16th July, 1999

Dear Mr. Sevin,

Have compiled a few words in my final report for you, your comments on the same will be ...
1




July 16, 1999.

Kind Attn.: Mr. Pierre Sevin
From:       Mr. Connie D’souza


Otto Burlington’s being a mail order r...
2

2.       Stocking:

Goods being selected for any given catalogue for the first time are stocked in quantities in varied...
5.      Employee Turnover:

The undersigned has seen a large turnover of employees during his tenure with the organization...
total bankrupt department on performance. Thus thereby no targets being fulfilled and resulting
cost cutting & Bombay offi...
7


Other Comments:

The undersigned strongly feels that a overall change in the attitude of the management and employees
...
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Otto Burlingtons’s Mail Order Pvt. Ltd - (Zonal Office) - Exit Report

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Otto Burlington’s Mail Order Pvt. Ltd. Zonal Office, Closure Report

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Otto Burlingtons’s Mail Order Pvt. Ltd - (Zonal Office) - Exit Report

  1. 1. 16th July, 1999 Dear Mr. Sevin, Have compiled a few words in my final report for you, your comments on the same will be highly appreciated. It has been wonderful working with your goodself, though our communication has been limited to handful of times. Your support and back up in words, oral and written in times of sheer frustration, where we were struggling in the dark, to get our work done vis a vis the Head Office has stood good time and again, and would surely stand good in the future struggle of self’s professional career, which has for the time being come to a halt. I am sincerely thankful and grateful for the same. Wishing the management and the organization on a whole and your good self my best wishes in your future endevours to make a success of OBI and your good self’s future. Best Regards Connie PS: For personal information. Hope you keep in touch. Mr. Connie D’souza 8, Darling Apts., Gr. Flr., Mini Land, Tank Road, Bhandup (W), Mumbai – 400 078 Phone Resi: 567 0049
  2. 2. 1 July 16, 1999. Kind Attn.: Mr. Pierre Sevin From: Mr. Connie D’souza Otto Burlington’s being a mail order retailing company with its insepction since a decade, has instead being the most successful one among its competitors has seen a downfall in recent times and specially in the last two seasons of its catalogue. The undersigned reflects on what would have been the reasons for the same, keeping in mind the position vis a vis the Bombay zonal office. •Operational Problems: Being a customer service oriented organization with buy back facility and the logistics well taken care by the customer service department, there has been quite a large number of unsatisfied customers. Specially when the organization is selling its merchandise through photographs and a wide array of media coverage through leading English and vernacular language print media. The major reason being the merchandise. As the undersigned has been a merchandiser/buyer since joining the company, would like to highlight and reflect about the concerned department on most part of this report. 1. Products/Merchandise for Catalogues: Though widely recognized and well-set brand by its name ‘OTTO’ ‘BURLINGTON’S’ the organization has not been able to live upto its reputation. The organization has not been able to provide the merchandise through its catalogue upto the satisfaction/expectations of its customer base in terms of quality in comparison with the retail prices in the catalogue. The large customer returns in the zonal office in regards of products returned due to quality reasons and customers likes and dislikes have been colossal. Effecting the profitability in terms of transit time to send goods to customer, to return the same to the warehouse and large amount of funds rechanneled for refund to customers on buy back facility, wear and tear, breakage during transit of the above etc. making the merchandise ineffective for re-sale. In turn creating a huge stock turnover at the warehouse, indicating the would be sickness of the organization. Other logistical efforts of repackaging, stickering, postage/courier in turn creating a heavy burden on the effective margin of any given product between its buying and retailing price thus effecting largely on the profits.
  3. 3. 2 2. Stocking: Goods being selected for any given catalogue for the first time are stocked in quantities in varied proportion without right anticipation of the would be sale of the same. Large buying of any merchandise not holding its own in terms of correct speculative sale targets/figures for future sales can cause grave consequences in terms of large stock turnover and also minimizing the maximum use of warehousing. Stock controlling and the devised method for placing orders and stocking, has to be framed with coordinating with the customer service and data of sales of the corresponding sales of the said products, in respect of its sale ability with the customer base, as also with the quality of the product. 3. Selection/Pricing: It is also seen specially in hard goods (as well as in garments and textiles) the merchandise is selected from suppliers, from the product portfolio which any supplier has existing with them. Whether the said products to be selected for previews are currently in the market or newly introduced. Its production position with supplier for future in terms of its molding, dies, RM etc. is not studied in great details with the suppliers for future period specially the life period of the catalogue. The product pricing in terms of RM (weight) tentative costs of dies, moldings, quality of RM used in hardgoods/garments/textiles, labour and other cost of production are not dealt with the Quality Assurance department. With better detailed study on the above mentioned factors, with products offered for selection by the buyers a better selection process could have been implemented. Substitute suppliers for any given products were not looked into, for any products if existing suppliers does not agrees to the organizations terms and conditions. Manufacturing defects, low quality RM in fabrics and plastics being a major reason for customer returns. 4 Transparency/Ineffective Communication and Coordination: It has been seen the coordination of merchandisers/buyers was at its lowest at any given time. With most buyers trying to be one up the other rather than working as a team, instead of putting pressure on one another. The essence of teamwork has never been by the undersigned during his tenure. Petty politics always taking upper hand rather than the larger good of the organization. The coordination of the Quality Control department and the Quality Assurance department reflected a very bad picture and seemed to be pathetic at times. Goods of lousy quality been approved (which can be aptly seen through the returns), no specific reasons allotted to the merchandisers/buyers for rejections to be forwarded to the suppliers for any debit notes or replacements, leaving the merchandisers and suppliers in the dark for lack of proper communication. Being a technical department, for the merchandise department, technicalities of the RM, QA on pricing and RM etc should have been worked stringently from selection stages itself, other than leaving the consequences of the same after introducing the product in the catalogue. The after effects can be seen now in the present crises. Merchandising is better left of the merchandisers with coordinating on the technical and quality aspects given top priority for any given products by the Quality Control department instead of doing the work of merchandiser/buyers of sourcing products. There was hardly any transparency in decisions taken by the management and buyers, to its respective zonal offices or buying center’s, in regards of sale effected of products from a particular zonal office, buyers net index reports, selection of any given products, stock reports by the stock controller, QC/QA guidelines etc. Without the merchandisers of the zonal office knowing the selection fo the products PO’s were directly placed with the suppliers/merchandisers!!! Why in the world than the zonal office requires to hire full time merchandisers!!! Solutions were seeked by buyers without specifying what problems they faced !!!??? which was ridiculous and the most absurd experience of the undersigned. Merchandisers/buyers not sparing time for the zonal office work follow-up and waiting for the last minute to act created delays for small items like stickers, form 31’s PO’s etc has also been a major reason of the failure of the department. 3
  4. 4. 5. Employee Turnover: The undersigned has seen a large turnover of employees during his tenure with the organization. With 3 chief buyers, 16 buyers, 2 QC managers leaving or asked to leave in a span of less than 1 ½ years. Which is quite high for a organization as OBI, thus effecting the continuity of work in progress and hampering the work atmosphere, time and energy wasted for recruiting new staff and for them to get acquainted on the job. The morale of any new employees with this kind of background can never be boosted with lack of trust governing in the department. 6. Buyers Responsibilities: Quite a number of times it has been seen that buyers take unilateral decisions and were high handed in their approach to juniors and specially with matters concerned with the zonal office, which the undersigned has experienced. Buyers lacking in communication/co-ordination with the management as well as trouble shooting problems arising out of any given situations, instead of which passing on the buck had become a norm. The undersigned strongly feels that buyers need not be good merchandisers. As could have been seen by the rapid selection of products that have not done well in the last 2 seasons, in terms of quality and products uniqueness, of non availability in the market and a tendency to go for imported products whose supplies are inconsistent if not imported in the right channel. Buyers should have been made responsible for every work done by them in terms of selection, quality and specially pricing of which undue advantage was taken, sacrificing quality, packaging etc. with respect to selling good quality products to the final customers. Loopholes of price rigging’s through efforts of stringent QA and a method of keeping the two departments of merchandise and QC/QA department separate with indigenous results must have been made to assure quality results in the ultimate products in overall terms of pricing and quality till its dispatch. Its also strongly felt, that though buying centers be increased in other cities, the buyers did make business trips, which seemed too fancy in the end results. As there was no successful results in product selection for the given buying centers, or a negligible selection, which did not match the cost of expenses of such business trips to any other buying centers other than Delhi. When the undersigned joined Bombay office, the representation of products of the Bombay office was 10-12 products with 11-12 vendors. Which rose to more than 125 plus products over the period of his tenure with a varied vendor base of 50-60 plus vendors and a large data base of manufacturers and suppliers to be developed for future developments. Such exercise of not only working with existing vendor base, but expanding the same should have been followed by the buyers continuously. Which was missing in Delhi right from the start and was static to a handful of suppliers continuing repeatedly through all seasons and years to come. Making it look as a lobby of buyers representing a certain set of vendors, effecting the whole set of the merchandise selection in terms of quality and pricing. Finally lowering down the products selection in the Bombay office to 3 products and 3 suppliers in 2/99 catalogue with no representation in the garments/textiles/soft home section from Bombay for the last 2 seasons and as on 09.07.1999, the day of seeking undersigned resignation. 7. Labour Cost: It was also found in the early stages a lot of packaging was done in-house rather than being done directly through the suppliers (which was implemented from 1/98 season on a regular basis)raising the cost of packaging and other consumables to a high effecting the overall cost of final sale, making a dent in the profits. Control on the same was concentrated wholly and solely with the QC dept. or warehousing making it impossible for merchandisers to study the cost effect on the final pricing strategy of the given product, which was also seen. And the wrong side of the QC head in Nitin Goel/ Ishwar Gambir etc. followed by Vandana & otheres in the buying dept. over price rigging, vendors being forced to pay to pass QC certification, to enlist their products in the catalogue. Making it a
  5. 5. total bankrupt department on performance. Thus thereby no targets being fulfilled and resulting cost cutting & Bombay office being axed as a first major exercise. Also stated in the above para 5 the employee turnover, which shot up the costs of hiring good professional merchandisers/buyers. Undersigned’s dilemma in the whole situation: Since joining OBI, there have been many occasions where the undersigned had been in a constant tussle on many operational aspects of the merchandise department from the Chief Buyer down to the buyers and QC dept. and A/C’s dept. It was a difficult position where the undersigned found himself reporting and serving too many masters at one time with one chief buyer and 4/5 buyers wanting his attention which was quite a handful. All trying to be one up the other and trying to intrude other buyers area of products to get some extra mileage with the undersigned and the management thereby creating a lot of rift among themselves as well as the HO and the zonal office. Reports on buyers visit to Bombay office their high handed behavior was drafted and sent to the management by the undersigned during buyers visit in March 1998, on request of Mr. Nakul Kapur. With specific reasons/backup in terms of paperwork/mess up created in pricing by the buyers, buying merchandise through traders while manufacturer’s of given products were in Bombay creating losses to the company. And many a products being best selling items, on which quantities were substantially high, which was promptly rectified by the management in certain cases, and others stood neglected by the buyers. There were a couple of other reports when the management went stern on price reductions, where undersigned got not only prices reduced substantially but also introduced many manufacturers of goods which were procured from traders in Delhi, which was again neglected and not implemented by the buyers. The undersigned squarely puts the blame on the merchandise departments inefficiency for the kind of upward movement of the losses curve incurred in nearly half a decade of OBI’s existence and doubtful actions of the buyers. And the large turnover of more than 150,000 units laying in the warehouse not being sold or returned by the customers. Marketing: Though there are many a reasons for today’s standing of the organization including customer service,. But due credit should be given where it lies and specially of the marketing department which have done a good job in selling the kind of merchandise that was asked to be sold through the catalogue mail order concept. And covering a wide terrestrial region in varied multi cultural/language/traditional land as India and making OBI truly a name known by a good customer base. Who the undersigned feels have accepted the concept of Catalogue Shopping in a large way, as can be seen by the good success ratio of organizations/competitors like TSN, TeleBrands etc. Though they are from the visual media, who in turn have taken the concept from OBI and changed the disadvantages of OBI’s operation into their own advantage. By taking measures to rectify it in a way of better customer service, franchisee outlets to cater to customers with immediate distribution effect and not having buy back facility in quite a lot of products.
  6. 6. 7 Other Comments: The undersigned strongly feels that a overall change in the attitude of the management and employees as a whole had to be changed to cater to the mind set of the Indian customer indeed, which surely could have been done by tough management. Doing the same now would surely cost a monumental investment to the organizations top management decision making people and would be a tough act, but nevertheless possible and is the prerogative of the management. The targets not being met have pushed back the company atleast by 5 yrs. Proper planing in merchandising, distribution, packaging forwarding from garments to hardgoods should have done the trick, but unfortunately it was not to happen so. The undersigned also feels that himself along with his other colleagues were good enough to do the work allotted to them in a better way and the services of our could have been utilized in a much more better way, vis a vis the head office for better results, (though it sounds quite preposterous indeed!!! at this stage) by not doing so it is strongly felt that the Bombay zonal office was made ineffective by the HO from its insepction, rather than the other way round and has culminated in the end by being a liability to the organization, which has to be amputated at last, which was strongly anticipated by the undersigned, and a sense of pity governs for the kind of circumstances that the organization has reached, where in the management has to seek the resignation of the zonal office staff and specially from the undersigned when he himself had offered his resignation 2 times in the past!!! (Though out of sheer frustration towards the and utter callousness of the HO) and were not accepted, and the 3rd one had to be asked for!!! which was not on his own accord. It surely would have been appreciated if a termination letter would have been sent, for if losses are incurred in a huge way it is quite understandable that the first fallout’s are always the zonal offices of any organizations and surely would have been taken in the right spirit.

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