It’s an oft-repeated fact that India has the highest retail outlet density in the world with approximately 12 million outlets. A McKinsey report forecasted a growth of around $350 billion by 2010 and predicted that organised retail would account for 10 to 15% of this market. Radhakrishna Group owned Foodland Fresh, was recently reported as having the most number of outlets in the food and grocery format in Maharashtra, and has bigger plans of expanding. The CEO Purvin Patel mentioned, “Managing growth is a big challenge, as we became a 126 crore company from a 70 crore company in the last year. “ RK Foodland services retails like McDonalds, Apna Bazar and provides retail as well as customized distribution and logistic solutions.

Challenges presented by up scaling

There were some specific challenges that the company had to address. They needed real time information flow between their various outlets and distribution channels. The depots had to be connected through warehouse and transport management. As a result of up scaling, improving productivity per employee, and internal and external customer services in equal proportions was necessary as were standardising business processes and improving supply chain.

According to Patel, “The food habits of people in India change every 100 miles. This sort of fragmentation in the market limits supply chain development because of infrastructure constraints and lack of national distribution networks.”

Their legacy system wasn’t a scalable one, when they discovered that SAP, with its open architecture and unlimited scalability provided a solution to the challenge.

Implementing MySAP Retail and BI 7.0

RK Foodlland chose IBM as its implementation partner. The deployment of mySAP Retail commenced in June 2006 and was live on 18th December 2006, whereas SAP BI 7.0 went live earlier this year. The modules implemented were Merchandising, Warehouse Management, Sales and distribution and Financial Accounting.

The POS was integrated with mySAP IS using SAP IDocs. Patel regards the Indianisation with respect to the taxes – Sales Tax, TDS, Excise and VAT as a big bonus. India is the only country in the world, which uses the ‘MRP’ system for pricing. Sumeet Kolatkar, the CIO explains, “When brands have promotions, the MRP can change every month or more often. Initially, addressing this in the system was an obstacle, but now we can process the changes immediately. In fact, BI, which went live about 3 months later, on 31st March 2007, functions very smoothly and integrates perfectly with the Retail IS.”

The project went through well-planned stages. The first month was the ‘preparation stage’ where IBM analysed the requirements of the business. The ‘blueprinting stage’ took 2 months, in which they worked out how to best implement the project. A team from RK Foodland visited a retail site in Delhi, to observe best practices. Kolatkar informs, “They used Radio Frequency (RF), in their scanners at the picking and packing stage to send information directly to the WHM.”

A team was also taken to study the best practices of 7-Eleven retail chains in Australia. “We wanted to see how the system works in a fully functional process. We were also keen on finding if we had missed anything, and if we could improve on our forecasting tool,” states Kolatkar. These site visits were an important part of their implementation process before going live. Kolatkar reflects, “We didn’t have any major glitches after we went live, however it did take about 2-3 months for the users to understand how to master quick changes with regard to MRP, promotions, etc. The system has stabilised now."

Benefits beyond IT

For a growing retail giant like RK Foodland, it was imperative that they deployed a system compatible with unlimited scalability. They expected a lot of improvements over their previous system, like being able to get financial data online, improved cash flow management, data integration across units, planning and performance analysis. The benefits experienced, however, went beyond IT.

The top management showed increased commitment to IT. They were able to tackle change management issues proactively and set realistic targets. The company now intends to explore the full benefits of BI and graduate to a paperless office. They also plan on implementing additional modules like HR, and software like CRM and APO, which would aid planning and forecasting through the FnR model.