Future Group to ramp up supply chain

NEW DELHI: Kishore Biyani’s Future Group is ramping up its food and grocery supply chain, as this segment is set to be a battleground for global retailers, with Walmart buying Flipkart and Amazon eyeing stakes in grocery retailers.
The country’s largest retailer plans to invest Rs 500-800 crore in the next four years to create a nationwide food supply chain network of refrigerated trucks and temperature controlled distribution centres (DCs) to eventually manage the entire supply through this network, top officials said.

“We are creating a whole new food distribution chain that will help our retail and brand distribution business,” Biyani said.

Currently, Big Bazaar hypermarkets follows a hybrid supply chain model where stores are mostly supplied food and FMCG products directly by companies such as Hindustan Unilever and Colgate Palmolive, with some amount of supplies happening through the company’s distribution centres.

Future Group is trying to change it by supplying its entire food and FMCG from distribution centres — to be located within a range of about 200 km of each of its retail outlets. The DCs will be backed by technology that will give real-time inventory levels in stores to help them replenish stocks at frequent intervals.

“We are moving from the direct-tostore model to DC-based model and all the replenishment will be done through DCs,” said Mayur Toshniwal, CEO at Future Supply Chain Solutions, the logistics arm of Future Group. “The replenishments will be much faster and more frequent.”

This is a model that is widely followed by Walmarts of the world. This will save costs for the company and free up around 1,000 sq ft — used to stock a significant amount of supplies — in each Big Bazaar outlet, because this ‘back office’ would no longer be required with DCs in close proximity tracking their inventory levels.

Biyani said the move “will enhance fill rate, bring efficiency, freshness and stores will get larger assortments”.