The role of supply chain in Indian organized retail is very significant for on it depends the growth of this sector. The Indian Supply Chain Council have been formed to explore the challenges that a retailer faces and to find possible solutions for India.

The role of supply chain in the organized retail sector in India should be a shelf- centric partnership between the retailer and the manufacture for this will create supply chains that are loss free. This will also give rise to top and bottom line growth. In the organized retail sector in India the presence of fresh produce (vegetables and fruits) is very small. This is so for the nature of supply chain is very fragmented. This shows the important role of supply chain in the organized retail sector in India.

In the organized retail market in India, the role of supply chain is very important for the Indian customer demands at affordable prices a variety of product mix. It is the supply chain that ensures to the customer in all the various offerings that a company decides for its customers, be it cost, service, or the quickness in responding to ever changing tastes of the customer.

The infrastructure in India in terms of road, rail, and air links are not sufficient. And so warehousing plays a major role as an aspect of supply chain operations. To overcome these problems, the Indian retailer is trying to reduce transportation costs and is investing in logistics through partnership or directly. The Indian organized retail sector is growing so the role of supply chain becomes all the more important. It should become all the more responsive and adaptive to customers demand. There is also need for the supply chain to be more cost efficient and collaborative to win the immense competition in this sector.             

The role of supply chain in Indian organized retail has expanded over the years with the boom in this industry. The growth of the Indian retail industry to a large extent depends on supply chain, so efforts must be made by the Indian retailers to maintain it properly.

Supply chain and retail: The means to the end

A retail revolution is happening in the country. For global giants looking at newer markets, India presents exciting opportunities on account of its vast middle-class and a virtually untapped retail industry.

The Indian retail sector has seen unprecedented growth in the last few years. The KPMG report, `Consumer Markets in India: the next big thing has predicted that the organized retail sector is expected to grow at rate higher than GDP growth in the next five years. The AT Kearney's 2006 Global Retail Development Index positions India as a leading destination for retail investment.

The success in this competitive and dynamic sector depends on achieving an efficient logistics and supply chain, which can be provided by professionals, as they combine the best systems and expertise to manage a ready flow of goods and services.

The retail boom promises to give an impetus to a host of allied sectors and the logistics industry, as the backbone of the retail sector, stands to gain the maximum.

In India, the logistics market is mainly thought to mean transportation. But the major elements of logistics cost for industries include transportation, warehousing, inventory management, courier and other valued-added services such as packaging.

The logistics costs account for 13 per cent of GDP. The industry is currently on an upswing and is poised for a growth of 20 per cent in the coming years.

With the expansion of retail, supply chain will take on an increasingly important role. With the end consumer becoming more demanding and time conscious, the need for just-in-time services is increasing. In retail, where competition is intense and stakes are high, customer satisfaction is paramount.


Network critical

Industry experts opine that in India too the large retail chains will follow the global model of outsourcing their logistics so as to better manage complex supply chains and focus on their core business.

For the retail chains in agri-produce, efficiency of logistics is critical and can indeed leverage the brand to a great extent. The main asset retailers realize is  that knowing what is selling and what is not can improve the inventory processes. Inventory is the biggest cost factor, and if not managed well, it can also be the biggest drain. That's why retailers and their trading partners today set store by the inventory process and its impact.

Effective SCM enables:

Realistic ordering lead-times: Suppliers are not surprised by the next order. Retailers respond better to demand spikes, minimize forced markdowns and avoid obsolete-inventory costs.

Averting problems: Stores easily identify potential stock-outs and request replenishment before the inventory drops to zero. Deciding to de-list or replace a product is easier.

Facilitating resource planning and allocation: Product forecasts and supply schedules are easily converted to perform space planning, establish staffing needs and organise inbound/outbound shipments. Financial experts can plan cash flow and analyse margins into the future.

Four R's of SCM:

Follow the 4 `R's of SCM Right time, Right place, Right price, Right quantity to reap the advantages of:

The key players in the logistics industry are gearing up to meet the challenges by initiating both organic and inorganic growth to leverage the retail opportunity. Logistics firms have also started focusing on related services such as Customs clearing and forwarding, inbound warehousing, labeling and packaging, fleet management, order picking and inventory management.

Cold Chain

The booming retail sector has set off growth in the cold chain segment as well. It is a highly specialized service and caters to time sensitive and perishable items. The cold chain industry is growing at 20-25 per cent. However, there is an urgent need to establish the necessary infrastructure for an effective cold chain.

Excellent retail supply chain management revolves around understanding and balancing three key dimensions of availability, inventory and cost. Managing these trade-offs efficiently can result in supply chains that improve business performance and drive competitive advantage.

In order to enable to grow in these complex and highly competitive environment retailers must focus on three key strategy imperatives:

  • Provide a high quality, differentiated customer experience by carrying the right products, at the right price and by reducing out of stocks
  • Streamline and take cost out of the supply chain to maintain margins and competitiveness by improving asset utilization,  inventory visibility, and by ensuring that each division and supply chain partner has access to a uniform source of product and supply chain data
  • Identify ways to grow revenue beyond simply opening more stores by providing assortments that are tailored to specific stores

Everyday, best-in-class retailers all over the world are using i2's retail software solutions to power strategies that enable a superior, differentiated customer shopping experience, supply chain efficiency, and revenue growth. i2's retail solutions are scalable, designed to wrap around a retailers unique business process, and are modularized to enable sensible and rapid implementations. With i2's retail solutions, retailers can:

  • Rapidly execute an advanced planning process that enables a differentiated superior shopping experience, customized to the store-level and capable of enabling course corrections in-season, while simultaneously driving inventory productivity
  • Optimize the structure of the supply chain to support global sourcing and lean supply chain strategies, and also execute these strategies in the most cost efficient manner in order to protect and grow margins

Rapidly, and cost effectively, implement and change planning and supply chain business processes that span organizations both inside and outside the four walls of the enterprise in order to stay ahead of the competition.


The role of supply chain in Indian organized retail has expanded over the years with the boom in this industry. The growth of the Indian retail industry to a large extent depends on supply chain, so efforts must be made by the Indian retailers to maintain it properly.


Author is working as a faculty in sasurie collge of Engineering,Vijayamangalam, Erode-Tamilnadu.