Management Development Institute - Gurgaon

Supply Chain Management

Case-07
Flipkart: Logistics
Excellence in Online Retail
ID Name

1 18P084 Jitesh Kumar Mittal

2 18P086 Kshipra Dwivedi

3 18P089 Mudit

4 18P100 Rakshit Agnihotri

5 18P113 Souradip Roy Chowdhary

6 18P122 Abeer Prateek

Presentation Date: 2nd Aug, 2019

Post-Graduate Programme in Management

(PGPM: 2018-20 Batch)
Term: IV (Jun-Aug 201)
 Company History
Flipkart was established in 2007 by Sachin Bansal and Binny
01 Bansal, both alumni of the Indian Institute of Technology Delhi.

They worked for Amazon.com before quitting and founding

their own company.

Today, as per Alexa traffic rankings, Flipkart is among the top 30

Indian web sites and has been credited with being India's largest
online seller

Started with selling books and in 2010 branched out to selling CDs, DVDs,
mobile phones & accessories, cameras, computers, computer accessories
and peripherals, pens & office supplies and other electronic items.

As of 2016, Flipkart employs over 30,000 people and generates a

revenue of INR 199 billion.
 Market Place Model
• Vendors apply for listing and lipkart sends out invitation after verification
• All new sellers are categorized as Tier 2 sellers
• A Tier 2 sellers become Tier 1 seller after completion of 1 month and a
settlement defect rate of less than 5 %; Their internal seller known as WS
Retail
• Trusted seller - defect < 5%
• Preferred seller - considered best for a particular product
• Seller support - Dedicated team to support sellers
• Account manager – Relationship manager for a group of sellers

Vendors WS Retail Ekart/

3PL

Order Origin Nearby Order received

Market Place Delivery Hub
on Web Portal Warehouse by customer
 Sell/Return Model
• New policy offered by Flipkart
• Inventory in Flipkart’s warehouse with pre condition of buyback free of
cost
• Logistics and inventory carrying costs borne by Flipkart itself

Vendors
Ekart/
3PL

Order Origin Nearby Delivery Order received

on Web Portal Warehouse Warehouse Hub by customer

WS Retail
 Product & Business
Technology Development
Operations

Reverse Customer
Procurement Logistics Logistics Support
Flipkart’s Warehouse Management System
Issues in warehouse management System
• Minimal automation in the inward processing phase
• Difficulty in mobility due to packaging litter
• Scalability issue because of category wise storage

Automation used by Flipkart in WMS

• Use of Robots for sorting, putting, and movement of
items within the warehouse was implemented.
• https://youtu.be/QRtsuIVKydQ
 Logistics
• More than 100000 shipments per
day
• April 2013- eKart created for 150
cities
• Mother hub → delivery hub →
customer
• Tie up with >15 companies (
Blue Dart, First Flight) and India
Post to reach remote areas
• Saving of 2% on commissions
• Delivery time: 3 days to 3 weeks
 Reverse Logistics

• 2.6% returns for Flipkart, 30-

day return policy
• Established data systems to
identify frauds pertaining to
return policy
• 3 paths a return request takes:
 Replacement
 Store credit
 Actual cash-back
 Order Processing at Flipkart
• Flipkart uses its own ERP systems to process orders and track the details of
the transactions that need to be carried out
• It takes 8-10 clicks on an average to place an order
• A customer can be identified uniquely on the basis of the e-mail id and the
records are maintained with reference to this id
• Payment can be made using debit card, credit card , Net banking or Cash on
Delivery (COD)
• In 2013 Flipkart launched its payment brand called Pay Zippy to provide
safe and hassle-free payment option to its customers ad online merchants

Selection of
Searching by Placement Payment of
the Required
Customer of the Order the Order
Item

A Typical Order at Flipkart

 Order fulfilment at Flipkart
• Order fulfilment is done via Inventory or JIT procurement based on the availability
of the products
• They have an understanding with their vendors for order tracking, reconciliation and
MIS
• The order is shipped to the customer by courier, Indian postItem
orFound
its own internal
logistics arm depending on the area of delivery
Placement of the
Inventory Check at Local Warehouse
Order
Item Not Order Packing
Found Item Found

Inventory Check at Nearest Warehouse

Item Not
Found Item Found Delivery to Customer
Inventory Check at Other Warehouses

Item Not
Found Item Found
Customer Updated on the
Item Forwarded to Regional Procurement Team(RPT) for JIT
status of Shipment (via sms,
from local vendors
e-mail or website)
Item Not
Item Not Found Found Item Found

Item Out of Stock Item Forwarded to Central Procurement Team(CPT)

 After Sales Services at Flipkart
• Flipkart has a focus on customer delight and
ensures an excellent after sales service to its
customers
• After sales services are provided regarding
delivery and faulty or unsatisfactory products
• The return of unsatisfactory products are
done without dispute in an effective manner
• This is possible due to the understanding
with vendors
• In case of electronics, warranty and after-
sales service is the responsibility of the
manufacturer
• Whenever required Flipkart facilitates the
smooth interaction between customer and
the manufacturer
• Flipkart varies between 1 day delivery and 3
weeks delivery; time based on the location
and availability of the product
 Inventory Management at Flipkart

• The Inventory stocks are replenished

whenever it goes below the reorder point
• FIFO method is used for inventory
management
• For any shipment to any warehouse the
oldest items are shipped first
• For the decision of which item to store in
inventory and which ones to procure form
warehouse Long Tail Concept is used
• Long Tail Concept is basically selling a large
number of unique items
• Such items are ordered in an ad hoc basis
without keeping an inventory as demand for
such items is less hence overall inventory
and distribution costs can be minimized
 Supplier Management at Flipkart
• Starts of by sourcing from local suppliers and distributors
• If there is enough demand generated Flipkart approaches the
larger wholesalers or manufacturers directly
 Better deals in case of bulk orders from bigger
manufacturers
 Avoids channel conflicts for larger players
• India’s largest online retailer of books which are sourced directly
from publishers
• Across all product categories Flipkart works with 500 suppliers
including international suppliers as well
• Flipkart's steady line of growth allows them to get the best credit
line from suppliers
• Suppliers are graded into A,B or C categories based on their past
performances
• While placing an order with the supplier the following things are
considered
 Price Considerations-Credit Lines and Discount Terms
 Quality Check Contract-If Quality Checking will be
done at Flipkart or supplier’s place
 Percentage of Returns Accepted- Should be Higher
 Customer Support

• In house support staff

• 6000+ strong staff base
• 6 click policy
• Tasks of outbound call centre:
 Information about delay
in delivery
 Checks status of
refunds/returns
 Address issues/delivery
issues
Why go digital in SCM for
companies like Flipkart??
 Digital SCM in e-commerce
• Port management (autonomous freight shuttle debuts)
• Inventory management (hack-proof RFID chip)
• Brand protection (invisible digital markers to help fight counterfeit
products)
• Warehouse management (robot technology for collaborative
automated order picking)
• Infrastructure (deploying drones to inspect bridges)
• Delivery (using drones to deliver shipments)
 Competitor Advantage - Amazon’s Tech
Advancement
• The company spent $775 million Youtube links
to acquire Kiva Robots in 2012,
now called Amazon Robotics
• Today, they have roughly 100,000
robots in use across the world
• The robots of Amazon Robotics
can pick and pack without needing
any human assistance, enabling
Amazon to complete warehouse
activities super-fast
• Flipkart needs to compete on
these parameters