities. Thus a new partnership deal with UPS was also undertaken at
that time, though the previous sole partnership has ended. To summarise, AliBaba gained
valuable experiences in terms of logistic activities. With the end of the partnership with
UPS, AliBaba was actually ready to move into stage two since multiple negotiations with
other leading 3PLs were developing and AliBaba was ready to handle the logistic strategy
by itself.

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4.2 Stage Two

In the beginning of 2011, more 3PLs joined AliBaba to offer logistic services including DHL,
EMS and FEDEX. UPS stays as a partner of AliBaba but without that 78% huge discount.
At this stage, AliBaba became much stronger in terms of resources and experiences.
However, the situation was not that optimistic for AliBaba because it has already lost a lot
of potential customers due to the ending of the partnership with UPS and PayPal.
Therefore, there was one less payment method and a relatively more expensive delivery
fee posing barriers to attract new customers and retain the old ones. Furthermore, existing
customers outside US were complaining that the shipping duration is too long and
sometimes cost almost a month to receive the product.
After several discussions with 3PL partners, AliBaba came up with a plan that is feasible
and easy to implement while can help reduce the delivery time and cut the cost
dramatically. AliBaba decided to bring out overseas warehousing services to match the
requirement of low costs and fast delivery. The general idea is that AliBaba will rent
warehouses overseas in major trading marketplaces including North and South America,
Europe and Asian Pacific region. Once orders have been received, AliBaba will sort orders
according to their destinations and share these data with 3PL partners. Then the chosen
3PL partners will consolidate the orders and send them to the target regions warehouse
for final delivery. Since more 3PL partners joined at this stage, different 3PLs have different
focus in terms of regions and countries. Therefore, AliBaba will promote different 3PL
partners for different regions delivery service.

Figure 06: AliBabas Order Fulfilment at Stage Two

One reason for such promotion is because the overseas warehouses are owned by certain
3PLs and the location of the warehouse is carefully selected for an optimised delivery
route. An-other feature of overseas warehousing service is that it allows sellers to make
sales pre-dictions and customers to make preorders. For example, if a festival is coming in
one or two months and certain products will have an obvious sales boost, then the sellers

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can make rough predictions regarding the sales amount and ship them all at one time to
save delivery costs. The same scenario can be applied if the customer requires preorder.
The major advantage of this model for AliBaba was that the delivery time and cost was
reduced, which attracted more sellers and buyers to make deals through the website. It
had more flexibility in terms of order, preorder and sales predictions with more 3PL
choices. Furthermore, AliBaba had some control over the logistic activities since it needs
to sort out different orders for delivery and has more interactions with 3PLs. Nevertheless,
with the operation of this strategy, a few drawbacks have been revealed. One drawback of
this strategy is that it required the products to be standardised in the condition of sales
prediction. For instance, if the seller knows that certain kind of boots will sell very well
during the winter in Canada, he/she cannot make use of the sales prediction method to get
all shoes shipped at once to an overseas warehouse since the seller has no way to
determine what number of each size will be needed. Thus, standardisation was a
preliminary requirement for sellers to use that service. Another drawback was that AliBaba
could not manage the warehouse by itself since they were owned by 3PLs. Thus, the
warehouse was not fully optimised for AliBabas businesses. AliBaba learnt all these facts
through one year operation of overseas warehousing service, and it started to discuss
about future development of the logistic services.

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4.3 Stage Three

After reviewing the overseas warehousing service record, AliBaba decided to bring out the
upgraded version of that service which is called Big Warehouse Service. The major
difference between big warehouse service and overseas warehousing service is that the
warehouses now were all located in mainland China and managed by AliEx-press itself.
Moreover, the warehouse will perform the order consolidation and packaging activities.
The order fulfilment process can be shown as below:

Figure 07: AliBabas Order Fulfilment at Stage Three

When there is an order sent to the seller, the seller will notify the manufacturer to start
production which is the same as in the previous two models. Whereas the difference here
is that the manufacturer will not send the product back to the seller, instead it will be sent
directly to AliBabas warehouses in China. There are several warehouses located in
different regions of China and the seller can choose the closest one. Once the product
arrives in the warehouse, the staff will insert the information into the system and sort them
out for consolidation. Next step is packaging and then call 3PLs to pick up for final delivery.
By this means, overall order fulfilment time dropped to an even lower level because the
manufacturer no longer needs to send it back to the seller for packaging and delivery,
AliBaba will do it in a more efficient and professional way instead. The shipping fee can be
lower as well since AliBaba now has more negotiation power and can be a representative
for all the sellers to negotiate with 3PLs.
As for now, AliBaba is still using the Big Warehouse Service and the shipping fee is much
lower than before with even faster delivery time. AliBaba use its negotiation power to
promote different 3PL services in a certain time to drive incredibly low logistic cost and
raise the sales amount. When it comes to the next month, another 3PL will be promoted. In
such a way, it will attract more customers to buy on its website due to the low international
logistic cost and simultaneously reach economy of scale for 3PLs.

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Chapter 05
Future of AliBaba Supply Chain
With Alibabas business model and value chains, the future strategy of the company
includes strengthening and securing their supply chain to increase their substantial market
share, increase profits, and hold off competitors. Many of these planned strategies will
happen through various marketing and customer service initiatives, such as targeting
marketing to increase the customer base, continuously adding tools and features to the
software, monetising a user base that has been receiving many free services for years,
and expanding their service platform from trading to customer relationship management.
As Alibaba expands out of China, it must face fierce competition from Global Source and
niche B2B service providers. If they can expand while the competition threatens to move
onto Alibabas home turf, their future looks very bright.
The purely virtual and service providing nature of Alibaba.coms business model requires
they modify the traditional value chain model to reflect the customer base and service
provided, and that there is no physical product moving through their logistics. Because of
this, marketing & sales and customer service must be moved in the model to reflect their
presence from before the service can begin through to the end of the transaction. Also, the
concepts of inputs, operations, and outputs, need to reflect the service and its virtual
nature. As Alibaba.com continues to grow with the Chinese economy, especially the
increased internet usage of SMEs, and they monetise their customer base, Alaibaba.com
will continue its quest to becoming a world leading e-commerce business.
What has made the Chinese e-commerce giant Alibaba.com the world leader in creating
and serving business-to-business relationships has been their unique ability to link
suppliers and buyers around the world. Coinciding with their value proposition and
business ideas has been their timing in the history of the economic growth of China that
has served to fuel their incredible growth.

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Chapter 06
Globus: Introduction
Globus is a retail clothing store chain, based in Mumbai, India. It is part of the Rajan
Raheja Group. As of April 2012, the chain has 35 locations in 22 cities in India. Globus was
founded in January 1998. Its first location (at 35,000 square foot store) opened in Indore in
June 1999, followed by two locations in Chennai. Its Mumbai flagship location opened in
November 2001. By May 2008 the chain had expanded to 24 stores, and started a push to
greatly expand the number of locations. The chain has previously announced bold plans to
expand to a much larger number of stores, such as 150.
The chain was run by Ved Prakash Arya from its founding until March 2004. Currently, it is
run by Vinay Gajanan Nadkarni, who serves it as the Managing Director and CEO.
Nadkarni, who took over from Arya in 2004, opened the 36th store in February 2013.
Kareena Kapoor became the brand ambassador in 2008, and planned to launch her own
clothing line with the store. In 2007, Globus created the world's largest Christmas stocking,
which was 111 feet tall.
Globus with its fashion feet forward has never failed to up the ante while meeting its
audiences fashion enthusiasm. The mother brand Globus has been and epitome of sober
showmanship, while f21 complements youths street and club wear staples. The Poetry
and Signerio labels speak volumes of premium elegance and sophistication. Also a range
of must-haves of tees, singlets and racer backs from Globus are a wise investment.
The brand experiments with varied western silhouettes in ethnic prints and motifs for a
contemporary yet ethnic Indian woman. Globus avails a wide range of casual, occasional,
traditional and premium clothing for men and women coupled with jewellery and fashion
accessories, steered with a personal in-store shopping experience. The brands ethics
pertaining quality, style and juvenility are embraced by fashionistas nation-wide.
Chapter 08
Globus Supply Chain Overview

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Chapter 07
Globus Supply Chain Overview
Supply Chain Management (SCM) is essentially integrating suppliers to the end
consumers and emphasis the need for collaboration to optimise the whole system. The
basic aim of any SCM function is to make the organisation more agile and nimble footed to
respond to drastically changing consumer preferences by capturing the data of material
flow at all levels of the value chain. Retailers today face many challenges because of
greater product variety, shorter product life cycles causes greater fluctuations in demand
and calls for high responsiveness in supply chain and due to which need of shorter lead
time continues.
In retail transactions must be smooth, timely and accurate. When one is dealing with a
complex function such as retail it is very essential that they have a strong supply chain for
better responsiveness and cost effectiveness. An effective supply chain management
system can provide a 360 degree feedback to the retailer as well as to the manufacturer
about the popularity and complaints of any particular product.

Figure 08: Efficient Supply Chain

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Provide valuable insights on inventory and guidelines on merchandise allocation. It also

increases visibility of stock sales and consumer demand throughout the supply chain.
Facilitates collaboration and communication for improving relationship with supplier.
As Globus believes in value retailing so it is very essential that our supply chain is very
strong because they only make money when they reduced our cost and supply chain is the
only area for maximum cost reduction either it is purchase in bulk or it is better logistics
they only win if they are able to decrease our cost and response time. An efficient supply
chain is working something like that it is given in the above figure:
There are 5 essential areas for the success of any retailer in the supply chain and out of
these 3 are logistical functions. These are:

Warehouse (Facility)

Inventory Management

Transportation

Information Flow

Technology

Figure 09: Process Flow of Globus

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Chapter 08
Logistics and Supply Chain Stages
8.1 Warehouse
Warehouse is the location to or from which the inventory is transported. Warehouses are
the key driver of supply chain performance in terms of responsiveness and efficiency.
Before deciding the location of Warehouses they must consider the following points:

Location of our stores

Rent of the location

Format of our retailing

Recently, warehouse is treated as switching facilities rather than storage place and
companies try to move stock from the warehouse as soon as possible to reduce the
inventory handling cost, for higher inventory turnover and for shorter cycle time It is a
major cost centre, many customer problem are the direct result of improper warehousing
management.
8.2 Information Handling Function
1. Goods inward, Inspection & auditing, Goods outward, Excess Stock, Warehouse
2 . Expenses, Transit damage & Breakage. Globus try to locate its warehouses very near
to the stores as they see there are many warehouses in the NCR area like to cover Delhi
stores there is a warehouse in Wazirpur, for Noida and Ghaziabad regions stores company
started a new warehouse in Dadri which is very near from both the cities and for Gurgaon
there is also a warehouse so company try to decrease its response time for better
customer service and as Globus Retail concentrate more on value retailing so it is more
important that company focus on economies of scale and purchase in bulk and this
requires more warehouses.
3 .The function of providing warehouses is outsourced to Indo Arya which is one of the
best companies in India in the field of logistics. In some places like in case of HSRIL
warehouse in Dadri Globus outsource the whole logistics function to Indo Arya. Dadri
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warehouse of the company is provided by Indo Arya and it is a CWC warehouse.

Connectivity is very good from this warehouse because it is located on the GT road and it
takes hardly 1 hour in transporting stock to the Noida and Ghaziabad stores. There is
plenty of space inside the WH for parking and movement of vehicles. WH it divided into 3
sections of nearly 30,000 sq. ft. each out of which 1 section handling the inventory of
HSRIL format and hold furniture and home improvement merchandise, 2nd section carry
general merchandise and sanitary items and 3rd one is for Globus. In case of Wazirpur
warehouse there are 3 floors on the ground floor unloading and loading is done.
8.3 Inventory Management
Inventory exists in the Supply Chain Because of a Mismatch between Supply and
Demand. Inventory is the major source of cost in the Supply Chain. This figure shows that
there must be some inventory level they must manage for efficiently fulfil the demand of
customers and they must out the inventory in time so that they are able to send the stock
in stores in time and the damage stock is also out from the WH so that they maintain a
good inventory level.
8.4 Transportation
Transportation is defined as the physical flow of material and finished goods from point of
origin to point of use to meet customers need at a profit. It is essentially a planning
process and an information activity so an integrative process that optimises the flow of
material and supplies through the organisation and its operations to the customer. In Case
of intangible product, the delivery of tangibles at the right place & right time will speak
about its quality. India spends nearly 12% of its GDP on logistics.
India spent nearly $ 50 billion to move material from one use to another. Any good
transport service is that which provide:

Reliable and consistent delivery performance

Freight economy

Minimum product damage

Globus outsourced its transportation services to the third party which is Indo Arya. So in
this case all damages all responsibility is of transportation service. Company must provide
the required vehicle on time when WH requires it.
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8.5 Information Flow

Information serves as the connection between various stages of a supply chain, allowing
them to coordinate and maximise total supply chain profitability. It is basically information
based activity of inventory movement across the supply chain. Hence role of information
system plays a vital role in delivering superior customer service. This function is required
to facilitate the following information needs:

Order Registration

Order checking & editing

Order processing

Coordination means to integrate the total supply chain of the

company with informational needs as to time, quantity, value e.g.

Lead time, rate of consumption, delivery schedule & price of the material,
Transportation time & cost etc.

Flow of information is very essential to know the exact requirement of stores, to know
consumers preferences, to know the inventory level in store and in warehouses.
8.6 Technology
Better flow of information is only possible with the use of latest technology and that is the
reason because of which companies invest so much on new technology like RFID, ERP
software etc. Globus is also understand the importance of information and technology and
so company implement ERP software for making supply chain better. Globus using SAP
which is one of the most successful ERP. With this software sharing of information is much
easier because they can see how much inventory is available in the WH and placing STO
according to that. Making STO, Pick list and GRN is also very easy and fast with the help
of SAP. Globus also implements RFID in its Tarapur warehouse on some categories.

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Chapter 09
Inward Process in Warehouse
In warehouse when stock comes from the vendor site or from central warehouse then the
following procedure is used for inward of stock in warehouse:
9.1 Documents check
This is first and one of the most important steps of the in warding procedure because if any
warehouse inwards the stock in warehouse without check the proper documents then it
creates a big trouble for the organisation. It may be possible that the stock which come in
the warehouse is not belong to that warehouse or proper taxation is not done by the
vendor for that stock so proper checking of documents is must. Security guard and the
person responsible for stock unloading checks documents before allow the stock to enter
in the WH. If stock comes from central WH, any other WH or from any store then following
documents are checked by the security staff:

Stock Transfer Note (STN) staff checks whether this STN belong to this WH or to any
other.

Transporter waybill which is different in different in different states and somewhere it is

also not require this bill proves that this stock is legal and sales taxes are paid for this
stock.

Gate pass which confirms that stock comes out from the store or WH with the
permission of responsible person.

9.2 Stock Transfer Order (STO)

Stock Transfer Order (STO)/Stock Transfer Note (STN) are the document which is used for
transfer of stock WH and stores. At the store level STO is raise by DMs of their respective
department. STO is also required for the movement of stock from one warehouse to
another or from one store to another. They can say that all the movement of stock within
the organisation is takes place with the help of STO.

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If stock comes from vendors site then security checks the following documents:

Purchase Order (PO) whether this PO is for this WH or not and security also check the
expiry date of PO.

Invoice (Bill) which specifies what qty. vendor sends and what price vendor charge
from company.

Delivery challan which is the proof of payment of sales tax.

Figure 10: STO Movement

9.3 Purchase Order (P.O.)

Purchase Order (PO) which is only raise for the vendors/suppliers and this PO is only raise
by the Front End Category Team from the Zonal office or from Head office and it is also
raise by stores and in stores it is raised by Department Managers. PO from the store level
is only raise for the local vendors and vendors deliver stock directly to the stores. When
DMs of the stores raise PO then most of the time it first goes to category team and then
category team pass it to the vendors. In case when category team raise the PO then it
considered the requirement of the stores which is sent by the DMs to the category team
and then category team make PO for vendors and decide whether stock goes to WH or
directly to the stores.

Figure 11: PO Format

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After checking the documents stock is unloaded from the vehicle under inspection of
responsible person and security staff. Securities counts the cartons and see that cartons
are packed properly if there is any carton which is open or not in proper condition the
security put remark on the documents.
1. Entry in security inward register
After proper unloading security staff enters the details of in warding in security inward
register.
2. Stock Count and Check
After the entry of stock in the register this is the time to count the stock manually or by the
help of SAP and employee also check for any damage in the stock that the WH get and if
they find any difference between the quantity mentioned in invoice and the actual quantity
they get or if there is any damage product.
3. Entry into SAP
Now after counting the stock if counting is done manually then the stock is entered in the
SAP by scanning each and every product for the better visibility of stock across the supply
chain. If there is any problem in bar code like it is not read by reader because of any
scratch on bar code or bar code is not on the merchandise then the person try to find out
its article code by matching that product with other product of same characteristics like a
shirt of same colour, same size and same brand has common article code and when they
find any such merchandise then they enter its article code in the SAP manually and if they
dont get any merchandise then they put it away and inform the vendor about this type of
product.

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Chapter 10
Warehouse Storage Process
Storage is also the most important part of the warehouse because they cannot store all the
stock in store due very high property rents and every Sq. ft. of space is very costly in the
regions where stores are located and proper storage is also essential in WH to avoid
damages and for fast processing. In storage process when stock is enter in the SAP then it
is moved to there respective section which are arranged according to their category or MC
code.
Every item put in WH according to its type and the way it moves out from the WH like
clothes are put in bins and racks for fast movement of stock as they are easy for pick when
they are put in racks. For Big items like consumer durable and furniture there is no
requirement of racks because they are put on the floors and if they are put in racks them it
is also hard to put them in racks. At what location any item is placed is also decided
because it is not good to move glass items for a large distance so they put near to out
gate. The following is the Warehouse Outward Process:
10.1 STN is drawn from SAP
The movement of stock from the WH to the different stores or to other WH is known as
stock transfer for this purpose store/WH raise a Stock Transfer Note(STN) for WH
according to the requirement of store/WH and WH person takes this STN from SAP.
10.2 Check availability of stock through SAP
Before take the printout of STN that person check that is there any other store which send
the requirement of the same product if so then WH employee divide the stock between the
stores according to their requirement so that no one get stock out for that material.

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10.3 Pick list is made according to the STN

After checking the availability of material WH person generate pick lists according to the
category or according to MC code of the category like there is separate code for mens
jeans and separate MC code for ladies jeans and merchandise is put in the WH according
to their MC code so that it is for the employee to pick the merchandise.
10.4 Employees pick items according to the pick list:
Now the pick list is given to the employee which are responsible for pick the merchandise
and they take that pick list and as they know where this particular product is placed so they
go to that section and pick the items according to the article code which is write on the bar
code of the product and put it on the conveyor or in a blank carton and take it to the
section from which outward is done.
10.5 Items are scan through the SAP
When pick stock reach to the outward system the person at the outward system enter STN
No./Delivery No. and Handling unit which is L2000 for outward in the SAP and then scan
each item one by one and if any item which is not belongs to that STN then a red light is
blink in the bottom of SAP window and the person put that item away and tells the persons
those pick the item that this is not the right product and the employee again search for
right product and when all items get scanned then they pack the cartons for dispatching
and put the right tag for the store and STN no. on the cartons.
10.6 Pre Delivery Investigation (PDI) of stock
Before dispatching the stock to stores for some product a investigation is required to
confirm that the dispatch item it in good quality and it is not damaged this process is
generally for big product like furniture items, electronics items etc. In this process
employee check for any defect in the product and if there is any such problem they found
in the product then WH does not dispatch it to the store.

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10.7 Stock is packed

When stock is put in the cartons then it is the time to pack these and packaging staff pack
the cartons with the sheet of polythene so that cartons are not opened easily and
sometimes there are some damaged cartons also prevented from opening during
transportation by this process.
10.8 Documentation
When stock is packed then the WH person does the proper documentation for hassle free
movement of goods. Employee put the STN with gate pass which is very essential for
outward movement of stock without which security does not allow to pass the stock
outside the WH and a document is also attached for sales tax purpose which is different
for different states like if stock is moved inside the UP them an OC stamp is very essential
with the document or if stock is comes in UP from outside then form 31 is required without
these documents movement of stock is illegal.
10.9 Outward Entry Register
After seeing the required documents security person make entry into his register for the
outward stock. The format of outward register is like this:
10.10 Dispatch of stock
For dispatching the material to the store the employee of the WH tell the transporter about
the requirement of the vehicle in advance so that the transporter arranged the vehicle on
time for dispatching the material.

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Chapter 11
Points of Comparison: Globus v/s AliBaba
A comparison of operating models in the traditional retail and online retail environments:

Supply Chain

Globus

Retailers job is assortment

selection to fill limited shelf
space, cut long tail

AliBaba
Long-tail or virtually
unlimited assortment is a
key value proposition of
online retail

Procurement
Items are procured and

Slow-moving (long tail)

negotiated in bulk and will get

items may be procured in

sold through the channel

very small quantities

Inventory exists at up to 3
levels: Distt. centre, regional
Inventory

distribution centre & store

Management
Inventory value is mostly driven
by stock levels of SKUs

Transport and

Inventory only exists at one

level: distribution centre

Inventory value is mostly

driven by scale of
assortment

Often company-owned fleet

Freight carrier picks up

that delivers b/w distribution

large number of shipments

centres and to stores

from distribution centre

Logistics costs per

Logistics costs per

item are low

item are high

Logistics

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Lower number of orders,

High number of orders,

stable throughput

high throughput growth

Warehouse

Limited need for small order

Significant need for small

Operations

size pick/packing

order size pick/packing

Forklift and pallets to trucks

High degree of manual

labor or smart automation

Return to store can create

Return by mail returns item

reverse logistics complexity

faster to sellable inventory

Post Sale
Support

Return to store creates

additional touch point
to retain and up-sell

Often extensive service

levels and generous policies

Table 01: Comparison between Globus and AliBaba

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Conclusion
Fashion markets have long attracted the interest of researchers. More often the focus of
their work was the psychology and sociology of fashion and with the process by which
fashions were adopted across population. This paper has provided a conceptual focus
upon the main logistical issues involved in fashion retailing. The peculiar nature of the
industry was discussed in terms of its volatility, complexity and dynamism. It is with these
factors in mind, that the need for agility and responsiveness in the logistics pipeline has
been identified.
Todays fashion market place is highly competitive and the constant need to refresh
product ranges means that there is an inevitable move by many retailers to extend the
number of seasons i.e. the frequency with which the entire merchandise within a store is
changed.
Fashion supply systems are characterised by three critical lead-times: time- to-market,
time-to-serve and time-to-react. All three of these factors stress the importance of agility in
fashion supply networks. Agility does, however, necessitate radical changes in
organisational structures and strategies and a move away from forecast-driven supply.
Market sensitivity, virtual integration, networked logistical systems and process alignment
all become fundamental prerequisites to achieving the ultimate agility, a Quick Response
capability.

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Bibliography and References

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Christopher, M., (2000), The Agile Supply Chain : Competing in Volatile Markets,
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Christopher, M. and Towill, D., (2001), An Integrated Model for the Design of Agile
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Vol. 13, No. 4, pp 235-246
Gunston R and Harding P (1986), Quick Response: US and UK Experiences, Textile
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