Supply Chain Management (SCM) has come to stay as a key driver of business success and source of competitive advantage. Aligning business process through corporate restructuring is an age-old phenomenon. But more significantly, streamlining flow of goods and services along with that of suppliers, i.e., beyond the organizational context and integrating business processes of a firm with its suppliers is a bigger managerial challenge. The issue becomes more complex when the demand frequency increases due to the nature of the products; it becomes more complex due to the number of stock keeping units required for satisfying the endcustomers, and overall, there are issues of market fluctuations both in terms of demand and prices. The customers also negotiate and use their order size as the source of bargaining power to enhance their profitability, thus reducing the gross margins of the suppliers. A distortion in the buyer-seller relationship cycle and erosion of trust makes the flow of goods and services more transactional. In order to protect the market and control of supply cycle not to lose the end-customers, suppliers tend to supply more, leading to higher inventory costs. These kinds of structural issues and market fallacies lead to the ‘Bullwhip effect’. Bullwhip effect (Lee et al., 1997a and 1997b), which was first published by Forrester (1961), a pioneer of modern SCM, remains a critical issue in the supply chain of products in the global market. A small variance in the demands of the downstream end-customers may cause dramatic variance in the procurement volumes of upstream suppliers via the bullwhip effect under the condition that the distortions of demand-related information exist among the members of a supply chain (Lee et al., 1997a and 1997b; and Metters, 1997). This research paper focuses on understanding the impact of various factors like demand forecast updating order, order batching, price fluctuations and rationing and storage gaming in creating the bullwhip effect among suppliers of grocery items to large retailers. This paper also examines the influences of various external variables like business practices in the industry, nature of product supplied, small customer management issues, frequency of product supply and negotiation on SCM of grocery to large retailers.

The Indian retail industry has undergone a series of changes over the last decade. It has drawn attention from policy makers, researchers, strategists, investors and even politicians. Each of these players looked into the emerging scenario of organized retailing in India through their own lenses. While there was a big controversy about foreign direct capital flow to organized retailing in India, many policy makers are of the opinion that the same, if allowed, is going to significantly alter the composition of the Indian retail market. Whereas 96% of Indian retailing is unorganized, generating mass employment in the country through a network of kirana stores and wholesale shops, there are issues related to efficiency and fair value delivery to customers. The current business practices in the retail industry are not based on efficiency and win-win for all the players in business. While farmers do not get a fair price for their output, the consumers are also not able to get the products and services at fair prices. Some may lament this phenomenon as a problem of inherent structure of the market, but a majority of these markets in the developed world have emerged out of strategic interventions by lead players to bring transparency in business practices, to improve supply chain efficiency and to alter the current power balance that is heavily tilted towards the trading class.

Supply Chain Management (SCM) is a key driver for growth and profitability of the retail industry. Though the end-customers are never able to visualize the effect of good SCM practices, the smooth flow of products, lower inventory turnover, increase in average shelf life of the products and enhanced profitability for the members of the value chain are some of the measurable gains from good SCM practice. The idea of an efficient SCM practice emerges from the fact that the distance between the producer and the end customer is increasing over the years. A part of this phenomenon can be attributed to the overall business model of mass production, mass distribution and mass consumption through mass promotion. As companies try to cover up multiple segments, multiple geographic locations inside and outside the country, and sell through multiple channels, managing supply chains for uninterrupted flow of goods and services is a big challenge. Despite all precautions, many products and brands suffer due to supply chain inefficiency. One of the problems in SCM is the bullwhip effect which not only restricts the equal distribution of products and services, but also creates bottlenecks in the flow of goods and services, leading to loss of sale opportunity and increase in average inventory level.

Supply Chain Management Journal, Supply Chain Management, Practices and Scope, Bullwhip, Effect, Indian Dry Grocery Business, Supply Chain Management, Vendor Managed Inventory, Electronic Data Interchange, Point of Sale.