$2.$

Read the following case and answer the question presented below.

The meteoric rise and equally dramatic fall of Subhiksha, one of the earliest entrants in the Indian organized retail sector spanning about a decade $(19972008),$ makes an educative case study of mismatch between the competitive and supply chain strategies. The $$no$-$frills, deep discount$$ store offering a whole range of branded consumer items from its $1,665$ outlets in the country, at prices lower than any of its competitors at any of those locations presented a replica of Walmart, the world$$s largest and most successful discount store. The image was appealing and the offers most attractive for the Indian consumer. This led its promoters, in their early years, to believe that they had come up with the right solution for the burgeoning Indian retail industry in its transformation from traditional to organized format and could spread their presence throughout the country. This belief was strengthened by the investments that poured in from some of the largest corporate houses in the country, reflecting their confidence in the viability and growth of this strategy and format in Indian conditions. However, by $20062007,$ Subhiksha found itself in deep trouble largely due to cash crunch and failure to sustain its widespread distribution network, including meeting its obligatory requirements like wages for the staff, leading to

$2$ of $1$

its demise in $2008.$ While some experts attribute the failure of Subhiksha to global

recession and credit squeeze resulting in problems of liquidity, they failed to realize its

fundamental failure to achieve and maintain a strategic fit between its competitive and

supply chain strategies. Subhiksha started off basically as a food and grocery store, selling

branded items in this category. It went on a diversification drive to add more consumer

goods, including mobile phones, which operate at rather low margins in a highly

competitive market environment. Subhiksha failed to realize that the factors that led to the

success of Walmart went far beyond the simple operational cost reduction measures,

measures, such as non$-$AC$,$ small$-$sized stores, but was based on more strategic approach

to cost reduction that was essential to support a low$-$price leadership competitive strategy.

It failed to see the impact on inventory$-$carrying costs in a widespread network where the

square root law of inventory operated. It also lost sight of the fact that the larger the number

of facilities, the higher their maintenance and staff costs. Transportations costs also

increase beyond a certain level of increase in the number of locations to be served and the

control of such a widely spread network of facilities has its own problems. Above all, its

lacked communication network and infrastructure, like Point$-$of$-$Sale Capture of Data

$($POS$)$ and Cross Docking that ensured the continued and seamless flow of material from

end to end in a highly efficient supply chain without any intermediate storage point to

support their Every Day Low Price $($EDLP$)$ claims. Subhiksha, despite all efforts, does not

seem to come out of its financial troubles.

Describe your perspective on the Subhiksha$$s supply chain, their strategy and success$/$

failure potential.