Subhiksha Case Study
Important Points in Case Study
Subhiksha started its business in 1997 from Chennai and till 1999 it has only 10 Stores in Chennai
location. Main focus of the company was to open small stores i.e. convenient stores and sell the
product on less cost as compared to other competitors. In year 2000 Subhiksha opened 50 more
stores in Chennai and also raised funding through 10% Stake bought by ICICI Prudential. After the
funding by ICICI they started opening stores outside Tamil Nadu and by 2007 they had almost 1000
Stores across various city in India. They were looking to expand all over India in the midway Azim
Premji saw some big opportunity and invested hug amount in the company but in 2008 due to
financial loss company shut down its operations.
Decision Made by Subhiksha Regarding Supply Chain Drivers-
Subhiksha need Space for providing Retail Service. It decided to follow model of Convenience Stores.
It rent out small space for Supermarket. It given the facilities without AC due to which Expenditure
reduces.
It Focused on the Strategy to charge less price as Compare to Competitors. It operated on less net
margin as compare to Competitors.
It follows the Strategy in which Purchase through Centralized System, and it will helpful n the
bargain of products while Purchasing.
In Pricing Strategy follow the Every Da Low Pricing.
It uses bar coding techniques, Subhiksham card, efficient SCM, home delivery system, establishment
of Online retail system it started to make its headway.
It Established own Storing the data form which it can make the decisions for the future but during
the operation it didn’t worked in the proper way. It didn’t provide proper information of Inventories
and Requirements for Suppliers.
In Sourcing driver, it was responsibility of Warehouse handling person and Store manager to give
order when required in the store .
Problems Faced by Subhiksha During Operations-
Subhiksha Operating in the retail Services and it required location to Open the Stores in India. It
opened the stores in the Small spaces as compare to its competitors are operating in the retail
Space. It Focus on the Strategy of Neighbourhood in which opened the store in the near to
consumer. They don’t need to travel far from their place. In Stores operated without AC and other
Facilities due to which expenses can be controlled.
They opened large Number of stores in less time but unable to manage the inventories on the store
and entered in variety of stores like Grocery, Telecom ,Pharmacy and Fruit & vegetables.
Issues Related to payment to Suppliers on time. Around 6 Months Payment of Suppliers are due.
Fruit and Vegetables Wholesaler payment due more than 3 months.
Warehouses of Subhiksha are raided by Maharashtra FDA regarding issues related to food and drug.
Expansion of Stores without adequate system control and IT Support. That's why there was a huge
Audit and abnormal losses in the system. And when they have started implementation of SAP the
time has gone for survival of Subhiksha.
Many wholesale suppliers in Azadpur subzi mandi, or vegetables market, have stopped supplying
fruits and vegetables to Subhiksha's outlets in the National Capital Region (NCR) surrounding the
national capital. This comes in the wake of the company holding up payments for two to six months
against normal credit period of one month.
Recommendation for Subhiksha
They don’t need to focus on the expansion of Stores in all over India in such short time period and
Before opening of the variety of Stores other than Grocery . They need to test in different location.
Then After open the new stores for Expansion.
They need to make flow of information of from customers to Suppliers in a flow and if it breaks at
anywhere, it will give fault line in the Supply Chain Network.
It brought lots of business in one umbrella like Grocery, Telecom and Pharmacy which brought chaos
in the Supply Chain Network.
In which Way handled the Funding Problems in organization and blocking the Working Capital
through investment in the Expansion of the stores.
They need to focus on making profitable first 1000 stores opened and in which way supply chain can
be more efficient as compare to open stores in the future.
As CEO Get wrong assumption like that Telecom Sector product going to have boom in India and
opened the telecom stores in large number but as time pass It inferred that lots of Inventories in the
pile up.
There is no coordination between the employees and inventories pile up in the Store. Employees
doesn’t inform the Senior Employee Condition about Problems related to Inventory Pile Up.
