FINAL REPORT

COMPANY: Metro Cash and Carry

For the fulfilment

Of the course

Supply Chain Management

_____________________________

Submitted to

Mr. Arsalan Najmi

By

Muhammad Atif Ikhlaq (8301)

Shahzad Ali (8069)

Bakhtawar Shaikh

Moiz ul Hassan

Shahnawaz Bhamani (8303)

BBA-H

TABLE OF CONTENT

1. Introduction of Metro…………………………………………………………

2. Metro’s Business Operations…………………………………………………

3. Metro’s Supply Chain………………………………………………………...

4. Detailed Information…………………………………………………………

5. Metro’s Supply Chain Risks…………………………………………………

6. Opportunities and Forecasting………………………………………………

7. Inventory Management………………………………………………………

8. Short Term Planning…………………………………………………………

9. Recommendation……………………………………………………………...

Metro Cash and Carry

Introduction:Metro is the international wholesaler, operates across the Europe and some of the countries of

Asia and Northern Africa. Metro is operating over 750 stores in 29 countries in 2014.

Metro’s Business operations:Metro is kindly different from other wholesalers because metro looks for professional

customers rather than focusing on end consumers. Moreover, the cash and carry concept has a meaning of self-service and bulk quantity. There is a reason behind this concept which is Metro has targeted the professional customers who owns businesses and buy products and services in a bulk quantity for their business use. Metro’s core customers are Hotels, Restaurants, Caterers, Traders and other business professionals. Currently metro has 10 branches in Pakistan in which one was shut down due to low sales.

Metro’s Supply Chain:Metro Cash and Carry as a whole is one of the biggest wholesale business around the world as

they target professional customers and end consumer. For that, availability of goods becomes very crucial to manage and fulfil the entire demand of local customers. In each market MCC is much very active and they source 90% of goods from their local dealers and distributors. Other 10% include goods import from other countries and metro’s own brand products which is in demand to local customers in Pakistan. The strict policies and regulation ensures their sources to meet to international standards and encourage them to provide quality and safe products to their customers. The main objective of Metro is to add value in products and make them available anytime for their customers who have different shopping needs. At the same time Metro also focuses on the environmental and social issues to deal with unfavourable situation and take systematic action to tackle.

Detailed information:MCC normally deals in food, dry food and non-food items of best quality available to them

and their suppliers. The best thing about metro is that every branch orders its own inventory according to the turnover and keeps those products easily available that are more in requirement by the customers like P&G, Unilever and Nestle products. They shelve these products where they can easily grab the attention and catch the eyes of the consumers as other products also are shelved according to their sales level. However, those products which are less in demand and whose turnover is low, every branches of MCC ordered them collectively to the main branch and then order is transferred to warehouse before getting stock out and thus distributes goods to all branches at a time. By using this process, MCC can reduce its transportation cost and make them more efficient in availability of stocks. By designing and implementing these ways, MCC can get more aware to the issue and try to solve these barriers effectively.

METRO Cash and Carry owns its warehouse in Lahore and Karachi SITE area with a huge capacity of storing goods at a time. Before procuring from any supplier, MCC designed and draw some purchasing policies related to sustainability. These policies carry the requirements for managing the procurement process and sustainable supply chain which develops the guidelines to address issues and making strong procurement channels especially in their own brands. After establishing the channel and procuring goods from their suppliers, MCC store goods at their warehouse where all products are managed and kept under required temperature to maintain its freshness. External environment may affect goods as well as the business operation does also. However, MCC try to reduce the external climate and their business operations. Furthermore, those products that are no longer in business use, MCC repurpose them rather than wasting, which could influence the

environment. Fresh food items which involve fruits and vegetables are directly source from their suppliers and they normally use their own transport to deliver every morning at the right time with quality items. MCC also provides their suppliers training in order to meet the international standard of their company’s policies. Furthermore, food and dry food items from different companies like Unilever, P&G, Engro and many other companies use their own transport and deliver goods directly to the warehouse where they can store goods according to their temperature required to maintain its freshness. Items which does not have much cost, MCC also stores them to their warehouse and bears its handling and storing cost without any complexity. Halal meat is also source from the reliable suppliers in order to meet the international standard and strict quality assurance, from the live stock till it reached to the end users. Cold temperature transport is used to maintain the meat freshness and MCC also train them to fulfil their customer’s requirements. MCC transportation system is very huge and complex as they have outsourced their transportation with LASANI transports which provides them multiple options with the requirement of products. Metro Cash and Carry have a huge area and normally store the inventory above the shelves as they have a high ceiling and more than thousands of electronic goods and food items can be stored easily.

TO control their inventory and sales, METRO uses a Database Management System called GMS (Good Management System) which gathers the data of total sales and reports to Lahore Head Office and they directly report to Germany. The software manages the whole inventory available to the store and also generates daily purchase orders. Moreover, it can also create alarming situation before getting stocked out. Logistics hierarchy is well formed by MCC, in which sales people who are directly contact with shelves and products inform their supervisors about the demand of goods, after which supervisor informs to their floor manager or store manager to generate the purchase order with the help of Good Management software (GMS) and transmit to warehouse and suppliers.

Metro usually imports the inventory on 50 day expiry period and when it comes to local products, the expiry days are usually 60. The products imported from other countries don’t go for reverse logistics. In case of any fault in the product, it is not returned to its original place but rather wasted. The strategy of no return is used for fresh food items by Metro and for electronic products as well. They do have a policy called RTS (Return to supplier) for the default products. This strategy makes metro efficient and also to their supplier to deliver all quality products with safety without any wastage. That is the reason MCC suppliers are very much reliable and cooperate with them in any situation. All the products are easily available in Metro all the time as Metro’s suppliers follow quick lead time and if the branch goes out of stock, it obtains the products from other branches for the mean time. Fridays are the peak sale days and there has never been a shortage of inventory. MCC advantage is that, they never stock out in any situation whether they offer sale or any uncertain situation happens. Metro stores itself is kind of a warehouse where they keep sufficient amount of stock to tackle all situation. The company’s planning and forecasting is very strong and much accurate to order all demands at the right time and manage entire inventory both at stores and warehouse. Suppliers are not bound to supply for Metro only but they can supply to other places too. FIFO method is used for inventory outflow and the wastage ratio is minimized up to 0.2%. This sufficient time between order placement and delivery of goods enables their supplier to meet the quality standards of Metro and quality checking is also done by Company as well. This process has not only decreases the risk level in quality but it has also decreased the level of wastage and return to the suppliers.

Metro’s own brands include Meat and fresh food with recipe spice packets which are very popular among their professional and end consumers. The strategy uses to make their consumers a fan of their products and services with best quality and competitive price. A slaughter house is outsourced where quality check is assured and maintained. Metro team maintains a proper agreement and does surveys for quality check and standardization. Vegetables and fruits are shelved early morning and the stock is procured from the main market place (mandi). The vegetables are selected through a quality check which is done by the Metro quality assurance team. Metro’s international standard and polices guarantee that all items should be in great form, quality and freshness. The distribution of frozen and

chilled products is a big challenge for the company in order to maintain their freshness and taste for their end consumers. For that, Metro uses cold storage transport system and keep temperature-sensitive products into it under plus and minus degree according to the requirements. Monitoring can be done manually and through computerized software during the transport till the time of storage in warehouse or deliver goods to stores.One of the biggest plus point of Metro is that it is not affected by the political uncertainty in the city and no closure of the Cash and Carry mart is encountered. Huge parking area is secured by Metro which can facilitate around 550 cars at a time. Customers feel safe as they enter the premises of Metro.

Promotion deals strike Metro and increment in sales is noticed. Usually prices are fixed but the suppliers’ sometime offer seasonal promotions that are put up by Metro. Sony Bravia LED TVs priced high in the market but were promoted in slightly lower prices in Metro and the stock was sold out in the least expected time.

Metro plays as a huge platform for its employees. Special Training Programs are conducted for the employees where they are trained regarding the product’s quality and procedures. They are further trained to evaluate raw materials and minimize wastage in order fulfil as per international standard of Hazard Analysis of Critical Control Points (HACCP). High reward and appreciation with benefits is the culture of Metro. Facilities like health insurance and free medical for employees is provided ad everybody is treated equally, Metro encourage their employees to come up with new ideas to boost their business and everybody contributes when it comes to giving suggestions. When it comes to saving energy, Metro is playing its part very well. Led lights are installed all over the Metro store and further thoughts are being generated to go fully solar dependent.

Metro’s Supply Chain Risks:The core responsibility of Metro’s business is to build a strong relationship with suppliers

especially for the sustainability in terms of energy and fuel consumption to confirm availability of products at best possible competitive price. However many risk occurs while building the relationship with suppliers and procuring the goods.

Continuously growing variety in products range is the biggest risk not only for business operation but also for inventory and logistics of the company. Suppliers are now also becoming more internationalized and focus on regional and local product varieties has increased the risk. Lacking in inventory management which require proper planning can make company to bear huge losses and additional cost. Disruption or miscommunication can also negatively influence the supply chain, from the suppliers till it’s reached to the warehouse or store. In addition, it can also project in availability of insufficient goods can make company to go out of stock or over stocking to their warehouse or store for which company has to pay losses and can also lose their customers. Incomplete or poorly managed products can seriously lead company towards loss, unavailability of products to their customers and delay in customer’s orders, for that company needs to monitors all products on daily basis to tackle these situations. Additional risk rises with the delivery option for their customers which could increases the sales of the company but complexities in this option can make company to bear huge cost, so that completely built delivery option is very important.

Opportunities and Forecasting:MCC systematically identifies and communicate the market opportunities that could benefit

them in growing their business and capture best possible market. By studying market trend analyses, macro factors, competition, location analyses and success factors, MCC management board identify new market opportunity and enhancement in efficiency with short and medium term plans for business strategies. Furthermore, forecasting is the best way adopted by metro to make further plans. Metro adopts qualitative and quantitative data for forecasting. The main purpose of metro is to make the best relationship with their customers. Metro are also forecasting to minimizing the error of

uncertain situation in particular city and trying to remove the barriers and give the satisfaction to the customer. Metro has carefully allotted the warehouse location and offices to minimize the losses in uncertain situation.

Inventory management:Metro’s inventory storage could carry up to Rs. 100 to 80 million priced products which are

totally managed by Goods management Software and skilled employees. . They are trying to improved warehouse layout and technology. They make a good structured for the warehouse which they help to the workers to find anything and move their inventory accordingly to the demand and desire to the customer.

Short term planning:In short term planning Metro is trying to give the best services to the customer. Metro gives

the right product on right time at the right place which becomes the cause of customer satisfaction. They also maintain the record which is the main feature of short term planning.Short term Plans:

Pricing Demand Inventory management Forecasting

1. Due to some metro policies the limitations has incurred that customers can not shop for less than 2000 rupees and the children were not allowed in the premises due to which the sells decline as the time passes than they decided to cut down these policies.

2. If the particular product has less demand they did not buy much quantity because it cannot be sold.

3. We have used business to business (B2B) system.4. Metro is only for the professional customers who want to do shop for bulk quantity and

provide many things at one stop shop.5. Metro has designed efficiently for the professional consumers.6. Provided advanced customers’ needs and developed their competitiveness.7. It develops the proper shelf positioning of the particular products for the customers to find it

easily.Recommendation:

Metro mainly focus on wholesale business where you can find quality item in bulk quantity on lower and competitive price. But in Pakistan, this concept is not much implemented in terms of pricing strategy. MCC does not reach to the main manufacturer or producers in order to reduce cost for their end or business consumers. If we look at other Metro stores in other countries. The company has direct link with farmers, manufacturers and producers in order to acquire quality items and pay them fair market value. In order with that, it can benefit MCC for reducing cost to their end consumers. However, Metro in Pakistan have direct contacts with only suppliers which deliver them products on recommended quality but do not have much pricing advantage. For that, customers at metro does not feel much pleasure in term of pricing advantage.

We recommend MCC to implement direct approach to producers and farmers which could ultimately benefits metro and their end customers in term of pricing advantage to capture best possible market. This approach can also allow MCC to train farmers and aware them for future market needs and technology as well to produce better quality and quantity.

Another weakness of Metro which we identified was low marketing strategy at cost in low awareness to their consumers which company has to bear. MCC run their advertisement only in different season and occasional basis. Moreover, most of their customer does not know about the sales promotions and especial discount offers. MCC has a paid service to be registered which could advantage their customers in getting discount and sales promotion through message updates. However, only 1\3 of their customers are registered and most of them does not wants to pay for this service.

Our group has recommend MCC to give registration service to all their customer whether they are business users or end consumers at free of cost. This would help MCC to attract new customers and retain their daily customers and could increases the sale of the company and customers will feel delightful.