Procurement Practices Prevalent in Retail Stores with Special Reference to Fast Moving Consumer Goods (FMCGs) in Tamil Nadu

Abstract

Any consumable items require the process of Procurement. The procurement process in the retail store is customer centric and is driven by the customer choice, though there are situations where the demand planning and order sizing are made depending on the data collected by the customer support agents. For the current research, the Procurement Manager of the Retail Store, Supervisors and the Customer Support Agents are found to be the respondents. The procurement process in the retail store as viewed through the current research is that it is fairly easy and a complicated process. There are opportunities for outsourcing different functions of the procurement process to the service providers and the department yet manages various functions including supplier selection, management and assessment. The unique feature of the retail store in the Coimbatore City as told by the procurement professionals are the Everyday Low Pricing Scheme and the collection of customer data for the demand planning and supplier management. Since the supplier selection is based on the capability of the supplier and the order quantity, there are suppliers who are not having configuration which are necessary for supplying to the store, there is more dependency on the distributors who might take it as an opportunity to increase the cost of transport which might be problematic for the cost reduction policy of the store. A customer survey must be conducted in order to learn about the various set backs of the store and if the customers are more frequent in visiting the store, then the capital spent in visual merchandising can be reduced and this might also help reduce the total cost of the process as there was mentioned in the research findings that the visual merchandising tools over shadow the store appearance and the total amount spent is also higher in such case. During the supplier assessment phase after the regular audit of the suppliers, they are provided a score card, this method might prove useful to the suppliers but unless they are competitive business with similar suppliers which might improve the capability of the supplier and the concept of Vendor Managed Inventory (VMI) could be implemented to reduce the ordering cost and transportation cost.