In what ways do you think India is losing out due to lack of IT in supply chains?
With IT, a good flow of the product and information throughout the supply chain can be ensured. A slight change in the market trend can lead to gross miscalculations if the supply chain is not equipped with the right IT. For instance, the retailer may estimate the increase in demand to be X, the warehouse may estimate it higher than that; and the supplier even higher. This is known as the whiplash effect. It leads to tremendous impact onprofitability. This effect is not specific to any region, but very typical to India.

Information technology gives significant advantages. It takes care of both the processes and the systems. It definitely curtails losses. I learn that in India, as much fresh fruit is wasted in a year as is consumed. Information technology could change this scenario.

What are the breakthroughs in retail-related IT in Europe?
We have defined certain areas in the supply chain. Like demand management, order management, planning, procurement, scheduling and distribution. These are key to the management of the supply chain. Then we also look at the way employees work on these new systems. Because even if you upgrade the IT, but not the style of work, the benefits of installing the system will not percolate downwards. We at KSA give high priority to this aspect.

Demand management requires a great deal of forecasting for example, estimating the demand for green jeans in the forthcoming season. Once you know allthat, you have to work on the fits, sizes and numbers etc. So we need to have some consumer forecasting figures. This is a very complex procedure. The accuracy of the forecasts depends on the model that has been used. These forecasts are tallied by the management with the knowledge of products, customers, competitors, weather factors etc. Amongst our clients in the US, forecast error used to be as high as 60 per cent. By defining objectives and with the right strategies, this error rate has come down to almost 20 per cent in the case of most of our clients.

In what ways can the consumer benefit from improved information technology?
Retailers can gather information from the customers. They can get to know their consumers' birthdays, buying patterns, purchase history and work out displays, discounts and promotions accordingly.

Here one can quote the United States' Walmart retail chain's nappy-beer example. Men of a particular age group were walking into the store to buy nappies and at the sametime the sale of beer cans was going up. Research revealed that these men were baby-sitting at home. So Walmart started displaying beer and nappies together for convenience of the buyers.Similarly, in Europe, snack foods and plastic bags are specially displayed together to make things easier for the shopper. This process of linking separate areas together has improved sales too. It requires greater information on what people are buying and is known as category management. KSA also holds surveys. In Europe and in the US, we have been holding consumer surveys annually. In India, we've begun this year.

n Has the supply chain time reduced considerably due to improved IT?
It's shortening every day. One of our clients -- Oasis, Europe -- had stocked its stores with a large number of grey apparels for women last year. In mid-November, the retail store found out that its sales were falling. The company decided around November-end to bring in fresh stocks in different colours for Christmas to push upsales. The models had to be changed, so were the colours. They managed to do all this within two weeks -- by mid-December -- and got fresh stocks in their stores. Needless to say, sales went up drastically.

Survey had revealed that women were just fed up with grey. Oasis managed to change its stocks essentially with the help of IT. Earlier, the same process would have taken two to three months. It was also possible because of a quick response to changing tastes, making the right decision and using the right forecasting models. On the supply side, it was made possible due to a very close relationship with the suppliers. Moreover, the production monitoring process and transportation also needs to be efficient.

We learn that big business houses in India -- like the Tatas, Piramals and Rahejas -- are entering retailing. With this, the retail scenario can change considerably. The advantage India has is that it can pick the best and most suitable technologies available in the West and apply them here.

Withthe advent of e-retailing, how have retail stores reworked their strategies? What are the predictions for retailing on the Net this Christmas season?
Retails stores are slightly confused about this. They don't know if they should compete with their internet sites or not. Data reveals that 85 per cent of people who purchase on the Net come back and repurchase. As this market matures, it will become easier for the consumer to do price checks. But on the Net, it's easier to hike prices once demand picks up.

Last Christmas, the US recorded sales worth US $ 25 billion on the internet, which is really insignificant by US standards. This Christmas, predictions are that e-retailing can be anywhere between US $115 billion to US $ 750 billion.